March 15, 2016
Not only did Washington’s $113 billion plus state-building endeavor fail to bring stability and good governance to Afghanistan, it neglected to put in safeguards against one of the most predictable financial collapses in history. It didn’t take a Nobel prize-winning economist to foresee that Afghanistan’s distorted “war economy” bubble would burst in the post-NATO world. USAID, international donors and the previous and sitting Afghan governments were asleep at the switch, so to speak, paying little heed to fundamental economic warning signs, not to mention basic mathematics.
“I have not seen anything that would indicate that we [the United States] developed any programs anticipating this tremendous negative impact on the economy,” U.S. inspector general for Afghan reconstruction John Sopko told IRIN humanitarian news agency on Monday.
President Ashraf Ghani, according to IRIN, reported that at least 100,000 jobs were lost in the transport sector alone, which accounts for about 22 percent of Afghanistan’s gross domestic product. The construction sector, which represents 40 percent of GDP, was also driven by U.S. military contracts.
In addition, inequality increased while the poverty rate continued to hover at around 36 percent between 2007 and 2012 despite strong economic growth, including an astounding 21 percent increase in 2009, IRIN noted.
60 percent of the $113 billion the U.S. had appropriated for reconstruction was focused on building Afghan security forces while significant portions were dedicated to governance, counternarcotics and poppy eradication efforts – all at the expense of developing the ag sector, which accounts for 20% of Afghanistan’s GDP, according to CIA figures.
World Bank officials have blasted the U.S. for neglecting the agricultural sector. Journalist Douglas Wissing has long chastised U.S. development programs dating back to the Bush era for failing to focus on agriculture in a country where 80 percent of the population depend on it for their livelihoods.
Meanwhile, rising violence and deteriorating economic conditions have forced many Afghans to flee the country, although they are not being welcomed with open arms in Europe. In fact, European officials have urged Afghan citizens to not leave their home country as the EU implements stricter measures to control the influx of refugees, relegating hundreds of thousands of migrants to a homeless limbo.
Many critics have shamed both U.S. and Afghan authorities for failing to heed warning signs. The Associated Press reported in January that Afghan officials had four years’ notice that the U.S. military, “which spent more than $1 trillion between 2001 and 2014, would close most bases and withdraw combat troops,” at the end of 2015. About one third of Afghanistan’s population, the AP report continued, “lived close enough to a military base to benefit from its presence.”
Further, a World Bank report dating back to 2013 warned that increased uncertainty from the NATO transition and “violence, economic crime, and systemic corruption” were contributing to financial distress.
Unfortunately, Afghanistan’s economic woes are likely to persist in light of underlying fissures within the country’s very governing structure and political ambiguity at the top. According to a recent analysis by the Swedish International Development Cooperation Agency, Afghanistan’s “weak fiscal regime” inhibits the ability of Afghanistan’s National Unity Government (NUG) “to collect tax revenue and provide essential public services and goods.”
The minerals and petrochemical industries will not serve as a panacea for Afghanistan’s financial ills either, at least not anytime soon, considering international mining companies have backed off over concerns about violence and lack of infrastructure.
In fact, the ones benefiting the most from these resources, according to Integrity Watch Afghanistan (IWA), are criminal gangs that are looting mines and peddling minerals at a fraction of global market prices, thereby “undermining potential for the government to exploit the estimated $3 trillion in resources.”
IWA also noted that lack of governance is a bigger threat to the Afghan mining industry than investment, yet U.S. development efforts have focused on commercial issues like supporting tenders.
“Illegal mining and exploitation of mining by armed groups means that mining currently contributes more to corruption and conflict than it does to Afghanistan’s development,” IWA stated in a press release in January.
In short, the U.S. state-building adventure not only failed to prepare Afghanistan for the financial collapse, it actually sowed the seeds of the crisis. Washington injected billions of dollars into Afghanistan with little oversight, creating an inflated economy that benefited the political elite and criminals the most, and then withdrew with little thought of the consequences. Nearly 15 years and $113 billion later, the United States has left Afghanistan in a worse position by every measure of stability available, with little signs of hope.
While some may argue that U.S. aid has delivered improvements in areas like communications, women’s rights and education, these accomplishments likely provide little solace to Afghan refugees who are fleeing a country wracked by violence, corruption and economic hardship.