Masthead graphic based on a painting by Gudrun Thriemer.

Monday, October 10, 2005

"Afghanistan's Economy," October 10, 2005.

Richard Danziger, of the International Organisation for Migration "says that when poppy farmers in northern Afghanistan have a good crop it means they do not have to sell their children" (Cited in Huggler Sell daughters Oct 3 05).

But marriage for debt relief is not the only form of slavery reported by IOM in Afghanistan. Women are also exchanged to resolve disputes and kidnapped for forced marriage, prostitution, sexual servitude and forced domestic service. Women *and* men are bought and sold for forced labor. (IOM Jan 04).

In addition to moral and human rights concerns, human trafficking for domestic service and forced labor have the economic effect of keeping wages low.

According to a progress report by the American Center for Strategic and International Studies, Afghanistan's economy has grown steadily for three and a half years, but it remains heavily dependent on aid. (CSIS Measuring progress Jul 05)

" [government] spending accounts for 90% of Afghanistan's total budget, with the United States leading the way at approximately $15 billion per year" (CSIS Measuring progress Jul 05).

Two-thirds of US assistance supports American troops there. Of the remaining $5 billion per year, $3 billion supports the Afganistan National Army. (CSIS Measuring progress Jul 05)

CSIS-US observes optimistically that "Urban reconstruction has generated short-term employment opportunities in the larger cities," a circumstance which re-affirms what Mark Herold, an economist at the University of New Hampshire, said in 2003.

To the extent that this money represents true foreign direct investment, that is money from the private sector, it caters exclusively to the urban upper middle classes, that is, to the huge foreign expatriate community, the returned Afghan exiles, and the Karzai bureaucrats. It does little to garner mass support or to deliver political stability. Much of it has gone into airlines. (Herold Empty hat Aug 14 03)

Herold and others have pointed out that "foreign investors in non-extractive activities do not develop markets; they follow markets; and they tend to produce complicated products in complicated ways in order to appropriate scarcity rents" (Empty hat Aug 14 05).

In the words of the CSIS-US report itself, quote "For the most part, the influx of internationals and the return of millions of refugees have provided new markets for products such as cellular phones, services such as those provided by hotels and restaurants, and traded consumer goods" [When Herold was writing, new markets for traded consumer goods meant mineral water, herbal medicines, and textiles] (CSIS Measuring progress Jul 05). endquote

As Herold points out, "Given the income distribution, the endemic poverty in Afghanistan and the high-risk environment, no rational investor will gamble asset exposure in Karzai's Afghanistan" (Herold Empty hat Aug 14 03).

CSIS-US admits that "the post-conflict boom-town effect" has its dangers. "Inflated asset prices have raised the cost of living for the poor while encouraging the rich and powerful to seize property, sometimes forcing the poor off their land."

CSIS-US recommends that quote "State regulators therefore play an important role to ensure a just allocation of the peace dividend" endquote (CSIS Measuring progress Jul 05). This sounds as if CSIS-US recommends not only the oft-rejected practice of regulation as a legitimate government function, but also the even more reviled prinicple of income redistribution, which neoliberalizers and their press glibly claim "just does't work."

In addition, CSIS-US reports that "Inadequate salaries for government workers and Afghan police create incentives for corruption" (Voices CSIS Jul 05)

"Commanders [the local term our media replaces with the more colorful "warlords"] still maintain illicit sources of revenue, and job opportunities are lacking for most Afghans, including ex-combatants" (CSIS Measuring progress Jul 05).

Using more than a thousand local interviews CSIS-US concludes that quote "Crime is the chief security concern of Afghans - not Taliban or al Qaeda" endquote (CSIS Measuring progress Jul 05). Crime here means mainly theft, murder and kidnapping. A rise in kidnappings along with occasional reports of children's bodies found with their organs removed fuels concern that an active trade in human organs exists between Afghanistan and Pakistan. (Collet-White Reuters Jun 7 04)

After military spending, "Opium dominates Afghanistan's economy, accounting for 60 per cent of its income." Farmers prevented from growing poppies under a British-led eradication programme have been forced to hand over their daughters to drug traffickers to settle their debts (Huggler Sell daughters Oct 3 05).

These claims come from Nangahar province, which the British have hailed as their biggest success in the fight against opium. Opium cultivation fell by 96 per cent in Nangahar this year, part of a 21 per cent fall nationwide.

"But farmers are now coming forward to say that the forced loss of their poppy crop has left them unable to repay debts to drug traffickers who lent them money to buy the seeds.

In desperation, they resort to a traditional Afghan practice in which a family pays off its debt by handing over a daughter to a relative of the creditor (Huggler Sell daughters Oct 3 05).

"too few legitimate means of wealth generation are available to most Afghans. Growing poppy provides immediate economic benefit..." (CSIS Measuring progress Jul 05).

"Power, roads, water, and dependable communications are inadequate, especially in rural areas.... This severely hampers agricultural productivity and leaves farmers highly vulnerable to bad weather and other shocks, leading many to turn to growing poppy" (CSIS Measuring progress Jul 05). [But persuading farmers to grow something else may take more than rural electrification, new roads, irrigation and a cellphone/tv network. -jlt]

Take for example, 68-year-old Mohamed Hanif Isamuddin from Laghman province, next to Kabul and Nanagahar provinces. "For one acre of poppies he can make 150,000 Afghanis [about 4000 Canadian dollars]. If he sows the same acre with wheat, he makes only 6,000 Afghanis [about $165 CAD]" (Huggler Sell daughters Oct 3 05).

"Isamuddin gave up growing poppies of his own volition when he heard that the government was going to clamp down. ... Although he has not had to take measures as drastic as some farmers in neighbouring Nangahar, his son has had to leave home and go to Iran to find work.

"The government is doing the right thing," he says. "According to our religion, opium is prohibited. But if you have to feed your family, you do what you have to do.

"If people here cannot earn enough to feed their families, they will start growing opium again" (Huggler Sell daughters Oct 3 05).

The Senlis Council, a Paris-based NGO, has put forward a proposal for the legal cultivation of opium in Afghanistan. The proposal points out that while Afghanistan today provides 87 per cent of the world's illegal opium, legal opium-based medicines such as morphine and codein are in short supply all over the developing world.

Australia, India and Turkey already grow opium legally for use in medicine under licences granted by the United Nations.

This week both the UN Office on Drugs and Crime and Afganistan's Counter-narcotics Minister rejected the idea.

CSIS-US believes that quote "Investment in small-scale infrastructure projects could help to connect people and provide the necessary inputs for growth" (CSIS Measuring progress Jul 05). [But when they use the term "investment" here, they are referring to "official development assistance" from donor governments, not private "foreign direct investment" or "portfolio investment" in local companies. In other words, they really mean "aid," not "investment" at all.]

In fact, the World Bank admits that "perceptions of risk by investors and bankers have been a major obstacle to investment" in this sense. "Three years into the rebuilding of Afghanistan, [the Bank concludes, quote] modern private investment is still weak, largely informal and unable to compete in the world marketplace" (World Bank Jul 29 04). endquote

In July 2004, the World Bank established the Multilateral Investment Guarantee Agency to encourage foreign investment in Afghanistan by providing political risk insurance with coverage capacity of up to US$60 million. But so far they haven't had any takers.

Foreign investment, which is usually seen by the World Bank and other promoters of neoliberal globalization as the engine of economic development, has simply not been a factor in Afghanistan.

The Afghan Business Centre confirms that "foreign direct investment is still very low and domestic investment is held back by lack of access to capital and lack of management know-how. As a result, local manufacturing capacity is very low and the country relies on imports for almost all consumer goods" (

"The lack of alternative livelihoods [even] for demobilized soldiers means they [and other enterprizing rural Afghans] have little option but to pick up the gun again" (CSIS Measuring progress Jul 05). [Or get into marketing drugs, or slaves, or human organs. -jlt]

Which is worse then? the Taliban? or economic failure induced by docrtinaire economic neoliberalism?

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