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Update No: 074 - (23/01/08)

A bad month
January was a tense month in Kabul, for a number of reasons. The world media covered in detail the attack on Serena Hotel, the most luxurious venue in Kabul. Undoubtedly, the event signaled the launch of a more determined Taliban strategy to target foreign civilians in an effort to embarrass the government and follow the Iraqi precedents in spreading fear. However, to most of Afghanistan’s population January brought other concerns. The refugee expulsion crisis surged when Iran accelerated the repatriation of Afghans illegally residing on its territory, despite the rigors of winter. Kabul complained loudly and Teheran agreed to concede a grace period to allow Afghan authorities to set up facilities for receiving the returnees. About 9,000 Afghans were returned during the first two weeks of January, while 365,000 were returned last year. Of even greater concern to the mass of the population must have been the new rise in the prices of basic goods, such as staple food. It is estimated that 1.3 million of villagers and 900,000 residents of cities have been pushed into food-insecurity because they cannot afford to purchase sufficient quantities of food anymore, bringing the total of food-insecure inhabitants to 6.5 million. Over the last 12 months, staple food prices increased by 60%, with an acceleration over the last three months. Although WFP will deal with those at risk of starvation, rising prices will not help in endearing the government to the masses. The government claims to be taking measures to bring prices under control, but it has not specified which ones. The shortage is estimated at 500,000 tonnes of wheat. One measure which was taken and looks quote desperate was the closure of the border post of Spin Boldak-Chaman. The authorities blamed the shortages of flour in Afghan cities with a ban on export issued by the Pakistani authorities and claim that the border will remain closed until the Pakistani ban is lifted. There are shortages in Pakistan itself - which is why the ban was enforced in the first place! The Pakistani paramilitary also cracked down on smuggling, contributing to reducing the influx in Afghanistan.

Electrical mirage
Shortages of electricity supplies are getting worse in Kabul, where even those parts of the city lucky enough to be connected to the power grid only get 3 hours a day. Only those who can afford to pay special prices, like wealthy households, politicians and foreigners, get special lines which are not part of the power grid and are powered almost 24 hours a day. Bribes are also paid by businessmen who want their offices or factories to be connected. The situation was expected to improve by the summer, as the new power line coming from Uzbekistan is nearly complete, but the section connecting Afghanistan to the Uzbek power grid has not been built yet and it is not clear when this will happen. Moreover, it appears that Uzbekistan will eventually provide much less than the originally agreed 300 megawatts. The Americans are planning to install new generators in late 2009, but electricity generated this way will be up to 6 times as expensive as that sold by Uzbekistan and it is not clear who will foot the bill.

Copper promises
Negotiations to finalise the Aynak copper mine contract are continuing. Kabul expects to receive up to US$400 million a year in royalties once the mine gets running. Turnover is projected at US$3 billion a year, assuming prices of copper will stay high. MCC, the Chinese company which won the bid, says that it also plans to install a 400 megawatt power plant, with excess energy to be used to supply Kabul. However, there are some shadows cast on the deal by allegation of lack of transparency in the bidding process, the absence of a feasibility study and the inexperience of the Afghan Ministry of Mines, which does not have the human resources to ensure that the contract will guarantee Afghanistan’s interests.

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