The Political Economy of War and Peace in Afghanistan
By Barnett R. Rubin
Sweden, 21 June 1999
Contents
Acknowledgments
An earlier version of this paper was presented at the meeting of the
Afghanistan Support Group, Stockholm, Sweden, 21 June 1999. I would like
to thank the U.N. Secretary General’s Special Envoy for Afghanistan,
Lakhdar Brahimi, and the Ministry of Foreign Affairs of Sweden for that
opportunity. I owe special thanks to Ashraf Ghani for many exchanges of
ideas on this subject over the years. I also benefited from comments and
assistance from Sadiq Ahmed, William Byrd, Zareen F. Naqvi, Michael von
den Schulenburg, Lakhdar Brahimi, Ahmed Rashid, Didier Leroy, and R.
Scott Horton, but they, like Ashraf Ghani and my employer, the Council
on Foreign Relations, bear no responsibility for the views expressed
herein, which are mine alone.
The
Political Economy of War and Peace in Afghanistan
Summary: The 20-year old Afghan conflict has
created an open war economy, affecting Afghanistan and surrounding
areas. Not only has Afghanistan become the world’s largest opium
producer and a center for arms dealing, but it supports a multi-billion
dollar trade in goods smuggled from Dubai to Pakistan. This criminalized
economy funds both the Taliban and their adversaries. It has transformed
social relations and weakened states and legal economies throughout the
region. Sustainable peace will require not just an end to fighting and a
political agreement but a regional economic transformation that provides
alternative forms of livelihood and promotes accountability.
Keywords: Asia, Afghanistan, war, smuggling,
Islam, refugees
Quid est aliud omnia ad bellum civile hosti arma largiri, primum
nervos belli, pecuniam infinitam? (What is this but to lavish on an
enemy all the weapons for civil war, first of all the sinews of war,
unlimited money?)
Marcus Tullius Cicero, "The Fifth Phillipic of M. Tullius
Cicero against M. Antonius," V.ii.5, in Cicero Philippics, with
a translation by Walter C. A. Ker (Cambridge, Mass.: Harvard
University Press, 1951), pp. 260-1.
Classical interstate war may be, as von Clausewitz wrote, nothing
else but the pursuit of politics with the admixture of other means, but
the pursuit of politics through both peaceful and violent means requires
money. Just as in many parts of the world political power is a principal
means to the pursuit of wealth, war too may create conditions for
economic activity, though often of a predatory nature. Political leaders
speak in public about their ideas and goals, but much of their daily
activity is devoted to raising the resources to exercise power and
reward supporters or themselves. How political leaders raise and
distribute these resources often determines the outcome of their acts,
as much as if not more than their stated goals and intentions.
The dominant current form of war is neither Clausewitzian interstate
war nor classic civil war (government versus insurgency), but
transnational war involving a variety of official and unofficial actors
often from several states. Such wars develop particular patterns of
economic activity. The longer they persist, the more society and economy
adapt to war, creating a relatively stable type of social formation, the
civil or transnational war economy. A few actors profit, while most have
no say in the development of their own society. Peacemaking requires not
only political negotiations but transforming the war economy into a
peace economy and creating institutions for accountability over economic
and political decision making (Ignatieff, 1998; Holsti, 1995; Reno,
1998; Kaldor, 1999; Keen, 1998; Jean and Rufin, 1996).
The war economy of Afghanistan, which exemplifies this type of
system, is an open war economy affecting a broad region. Stateless and
devastated Afghanistan has become both a source of the world’s most
valuable contraband – opium and its derivatives – and a transport
and marketing corridor where armed groups protect a region-wide
arbitraging center where profits are made off policy-induced price
differentials. The region in question includes Dubai, the world’s
largest duty-free shopping mall; Pakistan, a state where the combination
symbolized by the two ISIs – the Directorate of Inter-Services
Intelligence and a trade regime for import-substitution
industrialization – have created a highly armed and corrupt society
where economic interest and the imperatives of covert action combine to
undermine enforcement of fiscal rules; Iran, where subsidized gasoline
sells for three cents a liter; Afghanistan, an essentially stateless
territory that has become the world’s largest producer of opium but
that includes the remnants of a road network that, with difficulty,
links Iran, Central Asia, and Pakistan; Central Asian states recently
opened to the world without the institutions to govern markets; and a
variety of linked wars, including Tajikistan, Afghanistan, and Kashmir.
In this context, through the development of an Afghan diaspora, the
spread of means of transportation and communication, the development of
cultural, kinship, and economic ties between Afghans and all the
neighboring societies, the opening of borders and lack of customs
enforcement in many areas, and the increase in opium production and
other contraband activities, the Afghan war economy has given rise to a
pattern of regional economic activity and associated social and
political networks that compete with and at times undermine official
economies and states.
Transformation of this criminalized war economy is thus essential not
only to Afghanistan but to neighboring regions. The economic and
political stability of Pakistan, in particular, is threatened by
phenomena associated with the political economy of war in Afghanistan,
but the phenomena also reach into Iran, the Arab states of the Persian
Gulf, and Central Asia, and, through the drug trade, into Russia,
Europe, and North America.
Prewar Economy, State, and Society
The pre-war society of Afghanistan cannot be reconstructed, but
today’s structures developed from transformations of that fragile and
fragmented society. Furthermore, in the event that political conditions
permit an attempt at reconstruction, an understanding of prewar social,
economic, and political relations is necessary if Afghans and
international actors are to avoid replicating or even magnifying
dysfunctional features of the system that proved so vulnerable to
external intervention and institutional collapse (Rubin, 1995a).
In the 1970s Afghanistan had an economy and society bifurcated
between a rural, largely subsistence economy and an urban economy
dependent on a state that in turn drew most of its income from links to
the international state system and market. Agriculture and pastoralism
accounted for about 60 percent of GDP, and about 85 percent of the
population depended on the rural economy for its livelihood. As late as
1972, economists estimated that the cash economy constituted slightly
less than half of the total. This figure probably increased later in the
1970s, as a result of the expansion of the national market after
completion of the nation-wide ring road and a rise in remittances from
labor migration to Persian Gulf countries after the 1973 oil price rise
(Rubin, 1995a, 62-75; Fry, 1974, 135-62).
Government expenditure consumed less than 10 percent of the whole
economy, less than 20 percent even of the cash economy. Government
domestic revenue was even less than that. In the 1960s foreign aid
accounted for 40 percent or more of the budget, including virtually all
development projects. This aid came from both the Soviet- and US-led
alliance systems, though the former predominated, especially in the
military. As aid declined in the late 1960s, export of natural gas from
northern Afghanistan to the Soviet Union (principally Uzbekistan)
replaced it, so that these rentier incomes continued to finance slightly
less than half the budget. Most of the rest came from taxes on a few
items of foreign trade and government monopolies of commodities such as
fuel and tobacco (Rubin, 1995a, 296-7).
The result was a government largely autonomous from most of the
society it ruled. It was free to institute reforms in the limited part
of the society it controlled but unable to transform or govern most of
rural society. Hence when the elite was deposed in a coup d’?tat, it
had few organizational resources to fall back on. The resistance
developed largely in isolation from the pre-war rulers, whom Pakistan in
any case blocked from reconstituting an Afghan nationalism with its
irredentist claims on areas of its neighbor.
Afghanistan was among the world’s poorest countries, but it lacked
the grinding poverty of ex-colonial societies with a higher degree of
capitalist penetration. Its rural society still included a safety net
based on an ethic of asymmetrical reciprocity within kinship-based
solidarity groups (qawm). This solidarity was slowly being undermined by
inroads of the market and education but the process was much less
advanced than in neighboring countries. This was most manifest in some
areas where property rights came to depend on enforcement by the state,
rather than being a manifestation of local social relations. The state,
which established private property in land and pasture, assured Pashtun
nomads and landlords access to pasture and agricultural land in the
largely non-Pashtun areas of central and northern Afghanistan. The state
also made possible the development of absentee landlordism in the
periphery of major cities. Before the mid-1950s, an merchant class led
the country’s economic development, but thereafter the state
nationalized the banking system and controlled the small industries that
developed.
Urban society depended on the redistributive activities of the state.
Since after the mid-1950s the private sector was largely confined to
trade, the state controlled most urban employment, which expanded
together with the foreign funded state. The state controlled almost the
entire educational system (secular and Islamic), which expanded rapidly
since the 1950s. The exception was the private, rural madrasas (Islamic
academies) that steadily lost influence and prestige. The Islamic
Movement of Taliban later emerged from these madrasas (and their kindred
institutions in Pakistan) after nearly a generation of destruction of
the state schools and the competing elites (nationalists, communists,
Islamists) they had spawned (Roy, 1986; Rubin, 1995b).
Changes in the role of women, including voluntary unveiling, and
women’s secular education and professional employment, were entirely
urban phenomena dependent on the state sector. They were decreed by the
highest (male) leadership of the state in order to implement a (lightly)
imposed vision of modernization. The subsequent collapse and loss of
legitimacy of the weakly modernizing state also meant the weakening of
the institutional support for women’s public roles (Dupree, 1998).
War Economy under Soviet
Occupation and the Soviet-supported Najibullah Regime
During the Soviet occupation (1979-1989) the bifurcation of Afghan
society and economy became even more pronounced, but a number of new
phenomena also emerged:
- dependence of competing leaders on opposing flows of politically
motivated military assistance;
- growing dependence of the population for subsistence on
politically motivated humanitarian aid;
- destruction of the rural subsistence economy through
counter-insurgency;
- rapid urbanization, including internal displacement to Afghan
cities and the flight of millions of mainly rural refugees to
camps and cities in Pakistan and Iran;
- the consequent creation of refugee-warrior communities in
Pakistan and Iran and of a region-wide Afghan diaspora; and
- the rapid monetization of the economy.
These changes laid the basis for today’s regional war economy.
On one side, the state’s dependence on foreign aid and sales of
natural gas became even more pronounced, but aid now came exclusively
from the USSR and its allies. The state lost not so much control of
(which it never had) but access to much of the rural areas. The state
expanded the urban institutions under its control, and a larger
proportion of the population depended on it not only for employment,
education, and health care, but food as well. By the Soviet withdrawal,
nearly all of Kabul’s food and fuel was donated by the USSR and
distributed by the government through a coupon system. As men under
government control were largely enrolled in the war effort, women’s
civilian roles expanded rapidly in the Soviet-supported state civilian
sector.
A different culture of dependency developed in the other sector of
the society, with different social effects. Soviet counter-insurgency
devastated the rural economy in much of the country (Swedish Committee
for Afghanistan, 1988: 37). Rural trading networks were also badly
disrupted, and food production fell by half to two thirds. The
destruction not only impoverished the rural population but weakened the
elites whose power depended on control of agricultural and pastoral
resources. In some areas, notably the irrigated plains north of the
Hindu Kush under government control, the government pressured the
peasants to grow cash crops such as cotton and sugar beets for sale to
government factories, increasing dependence on the state, as well as the
role of cash in the economy (Rubin, 1995a).
Much of the rural population fled, largely to Pakistan and Iran,
where it depended on international aid. (Urban employment was more
easily available in Iran, where refugees were not confined to camps, and
many local men were off fighting against Iraq.) In Pakistan, access to
aid was largely controlled by the Islamic parties recognized by the
Directorate of Inter-Services Intelligence (ISI) as recipients of US-
and Saudi- supplied military assistance. The humanitarian aid thus
funded a stable rear base for the mujahidin, just as the Soviet aid to
Afghan cities constituted a stable base for the Soviet-supported regime.
It was in these refugee warrior communities that Afghans also came in
contact with the international Islamist groups, mainly Arab, who
supplied both humanitarian and military aid, as well as fighters.
In these communities, as well as in rural areas in Afghanistan
(whether under resistance or government control) women’s roles
remained traditional or were subject to new restrictions. These
restrictions resulted from both the insecurities of life in exile and a
reaction against reforms associated with the disaster that had overtaken
the country.
This segment of the population came under the control of two related
elites: the mujahidin party leaders outside the country and the
commanders inside the country. Both became important economic actors,
displacing both the prewar state and the notables, mainly landowners,
who had dominated village life. The party leaders were completely
dependent on foreign aid initially, but some of them succeeded in
turning it into personal fortunes. Some of these were invested abroad
(in London real estate, Australian tire factories, etc.), but some was
laundered into the regional war economy, especially into arms and drug
trafficking and other forms of smuggling.
Within Pakistan, both officials of the mujahidin parties and
Pakistani officers involved in the arms pipeline became rich. A
considerable amount of cash was transferred directly through multiple
channels to pay for the expenses of war, and there was never the
slightest degree of accountability for these transfers. The humanitarian
aid that supported the 3-4 million Afghan refugees in Pakistan also
passed through many international, Pakistani, and Afghan hands before
reaching its intended beneficiaries. Intermediaries of various sorts
skimmed off cash and resold commodities. Profits from both the arms
trade and the humanitarian business were laundered through various
avenues, including the Bank of Credit and Commerce International, the
Dubai-based, Pakistani-owned institution that collapsed in 1992. But the
arms pipeline itself was also porous. Arms were sold off at all stages
of the pipeline by both Pakistanis and Afghans, feeding the existing
large arms markets in the area.
The transport of the arms and supply of goods to the refugees
directly expanded the existing infrastructure for smuggling and money
laundering. While the arms were delivered to mujahidin parties by
Pakistan military trucks (which were also used for smuggling on return
trips), the arms and other supplies were then transported to the border
region, and, where possible, into Afghanistan, by private trucks, the
same fleet that was used for the drug trade and other smuggling, but
which now expanded, thanks to the increased demand.
The basis for Pakistani-Afghan smuggling had long been the Afghan
Transit Trade Agreement (ATTA). Under this agreement, a variety of
listed goods could be imported duty-free in sealed containers into
Pakistan for onward shipment to land-locked Afghanistan. Much if not
most of the goods were instead sold in smugglers’ markets (bara
bazaars) in Pakistan. Many of these bazaars were located in the
Federally Administered Tribal Areas (FATA) on the Afghan border, where
Pakistani law does not apply. The trucks used in this lucrative trade
were in turn converted for the arms and drug trade, which in turn made
more money available for investment in smuggling linked to the ATTA.
This extension of the Afghan war economy was mainly located in
Pakistan. Within Afghanistan itself, the main economic actors were the
commanders. Contrary to some stereotypes, these commanders were by and
large not the "traditional" (i.e. tribal or landowning) elites
favored by the royal regime, which had been weakened by destruction of
the rural economy, but a group of new elites that benefited from US,
Pakistani, and Saudi policies of supporting only Islamist parties rather
than the nationalist former elite (Roy, 1986; Rubin, 1995a). Some
commanders originated outside the mujahidin party structures and
launched local insurgencies initially relying on local resources: zakat
and ushr (Islamic taxes) levied on agriculture, flocks, trade, and
wealth, and "contributions" from traders and other wealthy
individuals, as well as the plundering of government supplies. As the
war intensified, however, commanders increasingly depended on foreign
aid relayed by the parties, and subsequently they too became more
autonomous from local society (Rubin, 1995a: 255-8).
The commanders sought economic strategies that would increase their
autonomy from the party leaderships as well. In a number of areas far
from the Soviet-controlled main roads they established bazaars selling
items mainly imported from Pakistan and Iran. They also provided
security to traders in return for tribute. Where possible they sought
aid from Western or Islamic humanitarian organizations engaged in
cross-border assistance from Pakistan. Such aid provided services and
employment that increased resources under their control as well as their
prestige (Dorronsoro, 1996). In some areas they pressured the peasants
to grow opium, a cash crop they could tax. It was also during this
period that the production of opium started to increase.
The production of opium was related to one of the major
macro-economic changes induced by the war: a rapid increase in the
supply of money, which, combined with the destruction of the much of the
subsistence economy, induced an apparently large, if as yet unmeasured,
monetization of economic and social relations, as well as
hyper-inflation. The foreign supporters of the mujahidin supplied them
with millions of dollars in cash, and the associated smuggling
enterprises in Pakistan produced large cash profits that had to be
laundered, but it is unknown how much of that cash ever entered
Afghanistan, rather than staying in Pakistan or being sent elsewhere.
The Kabul government, however, accelerated the emission of currency
after the decision to withdraw Soviet troops. Not only did the
government have to pay for expanded security forces, including militias
recruited on a strictly mercenary basis, but it also lost its principal
sources of revenue. Soviet aid declined, and natural gas revenues fell
after 1986, due to poor maintenance and lack of investment, and ended
when the Soviet troops left, taking with them the technicians who ran
the gas fields. Money supply data published by the IMF shows that
beginning in 1987 and until the fall of Najibullah the value of
banknotes in circulation increased by an average of 45 percent per year.
Observers spoke of food prices rising by factors of five or ten. The
afghani rapidly lost value against the dollar, trading at 1000 to the
dollar, or about twenty times the official rate, by the summer of 1991
(Rubin, 1995a: 153-64).
Such a situation created tremendous incentives to find cash-producing
activities. Starting in 1987, after the introduction of Stinger missiles
and the Soviet decision (still secret) to withdraw, and a consequent
change in military tactics, roads became much more secure. Both trade
and humanitarian assistance that had previously traveled by pack animal
over mountain trails could now go by truck (SCA, 1988). Trade, including
the import of goods into Afghanistan and the transit trade (smuggling)
into the neighboring countries from both the Persian Gulf and the Far
East via the trans-Siberian railway, and the drug trade increased. Ahmad
Shah Massoud, the "Tajik" commander in northeast Afghanistan
who built up the most extensive resistance organization inside the
country, controlled the emerald and lapis lazuli mines of his native
valley, Panjsher. He levied a tax on each shipment of gems. After 1984
or so, Massoud also apparently enjoyed a protection income from the
Soviets: he allowed convoys from the USSR to pass by his area to Kabul
unmolested in return for a share of their content. At the same time,
smaller commanders could accept the monetary payoffs offered by Kabul
without renouncing their local power or allowing government
administration into their areas.
In those areas where it could be grown economically, opium was the
main expanding source of cash incomes, for both commanders and the
peasantry. In some regions of Afghanistan (the upper Helmand Valley in
particular), the climate and soil combine to create the world’s
highest opium yields. The ease of marketing opium made it an obvious
target for taxation and predation by local power holders. Equally
important, however, is that unlike any other crop available to the
peasants, its cash value as an export was so certain that the buyers –
commanders or international syndicates – would advance credit for it
in advance of planting under a system known as salaam. The Afghan
peasants receive a mere fraction of the eventual street value of the
opium. In the provinces with the highest yield (Farah, Qandahar, Nimroz,
Helmand), the income per hectare from opium is less than 2.5 times that
from wheat, and in some it is substantially less than that (UNOCHA,
1997). But a peasant who plants opium can obtain a cash advance to see
his family through the winter, even if the implicit annual interest rate
in the salaam system (estimated at as high as 100 percent) substantially
lowers the realized income. Opium substitutes for credit as well as
income and is thus one of the few reliable alternatives to dependency on
humanitarian assistance. As the opium is refined and moves up the supply
chain, prices rise rapidly, so that more sophisticated organizations
controlling opium bazaars or border crossing points (as opposed to just
some rural areas) could realize much more substantial incomes.
As a result of these opportunities, commanders substantially expanded
their autonomy from the parties, from Kabul, and from the local
population during the period after the Soviet withdrawal but before the
fall of the Najibullah government. Different commanders made different
use of this new situation. A few (Massoud, Heart commander Ismail Khan)
used these resources, as well as Western and Islamic humanitarian
assistance, to build territorially based institutions inside the
country. Gulbuddin Hikmatyar, the extremist then favored by Pakistani
intelligence, used revenue from the drug trade to build up an enlarged
military force based in Pakistan and south of Kabul. Others enriched
themselves through payoffs, investment in trade, and predation,
especially collection of arbitrary tolls on trade passing through their
area. Battles broke out from time to time over control of key trade
routes, in particular those used for the transport of opium. The war
economy, like the political structure, remained largely fragmented among
small, largely predatory actors each of whom maintained an interest in
sustaining the chaos that permitted his predation. At the same time, the
overall lack of security of both person and property blocked the
expansion of even this criminalized economy.
From the Islamic State to the
Islamic Emirate
The fall of the Soviet-supported government of Najibullah in April
1992 brought mujahidin groups, and in particular Massoud, to power in
Kabul, but rather than establish a new form of state power that would
provide the conditions for peacetime economic development, the new
Islamic State of Afghanistan reinforced the growing pattern of
regional-ethnic war economies embedded in transnational networks.
Despite its name, the new power enforced virtually nothing Islamic, did
not organize itself as a state, and covered only parts of Afghanistan.
Networks in various regions spanned the borders. Pakistan supported and
instigated attacks on Kabul by Hikmatyar and others, assuring that the
authorities could concentrate on little but military affairs. An uneven
pattern of regional consolidation partly replaced the previous
fragmentation, but no power could create a national state or market.
Massoud’s organizational power enabled him to occupy and hold Kabul
(or most of it), but he could not extend his direct control beyond parts
of the city and the northeastern region that constituted his ethnic
base. The fall or defection of former regime forces to local mujahidin
groups in the rest of the country effectively removed the last obstacles
to warlordism and economic predation. Thus a partly new form of economic
bifurcation developed.
Despite the change in power, the central state and its associated
economy continued to develop in a way continuous with the past. Massoud
and Rabbani did little to change the mores of Kabul except requiring
women news readers to wear headscarves on television. As the city was
gradually destroyed by the civil war partly incited by Pakistan, the
bazaars became less lucrative. Civil servants were often unpaid. The UN
and international humanitarian agencies stepped in to replace the USSR
as the supplier of food for the most vulnerable, but the amount they
delivered remained only about half the amount supplied by the Soviets
(120,000 tons versus 250,000 tons of wheat per year). The blockade of
the southern and eastern routes into the city by Pakistan-supported
forces, first Hikmatyar and then the Taliban, impeded the commercial
supply of food.
The printing of currency remained probably the single most important
source of state expenditure. Banknotes printed first under contract in
Russia and then by the American Banknote Company continued to be
delivered weekly to the Rabbani government. The resulting devaluation of
the afghani and inflation were so severe that the government introduced
new currency notes. Under Najibullah the official exchange rate had been
af. 50 to the dollar, and the largest bill was the af. 1,000 note. By
the summer of 1991, the afghani was trading at about 1,000 to the
dollar, and it continued to fall. The Rabbani government issued first a
5,000 and then a 10,000 afghani note. Each time it did so the currency
fell further. Hikmatyar forbade the use of the af. 10,000 note in
bazaars under his control. The former communist ethnic Uzbek warlord of
northern Afghanistan, Abdul Rashid Dostum, had his own notes printed
after breaking with Rabbani in January 1994. By September 1996, when
Kabul fell to the Taliban, the afghani was trading at 17,800 to the
dollar there. Furthermore, the afghani was worth even less
(25,600/dollar) in Dostum’s de facto capital, Mazar-i Sharif,
indicating the lack of a national market, a phenomenon that has
persisted even though the Taliban now control Mazar as well.
This partial regionalization of the monetary economy reflected the
regionalization of the real economy. Each region, controlled by a
different warlord grouping, was more integrated with the neighboring
state than with the rest of the country. The northern militias that had
grouped themselves around General Abdul Rashid Dostum controlled the
trade with the newly opened states of Central Asia through the bazaar of
Mazar-i Sharif and the customs point at Hairatan. A variety of small
commanders in Badakhshan, allied with some of the Islamic forces who had
fled from Tajikistan, controlled the opium crop of Badakhshan, which
moved north through war-torn Tajikistan with the help of corrupt
officials and members of the Russian border troops and CIS peacekeeping
forces. The Arsala clan (Haji Abdul Qadir and his brothers) was at the
center of the commercial development of Jalalabad, profiting from
Nangarhar province’s skyrocketing opium production and using the
Jalalabad airport as a center for the import of goods from Dubai for
smuggling into Pakistan in alliance with Afghan and Pakistani Pashtun
truckers and the local administration of the NWFP. Herat under Ismail
Khan turned into a boom town for trade with Iran and transit trade
coming overland from Dubai (transported by the same trucking networks)
and out to Pakistan by the southern route. Southern Afghanistan became
the largest opium producing area of the country, possibly the world, as
well as an entrep?t for the smuggling of goods into Quetta, some over
land and some via the Qandahar airport. The continued prevalence of
petty warlordism and continual infighting in the area, however, imposed
high costs on traders in the form of tolls and tribute.
The independence of the Central Asian states transformed the economic
stakes in Afghanistan. The oil and gas-rich Central Asian states, in
particular Turkmenistan, saw Afghanistan as a possible pipeline route to
connect them to world markets without having to reverse US sanctions
against Iran. Pakistan saw commercial and political connections to
Central Asia via Afghanistan as key to the development of
"strategic depth" in its confrontation with India. Pakistan
also needed natural gas, and the Daulatabad field in Turkmenistan, just
north of the Afghan border, was well positioned to be connected to the
Pakistan national network via a pipeline though Herat and Qandahar to
Baluchistan. This, in turn, placed Pakistan in opposition to Iran, which
aspired to be the outlet to the south for the resources of the entire
Caspian region, both Central Asia and the trans-Caucasus. The US began
to define a national interest in promoting the national independence and
economic diversification of the Central Asian and Caucasian states,
without relaxing its sanctions on Iran. Pipelines through Afghanistan
would nicely meet both goals. Various companies, including the US-based
UNOCAL, the Saudi company Delta, and the Argentine firm, Bridas, began
negotiations with the Rabbani government and various de facto
powerholders. Bridas paid the Rabbani government $1 million for a
contract signed in January 1996 awarding it the right to the pipeline
route (none of which was then controlled by that government). There were
reports of payoffs in Pakistan as well. The pipeline projects have since
languished as a result of political uncertainty and the turn of US
policy against the Taliban as a result of their harboring of the accused
Saudi terrorist, Usama bin Ladin, but some of the effects of early
competition over pipeline routes have persisted.
Pipeline politics formed an important part of the strategic and
economic context in which the Islamic Movement of Taliban arrived on the
scene in October 1994. Significantly, the Taliban’s first major
operation was to free a Pakistani trade convoy, led by an ISI officer,
heading for Turkmenistan via Qandahar and Herat, along the projected
pipeline route, from a blockade set up by tribal (Achakzai) militia, who
were demanding exorbitant tolls. The convoy rolled on to Turkmenistan
via Herat as the Taliban marched into Qandahar (Rubin 1995b; Maley 1998;
Rashid 1998).
Nearly five year later, the Taliban, who have renamed the country the
Islamic Emirate of Afghanistan, are the militarily dominant group in all
regions of Afghanistan save the northeast, where Massoud and some local
commanders affiliated with Rabbani hold out. Shia commanders still offer
resistance in north central Afghanistan as well. To say that the Taliban
"control," say, 85 percent of the country would be an
exaggeration, but they have largely defeated or disarmed competitors,
mainly local armed power-holders. The Taliban advance was partly
accomplished militarily: with Pakistani assistance, they have built up
the largest more or less centralized armed force in the country. But the
accomplishment was also financial. Like Najibullah and the mujahidin
parties before them, much of the allegiance professed to them was
purchased for cash. In areas that are frequently reported to change
hands between the Taliban and their opponents, the common change of
events is the payment of a commander by one side or another, who then
announces a change in allegiance. The Taliban captured Kabul after
paying of a Hizb-i Islami commander (Zardad, in Sarobi) who blocked
their advance up the narrow defile from Jalalabad.
The Taliban’s victory has permitted the consolidation of a number
of phenomena that had been developing previously, namely the emergence
of transnational trade networks of the Afghan regional diaspora, linked
to smuggling and drug trading groups in the surrounding countries as
well as to political parties, religious groups, and elements of the
administration, especially in Pakistan (Rashid, 1998). On a smaller
scale, northeast Afghanistan is becoming linked to Central Asia.
The key achievement of the Taliban is what they call
"security," meaning above all the suppression of virtually all
forms of predation by local power-holders, including tolls, banditry,
and exaction of exorbitant tributes. Taliban officials often describe
this situation by telling visitors they can now drive from one end of
the country to the other even at night with a car full of gold, and no
one will disturb them. This method of describing their achievement
illustrates its important economic motivation, as well as the principal
beneficiaries: those driving from one end of the country to the other
with trucks full of valuable goods. The security provided by the Taliban
has greatly reduced the cost of long-distance trade and provided the
peasantry with greater confidence that they will enjoy the fruits of
their labor. This is one reason for the rise in recent years of not only
the transit trade but the production of both wheat and opium in Taliban
dominated areas.
The provision of security of travel along the entire route from
Torghundi, on the Turkmenistan border, through Herat and Qandahar, and
out to Pakistan via Spin Boldak has opened a major corridor for the
smuggling of duty-free consumer goods from Dubai to Pakistan and beyond.
Some good are flown directly into the Qandahar airport for shipment to
Pakistan. The content of this trade complements the smuggling taking
place under cover of the ATTA and responds directly to changes in the
latter. Driving from Qandahar to Farah in June 1999 along the main
smuggling route, I noted that many of the trucks appeared to be carrying
automotive vehicle tires and spare parts rather than the electronic
appliances (televisions, video cassette recorders) I had heard so much
about. I later learned that automotive parts had recently been
eliminated from the list of goods eligible for duty-free import under
ATTA, and that they were therefore being imported by this alternate
route (Naqvi 1999).
A World Bank study estimates that this trade amounted to at least
$2.5 billion per year in 1997, the first year after the Taliban capture
of Kabul, equivalent to nearly half of Afghanistan’s estimated GDP and
around 12-13 percent of Pakistan’s total trade. Diplomatic sources in
Central Asia reported that truck traffic through Torghundi tripled
within two weeks after the Taliban capture of Mazar-i Sharif in August
1998, so the figure now might be significantly higher. These figures
exclude trade in illegal goods such as drugs and arms, which would also
raise the figures significantly. This transit trade has provided an
important mechanism for the laundering of profits from the drug trade.
The drug trade is also a major economic activity. In recent years
Afghanistan has been the world’s largest producer of opium, with a
harvest estimated at 2,800 tons of raw opium gum in 1998. While the
farmers receive little for this crop, it sells for thousands of dollars
per kilogram at the Afghan border.
The transit and drug trades are complemented by service industries. A
network of fuel stations has grown up along the route to supply diesel
to the trucks, and sources in Qandahar claim that these are controlled
by members of the families of some important figures in the Taliban
leadership. Qandahar itself now has several areas of the city devoted
largely to parking for trucks and boasts several fuel stations itself,
as well as shops and tea houses catering to the drivers. Much of the
fuel, of course, is smuggled from Iran, where its subsidized price is
approximately $0.03 per liter, considerable less than a soft drink. Many
institutions in Iran, including Islamic foundations and major traders,
are involved in this contraband.
The Taliban have this made a transition from localized predatory
warlordism to a weak kind of rentier state power based on a criminalized
open economy. The benefits of this new economic activity are evident in
increased prosperity in Qandahar, Jalalabad, and Herat. The trade also
appears to have shifted more toward the Taliban’s home base in
Qandahar. Kabul, seen by the Taliban as the center of corruption, and
key to the national, not regional, economy, has largely been left out
and is experiencing increasing poverty. The population of Kabul is more
dependent on international humanitarian assistance, when it is
available, than other areas of the country, but this aid does not seem
to play an important role in legitimating the Taliban domestically, as
Kabul is not part of their political base.
This increase in economic activity has provided the Taliban with a
more stable source of domestic revenue than other armed groups. The
World Bank study cited above (Naqvi, 1999) estimates that the Taliban
derived at least $75 million in 1997 from taxing Afghanistan-Pakistan
trade. The Taliban also levy zakat (an Islamic tax to fund ulama and
jihad) of 20 percent on the trade in opium and opium derivatives,
perhaps yielding revenues of as much as $100-200 million per year (Rashid,
1999). The funds raised in this manner do not go to the Taliban
government in Kabul but to a war treasury controlled directly by the
Taliban leader, Mulla Muhammad Umar, in Qandahar. In addition, the
Taliban also request special contributions from the truckers when funds
are needed for an offensive (Rashid, 1999). The Peshawar and Quetta
trucking associations were key financial backers of the Taliban, as they
greatly profited from the latter’s abolition of predatory tolls and
raids along the road. According to some reports, it was these trucking
interests more than the Pakistani ISI and military who urged the Taliban
to capture Herat in September 1995. The truckers also donate significant
sums to the madrasas, a traditional way for the newly rich to legitimate
their wealth and attain respectability in Muslim societies (Rashid,
1998).
The official budget in Kabul is paid for by direct foreign aid from
Pakistan (Rs. 500 million or about $10 million in 1998), and a few taxes
from Kabul itself. Until late 1998 the Taliban also received direct
financial assistance from Saudi Arabia, which provided subsidized fuel,
as well as cash grants. These were ended in protest over the Taliban’s
failure to expel or curb Usama bin Ladin. Bin Ladin himself is reputed
to have put some of his wealth at the Taliban’s service, paying,
according to some reports, for the capture of Kabul in September 1996.
It is not known how much income the Taliban may still derive from
supporters in the Persian Gulf, though their leaders tour mosques there
and raise what appear to be significant contributions, especially in the
UAE (some from Arabs and some from expatriate Afghans active in the
transit trade).
Interestingly, the Taliban have not begun printing their own
currency, though they now control the head office and all major regional
branches of Da Afghanistan Bank (the central bank). Banknotes apparently
continue to be delivered to Afghanistan from American Banknote via the
Massoud-Rabbani forces, and the Taliban continue to recognize these
notes, despite their protest against this funding of their enemies. From
the Taliban capture of Kabul in September 1996 to May 1999, the afghani
lost about 60 percent of its value against the dollar in Kabul and over
70 percent of its value in Mazar-i Sharif. The Taliban have forbidden
the use of "Dostum" currency.
Hence unlike all previous governments, the Taliban cannot finance
their operations through the printing press, while their opponents can
undermine their finances by printing money. Taliban banking officials
state that they recognize the Rabbani currency because he was the ruler
("padishah") of Afghanistan and that they do not wish to
undermine national unity by circulating two national currencies. In
practice, since the Taliban’s Islamic Emirate is recognized by only
three countries (Pakistan, Saudi Arabia, and the United Arab Emirates),
all of which have their own banknotes printed abroad, the Taliban would
probably be unable to obtain professionally printed notes.
Transnational Networks
The network of groups supporting the Taliban illustrates the
intertwining of economics, politics, and religion in the region. The
Taliban are a transnational movement led by Afghans but organizationally
present in both Afghanistan and Pakistan primarily through a particular
sectarian network of madrasas and political parties (Jamiat-ul-Ulema-i
Islam) belonging to the Deobandi movement. This movement, named after a
town in northern India where conservative ulama established a madrasa in
the nineteenth century, was founded to combat Islamic modernism, and, in
particular, reforms in Muslim education. Unlike Islamic revolutionaries,
Deobandi activists oppose blending Islamic concepts with modern
institutions or political ideologies and favor little more than the
imposition of a rigid interpretation of sharia.
The Afghan leadership of the Taliban receives key aid (capacity
building) from Pakistani intelligence and military officers and recruits
troops and staff from both sides of the border. About 25-30 percent of
Taliban troops are now estimated to be Pakistani volunteers, mostly
recruited from madrasas and political groups, not the Pakistani
military. These fighters are increasingly organized in separate groups,
as are groups of Arabs and other international supporters.
The religious and political networks are in turn are supported by
trans-border economic networks (consumer goods smugglers, drug
traffickers). These have close relations not only with the Taliban but
with the local administration in Pakistan, where the goods are sold in
smugglers’ markets (Rashid 1998). The transit trade and drug trade
thus erode the integrity of the Pakistani state. Given that country’s
fiscal dependence on customs duties and sales taxes on luxury goods, the
toleration of such a large black market is a significant contributor to
Pakistan’s financial crisis (Naqvi, 1999). Attempts to impose fiscal
discipline in Pakistan, which would harm the economic base of the
Taliban, languish from the effects of both ISIs. Such measures are
opposed not only by Pakistani constituencies, including smugglers, that
have formed around the effects of the import-substitution
industrialization trade regime, but by the security services, including
the other ISI, that want to strengthen the Taliban. For instance, some
Pakistani economic technocrats proposed reforming the ATTA to require
payment of duty upon entrance of goods into Pakistan, which would be
refundable at the point of entry into Afghanistan. When the Taliban
refused the first proposal, the Pakistani state made no further effort
to press the issue. And yet the country continues to receive
disbursements from an IMF Extended Fund Facility.
The economic networks involved extend beyond Afghanistan and
Pakistan. Afghanistan now appears to be the second largest trading
partner of the United Arab Emirates (along with Saudi Arabia and
Pakistan, one of the only three states that recognize the Taliban
regime). This reflects the purchase of duty-free goods in Dubai by
Afghan traders shipping them onward for smuggling. Afghan traders
dominate the grain trade in Dushanbe, and Persian is becoming more
common even in the Pashto- and Hindko-speaking bazaar of Peshawar. The
northern-based opposition also benefits from the drug trade and
smuggling (including the gems of Panjsher).
The drug and arms trade have brought international organized crime
into the region. Though over 90 percent of the opium is grown in
Taliban-controlled southern Afghanistan, increasing portions of it are
smuggled northward, partly under the control of the Russian mafia.
Russian organized crime groups have been involved in Afghanistan for
years. They are important as arms suppliers for Massoud and as middlemen
for opium exports. One major export route goes from territory controlled
by Massoud and Rabbani in the northeast across the Tajikistan border,
where some of it is transported by Russian troops and border guards to
Osh, Kyrgyzstan, which has become a major transshipment point. The money
involved in the drug and arms trades is undermining state institutions
throughout Central Asia and is also affecting Russia.
The burgeoning long-distance trade, both criminalized and criminal,
provides the economic underpinning of a new type of political power in
the region. The decision of Pakistan, Saudi Arabia, and the US to supply
massive quantities of weapons only to religious parties rather than to
Afghan nationalists who might challenge Pakistan, followed by
Pakistan’s post-1994 support specifically for Deobandi networks,
combined with the resources produced by this trade to allow a group of
ulama to control the state apparatus directly or the first time in
history. The Taliban do not represent a qawm (solidarity group) or an
ethnicity, despite the dominance of Qandahari Pashtuns in their
leadership. They represent not just a partisan faction but a social
group, the privately educated, rural ulama and their students affiliated
to the Deobandi movement. This network covers all rural parts of the
country inhabited by Sunni Muslims but was marginalized and encapsulated
by 100 years of statebuilding and the creation of new elites in
partnership with the rulers. For the past 20 years various factions of
these new elites, educated in Afghanistan’s state institutions and in
the West and the USSR, have busied themselves killing, arresting, and
exiling each other with the help of foreign powers. Meanwhile private
madrasas offered the only education available for Pashtun refugee and
rural boys after 1978, since the West did virtually nothing to provide
modern education for them. The consequent growth of the madrasas
reinvigorated the Deobandi network. It lost, however, its ties to the
khan-dominated local economy and society that had circumscribed its
power. Both the state and the rural economy that had strengthened the
khans collapsed. The Deobandi ulama became reinvigorated and more
autonomous in exile and in warlord-dominated Afghanistan, resulting in
their becoming more extremist and deracinated than was traditionally the
case. In exile they also became linked to international networks, both
political and economic. The replacement of the khan-dominated
subsistence and local-trade economy by a warlord-dominated commercial
agriculture tied to long-distance contraband provides this newly armed
elite with the opportunity to mobilize resources to exercise power
directly, as it never did before.
The domination of the central state, or what is left of it, by this
previously marginalized group has effectively reversed the pattern of
social, political, and economic bifurcation developed under the royal
regime and intensified under the communists. The capital city is now
ruled by a force from the countryside, which is attempting to reverse
the past decades of reforms. The Taliban have not used the resources
they can mobilize to rebuild much of the state’s administrative
apparatus and, as noted, have not printed money to finance their
operations, as did Najibullah, and as Rabbani and Massoud still do. Most
(two thirds, according to one senior Taliban official) of the funds of
the Islamic Emirate go to the war effort. Civil servants’ salaries are
derisory (e.g. $5 per month) and are paid infrequently in any case.
Nor have the Taliban as yet shown interest in a development strategy.
A few foreign businessmen have started ventures in Taliban-controlled
Afghanistan, mostly tied to the transit trade. These include a
British-American venture into telecommunications, which will facilitate
contact of Afghan merchants and truckers with suppliers and customers in
Dubai and Pakistan, and a cement factory, needed for road repair. U.S.
sanctions against investment in Taliban-controlled areas in July 1999
are unlikely to affect an economy that is already predominantly illegal.
The Taliban in power thus raise resources from foreign supporters and
criminalized trade, which they use in turn to fight their opponents and
impose the strict version of sharia, which consists largely of harsh
prohibitions, rather than a positive vision of developing an Islamic
society. The Taliban attitude toward the state reflects both the
negative experience of the past 20 years, during much of which a central
state dominated by a foreign ideology destroyed much of the country, and
the longer-standing Afghan popular view of the state as a predator that
takes from the people and gives little or nothing in return (Dupree,
1980). The annihilation of the state and the development and reformist
agenda it had pursued under several governments also spells the end for
now of the emancipation of urban women through decrees by modernizing
male leaders.
Micro Political Economy
of Conflict
In addition to the macro-economics of the conflict discussed thus
far, socio-economic conflicts related to the war have also developed at
the local level in ways that differ from region to region. The collapse
and partial revival of the state, the destruction of assets, and the
mass displacement and partial return of the population has created a
growing crisis in property relations. The old regime in Afghanistan had
established private property in land and pasture and used these
regulations in favor of Pashtun nomads and settlers in northern and
central Afghanistan. State protection of property in land also made
possible the development of absentee landlordism in areas around major
cities. In many areas landlords were better able to afford emigration or
were enticed into the regime’s program of "national
reconciliation," which promised state protection of their property
and exemption from land reform, while tenants and the landless stayed to
fight in the jihad – and for the land of those who sided with the
regime. Property relations changed greatly over the years of war, and
the advent of the Taliban, a largely Pashtun group professing support
for private property, is changing them again.
Nomadic sections of Pashtun tribes such as the Ahmadzai formerly
moved their flocks into the high mountains of Hazarajat during the
summer. The nomads, whose mobility gave them a natural vocation as
traders, also had more access to cash and acted as bankers for the local
peasantry, who were often heavily indebted. The revolt of the Shi’a
Hazaras against the communists in 1979, however, was also a declaration
of autonomy from the Pashtun-dominated Sunni Muslim state. Since that
time Pashtun nomads have been unable to use pastures in Hazarajat or
collect their debts. Hence a number of the tribes that formerly migrated
there have given their support to the Taliban reconquest of the area.
According to some reports, the "Taliban" troops investing
Hazarajat from the south were largely Ahmadzai nomads aiming to get
their pastures back. More recently, armed young men from Pashtun nomadic
tribes have returned to Hazarajat with the intention of collecting
twenty-year old debts.
Similarly, the fertile lowlands on the edges, particular the north,
of Hazarajat, are inhabited by largely Tajik (therefore Sunni)
populations who were also favored by the state against their Shia
neighbors. These groups lost land and other assets to the Hazaras over
the past 20 years and now form the base of Taliban support in these
areas. As Bamiyan, the center of the Hazara-controlled areas in central
Afghanistan, changed hands in early 1999 from the Taliban back to the
Shia parties and then back again, both Hazaras and Taliban recruited
from among local Tajiks engaged in several rounds of burning homes,
killing, and expelling populations in a pattern similar to ethnic
cleansing. This may well have been due as much to local conflicts that
became articulated with the national one as to the latter alone.
Pashtun nomads also lost pasture on the northern steppes such as
Dasht-i Archi in Kunduz, and Pashtun landlords lost control of their
agricultural lands in these areas. Some of the these dispossessed forces
were recruited into Najibullah’s "national reconciliation"
program (especially Pashtun landlords who had been local dignitaries
under the king but who had been dispossessed by "mujahidin"
recruited from the peasantry). Landlords around Herat and Qandahar lost
control to their tenants. In other areas the wealthier landlords were
better able to afford the journey abroad and therefore were more likely
to become refugees. In such cases local ulama often allotted use of
their land to the families of mujahidin or martyrs. As people return
from exile, they demand their land back, sometimes taking disputes to
Taliban courts. All of these transformations have created a rich field
for property and monetary disputes, sometimes connected to ethnic,
tribal, or clan conflicts, as well as class. The Taliban, in the guise
of restoring lawful private property, seem to have used their authority
to reward their supporters, which means certain tribes in some areas,
Pashtuns in some areas, and Tajiks in others. More studies of local
situations need to be carried out to understand the nature of local
disputes. As overall security and stability returns, so do landowners
and nomads, creating the ground for disputes that can undermine peace at
the local level and provide recruits for new revolts.
Political Economy of
Peacemaking
"Peace" could come to Afghanistan in many forms. It could,
for instance, arrive in the guise of a victory by one faction, most
likely the Taliban, or a melding or reconfiguration of existing armed
groups, ending open fighting and transforming the criminalized war
economy into an even faster-expanding criminalized peace economy.
Indeed, whatever political group might take control of Afghanistan, the
economic incentives for misgovernment are nearly irresistible. Only the
drug and transit trade are really worth the effort of taxation, while
the rest of the economy is hardly productive enough to make governing it
worthwhile. It is difficult to recover the cost of more than a very
sparse administration of such an economy and society. Such a political
economy would leave the power holders as unaccountable to most Afghan
people as they were under previous regimes. Most of the population would
be left to fend for themselves, in conditions of greater security, but
without a development agenda, public services, or reforms, notably in
the status of women.
Such a peace would continue to threaten the region, as expanding drug
trade, money laundering, and smuggling would undermine governance in
several countries, strengthen Taliban-like forces in Pakistan, continue
to pose both political and practical obstacles to international
reconstruction assistance, and provoke a defensive reaction from
Afghanistan’s other neighbors in Iran and Central Asia. The resulting
tensions among and within states in the region would make such a peace
elusive indeed.
A more challenging but, if successful, more rewarding alternative, is
to consider peacemaking in Afghanistan as part of a larger problem, of
transforming the political economy of a region. It has finally dawned on
Europe and the United States that nothing less will work in the Balkans.
There is no reason to think that Central and Southwest Asia will be a
simpler problem. It would be premature to offer a full plan, which in
any case is beyond my competence. The resources for such a project are
also unlikely to be harder to raise outside of Europe. But I can offer a
few suggestions as to what such a plan would have to accomplish.
No major institution has started planning for reconstruction of
Afghanistan or involved Afghans in thinking about what such a process
would involve. Even starting a serious international planning process
conditional on a cessation of hostilities and observance of minimal
humanitarian and human rights principles (the right of both sexes to
available education and health care) might affect the current dynamic of
conflict. Local actors now assume that no aid for reconstruction will be
available however they behave. It is not surprising that they find it
relatively easy to dismiss international professions of concern about
Afghanistan and their own behavior.
Aid for reconstruction of Afghanistan should be decided upon and
disbursed in such a way that it build reciprocity between state and
society and make the former more accountable to the latter. For
instance, programs aimed at replacing opium poppies would also have to
find alternative sources for financing state activities (Rashid, 1999).
The existing economic actors would have to be drawn into alternative
forms of activities from which they could realize reasonable profits
that they could enjoy more easily than the perhaps larger but illicit
ones of today.
The international private sector could also be involved as a source
of funds. Today positions on the proposed pipeline and other potential
international investments in Afghanistan are polarized around attitudes
toward the Taliban. Those who favor confrontation or boycotting them
oppose such investments, while Taliban supporters and some in favor of
engagement with the Taliban support them. The pipeline, in particular,
which requires an investment of $2.5 billion, at least half of which
would have to be financed externally, is stymied by political opposition
and, potentially, US sanctions.
A more creative solution might find ways to finance the investment
while reducing the risk that it would fund the war. Could, perhaps,
financing be offered, on the condition that the rental income go not to
any armed group, but to a fund for community development and
reconstruction? This would resemble the arrangement currently in
operation for overflight fees. Airlines crossing Afghan territory on
long-distance flights pay such fees into a Swiss account managed by the
International Air Transport Authority (IATA). The funds are held in
trust for spending on civil aviation requirements deemed necessary by
IATA (AFP, June 29, 1999). Perhaps such a fund from pipeline incomes
could be administered by an international organization under a board
including the major political groups as well as prominent Afghans and
technical advisers, Afghan and international. Naturally the problem of
fungibility would have to be addressed.
The current dysfunctional regional political and economic
relationships would also have to be changed. At the moment Pakistan’s
actions in Afghanistan are the result of semi autonomous groups within
the state and society pursuing their goals. The civilian prime minister
does not fully control the military, parts of the intelligence services
may be freelancing, and provincial governments deeply corrupted by links
to smugglers openly refuse to implement central regulations. The result
is a set of policies in Afghanistan that could deeply threaten Pakistan
itself. Pakistan in effect promotes economic practices that destroy its
own budget due to a combination of internal corruption and the
imperatives, as the security services see them, of covert action in
Afghanistan and Kashmir. Pakistan needs to develop the institutional
basis for articulating a national interest that would unite both
economic and security concerns, as well as the welfare of its own
people. Articulation of such a national interest would also favor more
equitable relations with Afghanistan. Pakistani businesses could benefit
from legitimate trade with Afghanistan and even more from its
reconstruction under international auspices. Representatives of
Pakistani businesses that stand to benefit from contracts for the
reconstruction of Afghanistan also should be involved in the planning
process. They constitute a significant support base for the Pakistani
civilian politicians, and might help shift the balance of interests
toward legitimate business interests in Afghanistan.
Greater financial discipline and accountability in Pakistan would be
key to this process. This far Pakistan’s fiscal crisis has been seen
largely as a country-specific problem, but it is central to the decay of
state institutions and governance throughout the region. A comprehensive
plan for the reconstruction of Afghanistan would also have to include
significant reform in Pakistan to transform some of the destructive
links between the two societies. The ATTA would have to be reformed as
part of a general change away from the high duties of an import
substitution regime toward the legal institutionalization of the greater
openness that exists de facto outside the law.
This in turn would be virtually impossible to sustain in a region
with such wide disparities in trade policy. International institutions
should work with the regional powers toward something approximating a
customs union which would both make legitimate trade more attractive and
reduce incentives to smuggling. Greater cross-border cooperation and
confidence building measures with Iran might also help reduce regional
tensions and create a common stake in rebuilding the country.
The drug and arms trades present particularly difficult obstacles.
The Taliban have recently agreed to rather stringent crop-substitution
programs in some of their core areas. But such programs will only be
sustainable if the economy of Afghanistan and the region begin to offer
more alternative sources of livelihoods, especially to young people, and
if a transformed economy can provide alternative sources to finance the
state.
Most important is working with Afghans to change the image and role
of the state, seen largely as a distant and indifferent if not hostile
power. Local power structures that have largely grown up as defensive
measures of self-rule to keep the state or powerholders away have to be
incorporated into official structures of planning and service provision.
It is unlikely that any central power will find it worthwhile to provide
localities with much in the way of governance and services. For this
very reason, Afghanistan needs a decentralized governance structure in
which provinces and localities receive authority to tax and plan in
consultation with local shuras (councils). In the past local societies
developed unofficial power structures to shield themselves from the
state, rather than participate it, and the centralizing mentality shared
by the Taliban and much of their opposition reproduces that past
pattern. Instead, modest local resources under local control could be
directed into locally accountable planning processes rather than a
dysfunctional central state. The central state will still be needed for
provision of basic security and dispute resolution, but a clear division
of labor among levels of governance will promote greater accountability
over the reconstruction process.
The disintegration of the state creates such potentials, though the
criminalized economy that has filled the gap in providing livelihoods
has created interests that will resist it. But unless peacemaking can
appeal to the interests of powerful economic actors and transform them
into agents of peace, it will be limited at best to halting fighting in
one place before social and economic forces provoke it once again
elsewhere in this dangerous region.
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