Afghanistan's good news: seeds of economic progress

Afghanistan has experienced little good news of late. The Taliban and its extremist allies have made a powerful comeback, especially in the southern part of the country. Violence is four times more intense than in 2005. Tactics used by Iraqi insurgents, including roadside explosives and suicide bombings, have migrated to Afghanistan.

Afghanistan's opium harvest has reached the highest levels ever recorded, showing a 50 percent increase over last year and providing 92 percent of the world's supply. Drug proceeds are supporting the Taliban and helping to fuel the growing insurgency.

Deteriorating security has set back Afghanistan's development efforts. Aid and reconstruction workers are targeted; immunization programs have been halted; scores of Afghan schools have been threatened or torched, leaving more than 200,000 children without access to education.

Hidden in the bad news, however, are the seeds of Afghanistan's future success: economic progress. Afghan president Hamid Karzai, who was in Washington this week and met twice with President Bush, remains relentlessly optimistic about his country's prospects and says these negative trends can be arrested.

The Coca-Cola effect

Earlier this month Mr. Karzai presided over the opening of a $25 million Coca-Cola plant in a new industrial park on the edge of Kabul. It is the first large factory to open in the country since US-led military forces toppled the Taliban in late 2001. The bottling plant, the project of an Afghan businessman, will provide 350 badly needed jobs.

Responding to the deteriorating security situation and countering the exploding drug trade get the lion's share of attention today. But many in the international community suggest that economic development that leads to jobs and the prospect for better lives is the real key to Afghanistan's long-term stability and the best way to marginalize the Taliban, regional warlords, and drug traffickers.

Among those who share this view is Gen. John Abizaid, head of the US Central Command: "It's important that the international community stays focused militarily, but also ups the ante with regard to economic reconstruction.... When there is economic progress, security also moves in a positive direction."

In the first instance, upping the ante for economic reconstruction means more resources for the expansion of electricity (only 6 percent of Afghans have electricity), major water projects to improve agriculture productivity, development of the infrastructure for mineral extraction (copper, iron, marble, and coal), and accelerated road building. "Wherever the road ends," says Lt. Gen. Karl Eikenberry, the American military commander in Afghanistan, "that's where the Taliban starts."

Unfortunately, from the outset, the United States and the international community underfunded the rebuilding effort in Afghanistan. Despite being the world's main front in the "war on terror," Afghanistan has never received the investment of resources needed to stabilize it, and it has been given far less in reconstruction assistance from world donors than other recent postconflict areas, including Iraq, Kosovo, and Bosnia. "The international effort to rebuild Afghanistan is in a desperate state," says the Sept. 9 issue of The Economist.

According to World Bank estimates, Afghanistan needs a minimum of $4 billion a year in aid to implement the comprehensive state building and reform plan (including counternarcotics) agreed to at the London Conference on Afghanistan in January, attended by more than 60 countries and international organizations.

The US should make a commitment to provide half that amount during the next five years with the second half provided by our European, Japanese, and other partners.

But economic progress in Afghanistan goes beyond reconstruction and development aid. It also means greater efforts to promote economic progress through trade and investment. Fortunately, Coca-Cola is not alone in taking on both the challenges and opportunities that exist in Afghanistan.

MCT is a US corporation that owns part of Roshan, the largest telecommunications firm in Afghanistan. Roshan just made another $60 million investment to expand its operations in the country. Roshan has been operating there for three years, demonstrating that companies with a long-term commitment in Afghanistan are making profits.

From cars to butter: new markets

Ford Motor Co. has identified Afghanistan as a new market opportunity and is seeking local companies for a Ford distributorship. 3M corporation has selected exporters to distribute its products in Afghanistan. Boeing has entered into a partnership with Ariana, Afghanistan's national airline. Land O'Lakes dairy company is at work training in the agricultural sector.

During his visit to Washington, Karzai met with a group of leading US CEOs. In Kabul, the Afghanistan Investment Support Agency has been set up as a one-stop-shop for the promotion, registration, and licensing of new investments – making Afghanistan, according to a 2005 World Bank survey, one of the world's leaders in the speed needed for business ventures to get started.

Next month, the Afghan government will sponsor its second annual business promotion road show in the US and Canada.

There will be visits to Des Moines, Iowa, to talk about agroprocessing; to Los Angeles to explore information-technology (IT) and telecommunication ventures; to Toronto for exchanges on energy and mining; and to New York to see what's possible in the construction, finance, and insurance sectors.

The road show will be kicked off with a business matchmaking conference in Washington, sponsored by the Afghan-American Chamber of Commerce, bringing companies and financial and government contacts together.

By working with local companies, says the Afghan government, American investors, "can both contribute to the overall economic prosperity of Afghanistan and enjoy opportunities to profit from this emerging market." They will also be investing in a stable, prosperous, and democratic Afghanistan – and the long-term national security interests of the United States.

Karl F. Inderfurth, assistant secretary of state for South Asian affairs from 1997 to 2001, is a professor at the Elliott School of International Affairs at George Washington University.

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