World
Najmuddin A. Shaikh
July 17, 2012
© Photo: Public domain

Much has been made of the successful conclusion of the Tokyo Conference hosted by the Japanese, traditionally one of the larges donors of economic assistance to Afghanistan in the post 9/11 period. It can be said that with some legerdemain the Japanese hosts were able to say that the Conference had yielded pledges from the 70 participating nations and international organizations of $16 billion over the next four years. I say legerdemain because the Americans could only promise that they would seek appropriations from their Congress approximating what they had been offering as aid during the last few years while other countries made pledges that were dependent on their own legislative procedures.

What does this $ 4 billion of economic aid annually represent? At the Bonn conference the Afghans had presented a paper asking for $ 10 billion a year over the next decade. This figure included clearly the military assistance needed to sustain the ANSF (Afghan National Security Forces) and which had been met up to that time entirely by foreign aid. Clearly before the Bonn Conference held in December 2011 it had already been decided that the ANSF was to be reduced from the peak of 352,000 that it was to reach this year- the cost of which was said to be between $ 6-8 billion a year to 230,000 with an annual cost of $ 4.1 billion. This meant that according to Afghan calculations they needed $ 6 billion a year as economic assistance a large part of which would be budgetary support to pay the manpower and other maintenance costs for the extraordinary expansion in education and health care facilities that had taken place in the last decade and that permitted donor countries to boast of such accomplishments as increasing the number of teachers from 20,000 in 2002 to 175,000 today with 30% of them being women or of increasing enrolment in schools to 8 million as against 900,000 in 2002. 

The pledge of $ 4 billion annually for the next four years may be said to be reasonably close to what the Afghans had estimated but as we look more closely at the Afghan paper “Towards Self Reliance” it seems evident that the projections are hopelessly optimistic. For instance this paper states that the financing gap in the budget was 93.5% in 2011 but would be reduced to 35.7% in 2015. Where the extra resources are going to come from is not very clear. The paper also states that over half the population is unemployed but hopes that work on the infrastructure will create more jobs. The truth of the matter is that according to the World report “Afghanistan in Transition: Looking beyond 2014” it would cost $ 3 billion to put the country’s road network into a maintainable state. Further that the budget allocation for road maintenance this year when comparatively larger assistance is available is only $30 million when the minimum required is $280 million. Such examples can be multiplied when the documents available are studied more closely.

To my mind however the most important point is that the growth of roughly 9% annually that the Afghan economy has registered in the last decade has been owed largely to the growth of the services sector. It is not difficult to see that as the Afghan employees of the foreign forces and of the whole host of NGOs lose their jobs following the withdrawal of foreign forces there will be a dramatic increase in the number of unemployed people. This will be compounded by the loss of jobs in the security sector, the transport sector and the construction sector as foreign spending on these items is eliminated or sharply cut. The planned reduction of the ANSF from 352,000 to 230,000 will not happen in 2014 but by 2017 this will add to the ranks of the unemployed. The ensuing downturn in economic activity will make nonsense of estimates that the Afghan economy will nevertheless grow at 5% or that there will be a growth in the tax revenues of the Afghan government. One source in this context that the Afghan government is expected to tap is customs duties on imports which it is believed have been sharply less than they should be because of corruption. Now one can be sure that as Afghanistan’s import capacity is reduced by the economic downturn this source of revenue even if corruption is eliminated will decline and not increase. 

The Tokyo Declaration and its annex, the Tokyo Mutual Accountability Framework, have made it clear that, during this period, 50% of the assistance will be available to the Afghan government with the rest being spent by the donors themselves with hopefully well coordinated plans. The past record is not very encouraging. Examples such as the Kabul Power Plant built at a cost of $300 million, which now can be used only as a backup facility, abound in the reports of the Inspector General for Afghanistan. The Mutual document also states that up to 20% of the assistance will be tied to the Afghans achieving the target of increasing local revenue, eliminating corruption etc. This check on the Afghans is good but what about the donors and their wasteful expenditure. A British report says that the Kabul-Kandahar, which was supposed to be a signature project, is still not fully metalled because of a combination of siphoning away of funds and contracts being outsourced through layers of companies. They fear that the road’s thin layer of asphalt will not last through an Afghan winter. The truth is that foreign aid administered by foreign agencies is expensive and results in grant of contracts to foreign contractors who spend only a small part of the contracted amount in Afghanistan.

There is no doubt that the Tokyo assemblage, following on the Chicago meeting, did manage to reassure the Afghans that Afghanistan will not be left to its own devices after the foreign troop withdrawal. Of particular importance in this regard was the announcement by Secretary Clinton in Kabul before the Tokyo meeting that Afghanistan had been made a major Non-NATO ally and that this was what had been promised in the Strategic Partnership Agreement signed during Obama’s visit to Kabul in May and which came into force on 4th July. Past experience has shown that apart from the psychological boost, the principal benefit that flows from such a designation is getting access to defence equipment that the American armed forces have declared to be in excess of their requirements. This will reduce sharply the cost of equipping the ANSF. 

There is no doubt in my mind however that, despite this reassurance, the withdrawal of foreign troops will bring a severe economic downturn in Afghanistan, increasing the number of unemployed on the streets and will bring political turbulence as power brokers and others fight over the division of what will be a severely reduced economic pie. The Americans will probably be able to conclude an agreement during the next year for the stationing of some 15to 20,000 troops at 4 or five Afghan administered bases. They will however confine themselves to COIN operations and will not generate the sort of employment in the services sector that was the hallmark of the larger NATO force presence.

Given the economic situation that is likely to prevail efforts for reconciliation acquire an even greater importance and urgency. The Tokyo Declaration “reaffirmed the importance of the peace and reconciliation process with a view to ending the ongoing violence in the country and restoring lasting peace and security as per the UN Security Council Resolutions” and “ reiterated the importance of reconciliation principles such as the renunciation of violence, the breaking of ties to international terrorism and respect for the Afghan Constitution, including its human rights provisions, notably the rights of women, and emphasized the region’s respect and support for the peace process and its outcome.” 

This however is no more than a reiteration of the hopes entertained. The discussion on reconciliation that was important in my view was the “core” group meeting between Afghanistan, Pakistan and the United States. The joint statement of this first ever ministerial meeting of this group is significant if all the participants were sincere. It said “Foreign Minister Rassoul welcomed Pakistan’s and the United States’ support for Afghan peace efforts, noting especially former Prime Minister Gilani’s February 2012 statement expressing Pakistan’s support for Afghan reconciliation and calling on the Afghan Taliban and related groups to participate in an intra-Afghan process for reconciliation and peace.”

“To build further momentum, we reaffirmed the importance of pursuing multiple channels and contacts with the armed opposition. Pakistan and Afghanistan committed to take full advantage of upcoming bilateral exchanges, including Pakistani Prime Minister Ashraf’s forthcoming visit to Kabul and High Peace Council Chairman Rabbani’s planned visit to Islamabad. These visits should determine and implement additional concrete steps to advance Afghan reconciliation.”

The major problem remains the lack of trust and confidence between the United States and Pakistan. From her one on one meeting with Pakistan Foreign Minister Khar which lasted for about an hour Clinton emerged to tell the press that “We want to use the positive momentum generated by our recent agreement to take tangible steps on our many shared, core interests,” and that the discussions had “focused on the necessity of defeating the terror networks that threaten the stability of both Pakistan and Afghanistan, as well as the interests of the United States”. Later a state Department spokesman confirmed that as always she had raised the issue of action against the Haqqani network asking that Pakistan do more and that the Pakistani minister had said that they would. 

Earlier while addressing a press conference in Kabul after announcing major non-NATO ally status for Afghanistan Clinton had recalled “the recent call from Pakistan’s parliament that Pakistani territory shall not be used for any kind of attacks on other countries. And all foreign fighters, if found, shall be expelled from Pakistani soil.” Her next sentence was “So we want to deepen our security cooperation with Pakistan” making clear what her expectations were. If this was not enough she spoke next of reconciliation on which she saw positive signs and connected it to the forthcoming meeting of the core group in Tokyo.

What has been publicly stated after these two crucial meetings suggests that Pakistan has agreed to try and persuade the Haqqani network representatives to engage in negotiations. The question is whether all parties are on the same page with regard to the nature of these negotiations. The Taliban and perhaps the Haqqani network want the negotiations with the Americans and currently seem to be insisting that such negotiations must be conditioned on complete foreign troop withdrawal with no residual American presence. Second their position appears to be that if there are to be intra Afghan negotiations these should be with the erstwhile Northern Alliance and not President Karzai who they perceive as an American stooge. 

Pakistan has some leverage with the “armed opposition” but it is limited even when Pakistan is prepared to threaten the use of force to expel the elements that are in Pakistan. It would seem therefore to be logical to agree to some parameters for the negotiations, which are likely to extend well beyond 2014. The Americans may, for instance, indicate that if the Taliban renounce ties with international terrorist networks, specifically Al-Qaeda, the Americans would undertake to withdraw their “residual presence” as soon as reconciliation took hold. The Americans could even propose that in return for such a renunciation of Al-Qaeda America would quickly release into Afghan custody the Taliban currently held at Guantanamo. 

My point is that even where there is agreement in principle and even when a measure of trust and confidence is restored hard and imaginative thinking will be needed to devise a negotiating strategy that will create a win-win situation for both sides. It is a difficult task but one which needs to be tackled urgently.

It is particularly urgent for Pakistan since if there is no reconciliation prevailing instability in Afghanistan will have its greatest fallout on Pakistan’s internal situation and equally importantly will lead to a further influx of economic and political refugees from Afghanistan into Pakistan.

The views of individual contributors do not necessarily represent those of the Strategic Culture Foundation.
Afghanistan After the Tokyo Conference

Much has been made of the successful conclusion of the Tokyo Conference hosted by the Japanese, traditionally one of the larges donors of economic assistance to Afghanistan in the post 9/11 period. It can be said that with some legerdemain the Japanese hosts were able to say that the Conference had yielded pledges from the 70 participating nations and international organizations of $16 billion over the next four years. I say legerdemain because the Americans could only promise that they would seek appropriations from their Congress approximating what they had been offering as aid during the last few years while other countries made pledges that were dependent on their own legislative procedures.

What does this $ 4 billion of economic aid annually represent? At the Bonn conference the Afghans had presented a paper asking for $ 10 billion a year over the next decade. This figure included clearly the military assistance needed to sustain the ANSF (Afghan National Security Forces) and which had been met up to that time entirely by foreign aid. Clearly before the Bonn Conference held in December 2011 it had already been decided that the ANSF was to be reduced from the peak of 352,000 that it was to reach this year- the cost of which was said to be between $ 6-8 billion a year to 230,000 with an annual cost of $ 4.1 billion. This meant that according to Afghan calculations they needed $ 6 billion a year as economic assistance a large part of which would be budgetary support to pay the manpower and other maintenance costs for the extraordinary expansion in education and health care facilities that had taken place in the last decade and that permitted donor countries to boast of such accomplishments as increasing the number of teachers from 20,000 in 2002 to 175,000 today with 30% of them being women or of increasing enrolment in schools to 8 million as against 900,000 in 2002. 

The pledge of $ 4 billion annually for the next four years may be said to be reasonably close to what the Afghans had estimated but as we look more closely at the Afghan paper “Towards Self Reliance” it seems evident that the projections are hopelessly optimistic. For instance this paper states that the financing gap in the budget was 93.5% in 2011 but would be reduced to 35.7% in 2015. Where the extra resources are going to come from is not very clear. The paper also states that over half the population is unemployed but hopes that work on the infrastructure will create more jobs. The truth of the matter is that according to the World report “Afghanistan in Transition: Looking beyond 2014” it would cost $ 3 billion to put the country’s road network into a maintainable state. Further that the budget allocation for road maintenance this year when comparatively larger assistance is available is only $30 million when the minimum required is $280 million. Such examples can be multiplied when the documents available are studied more closely.

To my mind however the most important point is that the growth of roughly 9% annually that the Afghan economy has registered in the last decade has been owed largely to the growth of the services sector. It is not difficult to see that as the Afghan employees of the foreign forces and of the whole host of NGOs lose their jobs following the withdrawal of foreign forces there will be a dramatic increase in the number of unemployed people. This will be compounded by the loss of jobs in the security sector, the transport sector and the construction sector as foreign spending on these items is eliminated or sharply cut. The planned reduction of the ANSF from 352,000 to 230,000 will not happen in 2014 but by 2017 this will add to the ranks of the unemployed. The ensuing downturn in economic activity will make nonsense of estimates that the Afghan economy will nevertheless grow at 5% or that there will be a growth in the tax revenues of the Afghan government. One source in this context that the Afghan government is expected to tap is customs duties on imports which it is believed have been sharply less than they should be because of corruption. Now one can be sure that as Afghanistan’s import capacity is reduced by the economic downturn this source of revenue even if corruption is eliminated will decline and not increase. 

The Tokyo Declaration and its annex, the Tokyo Mutual Accountability Framework, have made it clear that, during this period, 50% of the assistance will be available to the Afghan government with the rest being spent by the donors themselves with hopefully well coordinated plans. The past record is not very encouraging. Examples such as the Kabul Power Plant built at a cost of $300 million, which now can be used only as a backup facility, abound in the reports of the Inspector General for Afghanistan. The Mutual document also states that up to 20% of the assistance will be tied to the Afghans achieving the target of increasing local revenue, eliminating corruption etc. This check on the Afghans is good but what about the donors and their wasteful expenditure. A British report says that the Kabul-Kandahar, which was supposed to be a signature project, is still not fully metalled because of a combination of siphoning away of funds and contracts being outsourced through layers of companies. They fear that the road’s thin layer of asphalt will not last through an Afghan winter. The truth is that foreign aid administered by foreign agencies is expensive and results in grant of contracts to foreign contractors who spend only a small part of the contracted amount in Afghanistan.

There is no doubt that the Tokyo assemblage, following on the Chicago meeting, did manage to reassure the Afghans that Afghanistan will not be left to its own devices after the foreign troop withdrawal. Of particular importance in this regard was the announcement by Secretary Clinton in Kabul before the Tokyo meeting that Afghanistan had been made a major Non-NATO ally and that this was what had been promised in the Strategic Partnership Agreement signed during Obama’s visit to Kabul in May and which came into force on 4th July. Past experience has shown that apart from the psychological boost, the principal benefit that flows from such a designation is getting access to defence equipment that the American armed forces have declared to be in excess of their requirements. This will reduce sharply the cost of equipping the ANSF. 

There is no doubt in my mind however that, despite this reassurance, the withdrawal of foreign troops will bring a severe economic downturn in Afghanistan, increasing the number of unemployed on the streets and will bring political turbulence as power brokers and others fight over the division of what will be a severely reduced economic pie. The Americans will probably be able to conclude an agreement during the next year for the stationing of some 15to 20,000 troops at 4 or five Afghan administered bases. They will however confine themselves to COIN operations and will not generate the sort of employment in the services sector that was the hallmark of the larger NATO force presence.

Given the economic situation that is likely to prevail efforts for reconciliation acquire an even greater importance and urgency. The Tokyo Declaration “reaffirmed the importance of the peace and reconciliation process with a view to ending the ongoing violence in the country and restoring lasting peace and security as per the UN Security Council Resolutions” and “ reiterated the importance of reconciliation principles such as the renunciation of violence, the breaking of ties to international terrorism and respect for the Afghan Constitution, including its human rights provisions, notably the rights of women, and emphasized the region’s respect and support for the peace process and its outcome.” 

This however is no more than a reiteration of the hopes entertained. The discussion on reconciliation that was important in my view was the “core” group meeting between Afghanistan, Pakistan and the United States. The joint statement of this first ever ministerial meeting of this group is significant if all the participants were sincere. It said “Foreign Minister Rassoul welcomed Pakistan’s and the United States’ support for Afghan peace efforts, noting especially former Prime Minister Gilani’s February 2012 statement expressing Pakistan’s support for Afghan reconciliation and calling on the Afghan Taliban and related groups to participate in an intra-Afghan process for reconciliation and peace.”

“To build further momentum, we reaffirmed the importance of pursuing multiple channels and contacts with the armed opposition. Pakistan and Afghanistan committed to take full advantage of upcoming bilateral exchanges, including Pakistani Prime Minister Ashraf’s forthcoming visit to Kabul and High Peace Council Chairman Rabbani’s planned visit to Islamabad. These visits should determine and implement additional concrete steps to advance Afghan reconciliation.”

The major problem remains the lack of trust and confidence between the United States and Pakistan. From her one on one meeting with Pakistan Foreign Minister Khar which lasted for about an hour Clinton emerged to tell the press that “We want to use the positive momentum generated by our recent agreement to take tangible steps on our many shared, core interests,” and that the discussions had “focused on the necessity of defeating the terror networks that threaten the stability of both Pakistan and Afghanistan, as well as the interests of the United States”. Later a state Department spokesman confirmed that as always she had raised the issue of action against the Haqqani network asking that Pakistan do more and that the Pakistani minister had said that they would. 

Earlier while addressing a press conference in Kabul after announcing major non-NATO ally status for Afghanistan Clinton had recalled “the recent call from Pakistan’s parliament that Pakistani territory shall not be used for any kind of attacks on other countries. And all foreign fighters, if found, shall be expelled from Pakistani soil.” Her next sentence was “So we want to deepen our security cooperation with Pakistan” making clear what her expectations were. If this was not enough she spoke next of reconciliation on which she saw positive signs and connected it to the forthcoming meeting of the core group in Tokyo.

What has been publicly stated after these two crucial meetings suggests that Pakistan has agreed to try and persuade the Haqqani network representatives to engage in negotiations. The question is whether all parties are on the same page with regard to the nature of these negotiations. The Taliban and perhaps the Haqqani network want the negotiations with the Americans and currently seem to be insisting that such negotiations must be conditioned on complete foreign troop withdrawal with no residual American presence. Second their position appears to be that if there are to be intra Afghan negotiations these should be with the erstwhile Northern Alliance and not President Karzai who they perceive as an American stooge. 

Pakistan has some leverage with the “armed opposition” but it is limited even when Pakistan is prepared to threaten the use of force to expel the elements that are in Pakistan. It would seem therefore to be logical to agree to some parameters for the negotiations, which are likely to extend well beyond 2014. The Americans may, for instance, indicate that if the Taliban renounce ties with international terrorist networks, specifically Al-Qaeda, the Americans would undertake to withdraw their “residual presence” as soon as reconciliation took hold. The Americans could even propose that in return for such a renunciation of Al-Qaeda America would quickly release into Afghan custody the Taliban currently held at Guantanamo. 

My point is that even where there is agreement in principle and even when a measure of trust and confidence is restored hard and imaginative thinking will be needed to devise a negotiating strategy that will create a win-win situation for both sides. It is a difficult task but one which needs to be tackled urgently.

It is particularly urgent for Pakistan since if there is no reconciliation prevailing instability in Afghanistan will have its greatest fallout on Pakistan’s internal situation and equally importantly will lead to a further influx of economic and political refugees from Afghanistan into Pakistan.