Billion$ Needed To Stabilize Afghanistan

by Peyman Pejman

(IPS) -- While the influential U.S. ambassador to Afghanistan predicts terrorist attacks before the presidential elections next week, he, however, urged investors not to shy away from the war-ravaged country.

"Enemies of Afghanistan's success have initiated an effort against the Oct. 9 presidential elections," Zalmay Khalilzad told a gathering of the Afghan community in Dubai late last week.

"I anticipate increased attacks, perhaps some spectacular ones, as we get closer to the elections," he said.

Khalilzad's assessment comes as he and other Afghan and foreign officials acknowledge that Afghanistan's security has worsened in the past weeks, with a number of attacks on international aid agencies and local officials.

According to data provided by the Brookings Institute -- a U.S. think tank -- 12 reconstruction and aid workers lost their lives in Afghanistan between March and December last year. The number, however, increased to 59 between January and August this year.

"Security is fundamental. Without it, everything, including building a democratic system and a legal economy, is at risk," Khalilzad warned.

On Tuesday, the United Nations said preparations for the presidential elections in Afghanistan are on track despite a string of attacks and killings in recent weeks.

"Multiple incidents across the country on or around election day cannot be excluded," Jean-Marie Guehenno, the undersecretary-general for peacekeeping told the UN Security Council. "All efforts must be undertaken to be fully prepared to react to attacks, especially on polling sites, transportation of ballots and counting centers."

The UN-Afghan election commission says 10.5 million Afghans have registered to vote, although Guehenno acknowledged some may have registered twice.

U.S.-backed interim President Hamid Karzai is widely expected to defeat 17 challengers for a five-year term as the country's first popularly elected leader.

In an argument reminiscent of that made by the Bush administration about Iraq, the U.S. ambassador said Afghanistan has become a forefront in the fight against international terrorism.

"The regional terrorists, the extremist Taliban, and forces loyal to (warlord Gulbuddin) Hekmatyar are using, in cooperation with the al-Qaeda global terrorist network, foreign sanctuaries to continue their efforts to destabilise Afghanistan," said Khalilzad.

Despite the bleak warnings, however, the U.S. ambassador said Afghanistan needs as much financial help from the international community as it does from the Afghans living overseas.

The richest Afghan community outside Afghanistan is in the United Arab Emirates, which is home to 150,000 Afghan citizens. Khalilzad's trip to Dubai was the second in three months. In this trip he was attending the Afghan Reconstruction Conference to attract investment.

Khalilzad said, unlike the case with Iraq, the international donor community has delivered much of the aid it promised Afghanistan two years ago.

Brookings Institute figures show that the international community promised over nine billion dollars for Afghanistan and has paid about a third of it.

In the case of Iraq, the U.S. Congress alone appropriated $18.7 billion, but only about one billion dollars has been spent to date.

The Afghan-born American envoy said aid from the international community can only rebuild Afghanistan's infrastructure. To build the rest of the country, he emphasized, Afghans around the world must chip in.

There is some indication that Khalilzad's persistence has paid off to a certain degree.

Organizers of the Dubai conference said the community has invested some $100 million into various projects in Afghanistan in the past year, including building a Hyatt hotel, opening an international bank, a tire factory, and building a Coca-Cola factory.

Pessimists, however, pointed out that $100 million is far less than the billions of dollars Afghanistan needs. Optimists, in turn, said it is not the question of money, but a matter of gaining the trust of the Afghan diaspora.

"Ultimately, Afghanistan cannot be rebuilt by foreigners. It needs to be rebuilt by the Afghans," said Khalilzad.

But the Afghan business community complained that they are being pushed too hard too soon.

"Not that many people are investing back in Afghanistan," Saif Zahir, an Afghan businessman in Dubai, told IPS.

His firm owned a plastic company in the Taliban era that was looted during the war. Zahir said his company spent some money rebuilding the factory but the investment did not equal the profits of the pre-Taliban period.

"There are far too many problems. There is no infrastructure, no system, no (functioning) banks, no rules, and the government still runs on the old system," said the businessman.

U.S. and Afghan officials here confirm that many Dubai-based businessmen are frustrated by what they see as lack of economic reform in the country.

"Corruption in the country still runs 99.99 percent," said an Afghan diplomat here who did not want to be named. "Many people would want to invest in their country but simply do not trust the system."

Some Afghans stretched their corruption accusations further to include the donor community.

"They say the donors have spent so much money in Afghanistan. But where is the money? asked the Afghan diplomat. "It has gone back to the pockets of major companies from their own countries. It is just like Iraq."

Khalilzad said the Afghan government is well aware of businessmen's problems. He added the Afghan government would start a nationwide and wide ranging privatization programs, change laws, and crack down on "sub-legal" activities to make it easier for investors to come back to their homeland.

The U.S. government is also taking some matters into its own hands.

The United States Agency for International Development (USAID) will before the end of the year initiate a U.S.-administered direct-loan program to help small- and medium-sized businesses.

The government plans to disperse up to $50 million in about 10 economic sectors and the project might be expanded at a later date.

As if the prospects of helping Afghanistan's economy improve were not rewarding enough, U.S. officials are using a backup argument to lure Afghan investors back into the country.

"As a regional trading center, Afghanistan offers advantages compared to other countries in the region such as Iran, Pakistan, or Central Asia, with lower rates of customs duties, and the absence of sales taxes or value-added taxes," Khalilzad told the Afghan businessmen.

After the speech, one participant retorted: "Yeah, there are no taxes to the government. Just to the fat-cats."