Syed Zafar Mehdi
Omar Samad is a Senior Central Asia fellow at New America Foundation and Founder-President of Silkroad Consulting L.L.C. He was Afghanistan’s Ambassador to France (2009-2011) and Canada (2004-2009), and Spokesperson for the Afghan Foreign Ministry (2002-2004). He is currently Afghanistan’s Chief Executive Dr. Abdullah Abdullah’s senior advisor.
Q. How do you see Afghan economy shaping up in the future?
A. There is no doubt that high dependence on foreign funding can have disadvantages as well. With reduced aid, Afghanistan might face serious short-term challenges in managing its fiscal and monetary affairs during this historic security and political transition period. All sectors of the economy have to adjust to a new reality, and I am not confident that the current out-going government has done enough to prepare the population for belt-tightening measures or pro-actively strategized for change that is already underway.
The donor community also bears responsibility to makes sure that aid reduction is neither blunt nor crippling as agreed to in various donor conferences.
Recessionary signs are already seen in some sectors, but if the country can experience a successful political transition and security can be maintained at current levels, then the transition will be much smoother and a positive Afghan public and international mood can avert a deeper recessionary scenario.
Q. Afghanistan boasts of astonishing resources endowment worth nearly $1 trillion USD, which includes coal, copper, lithium, gold, gemstones, natural gas and oil fields. Do you think the country has the potential to stand on its own?
A. Afghanistan’s natural resources, whether mineral or otherwise, are to be viewed as national strategic assets that require thoughtful and professional planning and management skills. But first, the country’s leadership needs to make use of its best minds to strategize as part of a long-term vision. The prioritization and sequencing of all related matters i.e.security, infrastructure, capacity building and rule of law, are necessary for the proper exploitation of resources.
Furthermore, these resources cannot be efficiently exploited without the proper investment and business framework that includes the transfer of new technologies and skills to the country, and aims to generate revenues and create jobs.
Afghanistan should at all cost avoid the errors of some countries where their mineral wealth became a curse.
Q. Afghanistan has two manufacturing giants as its neighbors – China and India – and both are captivated by its enormous natural resources. How should the new Afghanistan government engage with regional countries in general and these two countries in particular?
A. Both China and India already are productively engaged in Afghanistan. These relationships, and others within our region, can further expand as Afghanistan’s new elected government (once election results are finalized) outlines its policy priorities and desire to work with our friends near and afar on the basis of shared interests. Each side will be looking after its comparative advantage and seeking new opportunities in economic sectors that bind them. It is essential that we offer our populations new avenues for income generation and steer some away from radicalization, and illegal and criminal activities.
Q. Notwithstanding the massive inflow of funds, the Afghan government, backed by the international community, has not only failed in building a robust economy but also failed to address the problems of unemployment and poverty. What reasons do you attribute to it?
A. Since 2002, the Afghans and their international friends have had to fight a war, rebuild a state and institutions destroyed over three decades of conflict, revitalize the economy, rebuild human capacity and deal with numerous challenges. We are grateful for the foreign assistance, the sacrifices and the generosity. Indeed, more could have been done despite a four-fold increase in GDP, domestic revenues and job creation. The main culprits are: lack of vision and political will, weak governance, inability to stem high-level corruption, inability to effectively fight the narcotics business, an ineffective judicial and prosecutorial system, shoddy contracting methods, and to some extent, weak coordination with and within the donor community.
Q. Despite massive water resources, most of the country has no electricity and diesel-operated generators are extremely expensive. Do you think the Afghan government has not been able to conserve and manage water properly?
A. The Afghan government and donors failed to prioritize this sector until 2008. After 13 years, Afghans should not be relying so heavily on imported power. Granted, this is a high investment sector that requires large-scale infrastructure work, but alternative power generation techniques should have also been studied besides hydro – an abundant source of power in Afghanistan. Since hydro power and agriculture both benefit from efficient water management, there has been little work done in this sector. This is an area that requires special attention by a new government.
Q. Can you tell us a bit about the U.S. State Department project of ‘The New Silk Road’, which is aimed at facilitating Central Asia’s efforts to return to its historic role as the gateway between East and West?
A. It is a concept that was first introduced by then Secretary of State Hillary Clinton in 2011 at the UN in the presence of Afghan leaders. Clinton said “building a web of economic and transit connections across South and Central Asia with a central hub in Afghanistan would help the transitioning country to build a sustainable economy, in turn ensuring a more prosperous future for the region as a whole.”
The idea revolved around increasing regional trade to “open up new sources of raw material, energy and agriculture products for every nation in the region.” However, this concept has experienced some resistance from China. Our hope is that both ideas can find common ground and not be seen as part of a zero-sum game.
Q. Afghanistan is primarily an agricultural economy but agriculture gains in rural areas continue to face the wrath of illicit opium trade, which is illustrated by the rise of opium production in recent years. What is the way out?
A. It is unfortunate to see the fight against opiates in Afghanistan, estimated to have cost more than $7 billion, not produce desired results yet. Not only has criminality increased, but society and the economy have been impacted by this scourge. Afghanistan’s addict population has seen a dramatic increase over the years and even some political sectors are infested by the drug proceeds. We also know that without an external demand market, our supply capacity would be diminished. Also, the profit margins from this illicit business are to a large extent in non-Afghan hands as the trade beyond our borders is in mafia hands.
There is no quick and easy fix for this problem. It starts with political will and ends with poverty-alleviation, rural development, farmer support, educational programs and addiction combat measures.
Q. How would you rate President Karzai’s performance in economic development and what is the biggest challenge in front of the new government?
A. In my book, the Afghan government since 2002 gets a “C” grade for handling economic and development activities. On the other side of the coin, the international community receives the same grade for the manner in which they provided, oversaw and disbursed their funds. While Afghans are grateful and experienced relative increases in their living standards, poverty is still endemic, and they also realize that so much more could have been done with the extraordinary sums that were pledged, processed and finally spent on the ground. They realize that between 10-20% of all funds were actually disbursed inside the country, while large amounts were repatriated or paid as part of sub-contracting methods.
While some infrastructural work has been completed, it has not as part of a strategy that prioritized all aspects of development. While the private sector has grown, it remains fragile and uncertain. The trade balance is off as the country relies heavily on cheap imports.
A new government will face much harder conditions as it will inherit a sub-standard, corrupt establishment, will face foreign aid shrinkage and will need time to find its bearings. It will be critical to appoint effective and competent leadership at the helm of critical institutions and focus on priorities.
(First published in Afghan Zariza)
Recent Comments