Afghan Pullout Risk by U.S. Means Builder Buys a Home in Turkey

Photographer: Scott Olson/Getty Images

Children watch as soldiers with the U.S. Army climb back into their vehicles following a patrol into a village near Kandahar. President Barack Obama said Feb. 25 that he asked the Pentagon to prepare plans for withdrawal of all forces by December, while waiting to see if the next Afghan leader will sign the Bilateral Security Agreement., Afghanistan. Close

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Photographer: Scott Olson/Getty Images

Children watch as soldiers with the U.S. Army climb back into their vehicles following a patrol into a village near Kandahar. President Barack Obama said Feb. 25 that he asked the Pentagon to prepare plans for withdrawal of all forces by December, while waiting to see if the next Afghan leader will sign the Bilateral Security Agreement., Afghanistan.

If U.S. troops leave Afghanistan at the end of the year, Mahammad Ismail will be right behind them.

The construction business owner bought a three-bedroom apartment in Turkey last month for $240,000, a price he says is worth it to avoid risking his life if Taliban insurgents return to power. One of his brothers was killed in the 1990s after the Soviet Union withdrew from Afghanistan.

“If something happens, of course I will shut my business and flee to Turkey,” said Ismail, 51, whose company operates in Kabul and the northern city of Mazar-e-Sharif. “I am really worried of possible civil war or that the Taliban will intensify attacks without American troops to help stop them.”

Afghanistan’s aid-reliant economy is suffering -- as seen in weakening growth, declining property prices and shelved investment projects -- as President Hamid Karzai delays signing a pact that would allow U.S. troops to stay beyond year’s end. While people with means seek refuge abroad ahead of an April 5 election for Karzai’s successor, poorer citizens in a nation where 31 million people live on an average less than $2 per day have few options.

“I will remain in my country and rely on wherever my destiny takes me,” Jamaluddin Hasan, 41, said in an interview in the grocery shop he owns in Kabul, the capital. “Living abroad without money could kill us, and living here without security might do the same. So it is better to remain alive or die in my own country.”

Photographer: Nicolas Asfouri/AFP via Getty Images

Afghan women walk down a hill in Kabul. While people with means seek refuge abroad ahead of an April 5 election for President Hamid Karzai’s successor, poorer citizens in a nation where 31 million people live on an average less than $2 per day have few options. Close

Afghan women walk down a hill in Kabul. While people with means seek refuge abroad... Read More

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Photographer: Nicolas Asfouri/AFP via Getty Images

Afghan women walk down a hill in Kabul. While people with means seek refuge abroad ahead of an April 5 election for President Hamid Karzai’s successor, poorer citizens in a nation where 31 million people live on an average less than $2 per day have few options.

Aid Cut

President Barack Obama said Feb. 25 that he asked the Pentagon to prepare plans for withdrawal of all forces by December, while waiting to see if the next Afghan leader will sign the Bilateral Security Agreement. All nine candidates still vying to succeed Karzai have vowed to sign the BSA, saying it would boost security and the economy.

The U.S. Congress cut Afghanistan’s aid budget by about half to $1.12 billion for 2014, equivalent to about a fifth of the South Asian nation’s total budget spending. Foreign grants pay for about 50 percent of the government’s expenditures, according to World Bank estimates.

Growth in the $20.5 billion economy slowed to 3.1 percent in 2013 from an average 9.4 percent between 2003 and 2012, the Washington-based multilateral lender said in a Jan. 29 report. It predicts the pace of expansion will remain subdued at 3.5 percent this year, with a pickup dependent on a smooth political and security transition. The Afghan currency has tumbled more than 20 percent in the past three years.

Investments Delayed

Escalating security risks are delaying moves to tap mineral wealth the government estimates at $3 trillion. Ravi Uppal, chief executive officer of New Delhi-based Jindal Steel & Power Ltd., said in December that “everything is up in the air” on $11 billion in planned spending by his company and its Indian partners to mine Afghan iron ore and build a steel plant.

Consumers and smaller companies are also facing the brunt of the potential departure of the U.S.-led International Security Assistance Force.

Asadullah Balkhi’s construction company, which provided services for coalition troops, recently reduced the number of employees to 35 from 60, halted activity at two apartment blocks in Mazar-e-Sharif and is cutting raw material imports.

“We already lost some of ISAF’s contracts because they are leaving, but the uncertain future has led us to stop some of our non-ISAF construction projects,” Balkhi, president of Alburz Construction Co., said in a phone interview. “The chaos could result in losses worth millions of dollars.”

Cash Transfers

Mokhtar Mohammad, a government employee, advises his friends to sell assets, reduce spending, and save cash. He has withdrawn all his funds from New Kabul Bank, a lender owned by the finance ministry, and transferred it to his brother’s account in Turkey.

“Everybody, like me, ignores buying and saves money,” he said in an interview.

As many Afghans delay investments, some families are buying small firearms and farmers are planting more poppy for opium, the South Asian nation’s most lucrative agricultural export, according to a report from United States Institute of Peace, a U.S. government-funded research house.

To be sure, U.S. forces don’t see the Taliban as an existential threat to the government and Afghanistan’s military remains “a cohesive and resilient fighting force” despite challenges, according to Marine Corps General Joseph Dunford, commander of the International Security Assistance Force.

Turnaround Possible

The BSA and aid pledges that would come with it “will significantly enhance Afghan confidence and erode our enemy’s will,” Dunford told the Senate Armed Services committee on March 12. “While the information environment is a challenge today, I believe it can be turned around.”

The economy could grow 5.3 percent in the 2014 fiscal year as domestic demand improves if political and security uncertainties diminish, according to the Asian Development Bank.

About 36 percent of the nation’s population live below the national poverty line and the government needs to create jobs for 400,000 new entrants into the workforce each year to sustain the economy, the World Bank estimates.

Those unable to flee Afghanistan due to financial constraints face threats from local militias that might regroup as U.S. forces recede.

The Taliban will boycott the elections, calling them illegitimate and an American conspiracy in a March 10 statement. The group plans to use “all force” to disrupt the polls and target voters and officials, spokesman Zabihullah Mujahed said in the statement.

More than 8,000 civilians were killed or injured in armed conflicts in 2013, a 14 percent increase from the previous year, according to a report from the United Nations Assistance Mission in Afghanistan.

For Ismail, the construction business owner, the best option if chaos breaks out is relocating to Istanbul.

“In my business, I will be hurt a lot,” he said. “But my soul will be at peace to see my family safe.”

To contact the reporter on this story: Eltaf Najafizada in Kabul, Afghanistan at enajafizada1@bloomberg.net

To contact the editors responsible for this story: Daniel Ten Kate at dtenkate@bloomberg.net Jeanette Rodrigues

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