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Update No: 111 - (26/04/11)

First escalate, then talk
The two sides in the war are still gearing up for more fighting this spring. ISAF is planning a new operation in Maywand (Kandahar), while the Taliban are penetrating deeply in the eastern part of Afghanistan, no longer so well guarded, reaching out to the neighbourhoods of the capital. In the west and in the north-west, where ISAF is weakest, the situation is also deteriorating. In other words, the Taliban avoid confrontation in the areas where ISAF has concentrated its efforts, preferring to focus elsewhere. At the same time, however, signals that the two sides are ready to consider talks are intensifying. The Taliban have announced a new decree by Mullah Omar, ordering his men not to attack schools any more. Reportedly an agreement over the reopening of schools in areas under Taliban influence has already been reached between the Taliban and the Ministry of Education. The Minister of Education, Wardak, in a public speech went as far as praising the Taliban for modifying their policies. Sources close to the Taliban report that Mullah Omar will issue more decrees, revising the movement’s stance on a number of key issues. If that were to effectively happen, it would be a clear signal that the Taliban are openly positioning themselves for negotiations. However, the Taliban continue to insist that they want a ‘confidence building measure’ from ISAF in order to move one step closer to actual negotiations.

In the shadow of the banks
The Afghan government has made a decision on how to deal with the Kabul Bank crack and the related financial scandal. The largest private bank in the country will be split in two, with one half taking over all the bad loans and try then to recover them. With this move the government responds to intensifying pressure from the International Monetary Fund and donors, who wanted the mess in the banking sector sorted out. In reality, although Kabul Bank’s management was the most ruthless in the country’s banking sector, other private banks have often operated not much more cautiously. At least two of them are very exposed and in extremely shaky positions. The only Afghan bank which is not seriously at risk is the Afghan International Bank, which is the best managed of the lot.

On a separate issue, the UN this year forecasts a slight reduction in the opium poppy harvest, despite very high prices following the poppy disease last year. The decline in production is expected to be concentrated in the South, with increases instead in the north-east and in the west, where the poppies were supposed to have been completely eradicated in the past.

Permanent American presence: who wants it?
The American military would like to maintain permanent military bases in Afghanistan, up to three of them; the main rationale seems to be that only by maintaining military bases the US Armed Forces would be able to claim success in Afghanistan. Any outcome short of that would probably be seen as a failure. The Department of State, by contrast, does not seem to believe that permanent bases are worth the trouble which they would attract and would be happy with American presence being limited to some kind of training and assistance programme. The Karzai government, from its side, likes the idea of a Strategic Partnership with the US, which it sees as a guarantee against external threat as well as a guarantee of continuing support. The regional powers are unanimously opposed to the idea of permanent US military bases, but also of a long-term American presence of any kind. Many believe that signing an agreement on military bases would spell the end of any possibility of a negotiated settlement.

Forecast 2011
Every year in Afghanistan is declared to be the decisive one; perhaps 2011 qualifies better than its predecessors. The western debate about disengagement/escalation should be clarified once and for all in 2011. The Europeans have already made clear that their disengagement starts in 2011 regardless; the Americans still seem to hesitate. The American army defends its honour in Afghanistan, not wanting any lingering suggestions of it being another Vietnam and will lobby to continue fighting and trying to gain the upper hand, at least until the budget cuts season comes up in Washington. Then they will be asked whether they choose to sacrifice the war in Afghanistan or some of the high technology programmes aimed at a future intercontinental war.

The fight between President Karzai and the Electoral Commission over the legitimacy of the new parliament elected in 2010 highlights how fragile the political environment remains. The electoral results leave little room for Karzai’s influence in the parliament and he has been trying to coerce the Electoral Commission (through the Attorney General) to change the results, so far without success. The majority within the commission sympathises with the opposition to Karzai, or with elements of the ruling coalition who would not mind seeing Karzai downsized. The mixed composition of the Commission was the result of the 2009 Presidential Election turmoil, as an attempt to reassure that the 2010 elections would have been fairer. The ‘peace agreement’ collapsed over recriminations of who cheated most! Karzai sees a reduced Pashtun presence in the parliament as a development which might dramatically reduce his ability to obtain support from the parliament on key issues. In January the confirmation of the results was postponed once again, but the majority of the unofficially elected MPs have decided to inaugurate the parliament against Karzai’s opposition. If elections were supposed to bring peace and harmony, they have not succeeded.

In the meanwhile President Karzai is already convinced that the Americans will eventually dump him and will continue trying to build his own power base and establish relations with the countries of the region. He will have to make the system over which he presides, a little bit better at managing resources and more effective, if he wants to survive politically; that is going to be a challenge because his supporters now are largely motivated by the predatory opportunities which international intervention and war offer. The relationship with the Pakistanis remains difficult despite Karzai’s try in 2010; the Pakistanis still think they hold all the winning cards and will continue pushing for a settlement in their favour. The attitude of the rest of the region will continue to rotate around the Pakistani attitude.

President Karzai believes that he needs patronage and corruption in order to keep his ruling coalition together. He might be right or not, but his practices are less and less popular in Washington. Karzai managed to stall the investigation of the US-supported Crime Task Force, but his freedom of manoeuvre is getting more and more constrained. Now the US grand jury is investigating one of Karzai’s brother, Mahmud, alleging graft, tax evasion and other illegal activities. At the same time the Kabul bank affair is back to haunt Karzai. The IMF has examined the issue and determined that the government has done too little to fix the problem to deserve the IMF’s help. Much of the foreign aid to Afghanistan is now at risk as donors are up in arms against the failure to develop any banking regulations, even after the Kabul Bank debacle. This at a time when the Afghan government is actually demanding that a larger share of external aid be channelled through the government itself, as opposed to being spent directly. Experience suggests that Karzai still has a chance of having it his way, as Afghanistan is too high a profile conflict for Washington to risk too big a crisis. With Holbrooke dead and Ambassador Eikenberry likely to be replaced relatively soon, the enemies of Karzai in the Department of State are weakening, while the military, more inclined to cooperate with Karzai regardless, seem stronger after the American mid-term elections. But Karzai is taking a risk, as Washington itself and its European partners might not be able to ‘sell’ the bottomless pit which the Afghan operation has been becoming, to their parliaments anymore. Karzai is also trying to convince his Western backers to support him in his on-going dispute with the parliament, but they have little appetite for this. The parliamentary elections were heavily rigged, but having accepted the process the Westerners cannot now backtrack.

ISAF faced in March renewed criticism by Karzai, because of a string of incidents involving civilian casualties. Gen. Petraeus relaxed the rules of engagement when he took over ISAF’s command and intensified air strikes as well as Special Forces operations. Now Karzai says that Petraeus’ excuses are no longer enough and later even called for ISAF to stop operations. Although he did not follow up on his request (made during a public meeting) with a formal demand, it is the first time that he has gone this far; with the transition to Afghan command to start soon, there might be important repercussions in terms of operational planning. Karzai moreover is upping the stakes in his soft confrontation with Washington, by imposing for the first time conditions on the concession of permanent rights for US bases in Afghanistan. He argued that such rights would have to be based on a comprehensive peace settlement, taking into account the interests of the neighbouring countries as well. Finally, Karzai has been recently arguing that he wants to see ISAF’s Provincial Reconstruction Teams shut down, because they function as a parallel government and therefore undermine his own influence. ISAF, by contrast, sees PRTs as essential to its military effort.

The political landscape is getting more complicated because Afghanistan too is getting affected by rising food prices. The ‘Egyptian wave’ has not arrived yet as the country is quite insulated from the Middle East, but demands for pay rises can already be heard among government officials and contractors. The rising oil prices will also stoke trouble. The government pay bill already exceeds its revenue by several times and can only be afforded because of external support. Fortunately for Karzai the disgruntled Members of Parliament and the failed parliamentary candidates are too busy exchanging accusations against each other, and if they do mobilise crowds these will be their relatives and kin to support their claim to a seat; there is little genuine civil society that could move against Karzai. The big issue for Karzai is whether his alliance with Vice-President Fahim can hold; Fahim has been good in mobilising Tajik support behind himself, through the distribution of posts and government patronage. However, his greater than expected success in undermining support for opposition leaders like Dr. Abdullah and Qanuni is turning him and his circle into a potential danger for Karzai: the President’s ‘divide and rule’ method does not work if Fahim comes close to monopolising Tajik support. The parliamentary dispute is just one of many signals that Karzai is uneasy about Fahim’s growing influence; Karzai’s closest supporters do not spare criticism of key allies of Fahim, like Minister of Interior Bismillah Mohammadi. Few believe that the coalition and indeed the system as such could survive in the event of a Western disengagement, which instead looks more and more likely. Even if in recent months Washington has been downplaying the forthcoming downsizing of the US military contingent, the Department of Defense budget request for 2010 points at an average US troop level of 98,000, well below the current numbers.

Washington’s plans for continuing escalation in Afghanistan have started meeting significant hurdles in 2010 and in January 2011 a new one appeared. The Europeans and President Karzai himself now question the need for continuing to rapidly expand the Afghan armed forces, when obvious issues of quality and capability already exist. The Europeans are also worried by the cost of all this effort in a time of growing budgetary constraints. NATO is also achieving little in terms of convincing European countries to send more trainers and mentors to coach the Afghan armed forces. The shortfall increases instead of falling, because the size of the Afghan forces expands, increasing the need for mentoring teams. Disagreements also exist on how to distribute the proposed increase to 378,000 personnel between army and police. The Americans in the meanwhile are sending another 1,400 troops to keep the sense of a momentum going; they have widely campaigned in the press arguing that the Taliban are being weakened; however support for the war in the US continues to fall according to the opinion polls.

The forthcoming decision over de-surging by the Obama administration has been one of the main focuses of the debate in the media. Until last month, Gen. Petraeus seemed to be positioning himself against a significant withdrawal; more recently however he seems to have accepted the idea of a more substantial troop draw-dawn. Perhaps he received messages from Washington that it has to happen anyway, or has heard that he is being considered for a promotion in Washington. It seems now clear that some non-combat troops will go first, but during the second half of 2011 some combat units will also be withdrawn.

Afghanistan continues to be subjected to the vagaries of its neighbours, who use carrot and stick to gain diplomatic leverage in the region and elsewhere. Iran has been using the stick in January: its blockade of fuel tankers at the Afghan border caused a 50% increase in prices, causing street protests against Iran. The Iranians might have been trying to signal to Washington that it can retaliate against fuel sanctions in Iran by creating trouble in Afghanistan. Russia instead is using the carrot these days. Recently President Karzai has invited Russia to rehabilitate a number of old Soviet projects in Afghanistan and the Russian President Medvevev showed interest and expressed readiness. Russia also says it is ready to sell helicopters to the Afghan armed forces, but the Americans, who would be paying for them, say the old models are being overpriced by the Russians and the sale has not been agreed yet.

On the battlefield, the Taliban have been hurt but not mortally wounded; they have lost in some areas and gained in others. They seem to believe that they need to hold on for a few more months in order to demonstrate that the surge has achieved little or nothing and gain diplomatic leverage. The nut of how to make the Afghan security forces able to operate independently has not been cracked yet, a fact that adds to Pakistani and Taliban self confidence.

The informal truce between Pakistani and Afghans in Kabul was over by February, presumably because the Pakistani services do not see any prospect of Karzai coming closer to their position with regard to negotiations. On the other hand, it is clear that ISAF has gained some ground against the Taliban, mainly because of the better anti-IED technology being used and because of the effectiveness of Special Forces raids. The coming spring will tell us how sustainable all this is. The attempt to kick-start a negotiating process has been stuck for months, as Karzai tries to get the insurgents to talk directly to him, bypassing the Pakistanis, and the latter resist. Much effort is now focused on finding a neutral venue where the Taliban could gather and discuss the matter with representatives of the Afghan government; Turkey has been proposed and the Turkish government has agreed, but the Taliban do not seem entirely satisfied.

As long as massive international intervention goes on, the macroeconomic indicators will look good; given that every year more than the Afghan GDP is injected into the country in the form of aid and expenditures, growth rates in the range of 10-20% are not particularly impressive. It is clearly a bubble which is bound to burst at some point. Sectors of the economy will suffer already in 2011, as a dry winter is bringing drought to several provinces. Nature’s gifts are Afghanistan’s best chance of anything resembling a real economic take–off, because developing an industrial sector faces bad odds. Among all else, the high cost of electricity in Afghanistan is generating complaints by the business sector: electricity is mostly imported at relatively low prices, but consumers get charged up to 20 US cents per kilowatt, which some judge as too high for competing with the industrial sector of neighbouring countries.

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