Afghanistan‘s economic growth has slowed but remains satisfactory levels to generate rising average standards of living. Real GDP growth is expected to close the fiscal year 2011-12 at 5.7 percent, down from 8.4 percent in 2010-11. The slowdown in growth was mainly due to weather-related condition which lowered agriculture output to below –average levels.
The economy this year (2012-2013) GDP growth-related to pick up again and is projected to reach 7.1 percent , favorable weather condition during the first quarter of the year resulted in good harvest season , which is likely to increase agricultural output.
The service sector will continue to account for about half economic growth for next year fueled by the growth in the telecommunication sector.
In addition, donor funding and development projects will continue to drive the demand for transportation and distribution service.
Longer-term projections are less positive, aid levels are expected to decline significantly this will reduce GDP growth levels of 4 to 5 percent per year.
A sizeable financing gap will continue to exist through 2012 despite projections of healthy growth in domestic revue collection. Afghanistan’s biggest economic challenge is finding sources of sustainable and equitable growth.
Education: in 2001 after the fall of Taliban, net enrollment was estimated at 43% for boys and a dismal 3% for girls. Moreover, there were only about 21,000 teachers (large under-educated) for a school-age population estimated at more than 5 million-or about 240 students for every marginally trained teacher.
Since 2002, school enrollment has increased from 1 million to 7.2 million children girls enrollment increased from 191,000 to more than 2, 71 million. More than 101,000 teacher qualifications and the overall access to equitable quality education in Afghanistan.
Health: according to recent data from Afghanistan mortality survey 2010 (AMS 2010) life expectancy at birth is at 64 years. Only 27% of Afghans have access to safe drinking water and 5% adequate sanitation, nevertheless there has been considerable progress over the last 9 years, about 85% of the population lives in districts which now have providers to deliver basic package of health facility (based on AMS 2010). Infant and under -5 mortality in 2010 has declined to 77 and 97 per 1,000 live birth respectively from 111 and 161 per 1,000 live births in 2008. The pregnancy-related mortality ratio is about 327 per 100,000 births, which means that every two hours a women dies in Afghanistan from pregnancy-related causes.
Access to electricity: the percentage of population with access to electricity in Afghanistan among the lowest in the world. The ministry of energy and water estimates that about 30% of Afghans have access to electricity from grid-based power, micro-hydro or solar panel stations.
The situation has improved significantly in the major urban population centers along the critical north-east corridor between Mazar-e-sharif and Kabul, following the importance of power from Uzbekistan and the rehabilitation of three hydro plants (Mahipar and Sorobi completed and Nghlu ongoing) increasing parts of some urban centers, for example Kabul, Mazar-e-sharif, and Pul-e-khomri, now have a 24 hrs power supply for the first time in decades.
Revenue Collection: since the implementation of an Automated System for Customs Data (ASYCUDA), the collection of transit fees in major transit corridors in Afghanistan has improved customs revenues have soared from around $50 million in 2003 (SY 1382) to over US$ 1 billion in 2011-2012 an increase of around 2,000% in 8 years.
Approximately 90% percent of imports and exports are covered through automated processing, the waiting time for trucks at the major border crossings has also decreased. The Afghan Custom Department has started the process to carry out customs performance measurement at Torkhum, Hairatan and Kabul Inland Customs Depots, but still there are vigorous signs of corruption are overseen the local heads of the department are involved in corruption but supported by the ministers within the administration these custom offices allow chemicals used in narcotics an illegal drugs (poppy, morphine) and other type of most dangerous drugs even they allow explosives and ammunitions for the Taliban to later on they are used to attack coalition forces an Afghan security organizations the said Customs Department is doing just because of money purposes a long with that most of the staff are hired through private relation which has doubled the worsen situation within the system.
Role of commercial banks in the economic development of Afghanistan: in country like Afghanistan which is still in the initial stages of economic development, a well organized banking system is the need of the day. There is acute shortage of capital in private banking sector of Afghanistan; the banks can play an important role in promoting capital formation, in controlling speculation in maintaining a balance between requirements and availabilities and directing physical resources into desired channels.
Commercial banks play an active and important role in the economic development of a country if the banking system in country is effective and disciplined; it brings about a rapid growth in the various sectors of economy but in Afghanistan a long side the in effectiveness of the banking system corruption and nepotism has played even negative role in the said sector even worth the Afghan commercial and non-commercial banks are busy with money laundering for bulk money of the terror regime of Iran the worst case is most of such banks with such attitudes are openly supported by the President Karzai administration most blame even him that he is part of all these activities his family members are share holders of the said banks and these banks are established via mafia channels the money which invested are the output of drug dealing and seizing the public and private properties all in all mortified the economy of Afghanistan , despite of the mentioned challenges the use of online banking is now increasing day by day, it has brought revolution in banking industry. The online banking which is the wave of future is now on the move in Afghanistan and progressing satisfactory to some extent.
Some of the banks already stared providing ATM/MCS to the customers to develop e-banking such as online money transfer, shopping, ease of business and travel tours.
Political perspective: Afghanistan is pretty critical from the political perception full of challenges, war-lords are in place, corruption, and lawlessness tremendously strained Afghan people. Most importantly, the insurgency has become sturdy. Most of the bordering areas between Afghanistan Pakistan and between Afghanistan and Iran are out of the run of the Afghan government. One major portion of the state [the judiciary] has outlawed real discussion and the President has failed to set up its members of government. War criminals and organized crime activists are highly maneuvering and laying more burdens on the shoulder of ordinary Afghans. Dreadfully fewer economic and political developments have taken place. The legislative appendage is not feasible. Most of its members are warlords, drug mafia or criminals. The absence of democratic tenets such as justice, fairness or civil liberties, have outcomes that enduringly collide between sundry limbs of the state. The largest part, notably the unconstitutional proceeds of president, added to the tribulations.
Regional conflict: Contention flanked by US and China on one hand and on the other between US and Russia. The rivalry linking Iran and Saudi Arabia as well as among Pakistan and India continues to be a problem. The panic of losing the war on terror, revitalization of radicalism, Islamization of the society, economic stagnation and unemployment have caused total failure in Afghanistan and most of Afghans have lost any hope in the current and future of the country. Most imagine the worst. There are no new beginnings for the country. Most of the youngsters endeavor to take refuge in the western world, therefore one can observe gloomy and hazy ambiance of Afghanistan.
Security outlook: As it is obvious that Afghanistan previously facing numerous enemies, defies most specially the vulnerable security circumstances generated here. An open arena for drug dealers, land mafia, economic mafia, war-lords and organized criminals exists to take advantage of situations. Beside corruption, nepotism and dissipations of the national security agencies (such as national police, army and intelligence) have added to the insufficiency of the security sectors even with proper training. Additionally, to the NATO abandonment of Afghanistan, we possibly will adjoin dividedness between tribes and tribal leaders. Furthermore, issues between war-lords, religious fantasist, socio-political fractions and splinter groups as our result total pandemonium will evoke events of the 90’s. Consequently, the NATO withdrawal will escort the country towards arm strife among plenty of tribes, drug dealers, religious political factions which may bring about disintegration of the country. This may occur in addition to a real clash between Sunni and Shia peoples.
India’s Military Spending and South Asian Security
Over the past several years, unprecedented military modernization in Pakistan’s immediate neighbour, India, has worsened South Asia’s security environment. India’s heavy military spending and its unstoppable quest for the acquisition of sophisticated weapons have threatened regional stability. Indian desire to acquire global power status through military means has further been intensified as a result of US assistance particularly in former’s defence sector. Within quick span of time, defence trade between India and the US has shot from $1 billion to over $15 billion leaving other regional powers in the state of security consciousness.
India’s obsession with its military build-up doesn’t end here. According to the Stockholm International peace Research Institute (SIPRI) a prestigious international institute dedicated to research into conflict, armaments, arms control and disarmament, India, once again tops the list as world’s largest weapons importer. This is not a new development as previously, India also topped the list for the same reason.
As per SIPRI estimates, Russia remains top arms supplier to India. However, surprisingly arms deliveries from the US increased more than six-fold in the five-year period to the India. This trend in long run will definitely reduce market space for Russian arms and ammunition to India.
Despite the fact that, India’s unbridled military modernization is the primary impetus behind South Asian instability, global power’s economic expediencies in South Asia also undermines delicate conventional parity between India and Pakistan. For instance, Indo-US strategic partnership, which apparently touted as US’ China containment policy, seems more of a Pakistan containment policy. Much of the US provided weapon-tech to India is more useful against Pakistan in a conventional warfare. Almost 70% of Indian military troops and weapon system are deployed against Line of Control, (LOC). Interestingly, peaceful settlement of Docklam issue between China and India as well as sky-rocketing bilateral trade between both countries, which has reached to $84.44 billion last year, makes prospects of conflict almost impossible.
However, in contrast to aforementioned facts, the influx of massive military hardware from western capitals to India continues and in certain cases the flow of arms has gained momentum. There are two primary motives behind India’s overwhelming spending in defence industry.
First, India aspires for greater role in global environment and in certain ways it has been demonstrating its will and capability to influence global dynamics. India’s successful test of Agni-5, a long-range ballistic missile, capable of carrying nuclear weapons with a strike range of more than 3,000 miles, is a practical demonstration of its military capabilities to influence other powers around the globe. For hawkish policy makers in New Delhi, a strong military power can extend India’s global influence.
Secondly, India is following a policy of coercion at regional level primarily, against Pakistan which shares history of hostility and violence due to longstanding territorial disputes such as Kashmir. There is growing perception in New Delhi that militarily strong India can dictate South Asian affairs. That’s why India has been consistently opposing diplomacy and dialogue for peaceful resolution of disputes. Therefore, to meet its foreign policy goals, which are based on coercion and usage of hard power, India spends massive in military build-up.
Ironically, South Asia is called as nuclear flashpoint due to history of animosity and violent conflicts between India and Pakistan. With its mighty military power, India has emerged as the most potent threat for not just Pakistan but also a security challenge for other powers in the region.
Given the advantage it has in terms of nuclear missiles, military hardware and submarine fleet, India has been trying to create an environment conducive to wage limited war against Pakistan. For that, India has not just developed its military doctrine, Cold Start Doctrine, but also initiated and sponsored sub conventional war in Pakistan’s chaotic province, Balochistan.
In such circumstances, Pakistan needs to maintain delicate conventional military balance vis-à-vis India. Despite the fact, Pakistan has been facing number of issues at national, regional and international levels which include on-going military operation in tribal areas to hostile border skirmishes; a robust military modernization plan has become inevitable. A militarily strong Pakistan will be able to maintain its territorial integrity against aggressive yet militarily mighty India.
It’s an open fact that Pakistan has consistently called for peaceful resolution of all outstanding disputes and it has offered to resume diplomacy and dialogue over Kashmir dispute. Unfortunately, India’s cold response has not only restricted Pakistan’s peaceful overtures but also refused to accept third-party mediation in peaceful settlement of Kashmir issue. This clearly shows that, current ruling regime in India is not serious for peaceful settlement, rather more inclined to use of force and coercion. Under such circumstances, Pakistan needs to strengthen its force posture to pre-empt any kind of misadventure from its adversary. However, Pakistan, as it has done in past, must embrace peaceful overtures to bring stability in the region.
US Call for a New Relationship
‘Trust, but verify’ an Old Russian proverb that President Reagan liked to repeat often. Trump is neither the first President nor he is going to be the last to criticize Pakistan of deceit and threaten to cut off American assistance. Notwithstanding, the last six decades of the US support, the US has failed completely in cultivating an ally in Pakistan nor has it meaningfully changed the nature of its relationship with Pakistan, which can be best described as ‘transactional’. A quid-pro-quo relationship between the two has never been established with regards to the assistance they both offered to each other. In truth, United States has never really trusted Pakistan.
President Trump avowed in his New Afghan Strategy that the US has been paying Pakistan ‘billions of billions of dollars at the same time they are housing the very terrorists that we are fighting for’ but the mantra should be put to a halt. Likewise, the US must be conveyed boldly to stop continuing its false claims that Pakistan shelters the ‘agents of chaos’ and be reminded that friends don’t put each other on notices.
Similarly, statements and avowals that India now is a strongest ally to the US, disturbs Pakistan, chiefly because of the irony at Trump administration’s part which only sees the glittering Indian market but pay no heed to the growing Indian cease fire violations across the LoC and the atrocities India commits against the unarmed civilians of the Indian held Kashmir.
The recent visits and statements however by the senior US officials and Trump’s aides reflect the US call for a new relationship between the US and Pakistan, which once used to be close allies in the US led ‘Global War on Terror’.
Pakistan’s foreign policy makers at this point in time must be mindful of the fact that the US is a major trading partner and should adhere to a relationship more than ‘transactional’. Moreover, the risks and fears at the US part of ‘rampant destabilization and civil war in Afghanistan’ increments further the region already devoid of trust. For, nobody actually knows whether the US will stay or eventually leave Afghanistan.
The Afghan war has now become a war of logistics, in words of Sun Tzu ‘the line between order and disorder lies in logistics’, Pakistani supply lines thus provide Islamabad with a leverage in absence of shorter, cheaper and acceptable alternative routes. Given these circumstances, Pakistan should make best use of the US call towards a more robust bilateral relationship.
The move for a ‘new relationship’ and improved ties began last week with senior Trump aide’s visit to Islamabad to hold talks with Pakistani leaders. Earlier also the impressions that Pakistan and the US were on a collision course were dispelled by a top US general. Likewise, US department’s acting Assistant Secretary for South and Central Asia Alice Wells asserted that the US was not thinking of cutting its ties rather assured that the US still cogitate Pakistan indispensable to the resolve in Afghanistan.
The aforesaid developments clearly indicate that the strained US-Pakistan relations would improve soon and that the suspension in the military aid is also not permanent.
To conclude, achieving long term stability and defeating the insurgency in the region will be difficult without Pakistan’s support and assistance.
Special Economic Zones and CPEC
Economic Expansion, high prices and inflation are the issues on which one can talk for hours. The scarcity of resources, energy crises and lack of industrial modernization are the challenges which Pakistan has been facing for past many decades. Despite the advantages of geographical setting, the country could not sufficiently expand its economy until 20thcentury. However, the China-Pakistan Economic Corridor (CPEC) has brought with it various infrastructural, energy, and industrial projects that show smooth progress in these sectors. One of the most significant developments is the establishment of Special Economic Zones (SEZs) under the Long Term Plan (LTP) of CPEC.SEZ is a physically protected area with definite geographic boundaries under which the investors and the developers enjoy duty free benefits and streamlined procedures, set up by the government. After the successful completion of the Early Harvest Program (EHP), the governments of China and Pakistan aspire to complete the Long Term Plan (LTP) of CPEC. As a key route to success, the LTP has been divided into three phases and the work on the first phase has already started. SEZs are on the first priority list of the first Phase of LTP. While utilizing the strategic location of Pakistan and the rich resources, the SEZ will contribute a framework for Pakistan’s domestic industries, and local economy.
The government has planned to establish nine Special Economic Zones (SEZs) in all the four provinces, federal areas and Gilgit-Baltistan under the framework of CPEC, which would be completed in a period of three years. Pakistan has conducted feasibilities of 5 SEZs which focuses only on the infrastructure. The three prioritized SEZs to be completed in the first phase of LTP are M3 Industrial City in Faisalabad, Punjab, Chinese SEZ Dhabeji, Sindh and Hattar SEZ in KP province. While the remaining six sites include Rashakai Economic Zone, M-1 Noshera, Bostan Industrial Zone District Pishin, AllamaIqbal Industrial City, Moqpondass SEZ in Gilgit-Baltistan, ICT Model Industrial Zone Islamabad, Development of Industrial Park on Pakistan Steel Mills Land at port Qasim near Karachi, Special Economic Zone at Mirpur AJK, Mohmand Marble city.
Although, there are general misunderstandings regarding the industrial ramifications of the SEZ’s under CPEC due to large number of Chinese firms and the exemption in the tax rates offered to them. However, the LTP of CPEC shows that these SEZ’s will offer the country with a great opportunity to accelerate industrialization because they are beneficial for all the international and domestic investors. So far in the history, SEZs have been the reason of economic boost in countries around the globe. Now this is a matter of concern that either these SEZs will make Pakistan a center of economic modernization and trade ventures or not. The economist and financial experts are optimistic about Pakistan’s emergence as one of the fast growing and promising global economy.
While stepping towards the era of industrialization, Pakistan faces a number of issues that have so far refrain the industries to understand their growth potential. Some of the chief hindrances to investment in Pakistan include poor security; non-availability of infrastructure and power crises, rent-seeking regulators, and cumbersome tax administration, etc. among many others.
Likewise the entrepreneurs in Pakistan have certain reservation with the incentives proposed by the government and SEZs for the investors and enterprises including ten-year exemption from all taxes on imported capital goods and exemption from tax on income accruable from development and operations in SEZs for a period of ten years. Although these incentives will be beneficial for the foreign investors at large but at the same time it will provide Pakistani enterprises with the opportunity to collaborate with the Chinese firms and launch joint ventures of mutual interests and benefits. This will be further beneficial for the annual Gross Domestic Product (GDP) growth of Pakistan. Moreover it will bring Foreign Direct Investment (FDI) in the country thus generating the foreign revenue.
Subsequently it is significant to keep in mind that in Pakistan there are certain security and political factors due to which the SEZ’s may face challenges. Hence forth to conquer these challenges provincial harmony among all the provinces and mutual consensus between the public sector and private sector is needed. SEZs under CPEC will be a life-time opportunity for Pakistani companies to work together with Chinese companies for the development of export-oriented manufacturing industries. Therefore, Pakistan should increase its products in the Chinese market and raise the ratio of its export while decreasing the trade deficit by lowering the imports.
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