KABUL — Afghanistan is awash in foreign aid. In 11 years of war, the United States and its allies have funneled hundreds of billions of dollars into the country. As a result, international spending is now the biggest part of the economy, making Afghanistan an "extreme outlier" when it comes to aid dependency, according to the World Bank. In 2010, for example, it received about $15.7 billion in development funding alone. That's roughly equivalent to Afghanistan's entire gross domestic product. And with $9.4 billion in public spending versus $1.65 billion in revenues in 2010-11, the country is heading off a fiscal cliff as the international community scales down its involvement ahead of transition in 2014.
More...
But what will be the political consequences of the money running dry? For the time being, international spending has forged a bought peace in Kabul, but many of the political settlements that keep violence at bay -- the agreements and expectations negotiated between elites -- could be upended by the transition.
To benefit from aid largesse, Afghans have had to cooperate. At the Kabul Bank, for instance, which was linked to major Afghan contractors employed by the United States and the International Security Assistance Force (ISAF), cooperation between competing factions enabled nearly $1 billion in insider loans to be siphoned off in recent years. The bank's financial arrangement illustrates the reigning political settlement in the country, uniting a number of national-level networks, most notably those of President Hamid Karzai, a southern Pashtun, and Vice President Mohammed Fahim, a northern Tajik. The Karzai-Fahim alliance has been crucial to stabilizing relationships between north and south in Afghanistan, and has been underpinned by the flow of international money, which provided an incentive to play along with the existing order.
This situation is replicated in hundreds of smaller, localized political agreements across Afghanistan. The country remains fragmented among rival networks of strongmen, many of whom have been co-opted by the central state and the international community. A drastic decline in funding will undoubtedly generate instability as the reigning political deals are renegotiated. Yet, even as the international community charges ahead with its exit strategy of increasing local troop levels and building bureaucratic capacity, there has been little serious analysis about the way its spending is interlinked with Afghan politics.
This week, I published a paper on Afghanistan's private security companies (PSCs) that examines the relationship between international spending and Afghan politics. Fed by the military surge, the PSC industry in Afghanistan has grown to a monstrous size, with high-end estimates of 60,000-80,000 employees in 2011, most of them armed Afghan guards. Unlike Iraq, the PSC industry in Afghanistan is largely dominated by Afghans, and as result it has become deeply interlinked with the Afghan government and local politics. Many of the newly rich PSC owners were former commanders who fought in the Soviet and civil wars and were able to mobilize networks of armed men. Some of them, like Matiullah Khan in the province of Urozgan, have become the preeminent strongmen in their areas as a result of their control over supply convoy and base defense contracts for the United States and NATO.
SUBJECTS:
