The military drawddown now in progress is both inevitable and necessary. The costs in blood and resources are simply unsustainable, while it is widely recognized that no military solution is plausible.
The military effort itself has had serious unintended consequences, including alienating a significant portion of the population, forcing cooperation with regional repressive governments, and fueling corruption with large cash flows. Most pertinently, it has significantly warped the Afghan economy, with contract arrangements overwhelming market forces. Unrealistically high salaries have drawn a high percentage of qualified individuals into the contract efforts supporting military and logistics operations, with few balancing programs. Afghan First is one of these and it has succeeded in stimulating local production, but to meet a high-end market that is now significantly shrinking. Modest development efforts have been concentrated in the areas where it is most difficult to operate, severely limiting their effectiveness. This has been compounded by an emphasis on short-term results (particularly problematical for agricultural efforts) and programs often designed with minimal local input. The most serious shortcoming of economic assistance has been its systematic neglect of broad sections of the country. So, for example, wide areas remain food dependent.
Addressing this challenge rests on two basic themes: continuity and change.
Continuity means an enduring commitment from the international community. The Afghan population must have confidence that they will not be once again abandoned to turmoil, civil war, and economic disintegration. But this commitment has to shift from military to economic. That is the first major change.
The second major change is the need for a basic realignment of development efforts. Simply scaling up ongoing programs cannot meet the real needs of economic development. Obviously there needs to be a shift from contracts as the major source of national income to production as the major source. Promptly addressing the 40% or so current unemployment rate is critical. This requires broad support at the grass roots level, particularly in agriculture which is the only possible source of jobs on the needed scale.
Afghanistan has great economic potential. This has to be shown to the Afghan poeple, to get them enthused about the potential for their own country and to empower them to speak up in their own behalf. On this score, efforts to greatly increase connectivity efforts throughout the country can provide the backbone for education, vocational training, agriculture extension and health care activities.
The first requirement is for Afghanistan to be able to meet its own needs, not only with food, but so far as possible with energy, light industrial products, and skilled labor. Demand will come not from governments or outside contracts, but from the private sector. This requires looking at development from an overall national point of view, not simply concentrating support in areas of poor security, but building in areas that can turn support into significant improvements for local inhabitants, directing more effort into the quieter areas of the country, especially those with good local governance.
In parallel with an effort to meet internal needs, there needs to be a concerted export effort in two areas: agriculture and minerals. An effort in agriculture means re-energizing traditional markets for fruits, nuts, and other agricultural commodities. Where ever possible there should be a parallel development of processing industries so Afghanistan can export not wheat, but flour; not cotton, but textiles; not oilseeds, but oil. The other export market is for raw materials, particularly minerals. This is a sector that could provide the wealth to transform Afghanistan, but it is fraught with difficulties. The first major tender in this sector, for the copper deposits at Aynak, illustrates major pitfalls, starting the the large bribe that was central in the award of the contract. The large amounts of money associated with mineral deposits require maximum transparency if corruption is not to cheat the Afghan people of their own heritage. Another major challenge is insuring that exploitation provides maximum short-term local benefit. Except for some critical management or technical positions, labor should be supplied by Afghans, so up front training and local infrastructure development is essential. As with agricultural products, local processing should also be maximized. So, for example, instead of simply shipping crude ore from the country, local milling should first provide high-grade concentrates, with such activities gradually upgraded to provide processing into raw metals or other industrial products.
The international community can provide significant assistance in creating the enabling conditions for real development. One critical area is with the re-development of traditional trade routes tying together regional economies. The Silk Road program currently being widely supported focuses on the physical network essential for such a vision. Two associated efforts are particularly important. The first is to identify short-term economic potentials. Where will network sections be first active? Where will there be opportunities for logistics points, service areas, hospitality and trading centers? Initial establishment of pilot facilities can proceed in parallel with network construction. The second challenge requires even more of an international effort: streamlining and standardizing border crossing procedures. Estimates already show that every one of the regional economies would benefit considerably from more open trade, but convincing governments to modify their current procedures and requirements is another question.
There is also an internal challenge for Afghanistan, where growth of light industry is currently hindered by export subsidies regional governments provide to their own producers selling goods into Afghanistan. Afghanistan needs to counter such efforts with focused protective tariffs or with its own subsidies. This is just one aspect of a range of internal actions Afghanistan can take, many of them addressed in detail in the National Business Agenda published earlier this year.
