Ensuring the emergence of a peaceful Afghanistan hinges as much on economic viability as it does on military projection. Enhancing local infrastructure is key to paving the way for a bright Afghan future. Modernisation of logistics solutions that foster cost-effective and secure import and export of foreign and domestic goods, which historically underpinned Afghanistan's centrality to the Silk Road, will again be necessary to guarantee the country's long-term success.
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Renewed pledges from Kabul to hike the defence spending budget may offer a beacon of hope for the realisation of this objective, if the central government's forecasts are not overly optimistic. While Afghanistan is still healing from the scars of the Soviet invasion of 1979-89 and the US-led War on Terror from 2001 to today, many Afghans wish to see their country re-emerge as a land of peace, prosperity and freedom. To do so, Afghanistan's requirements are not dissimilar to what the country needed in the 1980s, 1990s and 2000s – substantial investment in security, logistics, and a diversity of available economic opportunities.
Recent assessments by economic and military experts have suggested that Afghanistan's defence spending budget will increase in the coming years, building on the country's allocation of 8.4% of GDP to this sector in 2015, with an estimated increase to 11.6% by 2020.
To see this forecast through, however, the Afghan government will need to resolve numerous contradictions and close black holes in its budget projections caused by reductions in foreign aid and rampant misappropriation of funds, while reinvesting what current revenues and aid are coming in to grow a sustainable local economy capable of supporting the defence budget in years to come.
The Afghan business climate
The current business climate in Afghanistan, by and large, has failed to foster the creation or maintenance of profitable domestic products for export or career trajectories for the Afghan people. The economy has been almost entirely supported by foreign aid over the last twelve years. Public sector jobs are few and far between, and remain greatly underpaid.
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By GlobalDataLocal industry has largely deteriorated following the reduction of US and coalition forces, while entrenched corruption at all levels of government and lucrative illicit markets continue to stunt Afghanistan's economic growth. Drug trade is a thriving industry in the country. Opium poppies are grown and harvested as a preferred cash crop and sold outside of the traditional marketplace, providing no tax revenues to Kabul.
The US Army is evaluating 60 new technologies to help reduce fuel and water usage at forward bases.
While Afghans have the ability to grow corn or wheat, such commodities lack the monetary incentive available in poppies – even when subsidised. Opium gum, morphine base and heroin products are grown, refined, and exported from Afghanistan to market countries around the world where they receive high street prices which are manipulated to always be greater than legal crop yields.
Moreover, some Afghans are encouraged by the absence of any economic or local political structure to join the Taliban, receiving higher pay compared to many other legitimate avenues of work. Such diversion of human resources to poppy cultivation and rogue groups further stunts Afghanistan's positive development.
Curing the cancers within
Afghanistan's proposed increase in defence spending is a response to the wind-down of foreign military presence in the country. As Western partner nations have scaled back their physical footprint, they have opted to provide donations of aid or traceable funds to support reconstruction, allowing Afghans assume a greater role in their own country's security and economic wellbeing. One major hurdle, however, will be Afghanistan's ability to fund the operating costs of foreign-built or funded programs itself once Western nations pack up and go home. These include funding hospitals, operating counter-narcotic aircraft, fuelling power plants, and educating children – particularly girls – among other key tasks.
Another crucial issue which will pose a direct challenge to increases in defence spending is public fund embezzlement and rampant corruption within the Afghan government, making effective aid and resource distribution difficult.
Retired US Marine Corps General John Allen told the US Senate Foreign Relations Committee that "the existential threat to the long-term viability of modern Afghanistan is corruption." While the average Afghans did benefit from the influx of foreign aid over the last decade, it must be noted that significant portions of funds were diverted into private hands. And it is not only foreign militaries that see this threat, but new Afghan leadership as well, with President Ghani reaffirming that "the resolute support legacy [from NATO forces] to Afghanistan will not be guns and ammo … but systems and processes that enable fiscal discipline for the future."
The benefit of an expanded Afghan defence budget planned over the coming years will be lost without discipline and accountability throughout the government. While the Afghan government has reaffirmed its commitment to uproot the poppy trade, curb Taliban recruitment, fight insurgency, develop and secure logistics systems, attract foreign investment and trade, and integrate the population into the public and private workforce, experts question whether such pledges from Kabul are really possible in light of reductions in foreign aid and military presence.
Foreign support still paramount
While Afghanistan faces great challenges ahead, the country has not yet faced a total loss of assistance from partner nations' contributions of money, training, logistical support and materials. The US-led NATO and coalition military spending in Afghanistan remains significant even after combat draw-down as evidenced by a US Department of Defence budget of $85m specifically earmarked for Afghanistan alone in 2014. President Obama just confirmed that 9,800 US troops will remain in Afghanistan.
US and allied nations also contributed $121.4m in accountable aid to the Afghan Government in the same year. Numbers for 2015 have yet to be released.
To the East, Japan has emerged as a front-runner in continued funding with Tokyo supplementing its voluntary funding to projects in the country by $13.6m as part of its "Aid to Afghanistan" initiative. This follows up some $9m donated from Japan's Peacebuilding Grant to UNODC to strengthen the Afghan criminal justice system and $20m through UNDP for Afghani agriculture. The Government of Japan has approved a further $3m grant to Afghanistan to improve the country's main north-south motorway.
China, which borders Afghanistan to the East, has also stepped up efforts to play a constructive role in reinforcing security and economic development, pledging $327m in economic aid through 2017. Likely this infusion will shift the regional geopolitical gravity eastward in coming years as Western involvement is reduced.
Foreign procurement
According to the World Bank, Afghanistan's GDP growth has been dropping precipitously, falling to 9%in 2014 from 12%in 2012, and is set to remain stagnant at best as aid organisations and Western militaries continue to withdraw from the country.
Ultimately, Afghanistan's defence procurement list and military spending relative to its GDP may have an inverse relationship by default as aid money dries up; and it matters little compared to domestic issues which the country faces regardless, such as fostering opportunities for Afghans to earn a fair living wage, providing a secure environment, leveraging international assistance to discourage Afghans from joining the Taliban, which unfortunately offers in many regions a more reliable social and security structure than the current Afghan Government.
In order to counteract the majority of Afghanistan's problems as NATO and coalition forces reduce their presence in the country, the government has attempted to procure military systems and civil aid supplies, with over $6m in medical supplies being donated from NATO countries as well as $634m worth of US weapons systems being bought directly through the US Government's foreign military sales programme.
Procurement is a logical and natural step for foreign weapons and defence systems, many already left in Afghanistan under lock-and-key, to be offloaded at minimal cost and maximum benefit, especially when looking through the GDP-to-defence-budget lens, provided the national government is able to account for the material. To date, the US Department of State has approved more than $18.6bn worth of foreign military sales with Iraq – a model that Afghanistan should embrace and replicate as US and coalition forces continue to leave the country in order to get the most for their money.
Local solutions for local problems
Historically, Afghanistan is a nation constrained by its geography; it is imperative for the country to modernise its road networks and to secure such routes before any real trade takes place. A strong road network is also fundamental for maintaining security over the many geographically remote regions of the country. Border protection is of paramount concern due to the transnational nature of illicit activities, including the smuggling of poppy based products, weapons, persons, and proliferation of terrorist organisations, and also the relative ease which Taliban and associated groups traverse Afghanistan's borders to the East.
n the fight against terrorism, defence and security agencies are turning to behaviour prediction software.
In order to stimulate economic growth within the country, the US, NATO partners and other leading donors such as Japan, have encouraged the Afghan Government to buy domestically produced goods as much as possible in order to supply jobs to the local Afghan population, re-invest in sustainable local economy, and reduce the manpower diversion into illicit or insurgent activities.
Yet, despite new procurement powers, continued aid and a greater emphasis on military spending, Afghanistan is opting to outsource production, for both technical and basic supplies. While high quality-domestically produced combat boots can be supplied to the Afghan National Security Forces (ANSF), for example, at $62 a pair under a contract that would guarantee $40m a year to local Afghan contract winners, the Afghan Government chose to forgo the proposed plan and outsource production to China, where boots of lesser quality can be purchased for $22 per pair forcing the Kabul factory to be closed.
This is indicative of procurement trends in the country. Even for small ticket items, bureaucrats choose to buy foreign goods, passing up opportunities to support indigenous product development which in turn would support domestic industry and reconstruction. This pattern keeps local suppliers, and the population at large, stuck in an untenable situation, a negative feedback loop in which Afghans are unable to progress to developmental levels required for the country's sustainable future, which then restricts Kabul's ability to fund its own defence budget.
Thus, while some funding from major players in both Western and Eastern hemispheres is slated to continue, and supporting Afghanistan in boosting its defence budget trajectory, such funding will not be indefinite. Afghanistan cannot allow itself to sink into a black hole of foreign funding, and must therefore develop domestic revenue-generating systems to feed its growing defence and civil budgetary requirements.
The future of Afghanistan rests on building sustainable economic opportunities from within the nation, empowering local Afghans and encouraging legal regional and international trade.
