The Delhi Investment Summit on Afghanistan should highlight the fact that the campaign for the country’s economy is as important as the counter-insurgency effort
India’s initiative to host the Delhi Investment Summit on Afghanistan tomorrow is a welcome step forward in enabling the country to achieve long-term economic self-reliance, in line with the key objectives of recent international conferences. The one-day summit intends to showcase Afghanistan’s economic potential and attract foreign investment, while exploring possibilities of cross-country investment partnerships and collaborative ventures from within the region and beyond as a regional and international confidence-building measure.
The daylong discussions should highlight that the war in Afghanistan is not being waged on the battlefield alone: if our country, Afghanistan, is to emerge as a strong and independent democracy, the campaign for Afghanistan’s economy must stand on equal footing with the counterinsurgency campaign. In fact, they are one and the same.
We can’t build schools during firefights; but without schools, the firefights will continue. Yet a disproportionate amount of international resources — about 80 per cent of the aid provided by each contributing country — has been devoted to military operations, at the cost of job creation and long-term economic development. But it is more jobs — not just more bullets — that will persuade militias to lay down their weapons.
Fortunately, Afghanistan is endowed with natural resources — copper, iron ore, lithium — and can finance its own development, though only if the country receives the necessary investment and technical assistance from the international community.
Although Afghanistan has $3 trillion worth of mineral wealth, we lack the transportation network to ship these resources to markets.
Building the necessary infrastructure — railroads, highways, processing plants — will not only facilitate the mining industry but also create jobs. A sustainable livelihood, no matter how small, will immediately weaken the insurgency — and its base, a destitute populace — while a modern transportation network that links Afghanistan with its neighbours will spur long-term growth.
Production of illegal drugs in Afghanistan is another key problem that can be addressed by economic development. We know from international experience that global demand for narcotics finds ready supply in nations where governance is weak, instability high and poverty rampant.
But if Afghanistan’s agriculture sector were revitalised, fewer farmers would rely on opium harvesting — a dangerous enterprise to begin with — to make a living.
Instead, they could grow wheat, pomegranate, saffron and high-value crops. As agribusiness becomes profitable and sustainable, it would drive down the cost of food for the poor and raise rural incomes, which should in turn further weaken the insurgency in crucial provinces like Helmand and Kandahar.
Energy is another factor pivotal to earning the trust of Afghans. Without a comprehensive electricity grid, Afghanistan can hardly achieve a productive economy.
The availability of electricity can open a very large market for electronic goods, drastically expanding consumer consumption. Just as importantly, the Afghan people could finally reap the benefits of a globalised world through use of the internet — only three per cent of the population has access to it.
Further, corruption can be stemmed when the abuse of power is no longer necessary as a means of economic uplift. Corruption is a symptom, not a cause, of weak governance, which can be strengthened only when Afghan civil servants are thoroughly trained and paid competitive salaries on a sustainable basis.
Right now, a driver at an international non-governmental organisation (NGO) or a United Nations agency earns at least five times more than a civil servant working for the Afghan government.
Nor can this situation be improved unless resources are channelled from aid organisations — too many to count, really — directly toward restructuring the Afghan government into an efficient apparatus of resource allocation.
Former U.S. Ambassador to the U.N. John R. Bolton once argued in the Los Angeles Times that “religious fanatics, and their grievances, do not arise from poverty or deprivation.” To the contrary, many Taliban fighters join the insurgency simply to earn a living. A significant number of these “rented” Taliban can be made to turn swords into ploughshares if they have alternative opportunities.
Regional security is closely tied to the nascent Afghan economy. Without stability, the Taliban will continue to enjoy widespread support — and a base from which to attack regional interests.
But if the international community relies on military might alone, how will the outcome in Afghanistan differ from that of the Americans in Vietnam, the French in Algeria or the Soviets in Afghanistan?
I - Opening
0930 – 1000 hrs : Arrival and Registration of delegates
1000 hrs : Inaugural Session
II – Investment Opportunities in Afghanistan (followed by Q&A)
Proposed issues of discussion:
Overview of Investment/business Climate and Opportunities in Afghanistan
Afghanistan’s growth Strategy, priorities and plans: Tokyo and Beyond
Long-Term Investments: Opportunities for foreign investment in Afghanistan’s mining and hydrocarbon sector
Short-term Investment Needs and Opportunities in the social sector and services
III – Cross-cutting Issues and challenges (followed by Q&A)
Proposed issues of discussion:
IV – Working Group Sections: Investment Sectors
Working groups followed by opportunities for business - to- business interaction
Mining, Infrastructure, Energy & Transportation
Agriculture (including Commercial Agriculture/agro-industry) & Industry (including SMEs)
Social Sector: Health & Education
Telecommunications, IT and other Services
V – Conclusion
Presentation on the outcomes of working groups, concluding remarks (Recommendations for Tokyo Conference) & acknowledgements,
If I had the money, I would "risk" it. I think there are long term gains to be made. Yeah it's all subject to security situation there after US withdraws, but I think the Afghans will secure themselves with international help and keep the tangos away.
Contending that most parts of Afghanistan is stable and secure, the country's Commerce and Industry Minister Anwar-ul-Haq Ahady today invited Indian companies to invest in sectors like mining, infrastructure and agriculture. "India has been a major partner in the reconstruction of
Afghanistan. India has been a major donor, a key advisor and an important investor. I invite you to come to Afghanistan and invest there," he said.
Ahady was addressing the Delhi Investment Summit on Afghanistan jointly organised by Confederation of Indian Industry (CII) in partnership with Government of India and Afghanistan government.
He said foreign investments can be made in various sectors and these companies can produce goods that could be sold in the domestic market and abroad.
It would also give employment to locals while the companies can make a healthy profit, he said.
The objective of the summit is to attract foreign investments from India to Afghanistan.
Ahady said the level of security is well above that is needed for economic development.
India, which has played a major role in reconstruction of the war-torn country, has invested about USD 25 million in different areas in the region in the last 10 years.
The minister said Afghanistan has created a business-friendly legal regime, and is also building a modern infrastructure.
"Our income tax law emphasises simplicity and our tax rates are the lowest in the region. Our investment law is also very investor-friendly".
The country has expertise in areas like cement, handmade carpets, marbles and fruit processing, he said.
On bilateral trade, he said, the potential areas for exports from Afghanistan to India are agricultural products and carpets, while imports from India include industrial goods.
In 2010-11, the bilateral trade between the two countries stood at a mere $500 million.
To a query, Afghanistan Finance Minister Hazrat Omar Zakhilwal said his country upholds world's best practices.
"We uphold to world's best practices... you should ask the participants of the Indian consortium that won contracts, what their experience in Afghanistan was. They will tell we were probably fairest, corruption free and all that" he told reporters.
India today strongly pitched for private investments in Afghanistan saying the grey suits of company executives should replace fatigues of soldiers and CEOs should take the place of Generals.
On its part, the war-torn but resource-rich country assured "unreserved" support and tried to assuage the fears of investors maintaining that Afghan government was endeavouring to ensure the security and safety. Cautioning that the military draw-down (by 2014) should not result in a "political or security vacuum" that will be filled by extremists once again, external affairs minister S M Krishna said, "We feel that foreign investment and domestic private sector development, both small and large scale, can play that role.
"Let the grey suits of company executives take the place of olive green or desert brown fatigues of soldiers; and CEOs, the place of Generals" and added "that there should be something productive in its place."
Krishna was inaugurating the 'Delhi Investment Summit on Afghanistan' attended by Afghan foreign minister Zalmai Rassoul and officials and businessmen from 33 countries, including Pakistan, China, Russia, the US and Iran.
"Despite high level of return on investments and our efforts and measures to create enabling environment for investment, one of the major factors, which has significant impact on the level of investor interest in Afghanistan, is concern over security. "While it's true that there are certain areas in Afghanistan where security situation is no ideal, we should remember that these areas represent a small part of the country," Rassoul said.
Investing in Afghanistan: A Hard Sell?
By Margherita Stancati
Majid Saeedi/Getty Images
India’s Foreign Minister S.M. Krishna said Afghanistan’s mineral resources and its potential as an energy
hub are areas of opportunity. Shown, an Afghan miner examined an emerald in Panjshir Valley in Afghanistan, July 14, 2010.
Indian businessmen from sectors ranging from mining to education to tourism gathered in a packed hall of a New Delhi hotel on Thursday to figure out whether it makes sense to invest in war-wracked Afghanistan.
India’s foreign minister, industry leaders and top Afghan officials took the stage in turn to deliver the message that, despite concerns over security and political instability, Afghanistan is open for business – and this is the time to step in.
As the U.S. prepares to withdraw most of its forces by the end of 2014, Afghanistan is looking for ways to gradually reduce its dependence on foreign assistance.
India says it’s willing to help it become financially more self-reliant.
“Afghanistan may not be the easiest destination to sell to an investor but India has ventured to do exactly that,” India’s Minister S.M. Krishna said in his address.
He singled out Afghanistan’s mineral resources and the potential to make the country an energy hub connecting Central Asian countries and Iran to India and to other fast-growing emerging markets as areas of opportunity.
So far, Indian investment in Afghanistan has been led by state-owned Indian companies with a focus on natural resources.
A consortium of companies led by the state-run Steel Authority of India in November last year won the rights to a $14-billion iron ore project in the province of Bamiyan.
And a group of state-run Indian companies, including Hindustan Copper Ltd., is on a short-list to bid for four copper and gold projects around the country.
Now, the Indian government is encouraging greater involvement of the private sector, which has shown some interest.
For a start, the event was organized by the Confederation of Indian Industry, a leading industrial body.
“We see Afghanistan today as a land of immense opportunity,” Chandrajit Banerjee, the director general of the CII, said in his opening remarks.
But there is more to India’s commercial drive in Afghanistan than a desire to seek out economic opportunities.
An Afghan miner rested near a mine at Karkar, Afghanistan, October 21, 2004.
“The military draw-down should not result in a political or security vacuum that will be filled by extremists once again. There should be something productive in its place,” said Mr. Krishna. “We feel that foreign investment and domestic private sector development, both small and large scale, can play that role.”
Calling on Indian companies to invest in Afghanistan, he said India needs “to offer a narrative of opportunity to counter the anxiety of withdrawal, uncertainty, instability and foreign interference.”
Promoting Indian business in Afghanistan can be seen as part of a softer push to expand its influence in the country, something the U.S. has also encouraged it to do.
India sees this largely as a way of balancing Pakistan’s ambitions in Afghanistan and the Taliban in Afghanistan. New Delhi’s growing involvement in Afghanistan, particularly its training of local troops, has worried Islamabad, which sees Afghanistan as falling within its sphere of influence.
Analysts say Pakistan likely sees India’s greater commercial interests in Afghanistan in geopolitical terms, too.
At the investment summit, the Afghan pitch centered largely on the country’s vast and untapped natural resources, which include iron ore and copper.
Around 70% of the country’s territory is yet unexplored, the country’s mines minister said at the event.
In the near future, the Afghan government is hoping to attract tens of billions of U.S. dollars in foreign investment in these sectors, Hazrat Omar Zakhilwal, Afghanistan’s Minister of Finance, said on the sidelines of the event.
Other areas in which Afghan officials encouraged investment included infrastructure, cement manufacturing and the export of local goods like marble, carpets and saffron.
They also said Afghanistan is committed to making business transactions more transparent and to improve the existing regulatory system by looking at international best practices.
To assure potential investors, in his address Mr. Zakhilwal, played down security fears, saying the media exaggerates the risks.
“These concerns should be laid to rest,” he said, with reference to worries the security situation is going to deteriorate following the pull out of foreign forces.
But security is likely to remain a top concern for anyone considering doing business in Afghanistan. The U.S.-led coalition earlier this week said that insurgent attacks rose sharply in recent months.
India is flexing its soft power muscles this week by hosting an international investment conference on Afghanistan, barely a week before another global gathering in Tokyo to pledge aid. The BBC's South Asia correspondent Andrew North examines the deepening ties between India and Afghanistan.
On a recent flight from Kabul to Delhi none of the Afghan passengers were surprised when take-off was delayed.
Business class was still empty. Some VIPs must be running late, they concluded.
They were right, except the late arrivals turned out to be very important policemen - among them a colonel - severely injured in another insurgent assault on Kabul.
It is quicker to fly to next-door Pakistan. But when officials like this need help, Afghanistan would rather trust its old friend India to look after them.
Battle for influence
Encouraged by the US and its Nato allies as they prepare to retreat in 2014, India and Afghanistan are deepening their ties, to the frustration of their neighbour sandwiched in-between.
The two states signed a strategic partnership last year, which among other things promises more Indian help in building up Afghan security forces.
More than 100 Afghan officers are already attending Indian military colleges, with the number set to rise.
In effect, the next round of the age-old battle for influence in Afghanistan has begun.
India is watching closely the actions there of its huge northern rival China, which has secured rights to vast copper deposits.
The Indian government is keen to emphasise the soft power side of its strategy, such as Thursday's gathering at a plush Delhi hotel aimed at attracting more foreign investment into Afghanistan.
"Let the grey suits of businessmen take the place of the olive green fatigues of soldiers and generals in Afghanistan," Indian Foreign Minister SM Krishna told a conference hall filled with would-be investors.
In financial terms, India is already one of the biggest players in Afghanistan.
It has pledged or spent some $2bn (£1.3bn) worth of aid over the last decade to build roads, power stations and even the Afghan parliament.
'New silk road'
India has been rewarded with rights to mine Afghanistan prime iron ore reserves.
It is state companies who are leading the way so far though.
Private investors at the conference seemed to be doing more window-shopping rather than being ready to invest - with many nervous about events after the Nato pull-out.
But for Indian companies there is an open door, from the Afghan street to the presidential palace.
Afghan President Hamid Karzai did his university studies in India and speaks Hindi.
Walk through central Kabul and you soon lose count of the number of places selling Indian music and movies.
While you never hear a good word about Pakistan, you rarely hear a bad one about India.
Afghan officials at the Delhi meeting were talking of a "new silk road" between the two countries, even though Commerce Minister Anwar ul-Haq Ahadi admits Afghanistan is still "one of the riskiest places in the world to do business".
But go to a private Delhi hospital and you see a new kind of silk road already emerging, with a boom in Afghan medical tourism.
It is not just security personnel coming for specialist care, but thousands of other Afghans for routine operations.
Some hospitals now have separate reception desks with staff speaking the two main Afghan languages to handle the numbers.
As most Afghan patients pay with wads of crisp dollars, the hospitals want them to keep coming.
Locals in Delhi's Lajpat Nagar district, where many Afghan medical tourists stay, joke it should be renamed "Little Kabul".
The connections between the two nations are set to get physical, if a recently signed deal to pipe gas 1,700km (1,056 miles) from Turkmenistan across Afghanistan and Pakistan to India goes ahead.
India's state gas company is one of the leaders of a consortium trying to persuade global investors to stump up $7.6bn (£5bn) for the so-called TAPI pipeline later this year.
It is a rebirth for an old idea which US companies tried to get the Taliban to sign up to before 9/11 - and with the route by-passing Iran, the Americans are encouraging it again.
With the obvious security challenge of trying to lay and protect a pipeline not just across Afghanistan - but also the troubled Pakistani province of Balochistan - the project has been derided by some in India as, well, a pipe dream which leaves Delhi beholden to its old enemy Pakistan.
There are fears it will only increase the risks India faces in Afghanistan.
It has already lost diplomats in bomb attacks on its in Kabul embassy - attacks India says were carried out by Pakistani-backed groups.
Getting in deeper only inflames India-Pakistan tensions, some argue.
Why does not India just get out and leave "Af to Pak" asked a column by Shekhar Gupta, the influential editor of the Indian Express.
Foreign ministry spokesman Syed Akrabuddin says India's presence is about its own strategic self-interest.
"Afghanistan is in our neighbourhood and there is a history of Afghan soil being used for terror attacks on India. We can't have that again," he said.
The truth is that few Indians pay much attention to their government's policy in Afghanistan.
If they consider the country at all, they think of it as a place of suicide attacks.
But there is a kinder image too, from the Kabuliwalla story taught in many Indian schools - about a poor Afghan who comes to Calcutta to work to pay off his debts and befriends a young girl.
The many Afghans coming to India for medical treatment or business are showing another side to their country too, one Indians realise they can benefit from.