Business Focus: Afghanistan's economy in tatters after war, drought
The country's refugee problem is well known. Those still under the rule of the Taliban are in poor shape
BLOOMBERG
WASHINGTON
Taliban-ruled Afghanistan, the Central Asian country the Bush administration accuses of complicity in the worst terrorist act on US soil, is in the middle of its own human disaster.
One-quarter of the nation's 24 million people are at risk of starvation. Another 6 million have fled the country during the past two decades, and thousands more are streaming out now in the face of a possible attack by the US military and other nations.
"If there is to be a military coalition, there should also be a humanitarian coalition," Ruud Lubbers, the UN high commissioner for refugees, said yesterday.
After three years of drought, more than two decades of civil war and UN sanctions -- including a ban on foreign investment and international flights -- the economy is so poor that some people have been paralyzed from eating poisonous grass, the UN said. Some others subsist on meals of locusts and animal feed.
The UN is rushing 20,000 tents and kitchen sets to Pakistan to aid the Afghan refugees.
Only three nations -- Pakistan, Saudi Arabia and the United Arab Emirates -- recognize the Taliban government. That limits the landlocked nation's trade to smuggling arms, gems and electronic goods, trafficking in narcotics and exporting dried fruit.
The alarms sound even louder as the US and Afghanistan veer toward a possible confrontation.
The Bush administration is demanding the Taliban turn over Osama bin Laden, a Saudi-born Islamic extremist the US has named as the main suspect in the Sept. 11 terrorist hijackings in New York and Washington that killed thousands. The Taliban has refused, deepening the nation's international isolation.
It's an isolation Afghanistan can't afford. Per-capita income is less than that of sub-Saharan Africa, the world's poorest region, according to World Bank and UN estimates.
No one knows how accurate those estimates are, since the country has no functioning central bank and its latest economic data is 20 years old. It's not even clear how many people live there: The last census was in 1973.
"If you want numbers, they're out there, but they're all wrong," said Amin Tarzi, an Afghanistan expert at the Monterey Institute of International Studies in California. "Right now, there is no economy." Tarzi said he managed to enter the nation in 1996 and saw the currency, the afghani, depreciate by 400 percent in two days.
Since then, citizens have abandoned the currency for the Pakistan rupee, he says.
Afghanistan has no manufacturing base and no source of fuel of its own. Its shepherds and farmers are at risk from 10 million land mines left over from a decade of battle between the Soviet Union and US-backed resistance fighters.
One in five children die before their fifth birthday. Of those who make it that far, only one in four boys, and almost no girls, attend school, according to the UN.
Afghanistan's separation from the world economy is partly behind the country's reliance on smuggling and narcotics trafficking as sources of income.
Smuggling and the opium trade were eight times the size of the country's official exports of US$111 million last year, according to UN data. Most of those exports went to Pakistan, which has now said it will close the 2400km-mile border with Afghanistan.
"As opium production grew over the last 20 years, Afghanistan also became an open war economy, the linchpin in a vast regional trade of arms, gemstones and many different kinds of contraband," the UN drug office said in a separate report.
The World Bank estimated this contraband trade to be worth US$2.5 billion in 1997, equivalent to half of Afghanistan's estimated annual output and dwarfing the trafficking of opium, the bank and the UN concluded.
"Illicit activities have become key elements of people's survival strategies," wrote Barnett Rubin, a New York University professor who visited Afghanistan in 1998.
Rubin predicts that even if the Taliban loses power, the illicit economy will thrive.
"Whoever rules Afghanistan, the incentives for misgovernment are nearly irresistible," he wrote. "Only the drug, transit and gem trades are worth taxing." Even with naturally fertile land, the country had to import 2 million metric tonnes of wheat to stave off famine last year.
"Some Afghans, especially in the central parts of the country, have reportedly eaten poisonous grass that caused paralysis," the UN warned this week, even as it pulled out its relief workers. "Many displaced people in the northern provinces have been eating meals of locusts mixed with animal fodder." Through it all, the Taliban government has gotten by.
In Pakistan, within sight of the Khyber pass, traders have hawked Sony televisions, Italian china, carpets and other smuggled goods. Out back, away from the thousands of Pakistani shoppers from all over the country, reedy, bearded men hawked AK-47s, ammunition belts and hand grenades.
Until a year ago, Afghanistan was also the world's largest source of raw opium, which is refined into heroin. Then, by Taliban edict, poppy production was cut to almost zero, said Vincent McClean, director of the New York office of the UN's anti-drug campaign.
Yet both McClean and US officials say the Taliban may only be using the ban to boost the price of its opium inventory and because the drought had already wiped out much of the crop.
"The Taliban have just used this for public relations," Tarzi said.
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