The Economic framework of the Afghan conflict

War may be, as von Clausewitz wrote, nothing else but the pursuit of politics by other means, but the pursuit of politics through both peaceful and violent means requires money. Furthermore, in the vast majority of the world political power is a principal means to the pursuit of wealth. Political leaders speak in public about their ideals and goals, but much of their daily activity is devoted to raising the resources to exercise power and reward supporters and/or themselves. How political leaders interact with economic and social actors to raise and distribute these resources often determines the outcome of their acts as well as their stated goals and intentions

Conflicts, then, are economic as well as political and military systems. Civil wars like Afghanistan develop particular patterns of economic activity that sustain them. The longer they persist, the more society and the economy adapt to conflict, creating a relatively stable type of social formation, the war economy. A few actors profit, while most have no say in the development of their own society and the vast majority suffer its consequences. Peacemaking and Peace-building in a society shattered by these effects as in modern Afghanistan requires not only political negotiations but transforming the war economy into a peace economy and creating the institutions for accountability over economic and political decision making by the political/military elite to the citizens of the state.

The Afghan conflict is not merely a civil war but a inter-state one, involving both official and private players from all the neighbouring countries and beyond. The war economy of Afghanistan, too, is an open war economy that is not confined to its boundaries. Through the development of the Afghan diaspora, the spread of means of transportation and communication, the development of cultural, kinship, and economic ties between Afghans and the region, the opening of borders and erosion of customs enforcement in some areas, and the increase in opium production and other contraband activities, the Afghan war economy has given rise to a pattern of regional economic activity and associated social and political networks that compete with and at times undermine official economic activities and severely undermine state structures. Transformation of the criminalized war economy is thus the key not only to Afghanistan but to the whole central Asian region. The economic and political stability of Pakistan and Tajikistan, in particular, is threatened by phenomena associated with the political economy of Afghanistan.

The pre-conflict society of Afghanistan in 1978 cannot be reconstructed, but the year 2000's structures developed from transformations of that fragile and fragmented society. In the 1960s and 1970s Afghanistan had and economy and society bifurcated between a rural, largely subsistence economy and an urban economy dependent on a state that in turn drew most of its income from links to the international state system and market, at the times benefiting from the cold war tensions between Moscow and Washington it continued to be the modern version of what it became in the 19th Century under the British hegemony, i.e. a buffer/protectorate rentier state. Agriculture and animal husbandry accounted for about 60% of GDP, and about 85% of the population depended on the rural economy for its livelihood. As late as the early 1970s, economists estimated that the cash economy constituted only around 40% of the total. This increased to almost 60% in the late 1970s, as a result of the expansion of the national market after the completion by the USSR of the nation-wide ring road and the rise of remittances from Afghan guest-workers that flocked to the prosperous Gulf and Middle East countries after the 1973 oil price rise.

 

Government expenditure consumed less than 10% of the whole economy, less than 20% even of the cash economy. Government domestic revenue, i.e. taxation, was even less than that limited to a few minute urban sectors in Kabul. Since the early 1950s to the late 1960s foreign aid accounted for 45% or more of the budget, including all development projects. This aid came from both the Soviet and US led alliance systems, though the former predominated, especially in infrastructure and the military. As aid declined in the early 1970s due to superpower détente, export of natural gas from northern Afghanistan to the USSR replaced it, so that these rentier incomes continued to finance slightly less than half the budget. Most of the rest came from duties on a few items of foreign trade and government monopolies of commodities such as fuel and tobacco.

 

The result was a government largely autonomous and detached from most of the society it ruled. It was free to institute reforms in the limited part of the society it controlled but unable to transform or govern rural society (85% of the country). Hence when the elites were deposed in a series of coups d'etat in 1973-78-79, it had few organizational resources to fall back on. The resistance developed largely in isolation from the pre-conflict rulers, whom Pakistan blocked from reconstituting an Afghan nationalism with its irredentist claims beyond the Durand Line (The Durand Line was the agreed 1893 Russian-British southern demarcation of the protectorate of Afghanistan that Pakistan and Afghanistan inherited as their international border since the former gained its independence in 1947. No Afghan government/faction has ever recognized this border)

 

Afghanistan was among the world's poorest countries, but it lacked the grinding poverty of ex-colonial societies with a higher degree of capitalist penetration. Its rural society still included a safety net based on an ethic of asymmetrical reciprocity within kinship based groups (qawm). This solidarity was slowly being undermined by inroads of the market and education but the process was much less advanced than in Soviet Central Asia or capitalist Iran and Pakistan.

 

Urban society depended on the redistributive activities of the embryonic state. The private sector was largely confined to trade, and the state controlled most urban employment. The state also controlled almost the entire educational system (secular and Islamic), which expanded rapidly since the 1950s. The exception was the private, rural madrassas (Islamic academies) that because of the appalling low standard of service steadily lost influence and prestige. The Taleban later emerged from these madrassas (and their kindred institutions in Pakistan) after a generation of destruction of the state schools and the competing elites (Nationalists, communists, Islamists) they had spawned.

Changes in the role of women, including voluntary unveiling, and women's secular education and professional employment were entirely urban phenomena dependent on the state sector and the whim of the ruler. They were decreed by the highest leadership of the state in order to implement an imposed vision of modernization. The subsequent collapse and loss of legitimacy of the weakly modernizing state also meant the weakening of the institutional support for women's public roles.

 

During the Soviet phase of the Afghan conflict (1979-1989) the bifurcation of Afghan society and economy became even more pronounced, and a number of new factors emerged. First, the dependence of competing leaders on opposing flows of politically motivated military assistance, mainly from USA/Pakistan and USSR. Secondly, growing dependence of the population for subsistence on politically motivated humanitarian aid, again USA/Pakistan with its Western Europe and Scandinavian allies and the USSR and its Warsaw Pact allies. Thirdly, the destruction of the rural subsistence economy through ten years of vicious guerrilla action by the mujehads and 'scorched earth' counter-insurgency tactics by the Kabul government. Fourthly, the rapid depopulation of rural Afghanistan and the urbanization of the country, including internal displacement of peasants to the Afghan cities and the flight of millions of mainly rural refugees to camps and cities in Pakistan and Iran. Fifthly, because of the massive rural emigration abroad the consequent creation of refugee-warrior communities in Pakistan and Iran and of a region-wide Afghan diaspora that have become substantial players in the internal affairs of the mentioned states. Sixthly and finally the rapid monetization of the economy that for the first time in Afghan history tie virtually all the inhabitants to the ruling military/political elite.

 

These changes laid the foundations for today's regional war economy. On the one side, the state's dependence on foreign aid and sales of natural gas became even more pronounced, but now became exclusively from the USSR and its allies. The state lost not so much control of (which it never had) but access to much of the rural areas. The state expanded the urban institutions under its control, and a larger proportion of the population depended on it not only for employment, education, and health care, but food as well. By the withdrawal of the Red Army, nearly all of Kabul's food and fuel was donated by the USSR and distributed by the government through a coupon system. As men under government control were largely enrolled in the war effort, women's civilian roles expanded rapidly in the Soviet-supported state sector.

 

A different culture of dependency developed in the other sector of the society, with different social effects. Guerrilla tactics and Soviet counter-insurgency devastated the rural economy in the country. Rural trading networks were also badly disrupted and food production fell by 80%. In some areas, notably the irrigated plains north of the Hindu Kush under government control, Kabul pressured the peasants to grow cash crops such as cotton and sugar beets for sale to government factories, increasing dependence on the state, as well as the role of cash in the economy.

 

The vast majority of the rural population fled, largely to Pakistan and Iran, where it depended on international aid. (Urban employment was more easily available in Iran, where refugees were not confined to camps, and many men were of fighting Iraq) In Pakistan, access to aid was largely controlled by chosen Islamic parties under the surveillance of the US and Pakistani intelligence and covert network, mainly the Directorate of Inter-Services Intelligence (ISI) and the CIA as recipients of Western, Scandinavian and Saudi supplied aid and military assistance. The humanitarian aid thus funded a stable rear base for the mujehads, just as the Soviet aid to Afghan cities constituted a stable base for the Kabul regime. In all each side poured over US$ 7 billion each to their proxies in this ten-year chapter of the Cold War. It was in these refugee warrior communities that Afghans also came in contact with the international Islamist groups, mainly Saudi/UAE and from other conservative/fundamentalist Arab states, who supplied,both humanitarian and military aid, as well as volunteers/fighters/trainers for the 'Jihad'.

 

In these communities, as well as in rural areas in Afghanistan (whether under resistance or government control) women's roles remained traditional or were even subject to new restrictions. These restrictions resulted both from the insecurities of life in exile and a reaction against reforms associated with the disaster that had overtaken the country.

This segment of the population came under the control of two related elites; the Mujehaddin party leaders outside the country and the field commanders inside Afghanistan. Both became important economic actors, displacing both the prewar state and the notables, many landowners, who had dominated village life. The party leaders were completely dependent on foreign aid initially, but some of them succeeded in turning it into personal fortunes.

 

Some field commanders outside the party structures and launched local insurgencies, such as the Hazaras in the Central Highlands, relied on local resources: zakat and ushr (Islamic Taxes) levied on agriculture, flocks, trade, and wealth, and contributions from traders and other wealthy individuals, as well as the plundering of government supplies. As the war intensified, however, commanders increasingly depended on foreign aid relayed by the parties, and thus,these foci of indigenous rebellion were ruthlessly purged by the 'Peshawar/Quetta machine' pursuingf its objective of total control over the 'Jihad'.

Field Commanders sought economic strategies that would increase their autonomy from the party leadership. In a number of areas far from the government controlled road network and the Jihad leaders in Peshawar/Quetta they established bazaars selling items mainly imported from Pakistan and Iran. They also provided security to traders in return for tribute. Where possible they sought aid from Western, Scandinavian or Islamic humanitarian organizations engaged in cross-border assistance from Pakistan. Such aid provided services and employment that increased resources under their control as well as their prestige. In some areas they pressured the peasants to grow opium, a cash crop they could tax. It was also during this period that the production of opium began to increase substantially from pre-conflict days.

 

The production of opium was related to one of the major macro-economic changes induced by the conflict: a rapid increase in money supply, which, combined with the destruction of much of the subsistence economy, induced an apparently large, if as yet unmeasured, monetization of economic and social relations, as well as hyper-inflation. The foreign supporters of the mujehads supplied them with millions of US $ dollars in cash, but it is unknown how much of that cash ever entered Afghanistan, rather than engrossing the bank accounts of intelligence handlers, Pakistani military and sustaining the Western, Scandinavian and Islamic 'assistance burocracy' that flourished as a result of the conflict. The Kabul government, however, accelerated the emission of currency after the decision to withdraw the Red Army. Not only did the government have to pay for expanded security forces, including militias recruited on a strictly mercenary basis, but also lost its principal sources of revenue. Soviet aid declined, and natural gas revenues fell after 1986, due to poor maintenance and lack of investment, and ended when the Red Army left in 1989, taking with them the technicians who ran the gas fields. Money supply data published by the IMF shows that beginning in 1987 and until the fall of the Najibullah regime in 1992 the value of the banknotes in circulation increased by an average of 50% per year. Observers spoke of food prices rising by factors of five or eight. The afghani rapidly lost value against the dollar, trading at twenty-five time the official rate by May 1992.

 

Such a situation created tremendous incentives to find cash-producing activities. Starting in 1987, after the introduction of Stinger missiles by the US/Pakistani handlers of the Mujehad, the Soviet decision to withdraw, and the resulting change in military tactics produced a much more secure road network. Both trade and humanitarian assistance that had previously traveled by pack animal over mountain paths could now go by lorry. Trade, including the import of goods into Afghanistan and the Afghan Transit Trade ( A system agreed in 1953 between Pakistan and Afghanistan for the latter not to pay import duties for goods imported through Karachi destination Afghanistan, a much abused system for smuggling in the region) into the neighbouring countries from both the Persian Gulf and the Far East via the trans-Siberian railway, and the drug trade increased. Field Commander Ahmed Massoud, who controlled the emerald and lapis lazuli mines of Panshjer and Badahkshan, also profited from the gems trade, levying a tax on each shipment. Ahmed Massoud also apparently enjoyed a protection income from the Soviets: he allowed convoys to pass through the Salang tunnel to Kabul in return for a share of their content. At the time, field commanders could accept the monetary payoffs offered by Kabul without renouncing their local power or allowing government administration into their areas, it also permitted them more autonomy from their US/Pakistani handlers that favoured certain factions in the struggle, notably the pushto fundamentalist Jamiyat-al-Islami of Gulbuddin Hetmayar.

Narcotics was possibly the main expanding source of cash incomes, for both the field commanders and the peasantry. The ease of marketing mainly opium but some hachis paste made it an obvious target for taxation and production by local power holders. Equally important, however, is that unlike any other crop available to the peasants, its cash value as an export was so certain that the buyers - filed commanders, the US/Pakistani army/intelligence and international syndicates - would advance credit for it in advance of planting under a system known as Salaam. The Afghan peasants receive a mere fraction of the eventual street value of the narcotic. In the provinces of the highest yield (Helmand, Kandahar, Nimroz, Farah and Badahkshan), the income per hectare from opium is less than 2.5 times that of wheat, and in some cases less than that. But a peasant who plants opium can obtain a cash advance to see his family through the winter and does not have to compete in marketing his wheat with free assistance handouts from the international community. Even the annual interest rate in the salaam system (usually as high as 100%) substantially lowers the realized income. Opium substitutes for credit as well as income and is thus one of the few reliable alternatives to dependency on humanitarian assistance.

As a result of these opportunities, field commanders substantially expanded their autonomy from the foreign controlled parties based in Peshawar/Quetta, from Kabul, and from the local population during the period of the Red Army withdrawal but before the fall of the Najibullah government, i.e.1987-1992. Different field commanders made different use of this new situation. A few like Ahmed Massoud and Ismail Khan used these resources to build territorially based institutions inside the country in Panshjer and Herat. Hekmatyar used revenue from the narcotics trade to build up an enlarged military force based in Pakistan and south Kabul. Others enriched themselves through payoffs, investment in trade, and predation, especially collection of arbitrary tolls on trade passing through their area. Hostilities broke out from time to time over the control of key routes, in particular those used for the transport of narcotics. The war economy, like the political structure, remained largely fragmented among small, largely predatory actors each of whom maintained an interest in sustaining the chaos that permitted his predation. At the same time, the global situation of lack of security of both persons and property constituted a major obstacle to the expansion of even this criminalized economy.

 

The fall of the Najibullah regime in 1992 brought mujehad groups to power in Kabul, but rather than establish a new form of state power that would provide the conditions for peacetime economic development, the new mujehad order reinforced the growing pattern of regional ethnic segmentation embedded in transnational networks and following the guidelines of the Pakistani/US handlers. An uneven pattern of regional consolidation partly replaced the previous fragmentation, but as envisaged by the powerful ISI strategy since 1979 no power could create a national state or market in Afghanistan. Tajik Ahmed Massoud's organizational power enabled him to occupy and hold Kabul (or most of it), but he could not extend his direct control beyond parts of the city and the northeastern region that was his base. The fall or defection of former regime forces to local mujehad groups in the rest of the country effectively removed the last obstacles to warlordism and economic predation in much of the country. Thus a partly new form of economic bifurcation developed.

Despite the change in power, the central state and its associated economy continued to develop in a similar way to the past. Despite the Islamic rhetoric of their government, Ahmed Massoud and President Rabbani did little to change the mores of Kabul in 1992 except requiring the women newscasters to wear headscarves on television. As the city was gradually destroyed by the civil war between Pakistani supported Hetmayar attempting to regain Kabul till 1995 and then when he failed by the new creation made in Islamabad of the so called student militia 'The Taleban' raised in the madrassas of the North West Frontier Province and Baluchistan (border areas in disputed Afghan-Pakistan territory, presently held by Pakistan.). The bazaars became less lucrative. Civil servants were often unpaid. The UN and international humanitarian agencies stepped in to replace the USSR as the only supplier of accessible food for the most vulnerable, but the amount they delivered remained only about half the amount supplied by Moscow (125,000 tonnes versus 280,000 tonnes of wheat per year). The blockade of the southern and eastern routes into the city by Hetmayar and the Taleban impeded the commercial supply of food.

The printing of currency remained probably the single most important source of state expenditure. Banknotes printed under contract in Russia continued to be delivered by weekly flights to the Rabbani government. The resulting devaluation of the afghani and inflation were so severe that the new government, the Islamic State of Afghanistan, introduced new currency notes. Under Najibullah the official exchange rate had been at 50 to the US$ dollar, and the largest bill was the 1,000 afghani note. By the summer of 1992, the afghani was trading at 1,000 to the US$ dollar, and continued to fall. The rabbani government issued first the 5,000 and then a 10,000 afghani note. Each time it did so the currency fell further. Hetmayar forbade the use of the 10,000 afghani note in bazaars under his control, while Dostum (the Uzbek warlord operating from Mazar-al-Sharif in the north of the country), after breaking with Rabbani in January 1994, had his own currency printed in Uzbekistan.

 

This partial regionalization of the monetary economy reflected the power, ethnic and economic fragmentation that was taking place in the country. Each region, controlled by different warlords, was more integrated with the neighbouring state than with the rest of the country. The northern Uzbek militias that had grouped themselves around ex-Soviet ally General Abdul Rashid Dostum controlled the trade with the newly opened states of Central Asia through the bazaar of Mazar-al-Sharif and the customs point at Hairatan/Termez. A variety of small Tajik commanders in badakhshan, allied with some of the Islamic forces that had fled the civil war in Tajikistan, controlled the narcotics crop of Badakshan, which moved north through the Tajik region of Gorno-Badahkshan with the help of corrupt Tajik officials, the Russian Border Forces and CIS peacekeeping forces of Kazahkstan and Kyrgyzstan. The Arsalan clan, headed by Haji Abdul Qadir and his family, were at the center of the Jalalabad mafia, profiting from Nangahar provonce's skyrocketing narcotic production and using the airport of Jalalabad as a center for the import of goods from Dubai for smuggling into Pakistan in alliance with the Afghan/Pakistan lorry mafia, the dishonest local administration of the NWFP, the crooked Pakistani Armed Forces and the notoriously corrupt government in Islamabad. Herat under Ismail Khan turned into a flourishing commercial center for trade with Iran and transit trade coming overland from the United Arab Emirates and the Persian Gulf (transported by the same transport mafia lobby described above) and out to Pakistan by the southern route. Southern Afghanistan became the largest narcotic (mainly opium) producing area of the country, possibly the world, as well as an entrepot for the smuggling of goods into Quetta, some over land and some via the Kandahar airport. The continued prevalence of different warlords and continual infighting in the area, however, imposed high costs to the traders in the form of tolls and tribute thus reducing profit margins to the transport mafia lobby.

 

The independence of the ex-Soviet Central Asian Republics transformed the economic stakes in Afghanistan. The oil and gas-rich states in Central Asia, in particular Turkmenistan, saw Afghanistan as a possible alternative outlet to world markets with a gas pipeline that through the western districts of Herat and Kandahar would avoid Russian control altogether of its economy and please Washington by not having to reverse US sanctions against Iran. Pakistan saw commercial and political connections to Central Asia via Afghanistan as key to the development of 'strategic depth' in its own half-century confrontation with India. Pakistan also needed natural gas, and the Dautalatabad field in Turkmenistan, just north of the Afghan border, could provide the cheap energy to Pakistan's ambitious industrialization programme. This, in turn, placed Pakistan in opposition to Iran, which aspired to be the outlet to the south for the resources of the entire Caspian region, both Central Asia and the Caucasus. Washington began to define a national interest in promoting national independence and economic diversification of the new Central Asian and Caucasian states, to weaken the Russian influence and without relaxing its sanctions to Iran. Pipelines through Afghanistan would nicely meet both goals. Various companies, including US-based UNOCAL, the Saudi company Delta, and the Argentine firm, Bridas, began negotiations with the Rabbani government and various de facto players in the Afghan quagmire. Bridas allegedly paid Rabbani US$ 1 million for a contract signed in January 1996 awarding it the right to the pipeline route (none of which was controlled by that government). The US/Pakistani lobby redoubled their efforts and there were reports of UNOCAL payoffs in Pakistan and the reinforcement of the Taleban push to Kabul in 1996.

This was the economic context in which the Islamic Movement of Taleban arrived in the scene in October 1994 under the auspices of Bhutto's government. Significantly, the Taleban's first major operation was to free a Pakistani trade convoy, led by an ISI (Pakistani Military Intelligence) officer, heading for Turkmenistan via Kandahar and Herat, from a blockade set up by a tribal (Achakzai) militia, who were demanding their share of the profits from the transport mafia lobby. The convoy rolled on to Turkmenistan via Herat, the Taleban improved their finances and resumed the conquest of Kandahar.

 

Six years later, the Taleban are the militarily dominant group in all regions of Afghanistan save the northeast, where Ahmed Shah Massoud and some local commanders affiliated with Rabbani hold out with Russian/Iranian support. To say that the Taleban control 85% of the country, as claimed by the pro-Taleban media, would be an exaggeration, but they have largely defeated or disarmed competitors, mainly local warlords in most of the areas reputedly under their control. The Taleban advance was partly accomplished militarily; with Pakistani assistance, they have built up by the year 2000 the largest armed force in the country with 30,000-35,000 men (over half are non-Afghans), as opposed by 12,000-15,000 men under the northern alliance. But the accomplishment was also financial. Like Najibullah and the Mujehads parties before them much of the allegiance professed to them was purchased for cash. In areas that are frequently reported to change hands between the Taleban and the Northern Alliance such as Kunduz, Takhar provinces and the Shomali plains/Pashjer Valley, the common chain of events is the payment of a commander by one side or the other, who then announces a change of allegiance. The Taleban captured Kabul in 1996 after paying Hizb-I Islami commander (Zardad, in Sarobi) who blocked their advance up the narrow Khyber route from Jalalabad.

 

The Taleban's victory has permitted the consolidation of a number of phenomena that had been developing previously for years, namely the emergence of transnational trade networks of the Afghan regional diaspora, linked to smuggling and narcotics trading groups in neighbouring countries as well as to political parties, religious groups, and elements of the armed forces and of the administration, especially in corrupt ridden Pakistan.

The key achievement of the Taleban is what they call 'security', meaning above all the suppression of virtually all forms of predation by local groups or commanders, including tolls, banditry, and extraction of exorbitant tributes. Taleban officials often describe this situation by telling visitors they can now drive from one end of the country to the other even at night and nobody will disturb them. (It is understood that a deal must be arranged with them in order to proceed) this method of describing their achievement illustrates its important economic motivation. The security provided by the Taleban has greatly reduced the cost of long-distance trade and provided the peasantry with greater confidence that they will enjoy the fruits of their labour, i.e. cultivation of opium. This is one reason for the rise in recent years of not only the transit trade but the production of opium to record levels in Taleban held areas. The rise in transit trade has also provided an important mechanism for the laundering of profits from the drug trade. A World Bank study published in 1999 estimates that this trade amounted to at least US$ 2.5 billion per year since 1997, the first year after the Taleban captured Kabul. Equivalent to two thirds of Afghanistan's total GDP and around 15/18% of Pakistani trade. These figures exclude trade in illegal goods such as narcotics and weapons.

 

Hence the Taleban have made possible a transition from localized predatory warlord politics to a weak kind of rentier state power based on a criminalized open economy. The benefits of this economic activity are evident in increased prosperity in Kandahar, Herat and Jalalabad. The trade also appears to have shifted to the Pushtu/Taleban stronghold of Kandahar. This increase in economic activity has provided the Taleban with a more stable source of revenue than other armed groups. With the assistance community sustaining the social costs of the basic health, education and food security of the population, the Taleban are de facto free to adjudicate these revenues to pursue their military objectives ignoring the needs of the population that are ruled by fear. According to several reports by the World Bank, EIU and experts on the region, the Taleban derive at least US$ 100 million from taxing Afghanistan-Pakistan trade, between US$ 200-250 million from the taxes on narcotics trade, they also receive contributions - around US$ 50 million - from the transport lobby mafia of Peshawar and Quetta in Pakistan. These trading and transport associations were the key financial backers of the Taleban and they reputedly donate large sums to the more than 4,000 madrassas in Pakistan that provide the bulk of the cannon-fodder that man the Taleban military forces.

 

Some of the transport associations are also involved in the narcotics trade, but the relationship of the high-level drug barons in Pakistan to the Taleban is less well known. There is reputed to be a network involved in the trade including Pakistani military and Intelligence officers active in Afghanistan, Pakistan drug syndicates, Pakistani government officials, and Afghan middlemen. This group is the main lobby behind Pakistan's political, military and financial support to the Taleban.

 

Until the summer of 1998 the Taleban also received direct financial assistance from Saudi Arabia and, to a lesser extent, the United Arab Emirates, which provided subsidized fuel, cash and political support. These were ended in protest over the Taleban's failure to expel or curb Osama Bin Laden after the attacks on the US east African embassies in July 1998 and all links finally severed after the imposition on UN sanctions in November 1999. Osama Bin Laden himself is reputed to have put some of his personal wealth at the Taleban's service, paying, according to some reports, for the capture of Kabul in September 1996. Since that time, however, his access to wealth appears to have decreased and after UN sanctions he has now disappeared from public view. Since the imposition of sanctions, it is not known how much income the Taleban may still receive from private supporters in the Persian Gulf and Islamic societies worldwide, but the porosity of the borders and the weak implementation of the sanctions regime indicate that a steady flow of cash valued at US$ 100-50 million continues and only the middlemen have increased their fees in the year 2000.

 

Interestingly, the Taleban have not begun printing their own currency, though they now control the head office and all major regional branches of Da Afghanistan Bank (the central bank). Banknotes apparently continue to be delivered to Afghanistan from Russia via the Massoud/Rabbani forces, and the Taleban continue to recognize these notes, despite their protest against this funding of their enemies. Since 1997 the Taleban have forbidden the use of 'Dostum' currency, however, which can be easily recognized by serial numbers and printing errors. Hence unlike all previous governments, the Taleban cannot finance their operations through the printing press. Alas Pakistan, of course, can finance the Taleban operations by printing rupees, as the Pakistani Rupee can be freely exchanged at market rates in any bazaar in Taleban controlled Afghanistan. Taleban banking officials state that they recognize Rabbani's currency because they do not want to undermine Afghan unity by circulating two competing currencies and in any case the Pak Rupee and the US$ dollar act as reserve currencies backing the Taleban.

 

The network of groups supporting the Taleban illustrates the intertwining of economics, politics, and religion in the region. The Taleban are a transnational movement led by Afghans but organizationally present in both Afghanistan and Pakistan primarily through the networks of Deobandi madrassas and political parties (Jamiat-ul-Ulema-I Islam). The Afghan leadership receives key aid (capacity building) from Pakistani Intelligence (ISI) and military officers and recruits troops from both sides of the border. The religious and political networks are in turn supported with transnational economic networks (consumer goods, smugglers, weapons, narcotics). These in turn have close relation not only with the Taleban but also with the Pakistan administration and government, where the smuggled goods are sold in smugglers' markets (bara bazaars). The transit trade thus erodes the integrity of the Pakistani state. Given that country's fiscal dependency on customs duties and sales taxes on luxury goods, the toleration of such a large black market (some sources estimate around 65/70% on the GDP) is a significant contributor to Pakistan's financial crisis and reliance on foreign aid (38% of Pakistan's annual budget for 2000 are grants and assistance from the European Union, Japan and USA among others)

 

The networks extend beyond Afghanistan and Pakistan. Afghanistan now appears to be the second largest trading partner of the United Arab Emirates (along with Saudi Arabia and Pakistan, one of the only three countries that recognize the Taleban regime). This reflects the purchase of duty-free goods in Dubai by Afghan traders shipping them onward for smuggling. Afghan traders dominate the grain trade in Dushanbe, Tajikistan. The northern-based opposition also benefits from the narcotic trade and smuggling (including gems from Pahsjeer valley such as Lapis Lazuli and Rubies), but the Taleban now control the areas producing 90% of Afghanistan's poppy, i.e. Helmand, Nimroz, Kandahar and Farah. There is also a thriving trade in smuggled fuel from Iran, where petroleum products are heavily subsidized, into Afghanistan, where for lack of a state the free market rules prices. Iran has formally declared a trade embargo against Afghanistan due to its opposition to the Taleban but it is indicative that only two months after UN sanctions were imposed the Tehran opened the Iranian-Afghan border in early 2000.

 

The burgeoning long-distance trade is an important source of Taleban power. The use of the provision of security to remove tolls and create a more uniform national market is a classic task of state building. The development of this economic pattern along with the supply of weapons through religious networks has allowed the ulama for the first time in history to control the state apparatus directly and impose its vision of an Islamic society. The Taleban are not a qawn or part of any mainframe movement within Islamic thought or tradition. They represent not just a partisan faction but an rural/fanatic religious aberration that formed a social power group of semi-educated mullahs that were duly marginalized over one hundred years of state building due to their ignorance of the basic tenets of Islam, but these angry local thugs gained some prestige and power through their Pakistani and American mentors as they were created and easily manipulated as cannon fodder for the anti-Soviet Jihad in the 1980s and as a basis for maintaining the Pakistani elite in power through the present economic regime in the 1990s. This network covers all parts of the country inhabited by Sunni Muslims but was marginalized and encapsulated by one century of state building in Afghanistan and the creation of new elites in partnership with the rulers. These new elites tore each other apart since the Daoud coup in 1973 an emigrated over the past two decades, while this rural madrassa education of Pushtun refugee and rural boys reinvigorated and gave power to this old stratum of religious zealots. It lost, however, its ties to the khan-dominated local economy and society, as it developed in exile and in warlord dominated Afghanistan, resulting in its becoming more extremist and deracinated than was traditionally the case and also linked to international networks, both political and economic. The replacement of the khan-dominated subsistence and local-trade economy by a warlord dominated commercial agriculture tied to long distance contraband also provides this elite with the opportunity to become direct contenders for power, as they never were before. Thus, they did not miss this chance in 1994.

 

The domination of the central state, or what is left of it, by this previously marginalized group of religious zealots has effectively reversed the pattern of social, political, and economic bifurcation developed under the royal regime and intensified under the communists. The capital city is now ruled by a force from the countryside, which is attempting to reverse the past hundred years of reform in Afghanistan. The Taleban have not used the resources they can mobilize to rebuild much of the state's administrative apparatus and, as noted, have not printed currency to finance their operations, as did presidents Najibullah or Rabbani. Most of the funds (two thirds, according to one senior Taleban official) go to the war effort, and there is no formal budget. Civil servants' salaries are derisory (around US$ 5 per month) and are paid infrequently in any case. Nor have the Taleban as yet shown interest in a development strategy. They raise resources from foreign supporters and criminalized trade, which they use in turn to fight their opponents and impose their bizarre and strict version of the Sharia, which consists largely of harsh and arbitrary prohibitions, rather than a positive vision of developing an Islamic society. Their attitude towards the state reflects both the negative experience of the past two decades, in which the central state dominated by a foreign ideology destroyed much of the feudal and archaic Islamic framework of rural Afghanistan, and the longer-standing Afghan popular view of the state as a predator that takes from the people and gives little or nothing in return. The annihilation of the state and the development and reformist agenda it had pursued under several governments, also spells the end of the emancipation of urban women and universal secular education for all citizens through decrees by modernizing male leaders.

 

In addition to the macro economic side of the conflict, there are also socio-economic patters of conflict at the local level that have certain patterns in common but differ from region to region. The collapse of the state has also changed the regime of property relations. The old regime in Afghanistan had established private property land and pasture and used these regulations in favor of Pushto nomads and settlers in northern and central areas of the country. State protection of property in land also make possible the development of absentee landlordism in areas around Kandahar and Herat, in particular. These arrangements changed greatly over the years of war, and the advent of the Taleban militia, a largely Pushtun group also professing support for private property in land, is changing them again.

Nomadic sections of Pushtun tribes such as the Ahmadzai formerly moved their flocks into the high mountains of the Hazarajat (central Afghanistan) during the summer. The revolt of the Hazaras against the communists in 1979, however, was also a declaration of autonomy from the Pushto-dominated state. Since that time Pushto nomads (locally known as Kuchis) have been unable to make use of the pastures of Hazarajat. In reaction to this prohibition, a number of tribes that formerly migrated there have given their support to the Taleban. In exchange the Taleban have ethnically cleansed areas of Hazarajat in order to implant these nomads once again. Similarly, the fertile lowlands on the edges of Hazarajat, particularly the north, are inhabited by largely Sunni populations who were also favoured by the state against their Shia neighbours. These groups also lost over the past two decades and now form the base of Taleban support in these areas. As Bamiyan changed hands in early 1999 from the Taleban back to the Shia Hazara parties and then back again, these groups engaged in burning homes, killing villagers, and expulsion of populations in a pattern similar to Balkan Ethnic cleansing to implant Taleban supporting ethnic Pushtos. This may well have been due as much to local conflicts that became articulated with the national one between Pushtos and Tajiks as to the latter alone.

 

Pushto nomads also lost pasture on the northern slopes of the Hindu Kush as Dasht-I Archi in Kunduz, and Pushto landlords lost control of their lands in these Tajik dominated areas. Some of these dispossessed forces were recruited into najibullah's 'national reconciliation programme' in 1989 (especially Pushto landlords who had been senators and local dignitaries under the king Zahir Shah but who had been dispossessed by the mujehads recruited from the peasantry). Landlords around Kandahar and Herat lost control of their tenants. In other areas the wealthier landlords were better able to afford the journey abroad and therefore were more likely to become refugees. Local ulama often allotted use of the land of absentee landlords to the families of mujehads or martyrs. All of these have created a rich field for property disputes, sometimes connected to ethnic, tribal, or clan conflicts, as well as class. The Taleban, in the guise of restoring lawful private property, seem to have used their authority to reward their supporters, which means certain tribes in some areas, and Pushtos generally. If security and stability return local conflict are guaranteed that will undermine peace at the local level in these ethnically mixed areas that will ensure recruits for the Taleban and justify their role as supreme arbiters, i.e. the Taleban are creating their own permanent rural constituencies or power bases.

'Peace' could come to Afghanistan in many forms. It could, for instance, arrive in the guise of a military victory by one faction, most certainly the Pushto Taleban or if the military equilibrium is drastically upset the Tajik Northern Alliance, but if the Taleban manage to occupy all Afghan territory it will transform the criminalized war economy into a criminalized 'peace' economy. Such an economy would leave the power holders as unaccountable to most Afghan people as they were under previous regimes. Most of the population would be left to fend for themselves, in conditions of greater security, but without a development agenda, public services, or reforms, notably the main victim would be the status of women.

Such a peace would continue to threaten the region, as expanding narcotics trade, money laundering, and smuggling would undermine governance throughout the region, strengthen Taleban forces in Pakistan, continue to pose both political and practical obstacles to international reconstruction assistance, and provoke a definitive reaction from Afghanistan's other neighbours in Central Asia. The resulting tensions among and within states in the region would make peace elusive indeed and regionalize the conflict from India to Kazakhstan as rival alliances prey on each other with four nuclear powers directly involved, i.e. Russia, China, India and Pakistan.

 

A more challenging but, if successful, more rewarding alternative, is to consider peacemaking in Afghanistan as part of a larger problem, of terminating the festering virus of radical Islam in Pakistan and transforming the whole Central and South Asian region. It has finally dawned on Europe, Japan and the USA that nothing less will work in the Balkans. There is no reason to think that Asia will be a simpler problem.

 

As a starting point, it would assume that aid for reconstruction should be decided upon and disbursed in such a way as to avoid the corrupt state structures and only tolerated when full accountability of the state to society is guaranteed. The existing economic actors would have to be drawn into alternative forms of activities from which they could realize reasonable profits that they could enjoy more easily than the perhaps larger but illicit ones today. Even starting a serious international planning process conditional on a cessation of hostilities and observance of minimal humanitarian and human rights principles (the right of both sexes to health and education would be a start) would change the dynamic, under which local actors assume that no aid for reconstruction is available or that it does not depend on their behaviour. The private sector must also be involved and resources administered and allocated outside the criminalized economy.

 

The key factor to peace in Afghanistan lies in neighbouring Pakistan. At this stage of the year 2000 Islamabad sees the protection of its interests in Afghanistan in a military-security perspective and to protect a source of revenue to its corrupt elite from smuggling and narcotics. Representatives of Pakistani businesses that stand to benefit from contracts for the reconstruction of Afghanistan should also be involved and set against their corrupt colleagues in order to provide the example that there can be such thing as an honest Pakistani business and provide the framework for national reconstruction. To put in cynically, perhaps a way could be found to launder narcotics and smuggling money into financing reconstruction rather than more conflict and despair.

 

A comprehensive plan for the reconstruction of Afghanistan would also have to include significant reform in Pakistan and an overhaul of its present putrid political institutions and dismal governance. A possible plan of action could develop along the lines of F.D.R.'s 'hundred days' in the early 1930s in the USA when he closed down the country to reform its institutions, this process could be overseen by the international community through a technical interim government in Islamabad prior to nationwide referendum for a new constitution that bars the military and feudal elite from the executive and devolves power to civil society. Greater cross-border cooperation and confidence building measures wit Iran and India might also help reduce regional tensions and create a common stake in regional reconstruction and development.

 

Most important is working with Afghans to change the image and role of the state, seen largely as a distant and indifferent if not hostile power supporting the criminalized economy. Local power structures that have largely grown up as defensive measures of self-rule to keep the state or warlords away have to be incorporated into official structures of planning and service provision. Provinces and localities should receive official authority to tax and plan in consultation with local shuras (councils). Resources could be directed into these more accountable planning processes rather than a dysfunctional corrupt central state.

The disintegration of the Afghan state creates such potentials, though the criminalized economy that has filled the gap in providing livelihoods has created interests that will resist it. But unless peacemaking can appeal to the interests of powerful economic actors and transform them into agents conducive to peace, it will be limited at best to halting the fighting in one place before social and economic forces provoke it once again elsewhere in this cursed region. The curse must be lifted through a comprehensive and structured strategy that marginalizes the current players benefiting from the state of permanent conflict.

(*) Andres Smith Serrano, Civil Affairs Officer based in Kandahar, Afghanistan with UNSMA (United Nations Special Mission to Afghanistan)