“The only drawback is money,” emir Abdur Rahman Khan lamented, as he battled uprisings against his efforts to build a modern Afghanistan from 1880 to 1901, “which I am struggling to accumulate day and night.” “The Treasury was empty,” he explained, “and a great deal of money was required for internal expenses, as well as for the building and keeping in order of the fortifications.” “I had issued orders to collect the revenue from the country, which was in arrears, and people did not like to pay.”
For generations, the emir wrote in his autobiography, the Afghan state had kept the peace by paying subsidies to clerics and tribal chieftains; this practice had to end. “It induced people to live a lazy life and get Government money for doing nothing, rewarding them for being helpless creatures of no use to their country or to themselves.”
An 1885 photo of Emir Abdur Rahman Khan (Image: Wellcome Library, London; photo by Lillias Hamilton; via Wikimedia Commons CC 4.0)
Amid the blood-red sunset of America’s two-decade nation-building effort in Afghanistan, there’s growing concern about what the night that lies ahead might bring. Ever since 9/11, Afghanistan has registered impressive gains, especially in education, reduced infant mortality, and maternal health. The bad news is, those gains will not endure—and there’s good reason to worry the State itself will implode.
To many, it may appear efforts to avert this outcome are fated to fail. The simple version of what happened—$2.26 trillion spent, and thousands of lives lost since 2001 to build a house of cards that collapsed inside weeks of the United States military leaving Afghanistan—is well known. There’s more to the story, though, than the top line.
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For the first two years after 9/11, United States policy-makers had no intention of involving themselves in building a nation-state. To some, the task seemed impossible. Eviscerated by decades of war, the country was in ruins. The country’s GDP per capita was fourth from the global bottom. Life expectancy for children below five was in the lowest 15% of countries. Girls and women were banned from schools and the workforce; just 21% of school-age children were receiving a formal education.
In a 2002 report, the World Bank noted: “Its economy is in a state of collapse, its infrastructure destroyed, its formal state institutions severely undermined or nonexistent, and its social indicators the worst in the world.”
From 2003, however, strategic planners came to understand that reconstructing Afghanistan’s state and civil society was key to preventing its future use as a safe haven for terrorists and narcotics traffickers. Funding began to surge in 2004, along with United States troop numbers, in an effort to ensure security across the country, and rebuild its institutions.
Early on, the results seemed roseate: GDP growth averaged around 10% every year in 2003-12. Inside Afghanistan, the evidence of what appeared to be an economic miracle were evident everywhere: mobile phones and the internet proliferated across a country which had few functional phone lines on the eve of 9/11; there were new colleges; new roads; new businesses.
The United States’ massive expenditure on the security sector, as well as its development aid, seemed to have sparked off a cycle of development that would transform Afghanistan.
For those who were looking, though, the shadows of this month’s downfall, were evident even in this high noon of optimism. The reasons aren’t too far to find. For one, little effort was made to build institutions or develop state capacity. Forced by political leaders to hasten the speed of developments, bureaucrats responded by awarding the vast majority of funding to private-sector contractors. From 2002-21, the United States directed just 12% of all reconstruction aid through Afghanistan’s budget.
Worse, Afghanistan became submerged in a tidal wave of cash. In 2010, United States reconstruction spending exceeded Afghanistan’s entire GDP, far exceeding what its economy could absorb. In the absence of credible regulatory institutions, corruption reached epidemic proportions. In 2010, United States officials sent home a cable famously recording Afghan National Security Advisor Rangin Spanta as saying: “corruption is not just a problem for the system of governance in Afghanistan; it is the system of governance”.
Feuds over who got the money—and how it was used—created new grievances between segments of the elite, communities and regions. The political system became highly criminalised, with government office being used for personal gain.
In 2012, US President Barack Obama’s administration ended a brief surge in troop numbers, having concluded that it had no significant impact on degrading the insurgency—and little appetite for a showdown with Pakistan over Taliban safe havens on its territory. As troop numbers declined, so did both military and development spending on Afghanistan. The economy began to splutter, and then slow down; GDP growth fell to just 1.4% by 2016. Economists at the International Monetary Fund estimated that all the jobs created during the troop surge in 2009 had been lost by 2016.
Long before United States troops ended their military involvement in Afghanistan, aid levels had fallen to their lowest levels since 2006—gutting the country’s economic life. Escalating levels of violence, and the closures of borders during the Covid-19 pandemic, also delivered hammer-blows to the economy. As funding dried up, so did the Afghan State’s ability to buy loyalty, culminating in the collapse of President Ashraf Ghani’s regime.
United States officials, a recent report by the country’s Special Inspector-General for Afghan Reconstruction observed, “often underestimated the time and resources needed to rebuild Afghanistan, leading to short-term solutions like the surge of troops, money, and resources”. They “also prioritised their own political preferences for what they wanted reconstruction to look like, rather than what they could realistically achieve, given the constraints and conditions on the ground”.
There’s little doubt—with the benefit of hindsight—that things could have been done better. A more responsible, agile government might have pumped more resources into Afghanistan’s underdeveloped agrarian sector.
Even before the Taliban took Kabul, the Afghan government’s revenues barely covered salaries for its employees, leaving little for development expenditure. Afghanistan’s foreign exchange reserves have now been frozen, and the future of development assistance is unclear. The impact of troop withdrawal has also been brutal: the closure of Bagram military base alone is estimated to have led to the loss of over 15,000 jobs, which will never come back.
The new regime’s prospects of generating revenue are bleak. Lacking roads and railways, and with high levels of violence, there’s little chance of investors being drawn to Afghanistan’s estimated $1 trillion mineral reserves. Even China, which has demonstrated willingness to invest in high-risk environments, has shown no interest in developing copper mining leases it was awarded a decade ago.
In Afghanistan’s cities and villages, meanwhile, millions face growing inflation, eroded incomes and shortages of fuel and food. Even though banks have resumed functioning, a large-scale exodus of both skilled workers and capital is underway.
In a magisterial essay, the economist Tirthankar Roy has pointed out the core problem would have been familiar to emir Abdur Rahman and his successors. Lacking resources, and cut off from the maritime routes that powered the industrial revolution, “governments running the country from Kabul never could impose their writ over the entire country”. “With their mineral resources, arid area states like Iran could create a strong central government in the early-to-mid-twentieth century. That option was not available to the Afghan state.”
Imperial military despotism, Roy has argued, allowed the centralisation of authority elsewhere in other resource-poor regions of Asia, like India, eventually allowing for economic transformation. In contrast, “resource-poverty, and a weak centre, made economic development a troubled process throughout Afghan history”.
For the world, the choices ahead are bleak. Economic engagement with the Taliban regime could empower a ruthless regime, legitimise its violation of the human rights of its citizens, and finance its use of terrorism. A collapsed Afghanistan, though, could degenerate into narco-state which exports terrorism; an epicentre for a cyclonic destabilisation of the entire region.
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