What now? The first step towards redressing the mistakes of the past decade is to help legitimatize the Afghan state. This begins by reducing the inflows of aid going outside of the government structure, curbing the massive spending on a large security force not sustainable by the country and helping local authorities establish their legitimacy in the eyes of their citizens by becoming dependent on endogenous sources of revenues.
Contrary to common belief, Afghanistan is not entirely poor. In 2007, the US Geological Survey announced the discovery of large amounts of minerals. Suddenly, a country once seen without a future is now recognized as endowed with significant natural resources. Afghanistan is poised to be one of the world’s largest producers of copper and iron. Also discovered were rare earth minerals, such as lithium, which are essential for the high-tech industry. Bamyan’s Hajigak iron ore deposit is now estimated to be one of the largest in the world. These newly discovered minerals could potentially be worth hundreds of millions per year—some estimates put the annual value of the Mes Aynak copper mines alone at $1.2 billion. Such revenues could lead to a renaissance of the ‘real’ Afghan economy, and help create thousands of jobs, attract investment in infrastructure and enable further growth of trade and commerce. This is a game-changer not only for Afghanistan, but for the entire region.
Of course, the discovery of these resources raises the possibility of Afghanistan becoming a victim of the so-called resource curse, when overdependence can fuel corruption, conflict and even greater levels of poverty. This is a real danger in Afghanistan, as it is certain to deepen the corrosion of the social contract between state and society, creating even more space for the Taliban to exploit.Enjoying this article? Click here to subscribe for full access. Just $5 a month.
Preventing this from happening won’t be easy. Traditional approaches to managing new natural resources, such as standardizing the bidding process for mine exploration and developing transparent institutions to administer resources and revenues, may take too long to be implemented effectively in Afghanistan.
Instead, an alternative two-pronged strategy should be considered. The first step would entail the establishment of a cash transfer of natural resource revenues directly to the citizens of Afghanistan. Direct cash transfer programmes are currently operated in about 45 countries and have had a significant impact on development; they’ve been adopted by organizations including the World Bank. In Mexico, for example, a cash transfer programme that reached a quarter of the population in exchange for school attendance and health clinic visits has been successful. Studies of this programme found that (a) children participating had a 12 percent lower incidence of illness, (b) were 33 percent more likely to be enrolled in school, and (c) were 23 percent more likely to finish 9th grade. A programme for schoolgirls in Punjab, Pakistan, meanwhile, increased enrolment by 11 percent. In addition, Bolivia and Mongolia have both established programs to link their natural resource revenues to finance cash transfer programmes, including copper and gold mines funding Mongolia’s ‘Child Money Programme.’
Under this structure, the distributed cash would be taxed as normal income. This is vital in Afghanistan as it would not only draw in resources to the state, but would also entice it to build its own tax collection capacity to recover part of these funds. In such a way, the government will be forced to depend on citizens for revenues, creating greater accountability. And because one of the key problems facing Afghanistan is a loss of trust in the authority of the state, and because this will be an important source of income for Afghans, such a programme would give citizens a direct stake in their country’s future and an incentive to ensure that management of the country’s resources is carefully monitored.
The second pillar of this strategy is tied to the National Solidarity Program (NSP). When first established in 2003, the NSP sought to empower Afghans in rural areas and at the grassroots by establishing local governance bodies called Community Development Councils in villages across the country. Cash grants were then given directly to these elected bodies to help them carry out small-scale rural projects. Over 20,000 communities across the country benefited from the programme, which is now recognized as one of the most successful efforts in rural in South Asia. Importantly, the NSP engaged the citizenry by helping them make decisions for themselves and to date it’s still the only significant development programme affecting over two-thirds of the rural population, and in all 34 provinces of the country.