Afghanistan

Politics:

• Analysis

  Afghanistan politics: Quick View - Further reports of fraud and misconduct

  Event

  New audit reports of Kabul Bank have further documented fraud and misconduct by bank officials, as well as political interference by Afghan government officials in the investigations and prosecutions carried out to date.

  Analysis

  The first audit, conducted by a US-based investigative firm, Kroll Audit, for the Afghan central bank, was leaked to a US newspaper, the New York Times, on November 26th. The findings of a second investigation, conducted by an independent joint committee on behalf of the IMF and other donors, were announced at a press conference in Kabul on November 28th. Neither report appears substantially to alter previous accounts of the bank's near-collapse in August 2010 owing to allegations of widespread corruption and undocumented lending-which led to a run on the bank-although both offer new details of how the founders of the bank, Sherkhan Farnood and Khalilullah Frozi, carried out their operation.

  Most sensitive are the allegations, in both reports, of close links between the bank and senior government officials and associates. According to Kroll Audit, more than 92% of Kabul Bank's total loan portfolio was disbursed among only 19 people and companies. Mahmoud Karzai and Hassan Fahim, the brothers of Afghanistan's president, Hamid Karzai, and first vice-president, Mohammad Qasim Fahim, respectively are both alleged to have been among the bank's biggest beneficiaries. Both men have escaped being indicted in the trials that have followed, although Mr Farnood and Mr Frozi are currently facing public trial before a special tribunal.

  December 07, 2012

• Background

  Afghanistan: Key figures

  Hamid Karzai

  The Pashtun tribal leader is not connected with the main Afghan parties. His lack of party affiliation has allowed him to act as a mediator between factions. He was elected president in October 2004, retaining the position to which he had earlier been appointed with the support of Afghanistan's international backers. However, both foreign and domestic support for Mr Karzai has been dented since then. Concerns have focused on his effectiveness, his independence with regard to his foreign backers, and the role of members of his family. Mr Karzai nevertheless remains the favourite to win the 2009 presidential election, although he has not yet confirmed that he will run.

  Yunis Qanuni

  Yunis Qanuni was one of the deputies of the former Northern Alliance (NA) leader, Ahmad Shah Massoud. Alongside Abdullah Abdullah and Mohammad Qasim Fahim, he dominated the interim administration in 2001-02. He served as minister of the interior and minister of education, and ran for the presidency in 2004, coming second behind Mr Karzai. He is a central figure in the United National Front (UNF) opposition group, and was elected chairman of the Wolesi Jirga (the lower house of parliament) in December 2005.

  Abdul Rashid Dostum

  The former communist leader of the ethnic-Uzbek Junbish-I Milli-yi group controlled much of northern Afghanistan until 1998, before fleeing into exile in the face of the Taliban takeover. His current power base is concentrated in the northern provinces, particularly Jowzjan and Saripul. The increasingly fractious ties between General Dostum and Mr Karzai's administration have deteriorated further in 2008. Early in the year General Dostum was accused of kidnapping and assaulting a former ally in the capital, Kabul; the incident ended in his being forced to leave Kabul and to resign his post of chief of staff to the armed forces.

  (Mohammad) Ismail Khan

  The former governor of Herat escaped from a Taliban jail in Kandahar in 2000, after having been betrayed in 1997 as he plotted to retake Herat. After the fall of the Taliban he regained control of Herat. He was dismissed as the city's governor in 2004, but remains popular in the region. He is also said still to control a strong private militia. He is now minister for energy and water, having been transferred to Kabul in an attempt to distance him from his base in Herat.

  Mullah Omar

  The reclusive, one-eyed former mujahid and spiritual leader of the Taliban has evaded capture since the movement was ousted from power. He is currently believed to be based in Pakistan.

  The judiciary

  According to the constitution, the state religion of Afghanistan is Islam. The legal system is based on civil rather than sharia law, but no law is permitted to contradict the beliefs and provisions of Islam. The judiciary is headed by the Supreme Court, whose members are appointed by the president for ten-year terms. In May 2006 parliament rejected Mr Karzai's reappointment of a conservative, Fazel Hadi Shinwari, as head of the Supreme Court. Nevertheless, the judiciary, which is dominated by religious conservatives, has repeatedly been criticised by liberals and women.

  The legislature

  Under Afghanistan's new constitution, which was approved in 2004, the National Assembly consists of two houses: the elected lower house, the Wolesi Jirga (House of the People), and the appointed upper house, the Mushrano Jirga (House of the Elders). The lower house has 249 deputies and the upper house 102. One-third of the Mushrano Jirga's members are chosen for four years by the provincial councils (each of the 34 provinces sending one representative). Another third are chosen by district councils for three years. The remaining deputies are nominated by the president for five years. Under the constitution, one-half of the presidential nominees must be women. Many observers, both domestic and foreign, have raised concerns over the backgrounds of some of those elected and appointed to the legislature. However, although many criticisms can be raised about the quality of its members, the assembly has proved itself to be independent of the president, and provides robust criticism of many policies and proposed legislation.

  Media services

  After years of repression, press freedom was officially reinstated in early 2002. In addition, in 2004 Afghanistan adopted a new media law, allowing, among other things, criticism of the national army and publication of photographs of  partly clothed women. However, criticism of Islam remained prohibited. Harassment of the media continues, and several journalists have been arrested and charged with blasphemy; the problem is particularly acute in regions beyond Kabul.

  Democracy index (for methodology, see Appendix)

  The Economist Intelligence Unit's 2008 democracy index ranks Afghanistan 134th out of the 167 countries rated. It is thus classified as an authoritarian regime, despite having conducted democratic elections for both the presidency and legislature (as well as a number of regional bodies). Its low overall score reflects the fact that Afghanistan remains essentially a failed state, despite seven years of strong donor support, including financial, military and governance assistance. The central government's writ is applied only weakly in much of the country, with powerful local individuals still having much greater power in many areas. In other parts of the country security is so fragile that central government influence is hard to detect at all. Particular concern surrounds issues such as tax collection and the enforcement of law (including the eradication of opium poppy cultivation). Disarmament of militias, or their incorporation into national security bodies, remains incomplete. Corruption and misadministration are widespread and extremely serious problems. As a result, government functioning receives a very low score.

  Reflecting the fact that elections have taken place, the country's score for electoral process is more impressive, and for such a poor country Afghanistan's civil liberties score is relatively good. This is partly the result of strong support for civil liberties among Afghanistan's donors and military backers—a position reflected in the country's new constitution. However, conservative Islamic forces have challenged the current line on civil rights in many areas, such as women's rights. In addition, a combination of intimidation (sometimes violent), weak electoral administration skills, poor education and cultural factors mean that the electoral system does not function freely and fairly. Insurgents also target those associated with the government for assassination in much of the country, especially in the south, deterring participation and freedom of expression (although the Taliban—the fundamentalist movement that ruled most of the country for several years to 2001—apparently did not seek to prevent the holding of the 2005 parliamentary election itself). Afghanistan's political culture and political participation scores are thus low.

  Democracy index
  	Overall score	Overall rank	Electoral process	Government functioning	Political participation	Political culture	Civil liberties	Regime type
  Afghanistan	3.22	134	5.17	1.79	2.22	2.50	4.41	Authoritarian
  Overall and component scores are on a scale of 0 to 10; overall rank is out of 167 countries.

  Download text file (csv format)

  July 31, 2008

• Structure

  Afghanistan: Political structure

  Official name

  Islamic Republic of Afghanistan

  Form of state

  Islamic republic

  The executive

  The president is both head of state and leader of the government. The cabinet is appointed by the president and approved by the lower house of parliament

  National legislature

  The National Assembly, which comprises a 249-seat lower house, the Wolesi Jirga, and a 102-seat upper house, the Mushrano Jirga

  National elections

  Hamid Karzai began a second five-year term as president in November 2009 after a disputed election held in August of that year. Elections for the lower house and provincial councils were held in 2005; candidates stood as individuals rather than as representatives of parties. A lower house election was held in September 2010. The next presidential election will be held in 2014, and the next legislative and provincial council elections are due in 2015

  National government

  The president appoints the government, which reflects Afghanistan's ethnic mix

  Main political organisations

  A number of factions exist (some dating from the war against the Soviet Union in the 1980s), including the Taliban (Sunni Pashtun); the United National Front, primarily consisting of Jamiat-i-Islami (Tajik), Hezb-i-Wahdat (Shia Hazara), Junbish-i-Milli (Uzbek) and the National Islamic Front; Hizb-e-Haq wa Edalat (Right and Justice Party); Jabha-e Milli-e Afghanistan (National Front of Afghanistan); Hezb-i-Islami (Pashtun); and the National Coalition of Afghanistan

  Key ministers

  President: Hamid Karzai

  First vice-president: Mohammad Qasim Fahim

  Second vice-president: Mohammad Karim Khalili

  Agriculture: Mohammad Asif Rahimi

  Borders & tribal affairs: Azizullah Din Mohammad (acting)

  Commerce & industry: Anwar ul-Haq Ahadi

  Counter-narcotics: Zarar Ahmad Muqbel

  Defence: Bismillah Khan Mohammadi (acting)

  Economy & manpower: Abdul Hadi Arghandiwal

  Education: Ghulam Farooq Wardag

  Energy & water: Ismail Khan

  Finance: Omar Zakhilwal

  Foreign affairs: Zalmay Rasul

  Information & culture: Sayed Makhdum Rahin

  Interior: Mushtaba Patang (acting)

  Justice: Habibullah Ghaleb

  Mines: Wahidullah Sharani

  Public health: Suraiya Dalil (acting)

  Refugees & repatriation: Jamahir Anwari

  Rural rehabilitation & development: Wais Ahmad Barmak

  Telecommunications & information technology: Amirzai Sangin (acting)

  Transport & aviation: Daoud Ali Najai

  Urban development: Hassan Abdulhai

  Central bank governor

  Nurollah Delawari

  October 19, 2012

Economy:

• Background

  Afghanistan: Economic background

  Gross domestic product by origin
  (US$ m at current prices unless otherwise indicated; fiscal years Mar 21st-Mar 20th)
  	2001/02	2002/03	2003/04	2004/05	2005/06
  Agriculture	n/a	1,956	2,149	2,332	2,617
  Mining, manufacturing & electricity, gas & water	n/a	660	622	873	1,065
  Construction	n/a	194	250	435	610
  Trade(a)	n/a	431	428	511	574
  Transport & communications	n/a	454	543	511	635
  Public administration	n/a	223	245	299	442
  Others incl finance	n/a	414	436	645	686
  GDP	n/a	4,390	4,769	5,733	6,851
  Memorandum item
  GDP per head (US$)	n/a	201	217	246	290
  (a )Residual item including data discrepancies.
  Source: Asian Development Bank, Key Indicators of Developing Asian and Pacific Countries.

  Download text file (csv format)

  July 31, 2008

• Structure

  Afghanistan: Economic structure

  Economic structure: Annual indicators

  	2008a	2009a	2010a	2011a	2012b
  GDP at market prices (Af bn)	533.5	615.1	729.9	874.7	–
  GDP (US$ bn)	10.6	12.2	15.7	18.7	–
  Real GDP growth (%)	3.6	21.0	8.4	5.8	–
  Consumer price inflation (av; %)	26.8	-12.2	7.7	11.8	–
  Population (m)	29.8	30.6	31.4	32.4	32.7
  Exports of goods fob (US$ m)	2,465.0	2,517.0	2,836.0	2,908.0	–
  Imports of goods fob (US$ m)	-8,945.0	-8,872.0	-9,139.0	-9,174.0	–
  Current-account balance (US$ m)	92.0	-347.0	267.0	18.0	–
  Foreign-exchange reserves excl gold (US$ m)	2,430.8	3,501.4	4,174.4	5,268.3	–
  Exchange rate (av) Af:US$	50.25	50.33	46.45	46.75	–
  a Actual. b Economist Intelligence Unit estimates.

  Download the numbers in Excel

  Origins of gross domestic product 2010/11a	% of total	Components of gross domestic product 2010/11a	% of total
  Agriculture	28.8	Private consumption	97.4
  Industry	21.3	Government consumption	11.5
  Construction	10.4	Fixed investment	17.5
  Manufacturing	12.2	Exports of goods & services	9.8
  Services	49.8	Imports of goods & services	43.9
  Principal exports 2006/07a	US$ m	Principal imports 2006/07a	US$ m
  Carpets	187	Machinery & equipment	532
  Dried fruit	126	Household items	330
  Fresh fruit	39	Food	328
  Skins	23	Metals	275
  Medicinal plants	10	Petrol & petroleum products	254
  Main destinations of exports 2011	% of total	Main origins of imports 2011	% of total
  Pakistan	31.9	US	31.1
  India	27.5	Pakistan	20.6
  US	3.9	Russia	8.3
  Tajikistan	8.4	India	5.7
  Germany	2.6	Germany	4.0
  a Fiscal years March 21st-March 20th.

  Download the numbers in Excel

  Download text file (csv format)

  October 19, 2012

• Outlook

  Afghanistan: Country outlook

  Afghanistan: Country outlook

  FROM THE ECONOMIST INTELLIGENCE UNIT

  OVERVIEW: Political stability in Afghanistan remains poor. The uncertainty engendered by the impending withdrawal of international forces in the 2013-14 forecast period means that the likelihood of fragmentation of the state and continued conflict remains high. The president, Hamid Karzai, continues to seek to strengthen his grip on power. His tenure in office will expire in 2014. The ability of the political system to manage a transfer of power has yet to be proven. Responsibility for security will be transferred to local forces by mid-2013 as international forces withdraw from combat roles. Economic development will remain the focus of both policymaking and aid efforts. Recent donor conferences have emphasised the provision of basic services, such as electricity and education. Increasing fiscal revenue remains an urgent priority, given that government spending is equivalent to slightly over 20% of GDP and that foreign donors are likely to wind down budgetary support in the coming years.

  DOMESTIC POLITICS: An ongoing campaign of insurgency by various groups, chiefly the Taliban-the mainly Pashtun organisation that ruled most of Afghanistan on Islamic-fundamentalist principles between 1995 and 2001-is a threat to political stability. Karzai has been reluctant to offer political concessions that might reduce the threat posed to his administration by the Taliban insurgency. The Taliban in turn officially reject the Afghan government as a legitimate partner for negotiations, and have also broken off tentative discussions with the US that were announced at the start of 2012. All sides in the conflict are internally divided over the prospect of settlement talks, and are likely to continue to hold off from making concessions until the shock of international withdrawal forces new alignments of political power in the country. Afghanistan lacks an organised system of political parties, and politics is instead driven by patronage, with Karzai making continuous attempts to balance and co-opt potential rivals and supporters. The president's term is due to expire in 2014, and the ability of the Afghan political system to manage a transfer of leadership has yet to be proven. Efforts by Karzai and others to consolidate power ahead of the 2014 presidential election are likely to exacerbate tensions with groups on the political margins. The ongoing struggle against the Taliban will remain the main priority during 2013-14. The International Security Assistance Force (ISAF), which is made up of US and other NATO troops, will end combat operations in Afghanistan in 2013, when responsibility for security will be transferred to the domestic Afghan National Security Forces. Efforts to reintegrate insurgents into civilian life will continue. The Afghanistan Peace and Reintegration Programme, which was launched in 2011, makes monthly payments to insurgents who pledge to lay down arms and attend demobilisation training, as well as investing in community improvement projects in villages that rehouse former insurgents. Those being reintegrated continue to face threats to themselves and their families; several have been attacked by the Taliban, and some Afghan security forces have targeted the homes of former Taliban government members who are attempting to support the peace process. The next presidential election will be held in 2014, and the next legislative and provincial council polls are due in 2015.

  INTERNATIONAL RELATIONS: Afghanistan's most important international relationships are those with the US and the other NATO states participating in ISAF. Ties between the Karzai government and its NATO backers will remain volatile, and a spate of incidents in 2012 has done particular harm to relations. The dramatic rise in so-called green-on-blue attacks on international personnel by members of the Afghan security services, which resulted in the deaths of at least 45 foreign troops in the first nine months of 2012, is symptomatic of the challenges faced by ISAF as allied forces prepare to withdraw. Recent international conferences on Afghanistan, including one in the US city of Chicago in May, a donor conference in Tokyo (the Japanese capital) in July and a meeting of NATO defence ministers in Brussels (the Belgian capital) in October, have sought to formalise the level of international assistance that will be provided to support the government. European and US public support for continued intervention in the country has fallen sharply, particularly as a sustained assault on the central leadership of the al-Qaida terror network has reduced the immediate threat of international terrorist attacks emanating from the region. Other global economic and geopolitical challenges now eclipse Afghanistan's importance for policymakers in the US and its allies. In 2012 around 26,000 ISAF troops, including 23,000 US soldiers, are expected to be withdrawn. Meanwhile, the announcement of a timetable for the withdrawal of US troops is likely to have made the attainment of American goals in Afghanistan even harder, as the Taliban are likely merely to wait until US forces have been drawn down and then try to reassert themselves more vigorously. Karzai remains keen that the US commit itself to a long-term role in Afghanistan-something that the US president, Barack Obama, is equally eager to avoid, particularly in a presidential election year at home. The US and Afghan governments have begun formal bilateral negotiations on a status-of-forces protocol that would govern US military personnel remaining in the country after the completion of the security transfer. This deal is expected to take at least until mid-2013 to finalise. Afghanistan's relations with Pakistan will continue to be vital in a number of areas, including trade and security. However, bilateral relations have soured in the past two years as groups based in Pakistan or elements of that country's government have been blamed for several high-profile attacks in Afghanistan.

  POLICY TRENDS: Both the Afghan government and the international donors and agencies that provide it with financial and security support will focus on economic development in 2013-14. Recent meetings between Afghanistan and its donors have emphasised the provision of basic services, such as electricity and education. There is likely to be growing emphasis on the need to move Afghanistan's public finances on to a more sustainable path. The government continues to make slow but measurable progress in the area of economic reform. Land registration (a major impediment to business, owing to delays and competing claims) and privatisation efforts are also likely to see only gradual progress. In addition to these longer-term problems, the government faces a formidable list of policy challenges in the next two years. According to the IMF, these include containing inflation, improving the efficiency of public spending, reducing corruption, addressing capacity constraints, strengthening the business environment and bringing down unemployment. Despite the recent improvements, increasing revenue further remains an urgent priority, given that government spending is equivalent to slightly more than 20% of GDP and that foreign donors are likely to wind down budgetary support in the coming years. According to an international watchdog, Global Humanitarian Assistance, in 2002-09 around US$26.7bn of aid was disbursed to Afghanistan, amounting to only 43% of the US$62bn pledged by international donors for 2002-13. In 2013-14 Afghanistan will continue to have one of the world's lowest ratios of fiscal revenue to GDP. The Afghan authorities will have only limited influence over monetary policy in 2013-14, owing to the undeveloped nature of the country's financial system.

  ECONOMIC GROWTH: According to the Fund's World Economic Outlook Update, released in October, real GDP growth (excluding opium production) in Afghanistan is estimated to have slowed to 5.8% in fiscal year 2011/12 (March 21st-March 20th), from 8.4% in 2010/11. In 2012/13-2013/14 the Fund forecasts that real GDP will grow by an average of 5.9% annually. The Economist Intelligence Unit believes that in 2012/13-2013/14 economic expansion will be supported by strong investment in construction (much of which will be linked to donor-led development projects) and by private consumption. Industrial growth may also be boosted by improved electricity supplies during 2013-14. A power-transmission link to Uzbekistan has improved electricity supplies in the capital, Kabul, and the rehabilitation of hydropower projects at Mahipar, near Kabul, and Kajaki, in Helmand province, will further support generating capacity, provided that rainfall is adequate. The weather will play the largest role in determining the level of agricultural production. Cultivation of poppies for heroin and opium production is the largest industry in Afghanistan, although it remains illegal. Foreign agencies have led a campaign against poppy cultivation, but such efforts will play a less significant role than prices in determining the mix of crops. The biggest risk facing the economy in the short term is that the reduction in foreign military spending and aid as a result of the withdrawal of foreign security forces will trigger a rapid slowdown in GDP growth. Afghanistan's nominal GDP in 2011/12 is estimated at around US$18.3bn, while the World Bank estimates that aid expenditure totalled US$15.7bn in 2010, meaning that even small reductions in aid spending could have a substantial impact. In 2012/13-2013/14 falling global prices for commodities and food should reduce inflationary pressures, and inflation is forecast by the Fund to average 6.6% in the two-year period.

  EXTERNAL ACCOUNT: Excluding grants, Afghanistan runs a persistently large current-account deficit, and we forecast that it will continue to do so. The composition of imports will increasingly be dominated by capital goods, many of which will be linked to the development of various extractive projects, including the Aynak copper deposit and the Hajigak iron ore mine, where operations are expected to start within the next decade. Substantially higher exports of minerals are therefore possible in the future but will take many years to realise. Donor-funded infrastructure projects will also boost imports. The potential for an increase in Afghanistan's traditional exports, such as carpets and dried fruit, is limited, but greater transit trade from Central Asian countries and trade with Iran could provide a boost.

  October 25, 2012

View detailed map

Country Briefing

Land area

652,100 sq km (World Bank, World Development Indicators Database)

Population

26.1m in mid-2010 (Asian Development Bank, Key Indicators of Developing Asia and Pacific Countries 2011)

Main towns

Kabul: 2,536,300 (Central Statistics Organisation, 2006)

Kandahar: 450,300 (Central Statistics Organisation, 2006)

Heart: 349,000 (Central Statistics Organisation, 2006)

Climate

Continental (wide extremes of temperature)

Weather in Kabul (altitude 1,815 metres)

Hottest month, July, 16-33°C (average daily minimum and maximum); coldest month, January, minus 8-2°C; driest month, September, 1 mm average monthly rainfall; wettest month, April, 102 mm average rainfall

Main languages

Pashto and Dari (Persian)

Measures

Metric system. Local measures include:

1 gazi jerib = 0.7366 metres

1 jerib = 0.195 ha

1 charak = 1.7665 kg

1 seer = 9.066 kg

Currency

The afghani (Af). Average exchange rate in 2011: Af46.8:US$1

Time

4.5 hours ahead of GMT

Fiscal year

March 21st-March 20th

Public holidays 2012

February 4th (Mawleed al-Nabi, Birth of Prophet Mohammed); February 15th (Liberation Day); March 20th (Navruz, New Year's Day, Iranian calendar); April 27th (Victory Day); July 20th (Awal Ramadan, start of Ramadan, approximate); August 18th (National Day); August 19th-21st (Eid al-Fitr, end of Ramadan, approximate); October 26th-28th (Eid al-Adha, Feast of Sacrifice, approximate); November 24th (Ashura)

July 25, 2012