Afghanistan: The Uncertain Economics of Transition

  • Apr 18, 2012

    The economics of Afghanistan are only one aspect of the challenges posed by US, allied, and Afghan efforts to accomplish a successful transition. There are many reasons that transition will either fail or be determined by Afghanistan’s internal dynamics and the role of regional states regardless of what the US, Europe, and other aid donors do:

    • The weakness and corruption of Afghan governance mixed with growing de facto power of regional and ethnic power brokers.
    • Continued insurgent sanctuaries in Pakistan mixed with divisions and radicalization within the Taliban, a rise in Haqqani influence, political efforts by the Hekmatyar group – creating an insurgent ability to win a battle of political attrition during 2012-2015 and beyond.
    • The difficulties of making a transition to a non-Karzai government in 2014, and creating an election that produces meaningful consensus versus region, ethnic, and sectarian divisions and power struggles.
    • The inability to create an effective mix of Afghan forces to replace US and other ISAF forces.
    • Peace negotiations that re-empower the Taliban and other insurgents at least regionally, and give them a form of victory by other means – the Cambodia-Nepal outcome.
    • A steady increase in the rate of US and allied force cuts and spending and unwillingness to sustain high levels of spending, advisory effort, and partnering after 2014.
    • An Afghan rush for the exits by wealthy and powerful Afghans mixed with a division of those who choose or must stay behind on regional, ethnic, sectarian and tribal lines – flight mixed with a revision to “Kabulstan.”
    • A rise in outside pressure from Pakistan, Iran, India, the other “Stans,” China, and Russia – the “new great game.”
    • The cumulative political pressure of “incidents” between the US/IAF and Afghan leadership, the US and Pakistan, border incidents, and blue-green, ISAF-on-civilian, and cultural clashes.
    • Transition becomes increasing irrelevant in strategic terms relative to problems in Pakistan, the rise of other forms of civil conflict and religious extremism rising out of the political upheavals in the Arab world, the rising priority for US military resources in the Middle East and particularly Gulf, and/or the rise of new centers of terrorism in movements like Al Qaeda in the Arabian Peninsula (AQAP), Al Qaeda in the Islamic Maghreb (AQIM), and Al Qaeda and Associated Movements (AQAM).

    It is still clear, however, that the economics of transition – and the level of future US and other donor military and civil aid efforts – are critical if transition is to have any chance of creating a reasonable level of post-2014 security and stability. It is also important to remember – for all the problems involved in creating any form of successful transition –that the various insurgent groups still represent relatively small, unpopular movements with ethnic and sectarian ties that limit their influence to part of the country.

    Even if the US and its allies cannot achieve the level of post-2014 stability and security they desire, this does not mean that Afghanistan cannot achieve relative stability based on some form of de facto federalism.  This will limit insurgent gains and control as well as mitigate the risk that Afghanistan will become a center of terrorism.

    Developing this stability, however, requires as much focus on economics as politics, governance, and security. It also requires that planners approach economics with a level of integrity that has been sadly lacking to date. Transition planners and managers need to be honest when the data and sources are in conflict, or so conflicting and poorly based that they cannot credibly be used for planning.

    They need to stop spinning claims of progress driven by uncertain methodologies, uncertain databases, or analytic structures that are not related to any other aspect of data collection and analysis. They need to stop creating modeling dependent on at least one variable that is uncertain or lacking in credibility to be useful in planning and analysis. They need to stop confusing the direct and indirect effects of wartime time and aid investments with legitimate economic growth and domestics revenues.

    They need to address corruption, the steady outflow of capital, the inability to determine what portion of spending is actually spent in – and stays in – Afghanistan. They need to address the fact that narcotics and grey and black economic activity is a major part of the Afghan domestic economy. They need to stop making absurdly optimistic assumptions about the “New Silk Road,” future domestic revenues and exports, and the other techniques being used to promise progress that cannot happen.
    At present, no official source of economic data and analysis – US, allied, Afghan, or international – meets these basic tests of professional integrity. Worse, most analyses make no explicit effort to deal with security and the fact that the nation is still at war, assess the possible economic consequences of any peace, or break out the very different impacts of transition in areas that are dependent on foreign spending and the market economy versus subsistence or purely domestic activity. 

    There is often the tacit assumption that the nation will be at peace, and the impact of war zones will be the same as the rest of the country. Credible transition planning cannot be based on systematic dishonesty and omission of key variables, and it must be based on explicit statements of the range of uncertainty in the data and whether it has a major impact on a given policy, program, or funding effort.
    These issues are addressed in detail in a new working report by the Burke Chair entitled Afghanistan: The Uncertain Economics of Transition, which is available on the CSIS web site at http://csis.org/files/publication/120418_afghanistan_uncertain_economics_transition.pdf

    The contents of the report highlight the problems involved in the current approach to analyzing the economic and aid aspects of transition:

    REAL WORLD VS. “MYTHICAL-MACRO” ECONOMICS

    AID SPENDING AND EFFECTIVENESS

    TRYING TO ESTIMATE AFGHAN ABILITY TO GENERATE REVENUES

    SPEND, NOT BUILD (AND THEN STOP SPENDING)?

    UNREADY TO MOVE FORWARD AFTER A DECADE OF EXPERIENCE

    DEALING WITH THE PRESSURES OF A GLOBAL ECONOMIC CRISIS AND DONOR FATIGUE

    TRYING TO RELY ON THE AFGHAN CENTRAL GOVERNMENT

    THE NEED FOR REALISM: DEATH OF THE AFGHAN COMPACT AND NATIONAL

    TRANSITION WITHOUT GROWTH AND PRODUCING A POSSIBLE RECESSION OR DEPRESSION

    WHY MISMANAGING TRANSITION COULD CREATE EVEN WORSE CONDITIONS FOR POST TRANSITION STABILITY

    THE US, ISAF, AND AFGHANISTAN CANNOT RELY ON MINES AND THE “NEW SILK ROAD” FOR TRANSITION

    ANSF DEVELOPMENT AS A STEADILY MORE UNCERTAIN ELEMENT OF TRANSITION

    CONCLUSIONS

    Other recent Burke Chair reports analyze different aspects of Afghan strategy and the Transition. They include:

    1. Dealing With the Growing Afghan and U.S. Tensions That Are Losing the War  - March 19, 2012 (http://csis.org/files/publication/120319_Afghan_Forces_Crisis.pdf)
    2. Afghanistan: The Failed Metrics of Ten Years of War - February 9, 2012 (http://csis.org/publication/afghanistan-failed-metrics-ten-years-war)
    3. The Afghanistan War at the End of 2011 - November 15, 2011 (https://csis.org/files/publication/111115_Afghanistan_at_End_2011.pdf)
    4. Pakistan: Violence vs. Stability - June 7, 2011 (http://csis.org/files/publication/110607_Stabilizing_Pakistan.pdf)
       

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Anthony H. Cordesman