At Last, Afghanistan Endorses American Values

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Show me your friends, show me yourself. ~ Folk Saying

Despite my own outlook being made more sunny by the recent doings in Afghanistan, I grant that even the most ardent American patriot may read the following and despair of our most prominent imperial venture: "A scandal at Kabul Bank, Afghanistan's embattled lender, has engulfed prominent reformers in the government of Hamid Karzai." In the circus that is Afghanistan's government — a staunch ally ever since we created it post-invasion — everything that isn't nailed down is stolen and even the reformers need reforming.

So here our foolish conquest has borne yet another utterly predictable scandal, at Kabul Bank no less, the nation's "largest and most sophisticated" and, needless to say, the one most closely linked to many of the Karzai government's leading lights. Why are we shocked at the behavior of our native allies? Whenever you conquer a country and look for collaborators from amongst the occupied, whom do you think will answer your call, the decent, upstanding patriots among them? Always you will get the dregs of that society, dishonorable traitors all too willing to sacrifice their country for a villa in southern France. And so, like a car left overnight on a Detroit street, Kabul Bank has been stripped bare.

It is important to note that while the rule of law may strike them as odd and utterly foreign (and it seems no amount of money can turn Afghanistan's army and police into staunch anti-Taliban fighters) Karzai & Pals took to American-style banking like a fish to water. They even have a genuine central bank, though it's on training wheels as their currency, a beautifully decorated piece of paper called the afghani, trades alongside the US dollar (both are officially recognized legal tender) to which they strive to maintain a 50:1 peg. So they are hooked firmly into America's monetary system. This had consequences.

This massive ($900 million down the blow hole, at least) fraud at Kabul Bank is only the tip of the iceberg, merely an effect of what lay beneath. We not only exported a huge, heavily equipped army into their midst, but flooded Afghanistan with US dollars as well, sparking a genuine, full throttle housing boom in its capital city. In the better areas of Kabul (no laughing, everything's relative) mansions are sprouting like mushrooms and homes can easily go for hundreds of thousands of dollars. Houses with million dollar price tags are far from unknown, as spectacularly corrupt politicians are far from unknown, and there's plenty of "liquidity" sloshing around to bribe them with.

According to the Afghani Central Bank, the "financial sector has grown significantly over the past six years. Assets have grown from US$60 million in 2002 to US$ 4.26 billion in August 2010. During the 2004–2010 period bank deposits grew from US$60 million to US$3.58 billion." Where'd all that money come from? Foreign aid, of course, mostly American. A recent piece in the New Yorker refers to the capital as "this dollar flooded city". And the rise of American-style banking has not been limited to Karzai's domain (Kabul's city limits) — throughout Afghanistan's more urban areas ATM kiosks and bank branches have proliferated under the occupation.

Besides the real-estate boom in Kabul, all these US dollars present opportunities for graft, fraud, and theft of a scale that the pre-invasion natives could have only dreamed. Kabul Bank was, to be blunt, an enormous fraud; as soon as the dollars were deposited they were "loaned" to the politically connected, the cash withdrawn and stuffed into suitcases, then scurried away to foreign locations unknown. This was all taking place with the full knowledge of Western and Afghani regulators, but they were too focused on "the problem of terrorist financing" to care.

Naturally, large politically connected banks do not collapse in the "modern" American banking system so already officials "describe the bank as u2018too big to fail'". They insist there's no need for any Afghani who had deposits at the bank to worry, either, as a government-administered program was created for just this sort of eventuality. At least I think it was created; if you seek out any information on the grandly named "Afghan Deposit Insurance Corporation" (ADIC) on the central bank website the link will lead you to a blank page which, I fear, exactly replicates what's in the vault of the ADIC. No need to worry, though — from the pockets of the American taxpayer, bless his heart, will flow the solution to all this stolen money.

It's depressing to think from what source (mostly, your paycheck) a war-ravaged, agricultural country — with a well-honed tradition of breeding a spectacularly corrupt elite — gets all this cash to throw around. Despite sporting an annual GDP guessed to be only $12 billion, Kabul Bank alone has a loan book (for what it's worth) of almost $1 billion. Keep in mind that Kabul Bank is far from an only child. Amazing for a war-torn capital of an impoverished nation, since 2003 Kabul has seen the birth of over a dozen new banks (Afghanistan International, Kabul Bank, Azizi Bank, Pashtany Bank, along others). All these are in addition to the country's traditional, unregulated "moneychangers" market where the decent people bank.

In Afghanistan your money is far safer lying at the feet of an alleyway moneychanger than in the vault of any official bank. It is a world so far outside of our conception we may as well have invaded the moon. If anyone would like to gain a deeper understanding of our Afghanistan misadventure, I'd recommend a read of Evelyn Waugh's Scoop, which uses the fictitious country of Ishmaelia as the apple of the colonialists' eyes.

From the "president" of Afghanistan Hamid Karzai's laughable pretensions of "ruling" anywhere outside of Kabul city, we read Waugh's description of Ishmaelia's "rulers" — "There never has been any Government in Ishmaelia outside (the capital) Jacksonburg" — (p.142) to the utter refusal of American and Afghani officials to tackle the problem before Kabul Bank's collapse — "You can't get a word out of the Government. They won't admit there is a crisis," (p.122) — Waugh tells us everything we need to know about the absurdity, wasted bravery, death, denial, and hubris of any colonialist venture.

Yet, with Kabul Bank's collapse the more perceptive observer can, at last, feel hope for our Afghanistan adventure. With our native allies' all too apparent embrace of our own banking system we are certainly more alike than ever before, and at this point in the farce I'd declare this a victory (Mission Accomplished! We're All Keynesians Now!) and bring the entire spectacle to a merciful end. Evelyn Waugh explained exactly what we, and the Russians before us, got ourselves into by invading the poor Afghanis:

"That profitless piece of territory; that the only thing less desirable than seeing a neighbor established there, was the trouble of taking it themselves". (p.106)

It's high time we left and let the Chinese give Afghanistan a try; assuming they're foolish enough to want to. At least they actually have the funds to bail out Kabul Bank.

Source Cited

Waugh, Evelyn. Scoop. (Little, Brown, and Co., New York, 1966)

CJ Maloney [send him mail] lives and works in New York City. He blogs for Liberty & Power on the History News Network website and the DailyKos. His first book Back to the Land (Arthurdale, FDR's New Deal, and the Costs of Economic Planning) is to be released by John Wiley and Sons in March 2011.

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