An Introduction to
the Economic Reconstruction of Afghanistan
DR. NOUR
ALI
Former Afghan Commerce Minister)
Afghanistan's economy being ravaged almost completely, its reconstruction
has to be started ipso facto from scratch or 'Tabula raza'. The pattern of
reconstruction chosen will determine the direction of the consequent political,
social, and economic character of the Afghan society. Every precautionary
measures must be taken to adduce this economy to the path of highest possible
rate of growth with its benefit distributed equitably among all strata of the
Afghan community, securing for the country as a whole a long lasting peace and
stability. In an attempt to contribute to attaining this aim as speedily as
possible the following economic strategy and model are put forth.
A: Proposed Strategy
1. Economic Reconstruction cum Statehood Recreation
The situation in Afghanistan is a predicament because not only Afghan economy
is shattered, its statehood also is ruined and wrecked. Such economy cannot be
reconstructed without the simultaneous rebuilding of the country's state and
state services. The involved reconstruction and rebuilding or recreation are
tightly interrelated and bound to move forward parallel one following closely
the other.
However the intended reconstruction and recreation cannot be undertaken as
long as the following preconditions are not met: First, all the foreign-made and
foreign-based provincial and/or regional warlords, dividing Afghanistan into a
number of fiefdoms of their own, must be forced out of the country. Second, the
government in Kabul - provisional or otherwise - must benefit from the tenet
of the Afghan people that it is governing exclusively for them without any
allegiance, commitment or loyalty to any foreign power.
On the assumption that these preconditions will be soon fulfilled, the
government could embark confidently upon the sought reconstruction plus
rebuilding under the protection of the international peace keeping forces. It is
believed that this venture could be carried out at the best by integrating the
local commanders, their foot soldiers or fighters as well as the rest of the
active population of the country into its process. The integration will be aimed
at reinstating the dignity of members of all social groups, including women, by
their participation in the mending of their evoked fatherland so as to become
the direct beneficiaries of its achievement.
To this end, the government would open in all provinces, including the
province of Kabul, its branch offices in charge of law and order, security,
public education, public works, public health, environment, agriculture,
industry, irrigation, energy (electrical, aeolean and solar), commerce, banking,
finance, etc. The coordinator of the branch offices, in each province,
representing the department of home affairs in Kabul - the future governor of
the province - would set contractually with the representatives from all the
counties of the province (including local commanders of high repute, notables
and religious leaders) a number of specialized and abiding joint committees;
each committee dealing with specific tasks corresponding respectively to those
of the branch offices themselves with special emphasis on the necessity of
security in the province. The inhabitants of the province being familiar with
physical geography of their constituencies and knowing best the resource
availability and economic potentialities of their localities and the specific
kinds of assistance they need, the joint committees are expected to contribute
significantly in identifying and formulating desirable and practical development
projects while sharing the responsibility of maintaining peace and stability in
the area.
The capital investment projects of social and economic characters, including
land development, land reclamation, flood control, vicinal road construction,
energy production, grain storage, food processing, education, training, and
health centers, etc., prepared by joint committees would be appraised, screened
and classified according to their degree of feasibility by the assembly of the
joint committees - chaired by the coordinator - with the participation of
the representatives from the concerned foreign fund providers. Projects with
high provincial priority and good feasibility prospect, regarded as self-reliant
in terms of their administrative, operational, and maintenance costs, would be
consolidated by the office of the coordinator/governor, and conveyed to the
department of national planning in the Capital. The proposed provincial plans
thus collected in Kabul would be reappraised and screened jointly by the
ministries of national planning, economic reconstruction, agriculture, mining
and industries, commerce, and the expatriate staff members of the involved
unilateral and multilateral financial institutions. The outcome will be the
National Economic Reconstruction, Statehood Recreation, and Social and Political
Reintegration Plan of Afghanistan. The same would be reverted to the
provincial/local authorities for implementation, which ought to be carried out
with maximum possible of co-operation from the people and transparency for easy
evaluation of performance and proper auditing of accountings.
Each provincial administration - in addition to the identification,
formulation, and cost and benefit ratio calculation of development projects -
would engage in enlisting qualified members of urban and rural local communities
for compulsory military service. The conscripts persons or draftees would be
conveyed to and converged on the Capital - as in the past - to undergo
intermixing of ethics and provinciality's. Then they will be distributed to
various military, gendarmerie, and police force basis in order to be trained
militarily, literately, and nationally. The goal will be to rebuild
Afghanistan's apolitical national armed forces replacing gradually the
international peace keeping forces as quickly as possible.
2. Mass Participation
The strategy sketchily outlined above implies that the reconstruction of the
Afghan economy calls for the participation of members of all Afghan social
groups in the conception and execution of quick impact development projects of
various magnitude for various geographical areas and purposes. Beside such
participation in general there are some specific sorts of it that are of
particular significance because of the current conditions of the Afghan labor
market. They are:
- The expatriate civil servants, army, police and gendarmerie officers, and
businessmen must be enabled to return to their home country in order to be
employed in different departments of government in Kabul and provinces, or
to re-establish their private businesses. Without their massive
participation, the contemplated economic reconstruction and state recreation
will not be able to take off the ground.
- If unskilled labor abounds, the skilled one is extremely rare in the
present Afghanistan. Permanent vocational training centers admitting -
among orders - the field commanders' foot soldiers must be created
urgently in almost every province to train electricians, mechanics,
plumbers, brick layers, carpenters, roof makers, tailors, shoe makers,
agricultural extension workers, grafters, veterinarians, improved seed
producers, etc. to meet the demand of the market and thereby to participate
in the envisaged reconstruction with more relevancy, dignity, and
productivity. The extensive participation of thus trained skilled workers in
the economic reconstruction of Afghanistan is not less vital than that of
the required highly educated members of Afghan bureaucratic and technocratic
social classes.
- Another essential and large-scale participation in the economic
reconstruction of Afghanistan is that of Afghan-American, Afghan-Canadian,
Afghan-Italian, etc., consultancy, construction, and other business
corporations. By opening their affiliate accompanies permanently in
Afghanistan somehow they would become an integrated part of the Afghan
society and economy. As such they will be better placed than other firms to
participate appropriately and responsibly in the preparation and
implementation of investment projects both in local and national levels. The
said corporations or companies will also provide Afghanistan with the
vitally important channels for transfer of valuable know-how, data, and
technologies badly needed for the self-sustained economic growth and
development of the country.
3. Redemption of Warfare Weaponries
Whereas the foreign-made and foreign-based provincial and/or regional
warlords will presumably be driven out from Afghanistan, whereas the field
commanders are expected to join the process of the economic reconstruction
keenly with enhanced social status, whereas the commanders' foot fighters
will - predictably enough - follow suit by participating in the same process
eagerly in getting much safer, more lucrative, and prideful jobs.
The prevailing atmosphere of war and instability would be vanished and
substituted with an environment of enduring peace and stability. The
thus-evolved social and political milieu will prepare the ground for easy
collection of warfare arms from the field commanders and their foot soldiers.
The prospect for peace is the prime requisite for retrieving the weaponries in
question. The other way around does not seem realistic.
That is, as long as insecurity, instability, and uncertainty are prevailing in
Afghanistan, the arms and ammunitions market will be a seller's market; few
Afghans will be prepared to surrender the weapons they possess beyond their
personal legitimate self-defense. However, as and when the social and political
outlook become more and more favorable for a long lasting peace, the market will
turn to become a buyer's one. The alternative opportunity cost of holding the
involved warfare items and the concern about their proper preservation would
push the possessors to sell them at the nearest government arm-purchasing
center.
The redemption of warfare weaponries facilitated by the ever-improving
prospect for peace entailing from the steady progress of the implementation of
the contemplated economic reconstruction will enable Afghanistan to regain its
territorial integrity and a self-reliant national economy while recovering its
statehood through its nationwide bureaucratic public administration and monopoly
control of means of violence.
B: Proposed Background Economic Model
1. Afghan State and Economy
Afghanistan is situated geographically between countries of much larger
domestic markets and greater scale economies. Its financial and trade
transactions with any of its foreign-partner countries constitute only a
marginal part of the total international transactions of that very country.
Afghan economy is constantly effected one sidedly by fluctuations occurring
outside its porous boundaries. It is therefore imperative for it - much more
than for any other country - to be of utmost flexibility in order to adjust
itself swiftly to ever-changing regional and international economic conditions.
The Afghan economic actors need to be free and independent enough to address
both short-and-long term investment requirements timely and appropriately on the
basis of the information transmitted to them by movement of prices. Afghanistan
has thus no choice - objectively and not ideologically - but to follow, as
much as possible, a least regulated free enterprise and free market model of
economy.
Afghan state's functions should ideally be limited to the provision of an
unbiased framework of law and order, the enforcement of contracts between
private partners, the supply of the necessary social and economic
infrastructures, and needed public goods. However, practically the Afghan state
- for a variety of theoretical, practical, and political reasons - cannot
afford to confine its economic interventions to these areas solely. It is
obliged to be owner - producer - suppliers of
(i) public utilities whose supply is often seen to constitute a natural
monopoly, (ii) essential goods and services for which market cannot function
competitively, and (iii) strategic items which cannot be left in the hands of
neither domestic nor foreign suppliers.
Outside the above sectors, the stand of the Afghan state with regard to the
economy should be rather of policy maker only. Its policy instruments, including
its fiscal and monetary policies, must be aimed at maximizing economic growth
with reasonable price stability while assigning agriculture top priority. They
should induce economic actors - private entrepreneurs including farmers - to
do things that the state believes will enhance economic development while
mitigating inequalities without damaging the efficiency and flexibility of the
economy.
That is, the decisions concerning the allocation of scarce resources,
available in Afghanistan, to produce desirable goods and services, cannot be
coordinated but - like in any other country - by a mix of market mechanism
and administrative procedures. In the light of the last 50 years of experience
in Afghanistan herself it may be stated assertively that it is to the benefit of
the country to maximize the role of the market by minimizing that of the state.
This implies that the Afghan state should be relatively of small size as much as
possible. Giving the resources endowment of Afghanistan, the Afghan people
cannot bear a big state's cost representing an excessive percentage of the
country's gross domestic product (GDP). Such a state will be undermining
seriously both public and private investments needed for the self-sustained
economic growth of the country.
However, Afghan state - though small in size - will always have to play a
very important role in Afghan capitalist market economy. Its role is to be
focused primarily on achieving for the Afghan people economic efficiency, social
justice, and individual liberty, all at once, by combining market intervention
and planning appropriately. The optimum combination will depend invariably on
political, social and economic circumstances in and outside Afghanistan.
During the period of Afghanistan's economic reconstruction, the sought
optimum combination suggests that the part to be played by the state will be
unavoidably at its highest limit and that of the market at its lowest, as a
result of which the state itself will be exceptionally very big. However as the
process of reconstruction advances, the parts to be played respectively by the
state and the market must move to opposite directions until they reach a
reasonable intermediary point of equilibrium at which the market - private
entrepreneurs - should become the main engine of development in the country.
In any event, the state should pursue a policy whereby to hold back the
reoccurrence of what is labeled 'islands of privileges (the cities) within the
sea of poverty (the rural areas)'. Urban incomes in Afghanistan - like in
many other third world countries - had been at least three times higher than
incomes in rural areas. Such differential of incomes had been the major factor
for the migration of populations from villages to the cities, particularly the
city of Kabul. Another important injustice between cities and country sides in
Afghanistan had been the provision of all kind of government services including
health care, sanitation, schools, electricity, clean water, surfaced streets and
roads. The unjust provision of government services in Kabul attracted an unfair
share of private sector investments in the Capital. Out of about fifteen raisins
cleaning and packing plants put in the country during the second half of the
60's, twelve were established in Kabul; all the hides and skins pickling
industries were placed in the same area; almost the totality of the small scale
textile and plastic factories were installed in the vicinity of that city. The
concentration of public spending and private investments in Kabul,
Mazar-e-Sharif, Kunduz, Kandahar, and Jalalabad meant pockets of relatively
better off urban inhabitants at the expense of the majority living in sheer
indigence.
Furthermore, the state should intervene to avert the reemergence of the
so-called 'home grown colonialism' or 'internal imperialism'.
Afghanistan's economic growth and public education expansion and modernization
before the former USSR's invasion had been conducive to the rise of a new
multiethnic power strata or elite including bureaucrats, technocrats and
businessmen. The thus-risen power strata tended to define itself by adopting a
way of life of a western style and becoming the 'reference group' for
members of other classes to imitate. Yet the furtherance of social promotion
opportunities facing economic constraints, the over all conditions in
Afghanistan became prone to the rapid propagation of revolutionary ideologies
due to which the country lost its political stability and national sovereignty.
It follows that the policy and planning inherent in proposed strategy for
economic reconstruction of Afghanistan seems fit for both economic and social
development of the country. With such policy and planning the benefit of the
reconstruction is expected to be distributed widely among the inhabitants of all
provinces, counties, and districts. The purchasing power of the population at
large could be increased. The Afghan domestic market for industrial goods will
be widened. The foundation for modern industrial development will be laid down.
The reoccurrence of 'islands of privileges within the sea of poverty' as
well as the reemergence of 'internal colonialism' could be checked. The
newly qualified Afghans, including the members of educated class would have
hopefully the opportunity to enter into the strata of political elite peacefully
and smoothly.
2. Afghan Economy and Civil Society
The economic reconstruction of Afghanistan, as outlined above, is expected to
trigger a process of modernization bringing about an extensive spread of civil
and political rights downward. The lower classes might feel the need of getting
accommodated autonomously into a new pattern of social groupings or institutions
lying between the primordial kinship groups and the state institutions. It will
be then on the state to look for this opportunity to clear the way for such
institutions or social groupings or 'civil society' to emerge in the country
as sweepingly as possible. Beside the fact that these social groupings
constitute the backbone of pluralistic democracy their desirable impact on
Afghan economy also will be beyond any doubt. The landowners under an irrigation
canal, for instance, may become inclined to enter freely into association in
order to cooperate for maintaining the canal more methodically and to use the
water more economically. Similarly the irrigation associations set up under a
given river may be intended to associate into the powerful federation of
irrigation associations of that river in a design to use the stream
hydrologically and hydrographically more rationally; and so forth up to the
incorporation of the confederation of irrigation associations of all
Afghanistan. It is plain for all to see that such associations for co-operation
- or civil society of Afghan style - aimed at achieving the best use of
water will be of cardinal economic importance in a country like Afghanistan
where water is the most valuable resource for agricultural development.
The example of irrigation-based civil society maybe extrapolated and applied
to many other sectors of Afghanistan's economic activities including the
storage of surplus crops of grains, particularly wheat. Local agricultural
cooperatives incorporated for the proper marketing of wheat may - through
their regional federation - build up the necessary storage facilities to
preserve the crop of wheat for much longer periods of time than any involved
individual farmer. With such facilities at their disposal they can avert
excessive market fluctuations ensuring regular and competitive supply for
consumers and remunerative prices for producers. Such prices, in turn, will
attract increased investments into this strategically sensitive sector of
Afghanistan's economy enabling the country to reach the stage of
self-sufficiency within a reasonable period of time.
The wide use of the concept and practice of civil society in Afghanistan
could prepare the ground for autonomous and democratic participation of Afghans
in the conduct of a significant part of their public affairs. Only with such
participation they may expect to have a small and suitable state in the country.
Otherwise the state will be too big and too costly for the Afghan people.
Imitating the United States of America, Canada, or Germany to adopt a federal
system of state in Afghanistan is absolutely irresponsible and whimsy. The
people of Afghanistan cannot endure it because it will be unbearably heavy,
inefficient and wasteful. A far better alternative option will be a relatively
small, centralized and democratically constituted unitary state combined with
the decentralized civil society institutions managing a large part of
Afghanistan's public affair autonomously, federally, productively, and
financially self reliantly. The role of the civil society in the future of
Afghanistan looks so crucial and vital that it deserves to be expressly an
integrated part of the economic reconstruction plan of the country. It justifies
a special program of education for training the required promoters, lawyers,
planners, managers, and administrators.
3. Afghan Economy and Globalization
The economic reconstruction plan of Afghanistan cannot afford to ignore the
present worldwide economic environment characterized by the process of economic
globalization, a process of rapid international economic integration embracing
both products and factors markets of almost all continents and countries. It has
been driven by an unprecedented liberalization of trade and capital movements,
which has been facilitated by the information and communication technology
revolutions. Beside the intensification of international trade in goods and
services, the globalization is manifested by intensified foreign direct
investment, short-term flows of capital, multinational enterprises involvement,
and production network reorganization on an international scale.
Notwithstanding the short-term hardships - including labor market disorder,
greater disparity of incomes, foreign exchange rates disturbance, etc. -
stemming from globalization it is generally acknowledged that its process is
irresistible. Few countries may embrace indefinitely a reactionary attitude of
adopting protectionist policies. A better approach would be to improve the
benefits of globalization while minimizing the costs particularly by adequate
action taken in the education and training of workers to make them adjustable
and transferable promptly from one sector to another according to the
circumstances.
In connection with the specific case of Afghanistan it may be stated that
globalization does not threaten its commercial farming industry in any of its
provinces or regions. Equally so for its edible oil extraction, hides and skins
pickling, fruits processing, and cement industries. The only industrial sector
that one may worry about it is Afghanistan's textile industry, which could
however survive by some technological modernization and management
rationalization. By in large it is believed that any unforeseen negative effect
of globalization on Afghanistan's manufacturing industries will be more than
offset by its positive impact on its export oriented orchard industry as well as
on its international transit trade industry and its mining resources - copper
and iron ore - potentialities to be developed hopefully through the
involvement of multinational or transnational enterprises.
Nevertheless there is a serious cause of concern which is the fact that
Afghanistan is - for knows reasons - the most backward of the backward
countries of the region. The outright consequence of the globalization in the
region will be the 'polarization' of economic growth within some favored
geographical areas situated outside Afghanistan's territory. The return on
capital and the productivity of skilled labor could be higher in the neighboring
countries than in Afghanistan. If things were left to market forces unhampered
by any effective policy interference, most of the capital formed and technicians
trained in the country will move out undermining the smooth process of its
economic reconstruction. Afghanistan being an exceptional case - a 'Tabula
raza' - the approach of WTO (World Trade Organization) and that of ECO
(Economic Co-operation Organization) are expected to be consistent with the
requirement of successful achievement of its economic reconstruction plan.
4. Action to be Taken Immediately
a) Redrafting of Afghanistan's Commercial Code
- To provide legal protection to widest possible range of short-, medium-
and long-term private investments aimed at maximizing their share in the
self-sustained economic reconstruction, growth and development of the
country.
- To encourage the mobilization of national savings through encouragement of
entrepreneurship and development of solid corporate business firms including
banking.
- To bring Afghanistan's economy into line with worldwide commercial and
financial market globalization.
b) Updating the Afghan Domestic and Foreign Investment Laws with a View to
Maintain their Competitiveness in Terms of the Incentives they are Furnishing.
c) Revitalizing Afghan Chambers of Commerce.
- To identify hindrances lying on the way of free and smooth movement of
goods and services throughout the country, and to specify the necessary
steps to be taken to remove them.
- To facilitate the Afghan export trade by recovering Afghanistan's
traditional markets and endeavoring to have access to new ones.
- To arrange pre-shipment as well as post-shipment export financing
facilities with Afghan commercial, agricultural, and industrial development
banks.
- To conceive an appropriate market-based price policy leading to the
required allocation of resources among various economic sectors ensuring a
proper balance between the production of agribusiness export items and that
of domestically needed food items. The so-conceived price policy should
represent at the same time one of the means to be devised for curbing the
production and commercialization of illicit drugs.
- To negotiate/renegotiate Afghanistan's trade and transit agreements with
neighboring states in a design to make the country one of the heaviest
transit traffic crossroad, for all categories of goods, including oil and
natural gas, to the legitimate benefits of all the parties concerned, in
accordance with the relevant international rules, regulations, and
practices.
- To study the feasibility of a commercial and industrial free zone to be
established in Afghanistan.
d) Renegotiating - if need be - the Terms of Economic Co-operation
Organization Among the Countries of the Region in an Attempt to Enhance their
Economic Growth and Development Balancedly and Equitably.
C: Conclusions
- The economic reconstruction of Afghanistan must encompass its whole
territorial space so as to have national, sub-national, regional, and local
characters. It ought to start from districts and villages.
- Afghanistan's economic reconstruction and its statehood recreation are
closely and inseparably inter-linked. Unless they are undertaken jointly
there will be no meaningful achievement in either terms.
- Afghan national army cannot be recreated without the simultaneous
recreation of the Afghan state. The regeneration of the one and the other
are to be accomplished together through the process of economic
reconstruction and state recreation of Afghanistan. Should the contemplated
army be created separately by an alien state without being geared to other
parts of the Afghan state, it would be very hard to be regarded as national,
multi-ethical, multi-provincial, and apolitical. Furthermore, the troops or
soldiers of such an army will inevitably be salaried. The cost involved is
unaffordable for Afghan public finance. Once the armed force is established
on this basis or precedence, it will be extremely difficult to be shifted to
the system based on conscript persons or draftees.
- The Afghan economic reconstruction must first be planned and then
implemented under the control of the Afghan state in accordance with the
national interest of Afghanistan. It has been noticed that many ostensible
donors are offering their contributions by taking in charge the execution of
this or that projects chosen by themselves according to their own
preferences. It is obvious that such a method of project selection will not
help Afghanistan's economic reconstruction. Conversely it will amount to a
new instrument in the hands of the same countries to keep interfering in the
Afghan internal affairs for their own illegitimate political interests and
extraterritorial objectives.
- Once the plan is agreed upon, the cost involved could be estimated more
rationally, accurately and responsibly.
- The economic reconstruction of Afghanistan may be conceived and carried
out satisfactorily if it helps primarily the Afghan agriculture to reach
quickly a stage whereby to leave a growing surplus output. Such output could
support the growth of a healthy industrial sector, which in turn could lead
to the development of a sound sector of services. This process of economic
sectors sequence evolvement may be secured in Afghanistan provided however
that the foreign-based and irresponsible warring faction and warlords are
ousted - as has been the case for Taliban - from the country at once.
Otherwise agriculture will be further depressed, poppy cultivation will be
resumed likely on a larger scale, the rural populations will keep pouring
into the cities where international peacekeeping forces are deployed and
humanitarian assistance is available. The growth, if any, will be again
confined to a few urban centers. The 'islands of privileges within the sea
of poverty' as well as the 'internal imperialism' will reappear -
this time probably more dauntingly than before - by turning into what is
described as 'revolution of rising expectation'.
- As long as the foreign-made and foreign-based warring factions and
warlords are ruling in Afghanistan, the international peacekeeping forces
- whatever their size - shall not be able to bring a durable peace and
stability into the country. As a matter of fact they cannot afford to take
the risk of entering into the rural areas without suffering heavy
causalities and for no avail.
- Building a national army amidst the foreign-based warlords and warlordism
does not make sense either. Maintaining a regular and well-disciplined army
in a territory where coercive forces are not centralized and monopolized in
a single center is absolutely impossible. Desertions of soldiers and
officers - instigated or lured by foreign-based warlords and/or by hostile
alien states - with paid salaries and possessed weaponries will be a daily
routine.
- The foreign-based warring faction leaders and warlords are compelled by
instinct to retain their relationship with the involved foreign powers and
to keep Afghanistan in turmoil in order to survive and perpetuate.
Attempting to reconstruct the country's economy or to recreate its
statehood, in the presence of such warlords, amount to squaring the circle.
- It has been the warlordism and its statelessness corollary that has
engendered the binladenism in Afghanistan. If the former is not eradicated
it is impossible that the later would not be re-engendered, sooner or later,
maybe with much more repressive and aggressive character.
- What binladenism has been to the innocent people of America the
foreign-based warring factions and warlordism is to the innocent people of
Afghanistan. Punishing, displacing or expelling the former by resuscitating,
nurturing, rewarding, and empowering the latter is worsening further
Afghanistan's dilemma and the tragedy of the Afghan people. The dilemma
may be resolved, the tragedy ended, and the binladenism extirpated provided
that:
- The foreign-based warring factions and warlords are wiped out from the
political arena of Afghanistan.
- International peacekeeping forces - albeit modest - are deployed in
the main Afghan cities.
- The country's economic reconstruction cum state recreation is taken up
more or less in pursuance of the proposed strategy.
In this manner, the Afghani state - behaving responsibly to the Afghan
people and to the international community - may be recreated in two or three
years; the peace keeping forces could be replaced by the reconstituted Afghan
national army accordingly; the reconstruction of the involved economy will get
well underway; the needed durable peace and stability will finally return to the
country, which legally ought to be grounded upon its non-aligned international
status ratified and guaranteed by world powers' community.
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