Can Afghanistan economy thrive without poppy?
The Afghanistan economy must shift reliance off its poppy crop toward agriculture and mining. The government began a massive poppy eradication campaign this week.
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Mr. Yeager hesitates to put a dollar figure on Afghanistan's mineral wealth, saying it requires more research. Then, to develop any deposits, firms must conduct exploratory drilling, arrange financing, and line up engineers. Normally those steps would take three to five years, Yeager says. "Then you couple that with the fact that there's really no infrastructure in Afghanistan, no drill companies."Skip to next paragraph
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The Aynak copper mine shows that some of the hurdles can be surmounted, though the deal has been criticized for lack of transparency and allegations of bribery. Indeed, natural resources often become a corrupting influence in developing nations. They also can tie economies to severe boom and bust cycles.
Afghan leaders are taking steps to avoid those mistakes. The Aynak deal was structured to give the government a fixed stream of revenue, shielding it from commodities crashes. And the government has been accepted as a candidate for the Extractive Industries Transparency Initiative, which would put mining revenues into accounts that are supervised internationally, says Mr. Steffensen.
Agriculture: the American angle
Another area for growth is agriculture. Worth $3.3 billion, it's not actually the biggest sector – it's No. 2 after services, a $4.4 billion segment dominated by trade, transport, and government support.
But improvements made in agriculture can be applied across the widest swath of the country. "The most likely areas of improvement are in the agricultural sector because more than 40 percent of people in Afghanistan are busy in this sector," says Abdullah Saleh, an analyst with the Afghanistan Investment Support Agency.
The United States is spearheading a $500 million investment this year in Afghan agriculture. This involves improving seeds, offering farmers credit, improving irrigation, and encouraging food-processing factories.
In the southern province of Helmand, USAID has set up an agribusiness industrial park with an airstrip, and, so far, has signed up a cooking oil manufacturer. But it remains treacherous for many farmers to transport their product to the capital. Fixing that problem is one goal of the Marjah offensive – launched by NATO and Afghan forces in mid-February – underscoring how development requires security.
"No one likes to go to a poor country that needs so much in terms of the social sector and put a bunch of money into the military," says Jeremiah Pam, a guest scholar on postconflict economics at the US Institute of Peace in Washington.
But "once you have security ... there are often surprises in terms of the capacity that is finally allowed to bloom."
Afghanistan needs $10 billion annually to support an army and police force big enough to protect it. Today, most of that comes from international donors. The challenge is to grow the economy fast enough to allow international forces to withdraw.