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Afghanistan Review, 19 June 2012

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Afghanistan Review, 19 June 2012 CIVIL - MILITARY FUSION CENT RE Afghanistan Review Week 25 19 June 2012 Comprehensive Information on Complex Crises This document provides a weekly overview of developments in Afghanistan from 12 – 18 June 2012, with INSIDE THIS ISSUE hyper-links to source material highlighted in blue and underlined in the text. For more information on the Economic Development topics below or other issues pertaining to events in Afghanistan, contact the members of the Afghanistan Team, or visit our website at www.cimicweb.org. Governance & Rule of Law Security & Force Protection Economic Development Steven A. Zyck ► [email protected] Social & Strategic Infrastructure he Afghan Central Bank, known as Da Afghanistan Bank (DAB), was the subject of DISCLAIMER two recent media reports. Firstly, Noorullah Delawari, DAB’s governor, says that laws permitting the issuance of Islamic bonds, known as sukuk, will soon be presented to the The Civil-Military Fusion Centre T Afghan parliament, according to Pakistan Today. Such bonds would then be introduced in ear- (CFC) is an information and ly 2013. Sergey Dergachev, a German asset manager specialising in developing countries, says knowledge management organisa- that, following the introduction of sukuk, Afghanistan’s “dependence on foreign grants will be tion focused on improving civil- lowered, and a new market will appear on the map for sukuk investors that will provide inter- military interaction, facilitating esting diversification opportunities”. Afghan bankers also suggest that the Sharia-compliant information sharing and enhancing nature of sukuk may allow these bonds to draw in Afghans who have formerly shunned what situational awareness through the they considered to be forms of investing banned by Islam. CimicWeb portal and our weekly and monthly publications. Secondly, Khan Afzal Hadwal, DAB’s deputy governor, told Pajhwok Afghan News that the Afghan government would be inviting bids from firms and investors interested in purchasing CFC products are based upon and New Kabul Bank in August. New Kabul Bank was established based on the remnants of Kabul link to open-source information Bank, which had nearly collapsed in 2010 following mismanagement and fraud among senior from a wide variety of organisations, executives and shareholders. Afghan officials have attempted to re-claim Kabul Bank’s miss- research centres and media outlets. ing assets, which total more than USD 900 million; only USD 128 million in outstanding loans However, the CFC does not endorse have been recovered, and the Central Bank has reportedly been unable to identify the location and cannot necessarily guarantee of more than USD 400 million in Kabul Bank’s missing assets. the accuracy or objectivity of these sources. Chinese investment in Afghanistan was also the subject of a number of articles this past week. Afghanistan’s cabinet has authorised Minister of Mines Wahidullah Shahrani to sign an CFC publications are inde- agreement with China which will give the Chinese National Petroleum Company (CNPC) pendently produced by Desk rights to oil and gas in a small part of the Amu Darya basin in northern Afghanistan, writes Pa- Officers and do not reflect jhwok. Under the agreement, CNPC should initially invest approximately USD 400 million in NATO or ISAF policies or posi- oil exploration. Once drilling begins, the deal is anticipated to generate USD 7 billion in reve- tions of any other organisation. nues for the Afghan government over the 25-year duration of the lease. Experts told BBC News that oil and gas would not ultimately be extracted for five to 10 years given the time involved The CFC is part of NATO Allied in exploration and preparation. Command Operations. An article from the Asia Times raises ques- tions about CNPC’s plans to extract oil Visit the CFC’s New and gas from northern Afghanistan. Ten- sions have reportedly escalated between Tokyo Conference Page CNPC and influential figures in areas The CFC has established a page dedicated to where the Chinese firm hopes to operate. the July 2012 Tokyo Conference on Afghani- CONTACT THE CFC Chinese engineers have reportedly been stan. At that page you will be able to read news intimidated by local power holders, and pertaining to conference preparations and the For further information, contact: President Hamid Karzai’s attempts to in- on-going transition process in Afghanistan Afghanistan Team Leader vestigate the intimidation have allegedly along with relevant research reports and previ- [email protected] put him into conflict with powerful figures ous international agreements on Afghanistan. formerly associated with the Northern Al- This page builds upon the success of the CFC’s The Afghanistan Team liance, according to the Asia Times. page on the December 2011 Bonn Conference. [email protected] Furthermore, copper mining at Mes Aynak faces repeated delays and complications, demonstrating the challenge involved in extract- ing valuable resources from Afghanistan, writes The Wall Street Journal. Afghans relocated from Aynak several years ago face harsh living conditions in areas where the Afghan government helped them settle. “This mine is not going to thrive if these communities fail,” Michael Stanley, the lead mining specialist the World Bank told The Wall Street Journal. “The No. 1 risk is the social license to operate,” he continued, referring to the local support needed to enable mining to proceed unimpeded. However, local dissatisfaction is just one problem facing the mine at Aynak, which is located in Logar province. The article notes that the presence of archaeological treasures at the site and the removal of Soviet era landmines have further complicated progress. However, experts on Afghanistan’s mining sector tell The Wall Street Journal that the most significant source of delays may be the Chinese government’s desire to see how the security situation in Afghanistan fares after the withdrawal of the bulk of international troops from Afghanistan in 2014. Not- ing such a concern, Shahrani said that the Mines Ministry is “applying pressure” on the Chinese consortium which was awarded the rights to Aynak in 2007. He stated: “We don’t want the companies to come and sit on our resources and wait it out.” The Indian, US and Afghan governments will be engaging in a series of trilateral consultations to promote cooperation regarding is- sues such as agriculture, mining, energy, capacity building and infrastructure, reports The Hindu Business Line. India has increasingly taken steps to support development in Afghanistan and later this month is organising a conference to promote linkages between Af- ghan and Indian enterprises. US Secretary of State Hillary Clinton, announcing the trilateral consultation process alongside India’s External Affairs Minister, stated the following: “We very much appreciate India’s commitment to help build a better future for the Afghan people and helping them with more than $2 billion for development, supporting the New Silk Road Initiative, hosting the in- vestment conference, providing security, training, and support.” Afghanistan and Russia are working to establish a joint commission to promote trade and economic cooperation between the two na- tions, according to Khaama Press. Afghan Finance Minister Omar Zakhilwal has reportedly been in Moscow recently in order to sign a deal to establish the commission with the Russian authorities. A spokesman for the Afghan Finance Ministry, Aziz Shams, says that the commission would also facilitate Russian assistance to Afghanistan. Up to 140 projects would emerge or benefit from the Afghan- Russian agreement and commission, says Khaama Press. Pajhwok notes that Afghan Foreign Minister Zalmai Rassoul and Kazakh Foreign Minister Yerzhan Kazykhanov signed an agreement aimed at promoting economic cooperation between Afghanistan and Kazakhstan. The agreement, which was signed on 13 June, sig- nalled both countries’ intent to collaborate on issues such as a trans-central railway, trade, agriculture and mining. Saffron cultivation is reportedly helping to replace poppy cultivation in western Afghanistan, where farmers package the high-value spice in tins or perfume-type bottles, according to CNN. “Herat province has been cleaned of 99% of its poppy cultivation,” Basheer Ahmad Ahmadi, the agriculture chief in Herat, told CNN. Many Afghans reportedly support saffron cultivation given that it fetches a high price on Afghan and international markets and because, unlike poppies, it is legal and not in conflict with Islam’s ban on drugs. Yet some farmers note that saffron cultivation is not without challenges. One farmer, Hajji Ibrahim Aadil, said that he was robbed and physically abused by Taliban members for promoting saffron. He tells CNN: “I walked for days with my eyes wrapped with a piece of cloth. I was kept in a well for two days. Finally, they told me to stop promoting the cultivation of saffron.” In addition, weak farm-to- market linkages mean that some Afghan farmers have trouble exporting their saffron abroad, where it fetches a far higher price than in Afghanistan. In addition, the Afghan government and international community’s saffron promotion efforts could reportedly result in excess supply and, hence, drive down prices. In other news, wheat yields, the number of kilogrammes produced per hectare, are up 20% relative to last year in both Nangarhar and Laghman provinces in eastern Afghanistan, according to Pajhwok. Nangarhar Agriculture Director Mohammad Hussain Sapi says that wheat was grown on 70% of all agricultural land in the province. Sapi credits the increase in part to higher-quality seeds and fertilisers distributed by both the Afghan Ministry of Agriculture, Irrigation and Livestock (MAIL) and by the Food and Agricultural Organiza- tion (FAO) of the United Nations. In addition, the distribution of food to food insecure communities in eastern Afghanistan also pre- vented families from eating the wheat seeds to stave off hunger before they could be planted. One farmer interviewed by Pajhwok says he hopes the Afghan government will purchase some of the excess wheat produced this year in order to harvest the seeds for use dur- ing the next growing cycle.
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