The writer was foreign secretary from 1994-97 and also served as Pakistan’s ambassador to Iran (1992-94) and the
US (1990-91)
Both candidates are committed to signing, post-haste, the Bilateral Security Agreement (BSA) with the United States. We can, therefore, assume that by end July, there will be a BSA in place. President Obama will probably announce a residual military presence of 12,000 of which 8,000 will be Americans and the rest from Isaf partners. There may well also be a reiteration of the pledges for military ($4.1 billion annually) and economic assistance ($4 billion annually) made at the Chicago and Tokyo conferences.
While the elephant in the room is, of course, reconciliation with the “armed opposition”, the rest of this column will try to identify the other problems that the new administration will have to contend with. Many of these issues will, of course, become less pressing if reconciliation is achieved quickly.
Up to 2013, the US had provided $96.5 billion in assistance to Afghanistan of which 56.5 billion was military assistance. For 2014, the aid level is $5.42 of which $ 4.72 is military, leaving about $700 million available for economic assistance. For 2015, the Obama Administration has proposed an aid level of $2.6 billion. If $2 billion is kept for the military as pledged in Chicago, there will be only $600 million for economic assistance. If the ANSF is to be maintained at the 352,000, a further $2 billion will be needed annually. Will it be forthcoming? Will the US be able to provide its share — usually 50 per cent of the $4 billion a year pledged at Tokyo by all donors? Will the new administration be able to meet the accountability requirements of the Tokyo agreement? Will the problems of administrative capacity and corruption persist?
At Chicago, the Afghan side had committed to providing $500 million for the Afghan National Security Forces (ANSF) from its own resources. In 2013, the total revenue of the Afghan state was 48 billion Afghanis (less than a billion dollars) as against 54 billion in 2012. This revenue sufficed to meet only 10 per cent of the Afghan government’s expenditure with the remaining being foreign assistance (64 per cent American and 26 per cent others). Can this budget permit spending $500 million on the ANSF without cutting down not only on development expenditure but also on the maintenance of education and health facilities created over the last few years?
Agriculture provides 20 per cent of the Afghan GDP but employs some 79 per cent of the population. The services sector, on the other hand, employs less than 16 per cent of the population but generates some 54 per cent of GDP. This sector, which has enjoyed a boom during the presence of foreign forces, is going to suffer a severe downturn, particularly among the younger more educated urban dwellers. How will the government support them?
Afghanistan’s economy is dependent on imports for many requirements, including food. According to official figures, in 2012 Afghanistan’s total imports were $6.39 billion against exports of just $376 million. How will this gap be filled when foreign aid dwindles?
Afghanistan has a substantial black economy — opium cultivation and unrecorded exports of timber and chromite and other minerals — but even so, the economic situation will be parlous and the new administration’s capacity to cope will be limited.
Afghanistan’s neighbours, particularly Pakistan with its long porous border, must prepare to cope with the severe economic distress that is inevitable in post-2014 Afghanistan.
Published in The Express Tribune, April 14th, 2014.
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COMMENTS (9)
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a new President (my educated guess is Dr Ashraf Ghani) should assume office by June/July. Wishful thinking Mr.Shaikh!????
@Saif: The World Bank, IMF and even international fund managers have been positive on the Pakistani economy since the new government's reforms and plans. Haven't you been following the news? Even the rupee has increased in value by 12 % and the investment ratings for Pakistan are up. Problems in Afghanistan will no doubt impact Pakistan but that's why the government needs to seal the border where possible and deport the Afghan refugees back to Kabul.
@Khattak: I interact with social services in Canada and we try to find support for refugees including Afghanis so I am surprised by the figure you give for remittances. The Afghanis who have migrated around the world are in different circumstances to other groups. The Afghanis you see in the West are refugees who have had to smuggle themselves abroad to claim asylum under difficult circumstances. Their lives are harder compared to other immigrant groups who come over with skills and legal visas through the immigration system. In practical terms the majority of Pakistanis I see in North America have jobs whereas most Afghanis live on state social assistance because they either have no jobs or have lower paying jobs. So they are not in the same position to send remittances overseas because they are struggling economically where they live as refugees. I don't think you can base improvement in Afghanistan on remittances from refugees abroad.
We and prepared! We dont prepare for anything Mr. Najam. Its not just our National way
Is anyone interested in following into the footsteps of those who became something from being nothing? I do not see any sign that there are people who like to be something. Why? if people did indeed want to be something, would they not follow into the footsteps of those who indeed did. Who were those people? The early Muslims. They became something when they became Muslims. Is anyone interested in becoming Muslim? People are exactly what they demonstarte through their deeds. The identity of a Muslim is that he or she will be the most likeable and loveable type of person. The topmost thought and concern in a Muslim's mind is his or her standing before Lord Creator (swt) answering what he/she said or did while in this world.
@Khattak: Foreign remittances of $ 7 Billion if true for Afghanistan is still a huge figure keeping in mind the size of the country and population. The figure for India in the just completed fiscal year is $ 72 Billion.
Very informative note. Year 2014,For Afghan govt it wont be good becuase rulers heavley depend upon American aid. America's exit, in fact, will bring a real test for the new transitional regime in Afghanistan. For common people it may not have serious impact becuase they use to live like a trible folks and they not have concern about infrastructure,hpwever they will demand for peace that is going to be dream in future inside Afghanistan.Taliban will openly come out to fight with state and then the neighbouring countries would be disturb.
Afghans have migrated around the world & the Annual Remittance is around $US7 billion according to some estimates. Keeping in view the estimated 25 million population, this is very high precious foreign exchange compared to Pakistan($13B), India($49B), China($60B), Bangladesh($15B). The successful democratic process will do wonders. One small example is as of yesterday, the investors have decided to go ahead with 20 food & cotton processing factories to be completed in next six month in Helmand Industrial Estate. If there is peace in Afghanistan, the economic stress will be manageable. Lets hope for the best.
How about Pakistan after 2014? Is anyone prepared for nasty and unpleasant surprises awaiting Pakistan after 2014?