South Asia

In complex post-conflict environments, such as Afghanistan, security and development needs are intertwined. Without addressing both at the same time, it would be hard to ensure an enabling environment for sustainable economic growth. In other words, bullets alone cannot remedy Afghanistan’s situation. In the words of the campaign of former U.S. President Bill Clinton: “The economy, stupid.” That is a fact that is even more relevant in the fight against terrorism in Afghanistan.

A large number of the Taliban foot-soldiers, who former Commander of International Security Assistance Forces (ISAF) General David Petraeus used to call “ten-dollar-a-day Taliban,” are non-ideological. They have resorted to violence in the absence of a sustainable livelihood to support themselves and their families. Many of these rental fighters can and should be weaned off the battlefield by providing them with long-term incomes. This necessitates the creation of more jobs for Afghanistan’s youthful population in urban and rural areas, leading to a lasting stability. And those jobs should be sustainable in a productive economy, since history has shown that employment created through “quick fixes,” like cash-for-work projects, has only temporarily addressed what remains Afghans’ top need and concern, even before security.

Investment Opportunities

Afghanistan has urgent need for impact investment. Some 70 percent of its 30 million people are below the age of 25, many of whom are the breadwinners of large households, with additional dependents such as war widows and children. Because Afghans begin working from an early age to support their families, they are resilient and enterprising. At a relatively young age, despite a high rate of illiteracy, they constitute a responsible, energetic, and industrious workforce. Unfortunately, they lack access to skills development opportunities, capital, and credit to grow their small or medium businesses, which largely operate in Afghanistan’s vast informal economy.

This situation provides for numerous impact investment opportunities in every sector of the Afghan economy. In June 2012, at the Delhi Investment Summit on Afghanistan, the Afghan Ministry of Commerce and Industries presented to potential investors a detailed list of “Investment Opportunities in Afghanistan,” an updated copy of which is available online. At the summit, some 320 participating business representatives were informed of 25 different markets for investment in the following sectors.

· Energy
· Minerals
· Transport
· Agriculture and agribusiness
· Small and medium industries
· ICTs, finance, health services, and construction

With the exception of a few domestic and foreign “first movers” in each of these sectors and their related markets, most markets remain under-invested. The government of Afghanistan has frequently encouraged Indian and international investors to visit Afghanistan and see for themselves the countless, highly profitable investment opportunities in the country’s “virgin” markets.

Doing Business in Afghanistan  

To flourish, businesses need security and governance, and so not surprisingly most investors want to know about the business environment in Afghanistan. Insecurity and weak governance do actually undermine business efforts and put investments at risk. Like most post-conflict countries, Afghanistan is not free of these challenges, and the Afghan government continues to confront and address them in partnership with the international community.

Despite ongoing negative news about the situation in Afghanistan, the Afghan government has made monumental gains in building the military and civilian institutions of the state, based on one of the most progressive constitutions in the region, which provides for a private sector-led economy. The World Bank’s 2013 Doing Business Index ranked Afghanistan 28 out of 185 countries when it comes to establishing a business in the country. This has been made possible by the Afghanistan Investment Support Agency (AISA), which serves as a one-stop-shop for investors, foreign and domestic, enabling them to register and establish a business in Afghanistan within a couple of weeks.

And over the past 14 years, the Afghan government has enacted a number of commercial and investment laws, including a company law, consumer protection law, competition law, partnership law, and arbitration law, among others. This legislation has streamlined many of the problems associated with Afghanistan’s former centrally planned economy. However, while these laws meet international business and investment standards, there are times when a lack of institutional capacity prevents implementation and enforcement. In an effort to attract, facilitate, and retain long-term investment, the reforms agenda of the new National Unity Government of Afghanistan has prioritized the resolution of existing bottlenecks to ensure a business-friendly environment across Afghanistan.

The Way Forward

Afghanistan is a trade hub that links the Indian subcontinent with Central Asia, the Middle East, and China, a region that includes some of the fastest growing economies in the world. Its location also makes Afghanistan a natural locus for an emerging regional network of trade routes and pipelines.

The ease of competition and the ample potential for growth in Afghanistan are relatively new developments. For the first time in decades, Afghanistan enjoys the most investment-friendly environment in the region. The people of Afghanistan see these new opportunities as a way to rebuild their homeland. They are proud of their historical tradition of commerce and cultural exchange, dating back 2000 years, to the era of the Silk Road.

With each economic opportunity that is fulfilled, the people of Afghanistan move one step closer to reconnecting with their heritage and securing a future for their country. Indian and other regional investors are welcome to play a major role in helping the Afghan people fulfill their national destiny, which is intertwined with that of India and the rest of the region.

To read the article at The Diplomat click here.

To read our report on Afghanistan Reconnected: Regional Economic Security Beyond 2014 click here.

Afghanistan President Ashraf Ghani’s visit to India will help set the new direction of bilateral ties. 

India was the first country with which Afghanistan signed a strategic partnership agreement, but the dynamics of the relationship has changed with Ghani, a US-educated former World Bank official, assuming power. 

Ghani has visited China, Saudi Arabia, Pakistan and the US before coming to India. In China he spoke incautiously of Afghanistan’s new external priorities which seem to have relegated India to the outermost circle. 

He has also decided not to pursue the request for defence equipment from India, which would suit us as we are hardly in a position to substantially meet Afghanistan’s critical requirements, but this does jolt the relationship politically. 

He obviously feels that he must engage Pakistan vigorously and obtain its cooperation for pushing the reconciliation process with the Taliban.

In this spirit he has made some unusual gestures, such as meeting the Pakistani army chief at his headquarters in Rawalpindi, besides engaging in coordinated operations with the Pakistan army against the Pakistani Taliban on Afghan soil. 

Reconciliation 

Ghani has also sent six officers for training at the Pakistani military academy to allay Pakistani anger at Afghan officers being trained exclusively in India. 

In return, Pakistan has not yet concretely facilitated the reconciliation process, opening Ghani to domestic criticism for this lack of reciprocity. 

Ghani is also counting on China to influence Pakistan to actively promote the reconciliation process, besides providing economic support to Afghanistan to compensate for the economic consequences of Western troop withdrawal. 

He probably calculates that India’s capacity to economically help is limited because of lack of contiguity and negative Pakistani policies, and that China could be a more productive partner. 

China has expressed its willingness to help in the reconciliation process. Its investment commitments — in the Aynak copper mines for instance — are known. 

The China-Pakistan Economic Corridor project indicates far-reaching Chinese plans to bring this region into its economic orbit, from which Afghanistan would potentially benefit. 

Ostensibly, Ghani is thinking in hard, practical terms of Afghanistan’s national interest. The Afghan polity is not unanimous on Ghani’s outreach to Pakistan and the Taliban. 

If this is pushed too far without adequate fruits from the exercise appearing quickly, political fissures in Kabul could widen. 

As it is, there is a suspicion that Ghani is seeking to strengthen the Pashtun elements in the polity at the expense of other ethnic groups. It is too early yet to see things clearly as no talks with the Taliban have begun. 

Accommodating the Taliban in the power structure in Afghanistan unconditionally will meet resistance from other ethnic groups, especially the idea of giving them governorships and ministerial appointments outside any electoral process. 

This will be seen as a weakening of the fledgling democratic base of the country. 

Strategy 

Whatever it might want the international community to believe, Pakistan has not given up its strategic ambitions in Afghanistan. It remains opposed to the Indian presence there. 

The West accepts Pakistan’s strategic oversight over Afghanistan, even when it has suffered greatly from its duplicitous policies. 

Pakistan has been the real problem in Afghanistan, providing safe-havens to the Taliban and abetting terrorist attacks there, but all this is being overlooked and Pakistan is now being seen as the key to the solution in Afghanistan. 

With this kind of acceptance of Pakistan’s policy in Afghanistan, why should it change its strategic designs in that country? 

Goodwill 

For India this is a problem, as Pakistan will continue to impede India’s access to Afghanistan as well as Central Asia. 

India will not be able to pursue its normal economic and other interests in this whole region because of the support the West and China give to Pakistani policies in Afghanistan. 

With radical ideologies and terrorism spreading in this region, and Pakistan itself in the throes of terrorism and sectarian conflict, India’s security is under threat. 

India needs to keep a presence in Afghanistan and Central Asia to consolidate its image as a benign partner capable of providing economic benefits and assistance, and maintaining a power balance in the region. 

It does not serve the interest of Western democracies to weaken India’s position in Afghanistan to the advantage of a military-dominated, terrorism- riven, democratically weak and radicalising state like Pakistan. 

Rationally, Kabul would need to maintain close ties with India to balance Pakistan and deter it from overreaching itself in Afghanistan. 

India, which enjoys great goodwill in Afghanistan, would want to nurture it and not lower its profile in Afghanistan deliberately, especially in the economic area, building Afghan capacities and humanitarian exchanges. 

India faces a big challenge, but its role and how it benefits the Afghan nation is understood by our many friends in Afghanistan, amongst whom President Ghani should rightfully figure. 

Click here to read the article at The Daily Mail.

The EastWest Institute has released a new report by a working group of Russian and U.S. experts on how the United States and Russia can jointly combat narcotrafficking out of Afghanistan. The joint U.S.-Russia working group previously has released two reports, Afghan Narcotrafficking: A Joint Threat Assessment in 2013 and Afghan Narcotrafficking: Post-2014 Scenarios in February 2015.

The paper points out that Afghanistan accounts for 80 percent of global opium and 74 percent of illicit opium production worldwide—90 percent of which is trafficked out of the country. Afghan heroin has created an addiction crisis in Russia, whereas for the United States the growing Afghan drug trade is further testimony to the failed decade long U.S.-led state-building exercise in the country.

The current publication comes at a time of increased tensions between the United States and Russia over Ukraine, which is detrimentally affecting joint efforts elsewhere in the world. “(…) [C]ooperation between the United States and Russia may not come easily even when confronting a common threat. Fallout from the Ukraine crisis has damaged the bilateral relationship to an extent that will take years to repair,” the study notes pessimistically.

Prior to the Ukraine crisis, both countries had slowly increased joint operations in the region. For example, back in 2010, Russian and American authorities seized approximately $60 million worth of opium during raids on four drug laboratories near the Afghanistan-Pakistan border. The EastWest paper elaborates:

"According to official data from the Federal Drug Control Service of the Russian Federation (FSKN), such cooperative operations continued through 2012, yielding a total of seven FSKN-DEA operations in the country. These operations resulted in seizures of 2.5 tons of opiates, 3.5 tons of hashish, 1.5 tons of morphine and 5.5 tons of precursors—along with the destruction of 10 drug laboratories."

However, even prior to the Ukraine crisis things did not always go smoothly between Moscow and Washington. Right around the time when United States state-building efforts intensified in Afghanistan (2008-2009), it became apparent that Moscow favored a more heavy-handed approach—a combination of opium eradication combined with interdiction efforts within Afghanistan and the destruction of laboratories—while Washington wanted to pursue a lighter touch campaign focused on drug interdiction in order not to further aggravate the Afghan population.

With the ongoing deterioration of Russia-West relations, the cooperation could potentially snap to a complete halt, although the U.S.-Russian working group does not seem to think this is likely. They offer a set of recommendations for Afghan, U.S., and Russian policymakers to consider. Here is a selection:

• Encourage Afghanistan to cooperate more actively with Iran to improve interdiction along the Afghan-Iranian border. (…)
• Speak with a common voice in matters of counternarcotics and border security in Central and South Asia and demand that Central Asian officials live up to the obligations of the counternarcotics and border management assistance that they have received. (…)
• Push Afghanistan and Pakistan to finalize the status of their frontier.(…)
• Deepen formal and informal cooperation across the FSKN and DEA field offices in Afghanistan and Central Asia.(…)
• Jointly expand multilateral training of Central Asian and Afghan border police, customs authorities and counternarcotics officers. (…)
• Establish joint positions on counternarcotics and border control at international bodies where these issues are discussed (…) 

According to the EastWest Institute, The State of Afghanistan’s Borders will be followed by three more reports in 2015 and 2016: two that will offer specific policy suggestions on alternative livelihood in Afghanistan and narco-financing and a final report presenting a compendium of all recommendations.

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To read this article at The Diplomat, click here.

How can economic development increase not only prosperity, but also security and stability in post-2014 Afghanistan and the region? Can Afghanistan reclaim its unique position as a transit route between resources in Central Asia, Southwest Asia and the booming Far East? And what are Pakistan’s challenges and opportunities in this scenario?

These were the dominant themes of the EastWest Institute’s advocacy and outreach mission to Pakistan’s capital of Islamabad from March 18-20, 2015, conducted as part of the Afghanistan Reconnected initiative (also referred to as the Abu Dhabi Process). The mission was carried out by a delegation of parliamentarians, former ministers and private sector experts from Afghanistan, Pakistan, India, the United States and Turkey. 

LEBRING-SANKT MARGARETHEN, Austria — In my life I have participated in several military parades, but one stands out. As an officer candidate in the Austrian Army, I marched in step to the tune of the “Radetzky March” past a crowd—my Uncle Winfried and Aunt Waltraud among them—down an alley leading to Eggenberg Palace, in Graz.

It was late fall, chilly and dark. Half the members of my company carried torches, which cast eerie shadows on the Baroque exterior of the castle.

As we marched by, crowds spontaneously clapped, some shouting, “Bravo, super Burschen!” (Well done, fine boys!) The shrill bark of red-faced sergeants and long days of monotonous drill were for a brief moment forgotten. Not forgotten were the echoes of past parades and the fate of those who had marched and cheered.

Grand national military parades are waning in most of the West, but in Asia, they are becoming a popular form of statesmanship. This year, lavish pageants of military hardware and marchers in formation will advance down boulevards in India, Pakistan, North Korea and China, as well as in Russia, straddling Europe and Asia.

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Yet however alluring and visually striking, these parades embody militarism, the deadly business at the heart of almost all sovereign states. The term “parade” comes from the Latin word “parare,” to prepare. Throughout history, parades have helped prepare citizens for war.

This volume of military parades suggests a dangerously combustible combination of militarism and national insecurity. They often create instability by starting a self-perpetuating cycle of lethal competition.

The 2015 Asian parade of parades began in January in India, which held a Republic Day gala in New Delhi. It featured cultural and religious tableaus woven into an awesome array of military displays. The “chief guest,” Barack Obama—the first American president to attend the event, with the first lady, Michelle Obama—applauded the troops with Prime Minister Narendra Modi and a host of dignitaries.

But these martial displays can prompt other nations—especially on borders—to continue a parade arms race in order to dispel notions of vulnerability and strengthen deterrence.

Following India’s parade, after a seven-year hiatus, Pakistan plans to hold its own Republic Day military parade. Noting President Obama’s visit to India and perhaps a Western tilt toward that country after NATO’s exit from Afghanistan, Pakistan’s prime minister, Nawaz Sharif, was hoping to secure President Xi Jinping of China as his “chief guest” of this year’s ceremony, as both leaders posture for a strategic alliance.

National military parades invite their own bigger and better sequels. Yet leaders of these countries might recall Europe’s experience in the late 19th and early 20th centuries, when countries underwent military innovation and stockpiled arms before the world wars.

Europe’s influence on parades can be found in Asia today in marching techniques, which often feature variations of the Prussian goose step (Stechschritt), especially popular in China, Russia and North Korea. Of the goose step, George Orwell noted that it is “one of the most horrible sights in the world.” He added, “It is simply an affirmation of naked power; contained in it, quite consciously and intentionally, is the vision of a boot crashing down on a face.”

Russia needs no reminder of the awful toll of the goose step. A parade will fill Red Square in May to commemorate the 70th anniversary of the end of World War II, the country’s most destructive war. President Vladimir V. Putin has expanded Victory Day celebrations, feeding his citizens’ reactionary sentiment for Soviet-era military prestige.

Military parades can also publicize military spending. In countries like China, where only a figure for the total defense budget is released, they help show what taxpayer money is buying.

After staging only three military spectacles since 1960, the Communist Party of China aims to “make Japan tremble,” according to The People’s Daily, a state-run newspaper, with a prodigious military parade later this year.

President Xi will reportedly, in an unusual gesture in China’s modern history, invite foreign heads of state to witness this tour de force in Beijing. Leaders of Taiwan, Vietnam and the Philippines may tremble as well.

In Japan, Prime Minister Shinzo Abe has sought to ease postwar constitutional restrictions on the country’s military. Under the aegis of “Abenomics,” the Diet has approved an increase in military spending for three consecutive years.

No one who has ever participated in a military parade can deny the rousing yet mind-numbing sensation that marching in perfect synchronization to the tune of martial music invokes, as well as the peculiar intoxicating bond that is forged between the soldier and the audience.

Marching, you are not allowed to move your head—save the dramatic “eyes right” for the presiding leader—and should restrict your vision to the neck seam of the soldier in front.

This peripheral blindness, however, affects the soldiers, yet also the onlookers, creating what Harold Rosenberg called “a herd of independent minds.”

There is another, more solemn version of the military parade. In June 2012, I stood in a long line of a few hundred American soldiers and contractors flanking left and right the main road of Forward Operating Base Salerno in Khost Province, Afghanistan. A coffin draped with an American flag was slowly carried through the base.

There was no music and no marching in step. A chaplain and a few soldiers of the unit escorted the coffin to a C-130 transport plane waiting on the runway. A loudspeaker shouted out the commands, and even though I was wearing civilian clothes, I instantly assumed a military posture at the order of “Attention!” With no further thought, I also knelt down at the command, “Prepare for prayer!”

When I later wrote about my experience in a story for an Austrian newspaper, many complained that I—as a correspondent—should not have participated in this “hero ceremony.” I felt I almost had no choice.

For a soldier, parades mark the beginning and sometimes the end of military life. For nations, throughout history—and this is what Asia’s leaders should keep in mind—what begins as a parade often ends in carnage and death.

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To read the piece at The New York Times, click here.