Afghanistan’s peace needs capital to endure

There is intense focus now on how to reach a peace agreement in Afghanistan, but little on how to sustain peace, particularly in an area that bores so many policymakers and pundits: economics. Yet peace with inadequate economic support risks adding demobilized soldiers and Taliban to the large numbers of unemployed Afghans. Massive social resentment easily can lead to a return to violence with space for terrorist movements such as al Qaeda and ISIS (more than 20 in all), to strengthen their foothold. 

Avoiding this danger requires international support and private investment. Both demand Afghan reform. And the international community needs to think about all three — aid, investment and reform — now.

Afghanistan does have a basis for prospering someday, but developing abundant natural resource deposits (copper, iron, gold and rare earth minerals), improving the Silk Road trade routes (rail, road, air and pipelines), expanding power generation, creating agricultural infrastructure, stimulating construction projects, and broadening the services sector will require large sums of money through aid and new private-sector investment. 

In the peaceful mid-1970s, Afghanistan matched Pakistan and India in per capita income. Since then, a chaotic Afghanistan has badly lagged in growth. To achieve a more rapid pace of economic expansion, any “new” Afghanistan must earn the public’s confidence anew.

Today’s growth is simply inadequate to fund solutions to the nation’s overall challenges, especially security. The World Bank reports, “Afghanistan continues to face major economic headwinds, with growth slowing to an estimated 1.8 percent in 2018. Only modest improvement in economic growth is anticipated in 2019.”

That scenario simply doesn’t cut it for a poor nation of around 35 million, with 25 percent unemployment overall (31 percent among the young). Three-quarters of the population are below age 30 (25 percent of the population is between ages 15-30), and only 54 percent of young Afghans are literate. Of immediate concern, the United Nations just reported one-third of Afghans need urgent humanitarian aid.

The $3.8 billion in annual international aid commitments — expiring in 2020 — have helped to keep a lid on any civil unrest that might result from such a troublesome mix of economic indicators. Even with the prospect of peace, billions of dollars more in aid will be needed for years to come.  

Commitments to such aid need to be part of negotiations, not an afterthought when donors have lost interest. And Afghans need to understand the reality that foreign aid alone will not generate enough to make the country’s economy grow rapidly enough. The private sector will need to contribute more, but getting both aid commitments and investments requires more reform than Afghan leaders have been able to produce so far.

While the economy actually has grown some tenfold since 2001, with the end of the Taliban government, it now needs to grow at 3 percent annually just to keep pace with population growth, and 7 percent-plus for two decades to get Afghans out of poverty.  

Even the Taliban understand today’s need; they are clear that, although they want foreign troops to leave, they want foreign money to stay and continue flowing into Afghanistan.

Market economies need sufficient consumer and producer confidence to expand and generate investment. That means when the ink dries on the coming peace accord, the Afghan public, in large numbers, will need to enthusiastically endorse it. It’s they who will have to decide whether it is wise for them to invest their own lives and treasure in tomorrow’s Afghanistan. And a young, aspirational population undoubtedly will want opportunities their parents never imagined. Many Afghan women certainly will.

In short, peace can be sustained only by an economy that ably serves the Afghan public. Building the public’s confidence in the future is an essential element to stimulate the broader private-sector investment needed to complement increasingly exhausted donors. However, if it is to pick up the slack, the private sector likely will need more convincing than the donor community has.

Ensuring the peace using professional apolitical security forces, enhancing the rule of law, faithfully promoting opportunity for all, improving educational opportunities, further reducing corruption, increasing diplomatic outreach, improving banking conditions, simplifying business formation steps, reforming government practices, streamlining trade and decentralizing government decision-making all will improve the prospect of Afghanistan attracting critically needed capital for development and creating the jobs needed to sustain an ongoing peace. Will a Taliban agenda contribute to such outcomes?

Afghanistan cannot survive as an independent nation, free of undue foreign influence, without attracting and retaining the funds needed to advance its own economic success. Warring Afghans in pursuit of peace would do well to keep donors and capitalists in mind.

Ronald E. Neumann was U.S. ambassador to Afghanistan from 2005-2007 and has made many visits back since. A former deputy assistant secretary of State, he is president of the American Academy of Diplomacy.

Mitchell Shivers is co-founder and president of Hughes+Shivers. He was a senior adviser to two U.S. ambassadors in Kabul and later a senior policy official at the Pentagon, including as Acting Assistant Secretary of Defense, Indo-Pacific Security Affairs.