The Coming Meltdown in Kabul
The Afghan economy isn’t strong enough to stand on its own.
In the past dozen years, foreign aid has transformed Afghan cities into boomtowns. Kabul alone has seen its population double, swelling to about four million as rural migrants and returning refugees of previous wars stream in. Construction is everywhere. But Kabul-based writer Matthieu Aikins warns in Harper's that the bustling metropolis, as well as other urban centers, is headed for economic collapse. “The aid boom of the past decade has fueled wild and haphazard growth without providing the infrastructure needed for it to last. In 2010, total aid spending was $15.7 billion—equivalent in size to the entire Afghan GDP,” he writes.
After the fall of the Taliban in 2001, many of the wealthy and powerful, among them U.S.-backed warlords, swooped into Kabul to grab choice lots. An estimated 70 percent of the city’s residents have not been so fortunate, living in illegally constructed dwellings. Sewage flows in open gutters, water is scarce and polluted, and “the smoke from burning scrap tires, wood, coal, and plastic garbage fills the air,” along with automotive exhaust. Youth unemployment is at 40 percent.
Some foreign aid has lifted families from nomadism and poverty. Aikins cites the example of a computer technician and his wife, a schoolteacher: They went from begging for stale bread to owning a home after he secured a job with the British Council, the United Kingdom’s agency for international cultural relations. But above struggling middle-class families and even the foreign-educated elite are “the businessmen, contractors, and warlords who have made millions off the torrent of money flowing into the country. . . . They’ve stashed most of their gains abroad: Mind-boggling quantities of U.S. currency are exported from the country in hand-couriered packets and on shrink-wrapped pallets. Afghanistan’s central bank estimated that $4.6 billion in cash left the country legally through Kabul International Airport in 2011 alone.” The dollars, tens of billions in total, end up in places such as Dubai, Malaysia, Pakistan, and Switzerland.
The nouveaux riches do spend lavishly in the capital, but even that money dribbles out of the country. Aikins notes the city’s many gaudy wedding halls, where a family can plunk down $100,000 for an event. One boasts 62 food service workers, generators, wells, and a greenhouse for growing flowers. But the trappings, from food ingredients to décor, come from nearby Pakistan, Iran, and China. Local manufacturers can’t compete, Aikins says: The flood of foreign cash has “driven up the costs of skilled labor, land, raw materials, and other inputs,” inflating the local currency even as “the free-trade, open-border policies pushed by the U.S. government and Afghan technocrats” make producers vulnerable to an influx of cheap goods from neighboring countries.
Before the aid dries up (foreign countries have made no commitments past 2015), Afghanistan will have to develop an economic policy tailored to maximizing its strengths. Aikins cites the work of economist William Byrd, a longtime student of the country, who recommends encouraging “high-value, labor-intensive farming, such as drying the country’s grapes into exportable raisins, or cultivating saffron.” The country is believed to harbor large reserves of minerals and precious stones, and Chinese and Indian companies have invested billions to mine them. Resource-rich but poor countries such as Afghanistan seldom retain the profits of such operations, however.
Foreign and domestic agencies have come up with a plan that would greatly expand overcrowded Kabul, and would install a hydroelectric dam in nearby mountains, providing water and electricity. The project would cost $34 billion, a fraction of $592 billion the United States has already spent on the war in Afghanistan. At present, plans for the so-called New Kabul remain nothing more than an engineer’s tabletop model.
THE SOURCE: “Kabubble” by Matthieu Aikins, in Harper’s, Feb. 2013.