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Afghanistan Review, 08 May 2012

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Afghanistan Review, 08 May 2012 CIVIL - MILITARY FUSION CENT RE Afghanistan Review Week 19 08 May 2012 Comprehensive Information on Complex Crises This document provides a weekly overview of developments in Afghanistan from 01 – 07 May 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 euters outlines the case of the Milli Boot Factory outside of Kabul, which is on the DISCLAIMER verge of closing after losing its primary customer – the Afghan National Security Forc- R es (ANSF). The Afghan government reportedly cancelled a contract with the company, The Civil-Military Fusion Centre first agreed by the US government, to provide leather boots to the ANSF. American officials (CFC) is an information and had previously hailed the factory as a major success. The company had been slated to receive knowledge management organisa- approximately USD 40 million per year to provide boots to the ANSF. However, when the tion focused on improving civil- United States handed over procurement responsibilities to the Afghan government, the Afghan military interaction, facilitating ministries of defence and interior awarded the boot contract to Chinese and Pakistani firms. information sharing and enhancing The Chinese firm is selling boots to the ANSF for only USD 22 per pair as opposed to the price situational awareness through the of USD 62 charged by the Milli Boot Factory. Fargad Saffi, the owner of the Milli Boot Facto- CimicWeb portal and our weekly ry, has been forced to fire his 700-person workforce and is grappling what to do with USD 30 and monthly publications. million in un-used raw materials. The problems experienced by Saffi and his company could CFC products are based upon and potentially become more common, says Reuters. International forces in Afghanistan adopted link to open-source information an “Afghan First” policy in 2010 which impelled the military to procure materials locally from a wide variety of organisations, where possible. This policy is, according to Reuters, credited with creating 15,000 new jobs in research centres and media outlets. Afghanistan and potentially denying the insurgency added recruits. However, the Afghan gov- However, the CFC does not endorse ernment does not necessarily hold such a policy, and many Afghan companies which supplied and cannot necessarily guarantee the ANSF and other internationally-funded activities are now increasingly concerned that they the accuracy or objectivity of these will experience a decline in business similar to the one facing the Milli Boot Factory. sources. The withdrawal of foreign troops from Afghanistan is negatively impacting foreign investment CFC publications are inde- in the country, according to a senior official at the Afghanistan Investment Support Agency pendently produced by Desk (AISA) interviewed by Tolo News. AISA Investment Promotion Director Rohullah Ahmadzai Officers and do not reflect says his agency has noticed a decline in foreign direct investment since 2011, when the Inter- national Security Assistance Force (ISAF) announced it would be transferring security respon- NATO or ISAF policies or posi- sibility to the Afghan government and the ANSF by 2014. Providing tions of any other organisation. an example of investors’ declining willingness to en- The CFC is part of NATO Allied gage with Afghanistan, Ahmadzai notes one mul- Command Operations. tinational joint venture which appears to have withdrawn a proposal to develop an in- dustrial park focused on agricultur- al processing. You Are Reading the TH Tolo News also reports that Afghan- 200 EDITION istan’s Minister of Commerce and of the CFC Afghanistan Review CONTACT THE CFC Industries, Anwar ul Haq Ahady, If you enjoy the and the Iranian Ambassador to Af- CFC’s reports, please For further information, contact: ghanistan, Abolfazl Zohrevand, encourage your colleagues signed an agreement on 02 May. Afghanistan Team Leader to “Sign Up” at www.cimicweb.org. [email protected] Under the agreement, Afghan trad- ers will be able to use the Iranian The Afghanistan Team [email protected] port at Chabahar to import and export goods. Approximately 50 hec- Humanitarian Update tares of land are being allocated near the port for use by Afghan trad- ers. Zohrevand had the following to say about the agreement: “The Food security is expected to remain stable throughout outcome of this agreement is not only positive for Afghanistan and Afghanistan through September, according to the latest Iran relations, we also expect it to help the joint cooperation of Afghan “Food Security Outlook” report for Afghanistan pro- and Iran traders so they can expand through cooperation to the Middle duced by the Famine Early Warning System Network East and Asia.” The Iranian ambassador indicated that Afghanistan (FEWS NET). The wheat harvest is likely to be average, had applied for rights to use Chabahar port and that this agreement is and the country has received average to above-average the outcome of that application process. levels of rainfall. Pockets of food insecurity will, howev- er, likely be found in Badakhshan province and small Regional economic cooperation was also the subject of an article from parts of north-western Afghanistan. Rural economic con- The Hindu Business Line. The Indian government will soon be hosting ditions may improve given rising livestock prices and the a meeting of regional investors in order to encourage them to invest in increasing value of wage labour. Compensation for agri- Afghanistan. According to an Indian government official, “[t]he meet- cultural labour is up 50%. ing will be held before the Tokyo meeting on Afghanistan. The Delhi meeting will act as a sort of the bridge between the earlier Istanbul meeting on Afghanistan and the Tokyo meeting.” Indian Foreign Min- ister SM Krishna also instructed working groups on economic cooper- ation, capacity development and socio-cultural development – which were recently established between India and Afghanistan – to meet in the near future. Over the past nine months, Pakistan exported more than USD 1 billion in goods to Afghanistan but imported less than USD 7 million from Afghanistan, according to Dawn.1 Pakistan currently exports more goods to Afghanistan than to its much larger neighbours, India and Iran. Pakistan exports nearly as much to Afghanistan as it does to Chi- na. However, businesspeople in Pakistan have expressed concern that improving trade relations in the region could enable India to replace Pakistan as a major supplier of goods to Afghanistan. They indicated Most likely food security scenario, July-September 2012 that, if India is ultimately permitted to ship goods to Afghanistan via Source: FEWS NET Pakistan, Pakistani firms could reportedly lose approximately USD 2 billion per year in commerce. Lastly, according to Tolo News, the governor of Afghanistan’s Central Bank, Noorullah Delawari, told the Afghan parliament that shareholders owe approximately USD 250 million to Kabul Bank, which was taken over by the Afghan government in late 2010. The Central Bank has identified – though not necessarily seized – several properties owned by former Kabul Bank shareholders in Dubai. Governance & Rule of Law Stefanie Nijssen ► [email protected] he US and Afghan governments have signed the Strategic Partnership Agreement (SPA) outlining relations between the two countries after 2014, according to Voice of America (VoA) News. US President Obama signed the agreement with Afghan T President Hamid Karzai during an unannounced visit to Kabul on 01 May. Topics covered in the agreement include govern- ment reform, free and transparent elections and the elimination of corruption, according to Tolo News. The SPA also indicates that foreign interference in Afghanistan’s electoral processes must be avoided, President Karzai said. The SPA will be sent to the Afghan parliament for approval by both the Wolesi Jirga (upper house) and Meshrano Jirga (lower house). While the Haq Wa Adalat party welcomed the agreement, two major opposition groupings, the Afghanistan National Front and the National Coalition, criticised the SPA, according to Pajhwok Afghan News. The opposition parties said the agreement was signed in a rush without consulting political parties or considering recommendations made by the Loya Jirga. Afghan lawmaker Shukria Barekzai says “[i]t is very early to say that the parliament may pass [the SPA] or not”. According to the aforementioned VoA News article, Kabul-based independent researcher Omar Sharifi says that the SPA sends a strong message “that the international community will remain engaged and prevent a return to the sort of civil war that tore Afghani- stan apart for part of the 1990s”. However, the Taliban and Hezb-e Islami both denounced the Agreement, according to Pajhwok. The Taliban said the Afghan government does not have the authority to sign an accord that legalises a foreign presence in Afghanistan. A Taliban statement said the following: “The agreement will create more conflicts, insecurity and political instability.” Meanwhile, a Hezb-e Islami spokesman, Ghairat Baheer, told Pajhwok that “[n]o respect has been shown to the opinion of Afghans” in the estab- lishment of the SPA. 1 The Nation cited a higher figure, indicating that trade between Afghanistan and Pakistan is worth approximately USD 2.2 billion per year. 08 May 2012 Page 2 Afghanistan’s relationship with India was discussed on 01 May at a meeting between Afghan Foreign Minister Zalmai Rassoul and senior government officials in New Delhi, according to The Washington Post. Rassoul met with his Indian counterpart, SM Krishna, to discuss elements of the strategic agreement between the two countries which was signed in October 2011; the bilateral agreement was recently approved by both houses of the Afghan parliament, according to Outlook Afghanistan.
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