Failure to launch: Afghanistan’s economy stalls without troop presence
By J.P. LAWRENCE | STARS AND STRIPES Published: April 19, 2018
The Afghan economy tanked after large numbers of coalition troops — and the jobs created to support them — left the country, indicating a 16-year, $122 billion reconstruction effort failed to develop a sustainable economic system, according to a U.S. watchdog agency.
Businesses that boomed in Afghanistan during the height of the international mission were in construction and logistics for international troops and aid organizations. Once most of the troops left in 2012, the country’s economy, which once enjoyed double-digit growth, stopped growing, according to the Special Inspector General for the Reconstruction of Afghanistan report released Thursday.
“Any hope that the upward trend would be lasting was an illusion,” SIGAR boss John Sopko said Thursday in prepared remarks for a speech at a Washington-based think tank.
The speech coincided with the release of the SIGAR report, which examined U.S. government’s support to private-sector development in Afghanistan since 2001.
The report cited multiple mistakes made by policymakers. Financial aid often encouraged corruption, experts lacked expertise in Afghanistan, and there was not enough aid given at the beginning of the war and too much money given at the height of it, the report said.
Per capita income rose quickly after the invasion, increasing from $117 per person in 2001 to a peak of $669 in 2012. Growth dropped significantly beginning in 2013, in parallel with the drawdown of coalition military and civilian personnel. This “confirmed that much of the growth was driven largely by the international presence,” the report stated.
In 2014, property prices plunged, unemployment rose and wages declined, leading to a mass exodus of Afghan refugees hoping for jobs in Europe. An estimated 500,000 jobs disappeared in the two years after the drawdown, according to a 2016 International Monetary Fund report.
“It was the shock associated with the troop withdrawal that caused the initial downturn,” said William Byrd, senior expert on Afghanistan for the United States Institute of Peace. Byrd, who peer-reviewed the SIGAR report, said other factors included the messy 2014 election and the deterioration of security in the country.
Afghanistan has relied on foreign aid in recent decades. When money from the Soviet Union dried up in the early 90s, the Afghan government collapsed, leading to a bloody civil war and the rise of the Taliban. Without a strong economy, the Afghan government continues to depend on international money, Sopko said.
“Even if the Taliban signs a peace deal tomorrow, the Afghan government still relies on international donors to cover roughly half of its budget,” Sopko said. “Our soldiers may come home, but our wallets will have to stay behind.”
Federal auditors found some successes in aid, including the development of Afghanistan’s telecommunications industries.
Experts underestimated the severity of Afghanistan’s economic woes, the report said, with one estimate in 2001 stating the country would need just $10 billion in developmental aid over a decade.
“There was an unrealistic idea of how this could be done on a shoestring, both in terms of troops on the ground and developmentally,” Michael McNerney, a RAND Corp, senior researcher who previously worked at the Office of the Secretary of Defense, told Stars and Stripes.
Policymakers assumed economic growth in Afghanistan would also build security, but new research by Yale University professor Jason Lyall suggests that assumption may have been wrong.
Lyall’s team tracked whether aid would change political views among at-risk youths in Kandahar.
When at-risk youths received $75 in cash — three or four months of income — their views of the government two weeks later improved by 25 percentage points. Eight months later, however, the same youths were actually 5 to 10 percent more in favor of the Taliban than when they started. Work training, meanwhile, did not sway support either way.
“This has been the fundamental misread of development in Afghanistan. It viewed insurgency as being due to economic factors,” Lyall said. “Most of these fighters are fighting for political or cultural reasons, not economic ones.
“The problem with this war is not that aid failed, but that aid failed and we don’t know why,” Lyall said.