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Update No: 126 - (26/07/12)

Summary: efforts to build up a positive momentum continue in Kabul and Washington – this month we had the Tokyo conference of donors and the US decision to classify Afghanistan a ‘major non-NATO ally’. However, the mood remains muted in Afghanistan and there is little optimism about the future.

Talk and fight
Despite the Qatar failure, contacts between insurgents, Afghan government and US diplomats are still going on, although with a very low profile. Those Taliban who are in favour of a deal are willing to offer more than ever in order to see real negotiations take off, but among the rank and file there is little interest for making deals. The Karzai government is trying to mobilise the residual Taliban interest through releasing tens of Taliban prisoners from the jails, but there are many hurdles to be cleared, including Karzai’s own weak credibility as an outgoing president who does not have an obvious successor, and has limited control over his own government. As a result everybody seems to assume that several more rounds of fighting are going to be inevitable. The Americans are putting a lot of pressure on Karzai to appoint a more effective and charismatic Defence Minister and even have their candidate, Minister of Interior Bismillah Mohammadi. However, efforts to get the small Afghan air force to develop rapidly into a capable force are failing miserably: right now most of its few (about 100) aircraft are grounded because of lack of adequate maintenance, or of the inadequate training of the crews. The Taliban are also gearing up for more fighting: after a very quiet winter and early spring, violence started picking up in May and particularly June.

Keep the money coming
The July Tokyo conference had been carefully choreographed, so the pledges to provide Afghanistan with an additional US$16 billion of aid over four years did not come as a surprise, nor did President Karzai’s pledge to fight corruption. In theory at least, about 20% of that is based on the conditions that Kabul demonstrates progress in the fight against corruption. US aid alone was US$4 billion in 2010, so the pledged aid would not bring external aid to Afghanistan back to the peaks of 2010, and of course in the past, not all pledges were honoured. The Afghan Central Bank had been advocating US$6 billion a year to keep the economy growing fast. Despite the Tokyo conference being hailed as a success, wealthy Afghans are not reassured and cash outflows from Afghanistan are if anything accelerating. Despite a doubling of the fees in the informal banking sector to 2%, traders report increases in their business activity in the order of 10%.

Marques needed
The Afghan government is making much of the fact that Exxon has shown some interest in bidding for a few oil fields in northern Afghanistan, despite the tension in Shiberghan between the central government and Gen. Dostum, who complains of how the benefits of the oil and gas industries are not flowing to the local population, but only to the Karzai family and their cronies. The government is keen to show that the big names of international business have an interest in Afghanistan; so far only JPMorgan Chase has invested US$40 million in a gold mine in the country’s north-east.

A ‘major ally’
As the Obama administration seems to intend to keep troops in Afghanistan after 2014, the decision to recognise Afghanistan as a ‘major non-NATO ally’ of the US is not so surprising, although it might seem risky to some extent, not least given President Karzai’s ambiguous attitude towards an alliance with the US. Right now the option of sealing a deal with Pakistan seems to be receding (it has advanced and receded several times since 2010). The candidate to Karzai’s succession from within Karzai’s camp who was most likely to receive Pakistan’s endorsement, Minister of Education Faruq Wardak, has reportedly been definitely told that the Karzai family will not support him in the elections.


 


 

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