Afghanistan's Aid Bubble

Letter From Kabul

Afghan boys play on a destroyed car at a hilltop in Kabul October 18, 2012.
Afghan boys play on a destroyed car at a hilltop in Kabul October 18, 2012. (Mohammad Ismail / Courtesy Reuters)

Afghanistan seems to be holding its breath. Business has ground to a halt and middle-class Afghans are eyeing foreign escape routes as they send their money out of the country. The sense of uncertainly is not just about who will be the next president, or whether the loser will accept the result. It’s about the precarious economy.

The Afghan economy has seen a dozen years of rapid change. The international community dumped loads of money into the country, with some positive results. Life expectancy has climbed by about ten years, and more children than ever attend schools. The supply of electricity has increased. And activists have put human rights and tolerance on the public’s radar: no longer confined to their homes as they were during Taliban times, Afghanistan’s women even boast a national cycling team, the members of which freely wheel through conservative rural communities, at least those near Kabul. 

But the aid has also become a trap. The West's billions have proved too small to modernize Afghanistan and too large for Afghans to properly manage. The aid has gone to the wrong places: Rather than channeling funds into stable regions where it might spur local enterprise, economic aid has gone toward quick-impact projects in the volatile south and east. In addition, the money has created a massive force of workers who service NGOs and international agencies, distorting local wages, property, and lifestyles. The end result is an aid bubble. When bubbles rupture in wealthy countries, many people lose jobs, houses, and hope. In a country that is already near the bottom of the list on most development indicators, economic destabilization could erase the past decade’s social gains. 

UNAIDED

As the international community withdraws from Afghanistan, it would be reassuring to declare “Mission Sort of Accomplished.” Yet even that is an overstatement. GDP growth tumbled from about 14 percent in 2012 to about three percent last year. Analysts predict even slower growth this year. Meanwhile, foreign aid has been cut; over the past half year, USAID, for instance, has reduced its spending in Afghanistan by half. As a result, Kabul faces a deficit of approximately $400 million, equal to about 15 percent of its revenue. 

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