CIVIL - MILITARY FUSION CENT RE Afghanistan Review Week 46 13 November 2012 Comprehensive Information on Complex Crises This document provides an overview of developments in Afghanistan from 30 October – 12 November INSIDE THIS ISSUE 2012, with hyper-links to source material highlighted in blue and underlined in the text. For Economic Development more information on the 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/cmo/afg. Governance & Rule of Law Security & Force Protection Highlighted Topics ►Clicking the links in this list will take you to the appropriate section. Social & Strategic Infrastructure . Three international oil firms bid on oil and gas deposits in northern Afghanistan. DISCLAIMER . Wood and coal prices have risen sharply, endangering Afghans as winter nears. Hizb-e Islami will participate in presidential elections if they are fair and transparent. The Civil-Military Fusion Centre (CFC) is an information and . European Union defers USD 25 million in aid over poor progress in justice reform. knowledge management organisa- tion focused on improving civil- . Afghanistan disputes SIGAR conclusions regarding ANA capabilities. military interaction, facilitating . Ministry of Interior say foreign countries try to perpetuate the conflict in Afghanistan. information sharing and enhancing situational awareness through the . Herat residents claim Iran is obstructing the progress of Salma Dam project. CimicWeb portal and our weekly . Construction of Hairatan-Mazar-e Sharif railway second phase will be launched soon. and monthly publications. CFC products are based upon and link to open-source information Economic Development Steven A. Zyck ► [email protected] from a wide variety of organisations, research centres and media outlets. he International Monetary Fund (IMF) announced on 12 November that Afghanistan’s However, the CFC does not endorse economic growth in 2012 is likely to be higher than previously projected and that infla- and cannot necessarily guarantee tion was likely to be lower than in recent years, according to Reuters. Gross domestic the accuracy or objectivity of these T product (GDP) growth was likely to be 11%, and inflation would hover around 5%. In 2011, sources. Afghanistan’s GDP grew by 5.77% and inflation stood at 11.81%, according to the IMF’s CFC publications are inde- World Economic Outlook. pendently produced by Desk Three international energy companies, Dragon Oil of the United Arab Emirates, Kuwait Ener- Officers and do not reflect gy and Turkey’s TPAO, have bid for the exploration rights to oil and gas blocks in the Afghan- NATO or ISAF policies or posi- Tajik basin, reports the Economic Times. Afghan Ministry of Mines official Abdul Jalil Jumra- tions of any other organisation. ni said the following of the bids: “It is a great day for the people of Afghanistan because we’ve The CFC is part of NATO Allied never had such big companies interested in Afghanistan.” Exxon Mobil, one of the world’s Command Operations. largest oil companies, did not ultimately bid after having reportedly considered doing so. The successful bidder will be announced in the first quarter of 2013. Afghan President Hamid Karzai arrived in Mumbai, India on 09 November in order to promote Indian investment in Afghanistan, according to The Times of India. During the visit, which in- volved meetings between President Karzai and representatives of major Indian corporations, the Indian and Afghan governments signed a number of bilateral agreements; the agreements address issues such as mining, development cooperation and fertilisers in addition to broader CONTACT THE CFC political and security issues, reports the Economic Times. Early during President Karzai’s visit, For further information, contact: the Indian Cabinet approved USD 100 million for a Small Development Project (SDP) initia- tive in Afghanistan. The projects to be funded under the SDP initiative focus on a number of Afghanistan Team Leader sectors, including education, health and agriculture. This is the third phase of India’s SDP initi- [email protected] ative in Afghanistan, which began in 2006. However, this disbursement is far larger than the previous two phases. India has committed approximately USD 2.3 billion in aid to Afghanistan The Afghanistan Team since 2001. [email protected] In other regional news, The Economist joined several other media outlets in highlighting how Iran’s economic troubles are causing difficulties for western Afghanistan. Each day approximately 1,000 Afghans, mostly working-age men, are returning to Afghanistan from Iran. The returnees had worked illegally in Iran, mostly in factories and on construction sites. However, economic mismanage- ment and international sanctions have hobbled the Iranian economy and removed job opportunities for Afghans. Iran’s economic trou- bles are also causing difficulties for businesses in western Afghanistan. A loss of imports from Iran means that raw materials needed for industries in parts of Afghanistan have dried up, and increasing scarcity has forced prices up in markets in Herat. However, the news was not all bad for western Afghanistan. The provincial governor’s office in Herat told Pajhwok Afghan News that Canadian experts are using satellite images to assess gas reserves in Kashk-i-Kohna, Rabat Sangi and Gulran districts. The three districts border Turkmenistan, which is home to massive natural gas reserves. The assessment in Herat was recently held up by insecurity, which led the Canadian experts to leave the area, though work is anticipated to resume within the coming days. The Associated Press writes that Kandahar, the largest city in southern Afghanistan, is beginning to face an economic downturn. Businesspeople say that their profits are beginning to decline sharply. Esmatullah Khan, a 29-year-old businessman who had provided goods and services to foreign forces in Kandahar, says that he and many other businesspeople are planning to leave Kandahar. In addi- tion to seeing their incomes decline, they are particularly concerned about being targeted by the Taliban once foreign forces depart. Declining aid levels for Kandahar are also weighing on Afghans’ decision whether to stay in the area or depart. According to the As- sociated Press, the United States Agency for International Development disbursed USD 161 million for Kandahar province in 2011 but will only be providing USD 63 million this year. Afghans say the price of wood and coal for heating are rising quickly in Kabul as the winter approaches, writes Wadsam. Prices this year are reportedly higher than in the past. Traders say they are paying as much as AFN 6,000 (USD 118) for 50 kg of wood and are in turn charging around AFN 7,000 (USD 137) to AFN 7,500 (USD 147) for the same quantity. Ordinary Afghans as well as labour un- ions have been hoping to draw attention to the rising prices, which they believe the Kabul municipal government should somehow reduce. However, Khair Mohammad Safdari, who oversees markets in the municipality for the government, says they have no legal authority to set fixed prices. In a closely related issue, the Kabul Money Exchange Union told Wadsam that one US dollar now costs AFN 53.30, a rate higher than in recent years. Traders and experts say that fewer US dollars are available in Afghanistan as the international community’s presence declines and as demand for US dollars increases in neighbouring Iran.. The head of the Afghan Central Bank, Noorullah Delawari, says that the increase is also tied with the outflow of dollars from the country, including for the Hajj, the annual Islamic pilgrimage. The rising value of the US dollar against the afghani means that prices for imported goods are rising, thus putting added strain on Af- ghans’ purchasing power. Afghanistan’s silk industry is facing threats from cheaper, imported silks, thus causing difficulties for silkworm farmers and silk mak- ers, according to The Daily Mail. The silk trade in Afghanistan, particularly in the western city of Herat, has been evolving over time. Pure silk was increasingly replaced by synthetic varieties, which cost one-seventh as much per kilogram. Now synthetic silk products from foreign countries, such as China, are increasingly available on Afghan markets. While an Afghan silk scarf might cost around USD 8, an imported scarf could be purchased for as little as USD 3. Accordingly, Afghans involved in the silk trade are facing hard times, and their livelihood and their centuries-old craft are in danger of disappearing from Afghanistan. A number of other economic development issues, which are summarised below, emerged during the past two weeks. A number of fixed-price stores – akin to American “dollar stores” or British “pound stores” – are flourishing in Kabul, reports Wadsam. They sell goods for a fixed rate of either AFN 89 (USD 1.75) or AFN 99 (USD 1.94). While their customers are grow- ing rapidly, some customers complain that some of the items are of low quality. Afghanistan’s Council of Ministers announced that the Ministry of Commerce and Industries, rather than the agriculture or coun- ter-narcotics ministries, is responsible for promoting Afghan saffron within the country and abroad. Several Afghan government entities, including the ministries of agriculture and counter-narcotics, have been involved in promoting Afghan saffron in recent years. President Hamid Karzai ordered Afghanistan’s Foreign Minister and Attorney General to summon former Central Bank chief Ab- dul Qadir Fitrat back to Afghanistan, according to Pak Tribune. He fled to the United States in June 2011, claiming that his life was in danger for having combatted corruption and large-scale fraud at Kabul Bank. Some within President Karzai’s government, however, believe he should be tried for failing to stop the theft of nearly USD 1 billion in assets from Kabul Bank by politically- connected shareholders and borrowers.