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Afghanistan: New Government Will Face Rebuilding The Economy

Efforts to form a post-Taliban government are now in full swing, with the Northern Alliance opposition agreeing to UN-sponsored talks that it is hoped will lead to a broad-based administration. But whoever takes power will face an unenviable task -- that of trying to rebuild an economy shattered by decades of civil war.

Prague, 19 November 2001 (RFE/RL) -- It's virtually impossible to put numbers on the devastated Afghan economy -- there are no reliable statistics and the last census was taken nearly 30 years ago.

But you don't need statistics to tell you the economy is in ruins. Zubair Khan is an Islamabad-based freelance economist who has surveyed Afghanistan.

"Industries? There was hardly [anything prior to the past two decades of war], but when I did my last survey of Afghan trade last year I was told there are about 26 functioning industrial units left in the country. The others have been closed down, their machineries have been ransacked or stolen and sold for junk, and there was just nothing there. There is no central electric-power generation, the dams have dried up because of the drought in the last few years, many cities provided their own electric power to a limited number of consumers through diesel power generation. In other words, it's an economy that's difficult to imagine anywhere else in this world in the 21st century."

Afghanistan is rich in minerals and its prewar economy was based on agriculture and animal husbandry. But over 20 years of war and three years of drought have left many people reliant on smuggling and drug production for their income -- and dependent on foreign food aid to eat. Millions of Afghans have fled the country. The last group to claim to govern Afghanistan, the Taliban, did not provide any services and collected no taxes. Afghanistan was last self-sufficient in terms of food in 1978 -- the last year of peace before the Soviet invasion. The currency, the afghani, is printed without any monetary control.

How to rebuild the economy in the face of such challenges is the topic of a three-day international conference next week in Islamabad. The World Bank is co-hosting the conference, which it hopes will bring together "knowledgeable Afghans" and other experts.

World Bank chief James Wolfensohn said yesterday a reconstruction plan will only be put in place when humanitarian relief efforts have been completed and a political solution has been found. In preparation for the conference, the bank released what it called an "approach paper" that outlines some of the tasks ahead. Some of the short-term priorities it lists are:

-- to achieve agricultural recovery and food security

-- to generate livelihood for returning refugees

-- to rebuild main roads

-- to expand the demining program

-- to generate massive short-run employment through public works programs

-- to restart and expand key social services like education and health, with a focus on reaching girls and women

The bank does not put a price tag on this wish list, but says it is expected to be high. Just removing mines will cost $500 million.

Previous reconstruction programs for smaller places ran into the billions of dollars. In the West Bank and Gaza, an area with a population one-tenth that of Afghanistan, the price tag was $3 billion. In Bosnia-Herzegovina, which has a quarter of Afghanistan's population, total pledges were $5.4 billion.

Farhan Bokhari is an Islamabad-based journalist for Britain's "Financial Times."

"Nearly everything that you can imagine that is necessary for a basic, decent human life is shattered and not available to most Afghans. What you're talking about is on the one hand the need for [billions] of dollars of fresh assistance from the Western world, especially from the U.S. But then that assistance [should] flow into all kinds of basic infrastructures. Education, health, housing, building roads and bridges -- everything that you could possibly imagine which is an essential part of what a basic civic infrastructure should be like."

Whether this cash will be forthcoming is open to question. Official aid from the world's rich nations currently amounts to just one-quarter of 1 percent of their economic output.

At talks this weekend in the Canadian capital Ottawa, representatives from rich nations mulled over how to improve the lives of people in the world's poorest countries but failed to come up with specific plans or pledges.

Bokhari says the money for Afghanistan's reconstruction will have to be in the form of grants, as Afghanistan is hardly in a position to be able to repay loans.

Aside from the basics, another huge task will be to create the institutions that a country needs to manage its economy. Farhan Bokhari says, "The country doesn't have a central bank, it doesn't have working ministries or centralized planning. Creating all those institutions is obviously going to be essential for any humanitarian relief operation. But what needs to be understood is that creating these on top is not going to be sufficient. You really have to make certain that whatever assistance goes into Afghanistan must trickle down to the most basic grassroots level for it to begin making a difference to the lives of ordinary Afghans."

The World Bank says it is looking for exiled Afghan professionals who could help. The bank said today some 200 participants are signed up for next week's conference, whose other co-hosts are the United Nations Development Program and the Asian Development Bank. It said around one-third of those participants are Afghans.