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Update No: 098 - (25/03/10)

Talks postponed
The actual impact of the Pakistani crackdown over the last two months, on the leadership of the Afghan Taliban is still difficult to assess, but it seems to have significantly disrupted their chain of command and control. The motives of the Pakistanis remain unclear and even the exact identity of all those arrested has not been fully established. It could be the turning point in the war, or at least a badly planned Pakistani attempt to bring the Afghan Taliban under their tighter control.

On the battlefield the decentralised structure of the Taliban has shown no sign yet of being affected, nor do the Pakistanis seem to be trying to prevent supplies and men from crossing the Pakistani border. After the big terrorist scare of late last year, UN staffers are beginning to return to the country from their refuge in Dubai, but staff shortages are becoming a major problem as many are not ready to serve in a country where the risk is substantial. Together with the fact that the Pakistani crackdown has for the moment made negotiations with the Taliban impossible, this is a further blow to the possibility of the UN playing a significant role in the coming months.

Karzai threads on
Otherwise business in Kabul continues as usual; the new cabinet is not complete yet several months after Karzai’s reshuffle, while the attention is focused on the forthcoming Kabul conference planned for June. It is hoped that this conference will finally clarify what Afghanistan’s development strategy is, following years of discussions and many kilometres of ink, but not everybody is optimistic. Karzai has appeased some of his critics by re-appointing foreign observers to the Electoral Complaints Commission, reversing his earlier decision to staff the Commission with cronies. It is a cheap price to pay for Karzai, as his election is already secured and the future wrath of the Commissioners will be reserved for the candidates to the parliament. Finally, the majority of the members of the Commission will still be Afghan appointees of Karzai, ensuring him a majority.

Economy exits post-electoral stagnation
After the economy almost ground to a standstill last summer, some signs of limited recovery are evident. Customs revenue in such places as Torkham is exceeding expectations as trade is flourishing once again. This is not surprising as the ever increasing foreign presence in the country has a major stimulating impact on commerce.

Faced with Iranian ‘noise’ concerning the possibility of a gas pipeline supplying Pakistan and maybe even India (we refer to this also in our current reports on Iran and Pakistan), the on-off-on Turkmens have resurfaced to re-propose their TAPI pipeline through Afghanistan, but their chances faced with the more advanced Iranian project seem slim, despite the international political turmoil surrounding that country. The production of opium is expected to fall again this year, as a result of a combination of low prices and bad weather. Despite the decline, there continues to be overproduction of opium in Afghanistan and stocks are huge, a fact which explains the low prices.

Crony capitalism marches on
A couple of recent incidents highlighted how the emerging sector of the Afghan economy is deeply affected by cronyism and favouritism. The bidding for the Hajigak iron ore deposit has now to restart from scratch, because of alleged malpractice affecting the first round of bids; several companies withdrew from the process and only one actually presented a bid, a Saudi company with a branch in Pakistan. The suspicion that the Hajigak mine might be well on its way to becoming another case of crony capitalism is not unwarranted, given how things go in Afghanistan. Political loans to members of the Afghan elite are common in Afghanistan; usually the money is used to buy villas in Dubai. Kabul bank, the country’s main bank, has been campaigning in favour of Karzai in the elections as well as conceding favourable loans to his family members. What the gain is for Kabul Bank in all this is not yet clear.

Summary & Forecast 2010
Despite having recovered some support during the 2009 Presidential campaign, President Karzai’s weak leadership is going to be severely tested during 2010. He will be under pressure from multiple quarters; he has already been coming under unprecedented pressure from his international partners to tackle the issue of corruption in the country. The growing awareness among western public opinions of the extent of graft and corruption in Kabul is clearly undermining the war effort. Karzai has built his power base on the toleration of corruption and it will not be easy for him to tackle the issue. He will however have to pay at least to pay lip service to it.

Sources within the government itself estimate that about US$10 million are smuggled outside the country daily through Kabul airport alone, corresponding to about a third of the official GDP. Foreign diplomats believe that government officials and political leaders have embezzled or accumulate through corruption US$2.5 billion a year. One of the former vice-presidents was caught in Dubai two years ago with US$70 million in cash, but then let go.

Expanding and consolidating his power base, or indeed even just maintaining it, looks likely to become increasingly problematic. Karzai’s patronage-driven system has already reached its entropic stage, where more and more has to be distributed just to keep it going. Of course, the demands of the patronage system are flatly at odds with the demand for reduced corruption coming from the donors.

As predicted, Karzai’s excessive promises during the 2009 electoral campaign are coming back to haunt him. His efforts to get his new cabinet approved by parliament have been frustrated by infighting among different factions and ethnic groups. In particular, Karzai’s Hazara and Uzbek allies are very upset because none of their candidate ministers has been approved by parliament; Tajik and Pashtun MPs have colluded in voting them down, although their motives are different. Karzai’s inability to get his full cabinet approved is humiliating for him because it highlights the narrowness and precariousness of his political base. His attempt to appease western critics has also achieved limited gains so far. His confirmation of Hanif Atmar as Minister of Interior (believed until recently bound to go) has won praise, like it did the approval of Omar Zakhilwal as Minister of Fnance.

In the west there is also satisfaction that Minister of Defence Wardak and Minister of Education Farooq Wardak have been confirmed, although whether this is a sound judgment is debatable. Another couple of new ministers have acceptable reputations. Although most of the 14 ministers who managed to get confirmed before the Parliament went into recess in mid-January, were new faces, they were also inexperienced and lacked a significant base of support. It will not be easy for them to handle the jungle-like Afghan government machinery.

The approval of the ministers most appreciated in the west was read initially as a sign of the Afghan parliament awakening to its institutional role and demanding a cleaner and more effective cabinet, but a closer reading suggests more complicated manoeuvres. Although the more liberal component of the parliament might have been motivated by a demand for competence and cleanliness, it accounts for only a small portion of the votes. Elsewhere, the motivation for giving Karzai such a hard time was the desire of various factions to raise their price with the president.

Karzai also faces the challenge of keeping control on a state apparatus which is more disintegrated than ever: in the areas most affected by the insurgency, many police stations have made pacts with the rebels. The loyalty of the army to Karzai is increasingly suspect, while there are problems in controlling the intelligence services too. The major expansion programmes affecting both army and police are not likely to resolve these issues, but if anything to compound them.

Observers were almost universally surprised by the arrest in Karachi of the operational chief of the Afghan Taliban, Mullah Baradar (‘Brother’). Mullah Omar’s avowed successor. Baradar is the highest ranking catch by the Pakistani intelligence since 2001. Pakistani and American sources converge in attributing the decision to arrest him to months of very strong pressure from Washington. Two other relatively high rank Afghan Taliban were caught at about the same time.

Now the question being asked by everybody is: is this the beginning of a determined campaign to hunt down Taliban leaders across Taliban territory or just a one-off token arrest? Increasingly dependent on Washington aid, Islamabad might have decided that it needed to appease the Americans to an extent; it might also be that the Pakistani services, faced with the possibility of unilateral American actions (such as physical elimination) decided to opt for the lesser evil and detain Baradar. A third possibility is that the Pakistanis might have decided to hasten the pace of talks between Taliban and Afghan government, hoping for a positive fall out of successful talks on their side of the border. Holding one of the highest ranking Taliban leaders means that talks can now easily take place at the highest levels which must create a quandary for his interrogators, as to how hard/soft his interrogations can be?

Karzai seems clearly to be trying to carve off an autonomous space for himself, away from his international patrons. The relationship of trust with Washington is probably spoiled forever; still Karzai is completely dependent on the Americans financially and militarily. The announcement of a date for the beginning of an American withdrawal (2011) further reduces Karzai’s leverage vis-à-vis Afghan society, because he has always been seen as the conduit to foreign money more than anything else. Few believe that he will be able to build an alternative legitimacy.

The London Conference at the end of January did not see the bashing of President Karzai that western diplomacies seemed bent on, although Karzai was warned by the donors that they would not fund the forthcoming parliamentary elections unless the system undergoes a substantial reform. In principle, the donors have promised a further US$3.6 billion for the reconstruction of Afghanistan over the three coming years, a 32% increase over the previous three years. They also promised US$500 million for the reintegration of Taliban combatants ‘giving up the gun’, which is now the talk of the town.

Karzai is focusing his political campaign over the issue of reconciliation; he achieved the de-listing of five Taliban figures already reconciled with the government from the UN list of proscribed Taliban leaders and is now seemingly accelerating the pace of reconciliation compared to what Washington thinks is desirable: he talks of involving the Taliban leadership in negotiations, but this is too early for Washington, which amongst other things has to convince a hostile public opinion in the US.

The messages coming from Washington concerning Karzai are not fully reassuring for the embattled Afghan President. When American Special Envoy Holbrooke says that there is more to Afghanistan than Karzai, he seems to hint a desire to reduce Karzai’s role. The battles of the spring and summer, pitting Karzai against American diplomats are over, but the trust is gone.

Washington is still divided between alternative options concerning Afghanistan. At the Department of State Clinton still argues that the US have to hang on to an idea of ‘nation-building’ in Afghanistan, which means elections, women’s rights and the like. Obama, Vice-President Biden, the Pentagon and the CIA are all more inclined to seek a settlement which protects their geopolitical and strategic interests and forget about the rest. Signals however uncertain, are slowly emerging that Clinton is gradually losing ground on this: Americans, Pakistanis and Saudis are converging towards some kind of idea of a deal with the Taliban, and that the Taliban leadership itself is not uninterested.

Afghanistan cannot afford more instability. In August-October, government revenue collapsed by about 30% because of the instability and uncertainty deriving from the post-election diatribe. Revenue recovered in November, where in fact it reached a record because many delayed payments took place. So far in the current year total revenue is up by a third compared to the previous year, to US$1.2 billion. This is in part due to the fall in the value of the American dollar, but also to a continuing rise in imports, driven by foreign presence and foreign funded projects. The ministries, however, remain paralysed by the 2009 electoral mess. In the first quarter of the Afghan financial year, only 3% of infrastructure projects were awarded, a figure which fell further in the second quarter. Everybody in the ministries is waiting to know his own fate as Karzai is expected to replace or reshuffle almost all the ministers. Now Afghan businessmen are even less keen than before to invest because they have heard President Obama say that disengagement from Afghanistan will start in 2011 and they have no faith that the Karzai regime would survive more than a few days after an American withdrawal.

Of US$5.3bn privately invested in Afghanistan over the past seven years, only 27% was foreign investment and the percentage is falling fast. The inability of government and donor agencies to achieve anything in the economic field, adds to the frustration. The provision of electricity seemed to have been addressed at least in Kabul earlier this year, but now most families are back in the dark. Many power projects are not functioning properly. The distribution network is badly designed and managed even worse.

The big Kajaki dam project is now postponed indefinitely because the contractors refuse to work in the insecure environment of Helmand.

With the American troops’ surge still going on, and more and more money being pumped into the country, it is likely that throughout 2010 violence will continue to escalate. The Taliban send messages through their raids in Kabul that there is plenty of room for them to strike wider, in a sense reminding their enemies that after all, they have been relatively well behaved so far, considering how civil wars and insurgencies go. Certainly the expectation among Afghans at large is for worse to come. Significantly, last year just 54,000 refugees have returned to Afghanistan from Iran and Afghanistan, the lowest number since 2001. There are no statistics concerning how many have crossed the border in the other direction, but they are very likely more. 2009 thus is the first year of the post-2001 phase which saw ‘exits’ from Afghanistan exceeding ‘entries’. 

 

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