Troop withdrawal could trigger economic depression in Afghanistan

By Olga Belogolova

June 8, 2011

Expensive nation-building efforts have had limited success in Afghanistan, and without proper planning, a troop withdrawal in 2014 could set off "a severe economic depression," according to the conclusions of a two-year congressional investigation from Senate Democrats released Wednesday.

"A precipitous withdrawal of international support, in the absence of reliable domestic revenue and a functioning market-based economy, could trigger a major economic recession," says the report, which was prepared by the majority Democratic staff on the Senate Foreign Relations Committee.

World Bank data estimates that 97 percent of Afghanistan's gross domestic product comes from spending related to the military and donor community presence, according the report, which warns that a withdrawal could pull the rug out from under the Afghan economy.

As President Obama prepares to begin drawing down troops next month, the report says that the administration should reassess its costly assistance strategy.

The study details how the majority of aid money in the region has been used for short-term stabilization programs, as opposed to long-term development projects, and questions the efficacy of both.

"The evidence that stabilization programs promote stability in Afghanistan is limited," the report says.

In fact, the study notes that at times, the money flowing into local governments can actually "fuel corruption, distort labor and goods markets, undermine the host government's ability to exert control over resources, and contribute to insecurity" without the proper oversight.

The report advises that additional planning is necessary to facilitate a smooth transition and says that the administration should "standardize Afghan salaries," which it notes are currently "inflated" and have created "a culture of aid dependency."

As next month's troop withdrawal looms, the administration has yet to make a decision on how many troops will be coming home. President Obama will hold a video conference on Wednesday with Afghan President Hamid Karzai to discuss the drawdown.


By Olga Belogolova

June 8, 2011

http://www.govexec.com/defense/2011/06/troop-withdrawal-could-trigger-economic-depression-in-afghanistan/34118/