Afghanistan’s War Economy

After 16 years of long, hard and bloody war, during which United States disproportionately used both military and monetary resources to attain stability, Afghanistan is far from stable. The irrational use of resources, which include United States and NATO’s war-machines, failed to produce the desired results; in fact, this insensible and un-methodical use of resources, especially by Bush Administration, further aggravated an already bleak situation.

The disappointment, from the failures, is so great that for last five years the focus, of United States and its Allies, is on maintaining status quo and for that different instruments and resources have been employed. One of the instruments, which is devised to realize said objective, is to engage Taliban through Pakistan so that United States can leave Afghanistan with a system of some sort that can produce results, no matter how trivial these results are. 

Despite all the efforts and extravagant spending of resources, United States and its Allies are failing to curb ever-expanding presence of Taliban. Kabul is losing more territory, every year, to those groups, which question the legitimacy of Kabul government and contest, in various manners, the writ of Kabul. In 2016, Kabul has lost 15% of its territory to the Taliban and currently it only controls 56% of Afghanistan’s total territory.

To understand why United States is failing perpetually in realizing its objective, of bringing stability in Afghanistan so that it could leave without any serious blemish, it is imperative to understand the political-economic structure of Afghanistan.

Located in one of the most strategically relevant regions in the world, the land locked Afghanistan has only witnessed violence and destruction since the Soviet invasion in 1979. As the presence of Soviet Union prolonged, the violence augmented and war intensified. This severely damaged its economy and yielded a perfect environment for the emergence and sustenance of militant groups. United States and Soviet Union’s contribution to war, in form of weapons and money that they were providing to armed groups to protect strategic & tactical interests, gave birth to war economy. Different groups, such as Hezb-e-Islami Gulbuddin, emerged that understood that confrontation/violence was indispensable to ascertain their existence. Over the years this war-economy grew so large that it substituted conventional economy of Afghanistan, which had been impaired to the point of insignificance by perpetual conflict and chaos.

The strategy, of using weapons and money to meet immediate objectives, was opted yet again by United States, when it invaded Afghanistan in 2001. It relied on Northern Alliance to deliver the goods and later contrived a government, which was not only comprised of war-lords, who were occasionally drug-smugglers, but also represented minority. These war-lords, on which United States too much rely, to meet strategic needs & objectives, derive their power from American presence and money United States spends to maintain status quo, which is why prolonged American presence is desired. These political-militant groups, which are the beneficiaries of the war, recognize that once United States leaves Afghanistan, its commitment to it and its monetary assistance to the country, in form of aid and loans, will gradually die. As per official statistics, around $110 billion has been spent, since 2002, to rebuild Afghanistan and major portion of this US Aid has either been wasted or stolen.

Groups, like Taliban and ISIS (later has considerable presence in the eastern region of the country) are incidental products of prolonged conflict in Afghanistan; thus, it is natural that these groups entirely depend on this alternative economy for their existence. Therefore, any fluctuations in this economy directly impact the capacity and efficiency of these groups.  

What’s the remedy??? In the short-run, Afghanistan’s war-economy must be dented. The more impaired it is, more weak are these armed factions/groups that thrive on it. This will reduce their effectiveness, which will facilitate in reaching normalcy in war-torn country. It must also be acknowledged that different groups benefit differently from the economic system and that is why the design, to be devised to impair this economy, must be comprehensive. 

The process shall start by improving mechanisms that have been developed to provide monetary assistance to Kabul. The aid to be provided, in form of loans and funds, should be objective-oriented and checks and balances must be introduced to ensure that neither it gets wasted nor it gets stolen. 

Afghanistan’s private sector should be facilitated and more economic/corporate opportunities should be produced so that private sector could expand and play its part in the revival of conventional economy. Currently the emphasis of Afghan government is on the broad and bold use of fiscal instrument to meet socio-economic goals, which has made political-economic situation more perplexing as it has increased corruption at various tiers of Afghan government/state-machinery. This wide-spread corruption has drastically slowed the pace of economic revival; in fact, corruption has made Afghanistan’s war economy far robust than what it was before 2002 American invasion.

In the long-run the conventional economy must substitute war-economy of Afghanistan, which will require stability, growth of private sector, more investment (domestic and foreign) and evolution of state institutions to the level where they could deliver their constitutional obligations effectively. If the situation, in Afghanistan, is allowed to continue, the country will remain unstable and insecure for a very long period, which implies that conventional economy would not resuscitate for many more decades.