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AFGHANISTAN


  
  


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REPUBLICAN REFERENCE

Area (sq.km)
647,500

Population
26,813,057

Capital
Kabul 

Currency
afghani (AFA)

President
Hamid Karzai

 



Update No: 058 - (21/09/06)

Peace in the making?
Pakistani president Musharraf's recent visit to Kabul was clearly meant to be a turning point in the relations between the two countries. Under US pressure to improve relations with Afghanistan, Musharraf went as far as admitting for the first time that the insurgents are indeed coming from Pakistani territory and receive support there, although at the same time he denied that they receive support from the Pakistani authorities. Pakistani authorities also stated that the Afghanistan government does not support the Baluchi insurgency back home, another new development. Signs of US pressure on Musharraf to mend fences with Kabul had appeared over the last few months and during August and September more emerged. The US voiced support for the resumption of incentives to cement exports to Afghanistan and expressed optimism at an Afghan-Pakistani agreement to establish communication along the shared border, calling it a 'breakthrough'. The US will provide the equipment to allow Afghan and Pakistan border units to talk to each other and cooperate at preventing infiltration across the border. However, it appears too early to say whether relations between the two countries are really on a new track. The newly found friendliness did not last long, in fact, and as early as mid-September the Afghan Foreign Ministry harshly reprimanded Musharraf for hinting that the Taleban have at least some popular support. In August, Foreign Minister Spanta had announced his intention to establish a 'strategic partnership with Delhi', and criticised the 'expansionist' foreign policy of 'some countries' which use terrorism for their purposes. 
The intensification of the clashes in southern Afghanistan did not contribute to improve the mood either. Although by mid-September NATO headquarters were claiming to have achieved a major victory which might be turning point in the war, most observers were sceptical. Clearly, compared to one year earlier, the Taleban are recruiting many more local farmers and they seem to be quite motivated, if not very skilled. The tactics adopted by the Taleban cost them heavy casualties, but tactics can always be adapted. 

Some good news and some more trouble
As the United Nations reported the coming of a record opium harvest, pressure on both the Kabul government and its international sponsors is bound to grow. Already the chief of the UN agency dealing with narcotics, Antonio Maria Costa, openly criticised the Afghan government for seeking excuses such as lack of capacity and lack of evidence for prosecuting individuals. Some interesting news came instead from the judiciary, as the new Attorney General for the first time since 2001 challenged the power of militia commanders by ordering the arrest of one of them, who was wanted for having threatened a judge. The climate in the judiciary has begun to change with the appointment of moderate scholars as Supreme Court judges, although the mass of the judges remain the same old corrupt lot.

Economy still pulling
Despite the deteriorating security situation, the Afghan economy does not seem to be slowing much. The new poppy crop, 50% higher than last year, will add a new boost. Imports of cement from Pakistan remain very high, despite the removal of subsidies on the Pakistani side. 190,000 tonnes were imported just in July. Recent reports suggest that over the last year the number of cars circulating in Kabul increased by a third to 400,000. A third Afghan private bank opened in June, although market penetration of the formal banking system remains low, with just one third of all businesses having accounts and less then 1% taking loans. The largest private Afghan bank, Kabul bank, has deposits for just US$206 million. The government plans to boost the growth of the banking sector by gradually starting to pay its 400,000 employees directly into their bank accounts. 

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