Afghan economy stagnates amid political deadlock

By David Loyn
BBC News, Kabul

  • Published
President Ashraf Ghani in Afghan parliament on 20 Jan 2015, presenting cabinet listImage source, AFP
Image caption,
Only eight candidates have been confirmed since President Ashraf Ghani presented his cabinet list to parliament

Exactly four months after the inauguration of Afghanistan's new president Ashraf Ghani, there is still no government in place in Afghanistan, and the long delay is threatening the economic recovery of one of the frailest economies in the world.

Instead, deputy ministers from the former administration are caretaking government departments, and the new president has fired many officials across the country without appointing replacements.

Only eight ministers have been confirmed by parliament, less than a third of the total, after long wrangling.

The highest-profile casualty was General Sher Mohammed Karimi, nominated as defence minister.

After long arguments in parliament it is now clear that no more ministers will be in place before members of parliament go for a winter break until the end of March.

Zero growth in 2015

Business leaders have criticised the president for the long delay in forming a government.

In the vacuum of power since the election last April, business confidence has collapsed, and growth, which had averaged 9% since 2001, could be zero this year.

Image source, AFP
Image caption,
After more than a decade of growth the economy is stagnating in the absence of a new administration

"The business community needs a strong government, legislation, the power of the rule of law," said Aarakhsh Hafizi, head of the international relations committee of the Afghan Chamber of Commerce. "Without that, the market economy will not work."

When President Ghani met Mr Hafizi with other business leaders soon after he took power in September, he said he would meet them monthly because of the importance of the private sector.

But he has not held any meetings since, and he recently went to neighbouring Turkmenistan without any Afghan business people, although his office had asked Mr Hafizi to name a delegation.

'Roundabout' for trade

Turkmenistan is seen by the president as one of the gateways in his concept of Afghanistan as a "roundabout" for trade and for oil and gas pipelines across Asia.

But the last-minute decision not to include business leaders in his party angered those people he most needs to rebuild the economy and deliver his vision.

Image caption,
Little sign of a trade "roundabout", as trucks near Kabul stand idle waiting for business

The impact of the economic slowdown can be seen everywhere.

Unused trucks are parked on open ground next to the road near Kabul. One driver, Zar Gulab, said he had never known a time like it.

The economy has been hit by a perfect storm of events - with political change coming as international troops left.

The artificial economy of the wartime years was ended - with the loss of the jobs of tens of thousands of people - just as President Ghani tried to form his new government.

And even before the arguments in parliament, forming the government took time because of an uneasy coalition between President Ghani and his chief executive, Abdullah Abdullah. In the truck park, a driver who gave his name as Wajid said simply, "For one truck you can't have two drivers."

Image caption,
Truck driver Wajid is not convinced dual leadership is the best way forward

'Centres of patronage'

There are few policy differences between the two leaders. Instead, the arguments have been between coalitions of interests, and tribal, religious and historical ties.

President Karzai opposed the development of political parties. Instead, in the words of one western diplomat, the 249-member lower house of parliament - the Wolesi Jirga - is "249 separate centres of patronage".

Allegations of corruption in the process to confirm ministers have always been denied, and cannot be proved.

But corruption was the reason given by one Afghan news agency for the otherwise unexplained withdrawal of Jailani Popal, nominated as finance minister, and a close ally of President Ghani.

It was said that he was facing impossible demands for payments from some members of the parliament to secure their support.

Image source, AFP
Image caption,
As the business sector waits for a new government, money changers wait for customers

Afghanistan simply cannot afford the posturing and continual delays.

In Kabul's central money market, a raucous gathering of money-lenders close to the river, manager Mohammed Khan Baz said the outlook was bleak.

"Even though a lot of projects are half-completed - not only office blocks, but hospitals, clinics, schools and roads all over the country - the money has simply run out and everything has closed down," he said.