Afghanistan's Might-Have Been

Former presidential hopeful Abdullah Abdullah tells Washington that supporting Hamid Karzai and doing right by Afghanistan aren't the same thing.

Abdullah Abdullah, Afghanistan's former foreign minister and a leading contender in the country's 2009 presidential election, arrived in Washington, D.C., this week with a simple message: support for the government of Afghanistan does not exclusively mean support for President Hamid Karzai. Abdullah, who was defeated in a presidential race marred by allegations of fraud, accused Afghanistan's leadership of having "lost a sense of direction" in remarks at the New America Foundation Tuesday.

Following closely on the heels of Karzai's visit to Washington last week, Abdullah concentrated on the importance of strengthening Afghanistan's democracy. "The success of the Afghan government ... will depend on the trust and sympathy of the majority of people in Afghanistan," he told his American audience. Unless the country's government drastically improves, the Taliban would still find willing recruits among Afghanistan's population. Afghans "want a moderate Islamic country, democracy, equal rights, respect for women's rights, education, and [to live] at peace with one another in a dignified manner," Abdullah asserted.

Abdullah poured cold water on the Karzai government's hope that it can offer Taliban forces incentives to abandon the insurgency and rejoin the political process. "They are not fighting to join the system -- a democratic system," he said. "They want to take Afghanistan back to the old days, where Afghanistan was the heart to international terrorism."

After a brief opening statement, Abdullah sat down with New America Foundation President Steve Coll to discuss the way forward for Afghanistan in greater detail:

Steve Coll: President Karzai is going to hold a peace jirga at the end of this month or the beginning of next month [in order to attempt to reintegrate the Taliban into Afghanistan's political process]. What is your evaluation of the peace jirga? And what is your evaluation of the American policy of trying to reintegrate the Taliban at a local level?

Abdullah Abdullah: First of all, the peace jirga is mainly a government-led initiative. It should have been a national, much more broadly based initiative, in order to gain the trust of the people. Some people in the country have interpreted this effort as an attempt to bring the Taliban back. I'm not saying that this is an attempt in that direction, but that perception -- it matters. Those things are not being considered in the preparation of the jirga. To think that we can bring [the Taliban] back [into the political process] -- they are not fighting there because they cannot be painters or carpenters. Part of the incentives is vocational training for the ex-combatants. I don't know.

It's a sort of program that has been worked out for a different planet, not for what is going on in Afghanistan. When I look into the details of the reintegration program, it's very idealistic. But the way forward is to bring the people in order to isolate those extremist elements, so they don't see a situation where they can take recruits from.

SC: What are the chances of achieving the goals that the American government has laid out in Kandahar Province over the next six months?

AA: The insurgency has reached a level that, unless we turn the tide against it, it becomes very difficult to regain the trust of the people. The people will think the Taliban are coming back. So on the surge, I am in favor of it. It was necessary. But what is the important element in the success of such a strategy? It is, of course, the part of the strategy that General McChrystal is emphasizing: protecting the civilians.

It is also important is to replace the Taliban system [of government] with a system that functions much better. We shouldn't be in a situation after 8 years, billions and billions of dollars spent, and many lives sacrificed to say that we want to create a better system than the Taliban -- it should be absolutely different from it as possible. That part can make a military strategy fail.

SC: How do you see the U.S.-Pakistani relationship -- is it producing changes in the historic Pakistani support of the Taliban?

AA: In terms of Pakistan, there are positive developments. There is a civilian government elected in Pakistan. There is a wider population that does not support the Taliban anymore, because of the atrocities the Taliban have committed. But, at the same time, the issue of the Taliban still getting support from some corners [of the Pakistani establishment], from some institutions -- that's a big question.

[F]rom the time that [Barack Obama's] administration was in place, [there have been] different voices, different messages given. Consistency of messages in Washington has great impact on the lives of millions and millions of people in our part of the world. If it's inconsistent, people will get mixed messages.

For example, the worst-case scenario for Afghanistan is premature withdrawal, subcontracting the case to a neighboring country like Pakistan. This is what had happened post-Cold War, and as a result of that we have today's mess -- the suffering of your people and our people. These are the things that should be taken out of the agenda. And then what remains? Commitment, long-term commitment. With foresight, and political will, and determination.



Interview: Raghuram Rajan

As the Greek economy threatens to spin out of control, the former chief economist of the International Monetary Fund discusses the roots of the crisis, and what it means for the future of the European Union.

Raghuram Rajan is used to being ahead of the curve. He was the youngest person to be appointed as the International Monetary Fund's chief economist in 2003, at age 40. In August 2005, he was among the first to raise concerns about the risky financial innovations that had revolutionized the global economic system. Before a crowd gathered to celebrate the tenure of retiring Federal Reserve Chairman Alan Greenspan, he predicted that these new methods could wreak havoc on the world economy. His warnings were dismissed at the time -- but proved prescient when the Great Recession hit in 2007. Rajan's upcoming book, Fault Lines, explores the global imbalances that lie at the root of the financial crisis.

As the Greek economy enters what the Deutsche Bank chief economist Thomas Mayer referred to as a "death spiral of government insolvency," Foreign Policy spoke with Rajan about Greece's options for getting out from under this crisis and what it means for the future of the European Union. Excerpts:

Foreign Policy: Why has Greece been hit so hard by the financial crisis?

Raghuram Rajan: The Greek problem is not one that began yesterday. It has been happening for the last 10 to 15 years. Having gotten access to the Euro, the incentive to stay disciplined has been relatively muted -- and Greece has historically not been well disciplined on the fiscal side. The ability to borrow provided by being [a member of] the Euro area allowed them to stretch more than they would have been able to stretch had they been on their own.

Not only that, it gave them the ability to essentially walk off the cliff. The safety valve for countries that stay on their own is that they can depreciate their currency substantially if they get into trouble. For Greece to go back to a different currency would be extremely difficult at this point and will cause substantial turmoil if it ever decides to do that. At least for the foreseeable future, Greece is in the Euro area and the only way it can become more competitive is by cutting wages substantially over time. That is always extremely painful, politically difficult, and leads to a lot of disruption. Given that Greece already has serious political tensions and a vibrant socialist party, this is not going to be easy.

FP: What does this crisis say about the future of the euro?

RR: The problem is that markets thought that the Euro zone was offering an implicit guarantee [of a bailout] to everyone, and therefore lent to them as if there was no chance of default. So countries could break fiscal discipline with impunity. So the problem with the Euro zone is that on the one side it gives you the cover to borrow while on the other side it doesn't insist on fiscal discipline.

If there is a massive bailout that protects Greece from having to restructure, you have to have an agreement that there will be fiscal control from outside on some of these countries. My sense is that will be the price that Germany will have to demand given the [domestic] political environment, in order to continue offering these subsidies to other countries.

FP: Given how reticent Germany has been to bail out Greece, where do you think the European Union is moving in terms of standing behind its troubled members?

RR: Well this is the fundamental question behind any kind of economic union. The ultimate test of a union is the fiscal side. Europe tried to do it on the monetary side, thinking that it would be enough. But monetary [control] without fiscal [control] is like having one leg instead of two. We've seen the consequences of that.

Ultimately, there needs to be agreement on the fiscal side, and that is much more difficult. It means, on occasion, making transfers to people who don't look like you, don't talk like you, and don't behave like you. I think the Germans are asking, "Why do these guys retire at 57 and go to the beach, and we're working and have to live in Hamburg?"

More than that is the notion that they are different -- they aren't us. There is a vague European-ness which has become more solid over time but is still not strong enough to compensate for these other questions.

FP: There is a great deal of talk of the risk of "contagion" from the Greek financial crisis. Does this situation pose a threat to Spain and Italy?

RR: Well, in containing you always have to ask where the contagion comes from. The umbrella that the EU has implicitly put, or the safety net it has put under these countries is probably one potential source of contagion, right? The idea would be that you've let Greece go, so you've taken the first step and how costly would it be to take the next step -- that is, to let Portugal go -- and then the third step, to let Spain go.

Essentially, you move from a situation where these guys had the implicit support of the EU to where they're all on their own bottoms. Then the market will have to look at each of these markets individually and ask if we can trust them to repay.

Of course, the countries that are individually fine should be OK, and the countries that are at the center of the euro area, where there is still some solidarity, may still be OK, but the countries that are at the periphery will be more problematic. Maybe this goes on to Portugal. Probably not to Spain, but it's not unthinkable -- Spain has a huge level of unemployment, and while its government debt is still relatively low, the potential for it to rise is substantial.

FP: What is the role of the IMF in resolving this problem?

RR: My worry more is that because of the passionate politics at the center of what's going on, we will end up taking an action that is more political than economic. The IMF's role is supposed to do the economic stuff, forget about the politics. The IMF has a duty to the country --  it can't ask tell these guys to keep servicing their debt if, at this point, the debt is too high to repay. Maybe it makes sense to bite the bullet and restructure.

Of course, the IMF also has to think about the larger consequences of any default, which might mean a little more contagion into the rest of Europe. So how does it weigh the country's well-being versus the region's well-being? [Protecting] the region's well-being may in fact imply we put some more money in and push the default out a few years so they limp along and try to do as much adjustment as they can. Then in two or three years we decide that it's impossible and we restructure the debt, but the world is a calmer and cooler place at that time. That is one possibility, but it requires taking Greece along to that point with all the social tensions [from the implementation of austerity programs] involved.

But sometimes the best thing [for a country] to do when they have too much debt is to say, "Look, I really can't pay and I'm going to write off 50 percent of the debt." It's not as if countries haven't defaulted before. The consequences of that could be a number of things, including adverse effects for Greece in the short run. French banks hold $79 billion of Greek debt. So there will be those consequences.