Afghanistan is one of the most conflict stricken countries in the world. It has always been ruled by some or the other economic power, with the Soviets and Americans both enjoying their reign one after the other. This competition between the Soviets and the Americans for control over Afghanistan led to the rise of Taliban, which threatened not only Afghanistan but also the western world. The constant change of power and rising domestic issues led to Afghanistan becoming highly dependent on foreign aid.
This historical timeline has high relevance in today’s date since talks have taken place where it has been decided to withdraw NATO troops from Afghanistan by 2014. Withdrawal of these troops will declare Afghanistan a free nation after a very long time in its recent history. The question that then arises is whether or not Afghanistan will be able to exercise its sovereignty and stabilize itself.
The Afghan economy faces various issues such as terrorism, illicit opium trade, lack of infrastructure and mostly importantly, the high dependence on foreign aid. In fact as per the World Bank statistics, 97% of Afghanistan’s $19.91 billion GDP comes in the form international aid and military support. Out of the same, foreign aid itself accounts for 40% of the GDP, which emphasizes how dependent the economy is on foreign aid.
During a time such as this, when Afghanistan is transforming itself into a completely independent nation, it is key for the economy to be able to sustain itself. The western economies have decided to donate dollar $16 billion to Afghanistan over the period of four years for it to be self sufficient. However, by the end of 2015, the Afghan economy will run out of this aid, which is being paid in installments of $4 billion. Thus it is critical for the economy to make efficient use of this aid. In order to do so, several steps need to be taken to stabilize the economy and then help in the growth of its various sectors.
Firstly it must bring out reforms in it’s agricultural sector. Afghanistan supplies 90% of the opium that is traded across the world. In fact this illicit trade of opium accounts for one third of the Afghan GDP. Thus, it is important for Afghanistan to shift from opium to more productive crops such as cotton or saffron. The economy could also use the opium more productively. The illicit trade of opium could be made legal if this opium is instead used for medicinal purposes. This would not only increase the GDP of Afghanistan, but will also augment its exports. Also, Afghanistan has resources in abundance, extraction of these resources could help its GDP skyrocket. It is estimated to have $3 trillion worth petroleum reserves and also has a lot of mineral deposits, both of which are scarce resources whose demand is rather high.
Secondly, Afghanistan has been able to uphold its culture even though it has been controlled by other economies. This could prove helpful, as the handicrafts industry of Afghanistan has a high scope of growth. It will also create employment and thereby reduce the unemployment rate of 15% that is prevalent. Moreover, it is internationally known that women are oppressed in Afghanistan. The handicrafts industry will help in the upliftment of women and will increase the importance of women society. Women will be able to fend for themselves, and this is especially important for those whose husbands cannot earn their daily bread or for those who are widows without male members of their family being able to support them.
The road ahead for Afghanistan is unclear. All that is known is that Afghanistan has to be able to pave its own path, both, metaphorically and literally.