Widespread corruption in Afghanistan ranks among the strongest factors determining the country’s future. But, it appears that the United States and its allies are focused on an uninterrupted exit, fearing the potential for chaos if they meaningfully confront the issue.
America enters the frolic of summer through Memorial Day’s more sombre gate. This day of remembrance of America’s fallen finds the war in Afghanistan in its eleventh year. Though the numbers of US military fatalities in this war still lags far behind those of 9/11, their sad loss deepens with echoes of Vietnam. There are other casualties, of course, deaths of allies, horrific injuries both visible and hidden, and, of course, deaths and injuries of countless Afghans.
The recent G-8 Economic Summit at Camp David and the NATO summit in Chicago, both encircled by themes of diminished economic and military might, left an image of the war in Afghanistan as a straitjacket in search of an escape artist. Disengagement is coming, but it is still the long goodbye. America’s loss of financial security has shackled its options, compromising security elsewhere in the world. The only certainty of outcome is that Afghanistan’s breath-taking corruption will hamstring the most noble of goals and sacrifices.
During the drumbeat for the 2003 invasion of Iraq, I met with an Afghanistan-American just back from his home country. I asked Nasir Shansab what he thought of George Bush’s neo-cons, and their wordsmiths, conjuring weapons of mass-destruction. Beyond scepticism over White House claims, Shansab answered, ‘If the US invades Iraq, Afghanistan is lost.’ The US would become embroiled in a quagmire in Iraq, and the fleeting opportunity to evolve Afghan society with a just rule of law would vaporize.
Shansab knows the territory. His family, descended from Afghan kings, were lynchpins in the economy. In 1934, Shansab’s father built a small hydroelectric plant in Kandahar, then a large one in Puli Khumir, as well as a textile factory with 3,000 employees. Other ventures included Afghanistan’s largest industrial plant, in Golbahar, with 8,000 well-paid workers, an embarrassment to the Communist government and a ticket to a fast exit. Shansab took his family and fled in 1975. The big factory? Still locked up and deteriorating in a country that doesn’t know what to do with it.
Shansab knows what corruption is doing to Afghanistan. In 2002, Shansab started planning to put the Naghlu hydroelectric plant, the nation’s largest, in good working order, providing inexpensive, clean, renewable power to a country desperate for energy. He figured he could accomplish this with $30 million, incorporating a Russian company, Technopromexport (TPE) that built the dam in 1967 – Naghlu was built and financed by the Soviet Union. However, once Shansab, working with TPE, had their bid accepted by the World Bank, TPE cut Shansab out of the project, with the blessing of Ismail Khan the Minister of Energy and Water.
Warlords were put in charge of important posts by President Hamid Karzai, to buy their cooperation. It seemed a good idea at the time. Khan, with his own private army is among the most powerful. He landed his post with zero experience with energy. The initial millions paid out by the World Bank have little to show for themselves. And the World Bank has had little to say about it. As part of his own private ‘Bleak House’ of legal battles, Shansab ultimately prevailed against TPE in Swedish Arbitration (as designated in his contract), a ruling that cannot be appealed. But the World Bank declined to pay TPE’s fees to Shansab’s company. After a year’s litigation in Afghanistan, Shansab got a court order blocking TPE’s account in Kabul. According to Shansab, Afghan officials intervened, forcing the court to lift its order. Before he could act, TPE withdrew all its funds and sent them out of the county. So it goes with Afghanistan’s rule of law and this is by no means atypical.
Meanwhile, Khan’s trajectory has been fascinating. In August of 2009 he was renamed as minister, but his reappointment was refused by reformers in Parliament. The Afghan constitution allows him to continue as acting minister for thirty days, after which Karzai must introduce a replacement to parliament. But Khan remained acting minister until February of this year, when he was introduced to parliament again and this time approved. Dr Azizullah Ludin, Head of the High Office of Oversight and Anti-Corruption, has reported to the parliament that Minister Khan embezzled $70 million. Despite his report, Ludin was dismayed to watch the parliament approve Khan’s appointment. Regarding Ludin’s allegations, Khan’s supporters in Parliament challenged Ludin to have them proved in the courts, and complained that he was sullying the reputations of other parliamentary members.
Concerns about Khan and his ministry surfaced soon after he took over the agency in 2004. Wikileaks revealed that US Ambassador Karl Eikenberry pressured Karzai to remove Khan from the position at the ministry, and described him as ‘the worst of Karzai’s choices.’ Consultants hired to identify problems in the ministry estimated that corruption contributed to the loss of $100 million or more each year from the country’s electricity system that should go back to the Afghan government, according to reports produced for the US Agency for International Development (USAID). Huffington Post reported last year that Khan’s financial disclosure statements, now required of Afghan officials, list two houses in Herat, a hotel, a garden and $240,000 in cash. He reported a monthly government income of about $3,650 and rental income of about $3,000 a year. Khan has told the Associated Press news agency, when asked about corruption allegations, that there were not any widespread problems of corruption or mismanagement. ‘No money is missing from the ministry,’ he said. ‘All the income goes directly to the bank.’
‘How soon and how efficiently electricity will be flowing reliably throughout Afghanistan is a moot point. Today, Kabul, a city of five million, has no running water and no sewage system… The toxicity of Kabul’s air continues to worsen. Power for the city is being purchased from Tajikistan. The international community, primarily the US, is stuck with the tab.’
How soon and how efficiently electricity will be flowing reliably throughout Afghanistan is a moot point. Today, Kabul, a city of five million, has no running water and no sewage system. Bid documents required the hydroelectric plant to be completed by the close of 2010. It is not operative. Optimists look to operation of the dam by 2015, but never operating properly remains a fair bet. The toxicity of Kabul’s air continues to worsen. Power for the city is being purchased from Tajikistan. The international community, primarily the US, is stuck with the tab.
Shansab’s other cautionary tale is just as grand, and fresh off the kabob. In June of 2010, there was tremendous excitement over Pentagon memos on geological surveys, which built on Soviet geologists’ charts, set aside in the panic of war. New high tech aerial surveys confirmed spectacular, diverse mineral wealth beneath Afghanistan’s forbidding landscapes. Dreamers seized on the discoveries as the potential cure for many of Afghanistan’s ills. They envisaged mineral wealth as the bedrock of a new economy, with well-paid jobs giving warring factions a stake in political and economic stability, as well as alternatives to growing poppies for opium. The potential value of untapped deposits was initially thought to approach a trillion dollars, some in the Afghanistan government give estimates triple that. In a nation with a loosely defined GDP of $12 billion, it’s no surprise that this stimulated hope.
Much of the publicity centred on exotic minerals like lithium, but the value of iron ore dwarfed all other contenders. Letters of interest in the Hajigak Iron Ore Mine were submitted in January, 2011, leading to 22 qualified bidders. Six final contenders submitted bids last September. One was a group Shansab put together that included a well-financed and highly experienced US mining company.
Now pause to consider Afghanistan’s place on Transparency International’s Corruption Perception Index. The latest survey examined 183 countries. Afghanistan managed a tie with Burma, just ahead of North Korea and Somalia, which tied for last. One assumes Afghanistan is closely observed by the government agencies of the US and other benefactors keeping Afghanistan’s government afloat. Yet it’s still in a race to the bottom. Last year a billion dollars disappeared from Kabul Bank, a significant slice of GNP. No one jailed, no one prosecuted. Official Afghanistan government stats state that in 2011, eight billion dollars in cash left Kabul just from the airport, in suitcases. Who knows how much really flew out of country, one way or another? How optimistic can we be for the country’s future?
Out of this morass of corruption, what were the expectations for a coherent and fair bidding process for mining ore potentially worth hundreds of billions of dollars? Shansab regards Hajigak as the largest iron ore mine in Asia and the richest untouched iron mine in the world.
At a time when the US and its allies are strapped for funds, one might figure that the winning companies would have upfront obligations. For example, bid documents required bidders to have detailed technical plans backed up with a financial plan. Shansab notes that while all bidders speak of investing, not all had written commitments by a financial company that they have the funds. Shansab says that all bids promised to support the local population, but only his group included detailed architectural plans for a small township, including housing for office employees and engineers, as well as factory workers. Shansab’s plans also included a 50-bed hospital, a school for a thousand students, a central sewage facility and water treatment plant, and a recreational centre with many amenities. His group was prepared to start immediately, and provided proof of financing to do so. Without conditions, Shansab’s group committed to starting not just mining operations but actually producing steel in forty-two months.
Shansab, examining the winning bids and press write-ups, felt that the winners were not going to contribute as much to the re-building of Afghanistan as he had undertaken to. He is, of course, bound to say that. But, to compound his frustration, his efforts to obtain some explanation from Afghan authorities, as well as from US agencies, as to how those companies could gain a lock on such incredible potential wealth without, in his view, making the same level of guarantees as to how much would be provided to Afghanistan, and when, has proved fruitless. He says the Afghan government was openly hostile to his enquiries. At time of writing the US Embassy hasn’t responded to him either.
Do the US and its allies, seeking an uninterrupted exit from the stage, fear the chaos if they meaningfully confront corruption? Whatever the answer, it’s a good bet there won’t be legions of stabilizing mining jobs in the foreseeable future.
The questions over Afghanistan’s governance that will probably never be properly answered continue to grow. In 2009, Shansab sent warnings to the State Department and White House that it was wildly premature to hold elections in August of that year. Instead, he urged a transitional, interim government until a leadership was developed that could resist warlords and better shepherd the rule of law into the courts and ministries. Unsurprisingly, the Afghans did not find the elections credible. Nothing’s punctured their cynicism. While Karzai’s cronies preside, most Afghans have no chance to become stakeholders in their country.
Many observers share Shansab’s concern that, as the allies depart amid diminished spending, the economy will move towards collapse, followed by government. With no governing centre of gravity, Afghan soldiers will drift to their villages and tribes, seeking a strong warlord. Corruption so permeates the present government that, it will prove as determinative to Afghanistan’s future as the invasion of Iraq.
Skip Kaltenheuser is a freelance journalist and writer. He can be contacted at email@example.com.
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