Editor in Chief: Moh. Reza Huwaida Tuesday, October 23rd, 2018

Economic Hardships Ahead

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Economic Hardships Ahead

In the post 2014 scenario, Afghanistan would be facing myriads of challenges in order to guarantee security and stability in the country provided that the international troops withdraw as per the announced schedule. It does not only require determination and iron will but resources and assistance to make the country stand on its own. One of the most dominating factors will be definitely financial support.

The economic system in the country has not been developed strongly and there are serious problems in the basic infrastructure, therefore the country would be in need of international financial support even after the 2014.

According to the report by the World Bank that has been prepared for the Bonn II Conference in December, 2011, the country would be in need of about $7.2 bn or more to be able to carry on its activities in different walks of life for one decade. This required amount is based on the optimistic calculations; however, it would be more than twice what the country is capable of producing.

Josephine Bassinette, the World Bank's country director in Kabul has mentioned that the international community should try to avoid an "aid shock" that could imperil many of the gains made over the last 10 years. "Although it is clear, overall levels of international assistance will decline, it is really important these declines are gradual, predictable and orderly," She said.

According to the announced schedule, the ongoing transition period in Afghanistan is going to end till the end of 2014, after which the country itself will be responsible to guarantee its security against the terrorism. Once the foreign troops withdraw from the country, it is going to have its impacts in two ways. First, with the withdrawal of international troops there will be decline in foreign spending on Afghanistan.

The report suggests that the economic growth of Afghanistan can fall almost to its half. This is really threatening for a country that is already having shaky economic growth. It would be really very tough for the authorities to meet the expenses of having 352,000 security forces trained properly and properly equipped. Then there are expenses of sustaining schools, colleges, roads, offices and other infrastructures that have been built in the last ten years or so; managing all these expenses would be really a Herculean task.

The second way the withdrawal of international forces may affect the country's economy is the possibility of increase in the insecurity. The investors, both national and international ones, hesitate to invest in the areas where there is no reliability of peace and tranquility, while the security in Afghanistan has been in questions for the last couple of years or so. Moreover, the withdrawal may further deteriorate the situation and most of the investments require many years, even decades to provide some outcomes. How Afghanistan is going to make the investors trust so much is difficult to imagine.

Afghan authorities have been very much hopeful about the mining sector. Yes, it is correct that there are large reserves of untouched mineral resources in the country that can provide great support to the country, but converting those untouched reservoirs into usable cash requires a lot of hard work. The process involves not only digging out the minerals but converting them to usable forms and then transferring them to different locations through reliable and fast transportation system.

Moreover, it would require strong communication system and latest equipments. But above all it would require a decade or two of relative peace in the country. Afghanistan has the biggest iron ore deposit of Asia in the remote area of Hajigak.

There are reports that Afghan government might choose an Indo-Canadian mining consortium as the winner of the bid for $10 bn plan to bring this deposit into use. However, the official announcement has yet to come. This ore can really help Afghanistan to a great extent but it may not be able to provide the support it is expected to provide.

According to the projections made by the World Bank, the whole mining sector may add only some percentage to the overall GDP. The whole situation can be best depicted in the statements given by a mining consultant in Kabul, "Even in the best conditions, you are looking at many years, often decades, to make significant money from an investment.

Here you have to build everything from scratch – power plants, transport networks – in a very tough environment. It's not clear how much is really viable." A European diplomat has mentioned that he could not convince from his countries to invest in Afghanistan. "They just shrug and say we needed 15 years of security, stability and growth, can you guarantee us that?" he said.

It is believed that economic system is just like the circulatory system for society. As a circulatory system circulates blood throughout the body and guarantees life, in similar way the economic system in a society guarantees life and development. Without a strong economic system the country suffers because of myriads of problems and may even become a failed state.

Unfortunately, Afghanistan has been suffering in this regard and has to depend on international help in order to stand on its own. It would require the same for at least one more decade. Yes, it is correct that Afghanistan can not keep on depending on the other countries for indefinite period of time and it has to be independent economically, but that cannot happen in a jiffy. The coming Bonn Conference is going to play a dominant role in defining the role of international community in the future developments in Afghanistan.

The international community has to keep one thing in mind that the developments that have been made in Afghanistan for the last ten years or so are very much valuable. They have been achieved by the dint of great sacrifices and a lot of resources. They should not be undone in any way and support to Afghanistan must not be ended before it is due. It will be in the betterment of Afghanistan, the region and the whole international world and would be of great assistance in putting an end to terrorism.

Dilawar Sherzai is the permanent writer of the Daily outlook Afghanistan. He can be reached at outlookafghanistan@gmail.com

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