Security and political uncertainty deepens Afghan downturn

Economy hit as run-off vote delays pact with the US over security.

KABUL // A bored security guard, a Kalashnikov rifle over his shoulder, stands guard alone outside an idle construction site for a 10-storey building in downtown Kabul, one of more than a dozen concrete shells with not a single construction worker in sight.

It was meant to be boom-time after decades of war and privation. Over the past few years, shiny new shopping malls started to spring up around the Afghan capital and construction cranes dotted Kabul’s spectacular, snow-capped horizon.

But the cranes have since disappeared and many buildings are empty and unfinished, having failed to reach completion before the money began to dry up.

Business has ground to a halt across much of Afghanistan. Political uncertainty abounds before another presidential vote and security fears are growing as the last foreign combat troops prepare to leave.

“To invest in such an environment would be craziness,” acknowledges Hameedullah Omar, marketing manager of a deserted nine-storey office complex in Kabul’s main shopping district that was completed only last year.

Foreign donors worried about deteriorating security are leaving as Western forces wind down operations, leaving aid-dependent Kabul to manage its threadbare finances on its own.

The United States and Britain, two of the biggest donors, have already cut aid by up to half.

International aid groups, which provide a lifeline for marginalised Afghans, say funds are drying up fast. One US non-profit group that runs 13 schools for 3,000 girls says it hasn’t paid its teachers for more than a year.

“Investment is mostly on hold in Afghanistan,” said the deputy chief of the central bank, Khan Afzal Hadawal.

The International Crisis Group think tank said in a report released last week that the number of attacks by Islamist insurgents had risen since the drawdown of foreign troops began, and forecast a bloody future unless there was more foreign assistance.

Investors and foreign donors have hit the ‘pause’ button, anxious about what lies ahead as Afghanistan strives to go it alone after nearly 13 years during which hundreds of billions of dollars of foreign capital kept it afloat.

Their main concern stems from a year-end deadline for foreign combat troops to leave, and stalled negotiations between Kabul and Washington on a Bilateral Security Agreement (BSA) to allow a small force of US troops to stay after December 31.

“The uncertain fate of the BSA and election run-off has damaged all businesses,” said Mr Omar. “It is not only ours but all around the country people live in such an uncertain future.”

After years of bitter wrangling over a range of issues, President Hamid Karzai has refused to put his name to the security pact, saying he would leave it to his successor.

But a presidential vote last month failed to produce an outright winner, setting the stage for a second round run-off — and yet more uncertainty.

That means it could be months before a new president is inaugurated, leaving little time to sign the BSA.

The two men poised to contest the second round run-off next month, Abdullah Abdullah and Ashraf Ghani, have vowed to complete the deal that will allow some US troops to stay for counterinsurgency and training purposes.

“If the run-off takes a long time and the security pact is not signed soon, the impact would be even more severe,” said Mohammad Ismail Afzal, manager of the Zia Shuja construction firm. “Many businessmen have already taken their money out, and the rest will take it out, too.”

* Reuters

Published: May 19, 2014 04:00 AM


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