Afghanistan continues to rely heavily on donor support, while the government in Kabul struggles to re-establish a viable economy. There are some positive signs: a January donor conference in London welcomed “improved government accountability” and pledged $10.5 billion to help finance reconstruction; and there are signs that former soviet central Asian republics could yield new sources of revenue. Afghanistan could be a beneficiary as Turkmenistan, Uzbekistan and the other central Asian states work to forge closer economic ties with China and south Asia. The Turkmen government hopes to develop its Daulatabad gas fields for export to Pakistan, transiting through Afghanistan, which will require the construction of a pipeline, bringing with it a welcome boost of new jobs.
Although there are fears that security issues in Afghanistan could prevent the pipeline’s development, the three governments involved have welcomed the results of an Asian Development Bank-funded feasibility study. According to Tracey Ann Jacobson, US ambassador to Turkmenistan, Kabul could earn up to $200 million a year in transit fees alone. President Hamid Karzai has described the venture as “a very real and feasible project”. Its development seems more likely than ever – though it is by no means guaranteed.
The international community is keen to support Afghan agriculture to generate employment, while suppressing opium poppy cultivation, which accounts for around 50% of GDP, according to an IMF estimate. Jean Mazurelle, World Bank country manager for Afghanistan, sees this as vital: “Increased production and productivity will create a legal agriculture for rural industries,” he says.
“Public investment will increase by a third and the Afghan people will have a sustainable trade sector.”
One banker who spoke to Emerging Markets was less optimistic: “The only hope of economic regeneration is for investors to be reassured that any funding is safe from internal threats. Only when that happens will the country be able to enjoy much higher levels of growth.”