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Afghanistan: The Long, Hard Road to the 2014 Transition
Afghanistan: The Long, Hard Road to the 2014 Transition
Table of Contents
  1. Executive Summary
The Economic Disaster Behind Afghanistan’s Mounting Human Crisis
The Economic Disaster Behind Afghanistan’s Mounting Human Crisis
Report 236 / Asia

Afghanistan: The Long, Hard Road to the 2014 Transition

Afghanistan is hurtling toward a devastating political crisis as the government prepares to take full control of security in 2014.

Executive Summary

Plagued by factionalism and corruption, Afghanistan is far from ready to assume responsibility for security when U.S. and NATO forces withdraw in 2014. That makes the political challenge of organising a credible presidential election and transfer of power from President Karzai to a successor that year all the more daunting. A repeat of previous elections’ chaos and chicanery would trigger a constitutional crisis, lessening chances the present political dispensation can survive the transition. In the current environment, prospects for clean elections and a smooth transition are slim. The electoral process is mired in bureaucratic confusion, institutional duplication and political machinations. Electoral officials indicate that security and financial concerns will force the 2013 provincial council polls to 2014. There are alarming signs Karzai hopes to stack the deck for a favoured proxy. Demonstrating at least will to ensure clean elections could forge a degree of national consensus and boost popular confidence, but steps toward a stable transition must begin now to prevent a precipitous slide toward state collapse. Time is running out.

Institutional rivalries, conflicts over local authority and clashes over the role of Islam in governance have caused the country to lurch from one constitutional crisis to the next for nearly a decade. As foreign aid and investment decline with the approach of the 2014 drawdown, so, too, will political cohesion in the capital. To ensure political continuity and a stable security transition, action to correct flaws in the electoral framework and restore credibility to electoral and judicial institutions is needed well before the presidential and provincial council polls. Tensions have already begun to mount between the president and the Wolesi Jirga (the lower house of the National Assembly), as debate over electoral and other key legal reforms heats up. Opposition demands for changes to the structures of the Independent Elections Commission (IEC) and Electoral Complaints Commission (ECC) and an overhaul of the Single Non-Transferable Vote (SNTV) election mechanism have become more vigorous by the day.

There is also, as yet, no sign of an agreement on the timing of the 2014 elections or the following year’s parliamentary elections, though President Karzai insisted on 4 October that the former would be held on time and “without interruption”. The IEC has hedged on publicly announcing the planned postponement of the provincial council polls, for fear that such an announcement could deepen the political crisis. At a minimum, the IEC must announce a timetable and a plan for the 2014 elections that adhere closely to constitutional requirements by December 2012, and a new IEC chairman must be selected to replace the outgoing chairman, whose term expires in April 2013, as well as a new chief electoral officer.

It is a near certainty that under current conditions the 2014 elections will be plagued by massive fraud. Vote rigging in the south and east, where security continues to deteriorate, is all but guaranteed. High levels of violence across the country before and on the day of the polls are likely to disenfranchise hundreds of thousands more would-be voters. The IEC will likely be forced to throw out many ballots. This would risk another showdown between the executive, legislature and judiciary. Under the current constitution and electoral laws, the government is not equipped to cope with legal challenges to polling results. Nearly a decade after the first election, parliament and the president remain deeply divided over the responsibilities of constitutionally-mandated electoral institutions. The IEC, its credibility badly damaged after the fraudulent 2009 and 2010 elections, is struggling to redefine its role as it works to reform existing laws. There is also still considerable disagreement over whether the ECC should take the lead in arbitrating election-related complaints.

It will be equally important to decide which state institution has final authority to adjudicate constitutional disputes before the elections. The uncertainty surrounding the responsibilities of the Supreme Court versus those of the constitutionally-mandated Independent Commission for the Supervision of the Implementation of the Constitution (ICSIC) proved to be a critical factor in the September 2010 parliamentary polls. The Supreme Court’s subsequent decision to establish a controversial special tribunal on elections raised serious questions about its own impartiality. Institutional rivalries between the high court and ICSIC have increased considerably since then, with the Wolesi Jirga aggressively championing the latter’s primacy in opposition to the president.

The tug of war between these two constitutionally-mandated institutions has extended to Supreme Court appointments; two of nine positions on the bench are held by judges whose terms have already expired, and the terms of three more expire in 2013. The ICSIC faces similar questions about its legitimacy, since only five of its required seven commissioners have been appointed by the president and approved by parliament. Ambiguities over the roles of the Supreme Court and the constitutional commission must be resolved well before the presidential campaign begins in earnest in early 2013. An important first step would be to appoint the required judges and commissioners.

Institutional rivalry between the high court and the constitutional commission, however, can no more be resolved by presidential decree than it can by a simple parliamentary vote. Constitutional change will ultimately be necessary to restore the Supreme Court’s independence and to establish clear lines of authority between it and the ICSIC. Even if wholesale constitutional change is not possible in the near term, legal measures must be adopted within the next year to minimise the impact of institutional rivalry over electoral disputes and to ensure continuity between the end of Karzai’s term and the start of the next president’s term.

Although Karzai has signalled his intent to exit gracefully, fears remain that he may, directly or indirectly, act to ensure his family’s continued majority ownership stake in the political status quo. This must be avoided. It is critical to keep discord over election results to a minimum; any move to declare a state of emergency in the event of a prolonged electoral dispute would be catastrophic. The political system is too fragile to withstand an extension of Karzai’s mandate or an electoral outcome that appears to expand his family’s dynastic ambitions. Either would risk harming negotiations for a political settlement with the armed and unarmed opposition. It is highly unlikely a Karzai-brokered deal would survive under the current constitutional scheme, in which conflicts persist over judicial review, distribution of local political power and the role of Islamic law in shaping state authority and citizenship. Karzai has considerable sway over the system, but his ability to leverage the process to his advantage beyond 2014 has limits. The elections must be viewed as an opportunity to break with the past and advance reconciliation.

Quiet planning should, nonetheless, begin now for the contingencies of postponed elections and/or imposition of a state of emergency in the run up to or during the presidential campaign season in 2014. The international community must work with the government to develop an action plan for the possibility that elections are significantly delayed or that polling results lead to prolonged disputes or a run-off. The International Security Assistance Force (ISAF) should likewise be prepared to organise additional support to Afghan forces as needed in the event of an election postponement or state of emergency; its leadership would also do well to assess its own force protection needs in such an event well in advance of the election.

All this will require more action by parliament, less interference from the president and greater clarity from the judiciary. Failure to move on these fronts could indirectly lead to a political impasse that would provide a pretext for the declaration of a state of emergency, a situation that would likely lead to full state collapse. Afghan leaders must recognise that the best guarantee of the state’s stability is its ability to guarantee the rule of law during the political and military transition in 2013-2014. If they fail at this, that crucial period will at best result in deep divisions and conflicts within the ruling elite that the Afghan insurgency will exploit. At worst, it could trigger extensive unrest, fragmentation of the security services and perhaps even a much wider civil war. Some possibilities for genuine progress remain, but the window for action is narrowing.

Kabul/Brussels, 8 October 2012

An Afghan woman and her children carry bags on their heads as they walk along a path on the outskirts of Mazar-i-Sharif, 5 November 2015. AFP/Farshad Usyan
Statement / Asia

The Economic Disaster Behind Afghanistan’s Mounting Human Crisis

Donors and Afghan state agencies must urgently tackle an economic crisis building up since 2014, when foreign troops started leaving and political instability worsened. The starting point must be a socio-economic assessment of just how big the problems are.

­As Afghanistan’s international donors meet in Brussels in a summit co-hosted by the European Union and the Kabul government on 4-5 October, Afghanistan’s rapidly deteriorating economy must be their central concern. Before this and an escalating humanitarian crisis merge to reach a dangerous critical mass, all must agree on several priorities – alongside renewed efforts to bring peace and political stability: realistic planning based on a thorough new socio-economic assessment, currently absent; adequate aid and support for state policy implementation, especially to help an alarming rise in numbers of displaced and shelterless people; halting repatriation of Afghan refugees, especially from Europe and Pakistan; and boosting investment and above all job creation in the country.

Afghanistan’s impressive average annual growth of nine per cent from 2002-2013 has declined rapidly since 2014. According to the World Bank’s World Development Indicators, annual GDP growth fell from 14.4 per cent in 2012 to 2 percent in 2013, and 1.3 and 1.5 per cent in 2014 and 2015 respectively. This drastic economic decline is mainly the result of the post-2014 international military drawdown and the year of intensified political instability that followed the 2014 election. Foreign troops once brought hundreds of millions of dollars into the Afghan economy, and their departure from 800 bases, large and small, deprives the country of what was after 2002 its largest single source of revenue. By one estimate, more than 200,000 Afghans have now lost jobs in logistics, security, and other sectors of a war-driven economy.

Heightened security concerns, political uncertainty and the erosion of the rule of law since 2014 have added to a devastating loss of confidence by consumers, producers and investors. Pervasive fears of a political meltdown have led to a surge in capital flight, with both wealthy and middle-class Afghans moving assets to the Gulf States, Pakistan, Iran, Turkey and Central Asia. Afghanistan’s human capital shrank too, especially among the urban middle class that had emerged after 2001 to play a stabilising role in Afghan politics. Hundreds of thousands of Afghans, mostly young and educated, left the country in 2014 and 2015, often to seek refugee status in Europe.

This sudden economic reversal has considerable political, security and social implications. Rising unemployment and widespread poverty is already widening the legitimacy gap between the National Unity Government (NUG) and the Afghan public, and expanding the reservoir of grievances that insurgents as well as hardline ethnic and regional players could further exploit. Unfortunately, it is not the NUG’s only pressing problem.

An Underestimated Humanitarian Crisis

The economic crisis may have been predictable, but its impact remains poorly understood and insufficiently reflected in strategic thinking and policies about the country’s future. The most revealing indication of such gross underestimation of the situation is the absence of any current, reliable socio-economic data. Three years after the economic reversal began, neither the NUG nor the international community have conducted any substantial assessment of the impact of the collapse of the war economy on the Afghan people and state.

The available figures show that the most vulnerable segments of the population are bearing the brunt of the burden. According to the Afghanistan Living Conditions Survey, the unemployment rate rose from 9.3 per cent in 2011-12 to 24 per cent in 2014. During the same period, the number of people who were not engaged in gainful employment increased from 26.5 per cent to 39.3 per cent of the labour force; among women, the rate increased from 42.4 per cent to 49.8 per cent. Those who manage to find work have to provide for a large number of dependents, with 47 per cent of the population under the age of fifteen. Although no such figures are available for 2015 and 2016, anecdotal evidence makes it abundantly clear that these negative trends are worsening. With Afghanistan’s estimated 32.5 million people growing by perhaps three per cent annually, adding half a million people to the work force every year, the decline in employment opportunities can only worsen.

Even without reliable Afghan government statistics for 2015 and 2016, the trends indicated by anecdotal evidence and UN figures point to a silently evolving, increasingly alarming humanitarian crisis. According to UNHCR, the total numbers of “people of concern”, including Internally Displaced Persons (IDPs), refugees and returnees, nearly doubled between 2013 and 2015, rising from 985,197 to 1.77 million people. UNOCHA estimates that 265,141 more were displaced from their homes in 31 of 34 provinces between 1 January and 15 September 2016.

On top of this has come an unprecedented rise in recent months in the return of registered and unregistered refugees from Pakistan, averaging 5,000 people daily in early September. Combined with the new internally displaced, an alarming one million (57 per cent of whom are children) could be on the move just as winter sets in between September and December 2016. All will require urgent food assistance, health, shelter and other essential services. This spike in the numbers of IDPs and returnees will increase the percentage of the population facing seasonal or permanent food insecurity beyond the current estimate of 40 per cent, and will further strain already meagre economic and employment opportunities and public services.

As Budgets Shrink

The decline in economic opportunities has long-term consequences for overall political stability. Over the past three years, state institutions have become by far the largest source of employment and providers of essential public services, but available economic resources are shrinking fast. Reductions in donor assistance and international contracts are increasing the fragility of the post-2001 political order, which is largely based on networks of patron-client relations in which powerful political players have become dependent on the continuous flow of international largesse. As international military spending and contracts shrink, these networks will rely even more on the proceeds of the informal economy including corruption, criminality, the opium trade and the illegal exploitation of resources such as mines.

The decline in economic opportunities has long-term consequences for overall political stability.

The NUG’s inability or unwillingness to respond to these challenges has profound implications for both its legitimacy and the future of the post-Taliban political order. In the Asia Foundation’s 2015 Survey of the Afghan People, citizens who believed the country was going in the right direction declined to 37 per cent from 55 percent in 2014. After insecurity, worsening economic conditions were cited as the main reason for such pessimism. While the NUG inherited problems that were already mounting before it was formed in September 2014, the Afghan public increasingly links the worsening economy with the government’s policies and/or inability to perform. While the NUG has prioritised the economy in its policy reform agenda, popular expectations created by such rhetoric have yet to be matched by a track record in forging or implementing reforms, let alone actual economic benefits. Aside from some major infrastructure projects such as energy transit routes, which depend on good security and may take years to make a tangible impact on the economy, the NUG has done little to respond to immediate asks such as job creation or the protection of the private sector against rising criminality and insecurity. 

The potential gains of some of the government’s most important infrastructure projects, including CASA 1000, which aims to carry power from Central Asia to South Asia, are threatened not just by insurgent violence but also by increased social and political discord over the distribution of national resources. For instance, in mid-2016 a persistent, predominantly Hazara Enlightenment protest movement emerged to oppose the government’s decision to change the route of another power transmission line bringing electricity from Turkmenistan to Afghanistan, from a route passing through the Hazara-majority Bamiyan province to one running through the Salang Pass. Absent transparency and accountability, such policy decisions could further escalate ethnic tensions.

The government’s ability to implement economic reforms is hampered by internal political gridlock, bureaucratic hurdles and pervasive corruption. Capacity constraints in most government ministries continue to adversely affect the execution of development projects. Payments are delayed to private sector contractors, suppliers and even the state’s own personnel. As of September 2016, nine months into the current Afghan fiscal year, the NUG has spent only 30 per cent of a $2.5 billion development budget. This slow pace in spending and execution is depriving a cash-starved economy of much-needed funds.

The government’s ability to implement economic reforms is hampered by internal political gridlock, bureaucratic hurdles and pervasive corruption.

Despite its many weaknesses and shortcomings, the NUG has succeeded in maintaining a degree of macro-economic stability and addressing the budgetary shortfalls it encountered in 2014. It has also raised domestic revenues above targets set by the International Monetary Fund. However, the new Afghanistan National Peace and Development Framework, 2017 to 2021 is based on an unproven assumption that the three-year economic decline has been stemmed and that over the next five years the economy will grow by an average of five per cent. Domestic revenue mobilisation is in fact a poor indicator of the economy’s overall health, and the current effort to raise more money runs the risk of further shrinking an already fragile and struggling formal tax base.

While taxation rates remain low in comparison to other countries in the region, there is a widening mismatch between what the government demands in terms of revenue and the services it offers. Meanwhile the costs of doing business are increasing, and rising violence and weakening government control is exposing an already shrinking private sector to extortion and other acts of criminality, including kidnapping for ransom. Those responsible may be the Taliban, urban criminal networks or a range of other actors, some with links to the state. 

Despite a rise in revenue collection in 2015, the U.S. Special Inspector General for Afghanistan Reconstruction (SIGAR) estimated that over half of the country’s customs revenues were lost to graft that year. Public sector appointments, including critical security sector positions, are often casualties of infighting and nepotism. All this indicates the complicity of powerful political networks at the highest levels of government, costs the state and Afghan people hundreds of millions of dollars in revenues, and curtails the delivery of even basic services. Astonishingly, corruption within the security sector extends to the sale of military hardware and ammunition to insurgents.

Recommendations

As international donors and the Afghan government devise their responses to address the deteriorating situation in Afghanistan, they should prioritise – alongside coordinated efforts to bring peace and political stability – a comprehensive and robust approach to an escalating humanitarian crisis, and adopt a more realistic vision of economic recovery and growth. They should:

  • Conduct a thorough national assessment of post-2014 socio-economic conditions and challenges to serve as the basis of more realistic strategic planning;
     
  • Urgently respond to the fast-growing humanitarian crisis, pledge adequate resources for the immediate needs of IDPs and refugee returnees for shelter, food, health and sanitation, and support the NUG in devising and implementing a coordinated policy to meet their longer-term needs for access to gainful employment;
     
  • Halt the deportation of Afghan refugees and asylum seekers from Europe; encourage the Pakistan government to end coercive, involuntary returns of all Afghan refugees, registered or unregistered; and provide financial and other incentives to sustain the millions that remain; 
     
  • Create new momentum in the fight against fraud by (i) tackling politically connected corruption networks within government; (ii) integrating robust anti-corruption policies with current revenue collection efforts; and (iii) ensuring robust oversight over payments in government contracts to private contractors and suppliers, while also streamlining these payments;
     
  • Ensure that funds reach the provinces, to promote more equitable distribution regionally and improve the writ of the government, while also prioritising the most under-developed and isolated regions;
     
  • Consider boosting private sector investment through guarantees and other protections and incentives; in particular encourage job-generating and long-term investments by the private sector through tax incentives; and provide, as far as possible, access to public services, including electricity, to firms that create jobs;
     
  • Take immediate, coordinated measures to ensure the security of private investors and business persons, including by targeting criminal networks, some containing elements within or linked to government institutions.  

CORRECTION: An earlier version of this article wrongly stated that the Enlightenment protest movement emerged to oppose the government's decision to change the route of the CASA 1000. This has now been updated to correctly cite that the opposition was towards the government's decision to change the route of another power transmission line bringing electricity from Turkmenistan to Afghanistan.