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Afghanistan's good news: seeds of economic progress

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Afghanistan's good news: seeds of economic progress | csmonitor.com

WASHINGTON – Afghanistan has experienced little good news of late. The Taliban and its extremist allies have made a powerful comeback, especially in the southern part of the country. Violence is four times more intense than in 2005. Tactics used by Iraqi insurgents, including roadside explosives and suicide bombings, have migrated to Afghanistan.

Afghanistan's opium harvest has reached the highest levels ever recorded, showing a 50 percent increase over last year and providing 92 percent of the world's supply. Drug proceeds are supporting the Taliban and helping to fuel the growing insurgency.

Deteriorating security has set back Afghanistan's development efforts. Aid and reconstruction workers are targeted; immunization programs have been halted; scores of Afghan schools have been threatened or torched, leaving more than 200,000 children without access to education.

Hidden in the bad news, however, are the seeds of Afghanistan's future success: economic progress. Afghan president Hamid Karzai, who was in Washington this week and met twice with President Bush, remains relentlessly optimistic about his country's prospects and says these negative trends can be arrested.

The Coca-Cola effect

Earlier this month Mr. Karzai presided over the opening of a $25 million Coca-Cola plant in a new industrial park on the edge of Kabul. It is the first large factory to open in the country since US-led military forces toppled the Taliban in late 2001. The bottling plant, the project of an Afghan businessman, will provide 350 badly needed jobs.

Responding to the deteriorating security situation and countering the exploding drug trade get the lion's share of attention today. But many in the international community suggest that economic development that leads to jobs and the prospect for better lives is the real key to Afghanistan's long-term stability and the best way to marginalize the Taliban, regional warlords, and drug traffickers.

Among those who share this view is Gen. John Abizaid, head of the US Central Command: "It's important that the international community stays focused militarily, but also ups the ante with regard to economic reconstruction.... When there is economic progress, security also moves in a positive direction."

In the first instance, upping the ante for economic reconstruction means more resources for the expansion of electricity (only 6 percent of Afghans have electricity), major water projects to improve agriculture productivity, development of the infrastructure for mineral extraction (copper, iron, marble, and coal), and accelerated road building. "Wherever the road ends," says Lt. Gen. Karl Eikenberry, the American military commander in Afghanistan, "that's where the Taliban starts."

Unfortunately, from the outset, the United States and the international community underfunded the rebuilding effort in Afghanistan. Despite being the world's main front in the "war on terror," Afghanistan has never received the investment of resources needed to stabilize it, and it has been given far less in reconstruction assistance from world donors than other recent postconflict areas, including Iraq, Kosovo, and Bosnia. "The international effort to rebuild Afghanistan is in a desperate state," says the Sept. 9 issue of The Economist.

According to World Bank estimates, Afghanistan needs a minimum of $4 billion a year in aid to implement the comprehensive state building and reform plan (including counternarcotics) agreed to at the London Conference on Afghanistan in January, attended by more than 60 countries and international organizations.

The US should make a commitment to provide half that amount during the next five years with the second half provided by our European, Japanese, and other partners.

But economic progress in Afghanistan goes beyond reconstruction and development aid. It also means greater efforts to promote economic progress through trade and investment. Fortunately, Coca-Cola is not alone in taking on both the challenges and opportunities that exist in Afghanistan.

MCT is a US corporation that owns part of Roshan, the largest telecommunications firm in Afghanistan. Roshan just made another $60 million investment to expand its operations in the country. Roshan has been operating there for three years, demonstrating that companies with a long-term commitment in Afghanistan are making profits.

From cars to butter: new markets

Ford Motor Co. has identified Afghanistan as a new market opportunity and is seeking local companies for a Ford distributorship. 3M corporation has selected exporters to distribute its products in Afghanistan. Boeing has entered into a partnership with Ariana, Afghanistan's national airline. Land O'Lakes dairy company is at work training in the agricultural sector.

During his visit to Washington, Karzai met with a group of leading US CEOs. In Kabul, the Afghanistan Investment Support Agency has been set up as a one-stop-shop for the promotion, registration, and licensing of new investments - making Afghanistan, according to a 2005 World Bank survey, one of the world's leaders in the speed needed for business ventures to get started.

Next month, the Afghan government will sponsor its second annual business promotion road show in the US and Canada.

There will be visits to Des Moines, Iowa, to talk about agroprocessing; to Los Angeles to explore information-technology (IT) and telecommunication ventures; to Toronto for exchanges on energy and mining; and to New York to see what's possible in the construction, finance, and insurance sectors.

The road show will be kicked off with a business matchmaking conference in Washington, sponsored by the Afghan-American Chamber of Commerce, bringing companies and financial and government contacts together.

By working with local companies, says the Afghan government, American investors, "can both contribute to the overall economic prosperity of Afghanistan and enjoy opportunities to profit from this emerging market." They will also be investing in a stable, prosperous, and democratic Afghanistan - and the long-term national security interests of the United States.
 
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Asia Times Online :: South Asia news, business and economy from India and Pakistan

HERAT, Afghanistan - Abdul Samad has given up growing poppies. The farmer from Gulmir, from a village in Pashtun Zarghon district of Herat province, has found monetary and spiritual benefits in switching to saffron.

"I always felt sinful when I was growing poppies," he said. "The money brought me no joy, and did not allow me to change my life."

In 2007, Afghanistan supplied more than 90% of the world's opium poppy, the raw material for heroin.

Abdul Samad grew the illegal crop for five years until a new government program helped him make the switch to saffron, the world's most expensive spice.

"I make more money than I used to," he said. "With poppy, I got between US$400 and $600 for each jerib of land. Now I make more than US$5,000." A jerib is approximately half an acre.

Saffron is prized for its taste and color, and is used in food and dyes. People in Herat use it to brew tea when they can afford it. Even locally, a small five-gram knot of the substance costs close to US$25, a bit pricey for villagers making no more than $200 per month.

But saffron is catching on. Bashir Ahmad Ahmadi, head of the marketing department for Herat's Department of Agriculture, estimates that the province now has 212 hectares planted in saffron, with annual production approaching 50-70 tonnes. This may be miniscule compared to the 7,700 tonnes of opium that Afghanistan produced from 157,000 hectares in 2008, but it is a start.

The nation's naturally conservative poppy farmers say they need more secure international markets for saffron before they make the switch in bigger numbers.

The world price of saffron has skyrocketed over the past few years, and is now running at about US$3,000 per kilogram. Rumors that it may prove therapeutic in cancer treatment has caused demand to spike even further.

This is good news for Afghan farmers, who are looking for an alternative to poppy. The banned opium plant is expensive to harvest, and there is the risk of police involvement and possible legal destruction. Worst of all, it is bringing in much less money than it used to. The price of black tar opium has fallen precipitously over the past three years, mainly due to overproduction.

Experts say that saffron is being grown in 16 provinces of Afghanistan, including the northern provinces of Balkh and Kapisa, but the bulk of the product comes from Herat, in the west of the country on the border with Iran.

Saffron has a history in Herat stretching back more than 80 years. The first plants were cultivated in the Hauz-e-Karbos area of the province, and in 1973-74 the government conducted experiments in saffron cultivation.

But war intervened, and the project was dropped. Not until 1991-92, with the influx of returnees from Iran, was saffron reintroduced. Iran, jealously guarding its near-monopoly on saffron in the region, did not allow saffron bulbs to be exported. The enterprising Afghans smuggled them in.

"The returnees from Iran brought bulbs with them, illegally, and began to grow saffron in Ghoreyan district [in Herat]," said Ahmadi.

When the Taliban took over in 1996, they encouraged farmers to grow poppy, said Abdul Qader, a farmer from Pashtun Zarghon.

"The Taliban were buying our harvest for a very high price," he explained. "Many saffron farms were destroyed, and converted to poppy."

Poppy cultivation rose quickly, said Qader, as drugs were the main funding source for the Taliban. But in 2000-2001, the Taliban banned poppy. Some see savvy marketing behind the prohibition.

"When the price of opium dropped on world markets in 2000-2001, [Taliban leader] Mullah Omar issued a decree banning poppy," said Ahmadi. "They wanted to boost the price of poppy in world markets."

After the Taliban were routed in the 2001 United States-led offensive, farmers returned to the now lucrative poppy trade, joining an Afghanistan-wide movement that made the country the number one opium producer in the world.

Drug money funds the insurgency and fuels government corruption, hindering development and threatening to turn Afghanistan into a pariah state. The search for an alternative to poppy has been going on for several years, and some think that saffron might be the answer.

The government of Herat, with assistance from the local, Italian-led Provincial Reconstruction Team, began to distribute saffron bulbs free of charge to those willing to make the switch. Saffron grows well in Herat's hot, dry climate, say farmers. It is also easier and cheaper to grow and harvest than poppy.

"Saffron does not need a lot of water," said Abdul Qader. "It does not need a lot of fertilizer, and you need fewer people to harvest it." Also, he added, the bulbs, once planted, are productive for six years.

Like Abdul Samad, Qader said that his life had improved dramatically since he began to grow saffron.

"This plant has brought blessings to our land," he said. "During the first three years I was making one kilogram of saffron per jerib of land. But by the fifth year I was getting three kilograms."

The value of his land has also increased, he explained. Before farmers began growing saffron in the area a jerib of land sold for 70,000 afghani ($1,400). The price has now more than doubled to 150,000 afghani.

According to Mohammad Hashem Aslami, a saffron expert and head of the agriculture section of the Danish organization DACAAR in Herat, Afghan saffron, particularly the Herati variety, is the best in the world.

"There are three reasons for our high quality," he explained. "First, we have the right climate; second, we harvest by hand; and third, we have a very great capacity for production."

Ghafar Hamidzai, director of Afghanistan's largest saffron company, Afghan Saffron, agrees. "If the farmers use the right methods of cultivation and harvesting, Afghanistan's saffron will be the best," he said. "We are attracting a lot of attention from Western markets."

Saffron could be a boon to Afghanistan's agricultural export industry if it is properly managed, according to the agriculture department's Ahmadi.

"Over the next six years, if farmers receive help from the government and non-governmental organizations, the production of saffron will increase to 50-70 tons per year," he told IWPR. "This is a very positive step for the development and prosperity of this country and the region."

But help from the Afghan government has been slow in coming, complain the farmers.

"The Ministry of Agriculture encouraged us to plant saffron, and promised us lots of assistance," said Qader. "But they have not done anything for us yet."

Not true, says Ahmadi. His office has distributed saffron bulbs to the farmers free of charge, he insisted. They sponsored some of them to go to Kabul for training, and they are working on getting Afghan saffron into international markets.

Hajji Toryalia Rausi, an official of the Herat chamber of commerce, told IWPR that farmers had not asked his organization for help.

"The farmers have not told us about problems with marketing of saffron," he said. "If they provide information on their rate of production, we can approve a specific and stable rate for their product."

But still, says DACAAR's Aslami, Afghanistan's farmers require more substantive support.

"It would be difficult for Afghanistan to compete with Iran on saffron production," he told IWPR. "We still lack a comprehensive plan."

Farooq Faizi is an IWPR trainee in Herat.
 
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