World Bank forecasts showed that the army and police force being built up in Afghanistan to keep the Taliban at bay after western combat troops leave in 2014 will impose crippling costs on the country's finances, leaving foreign donors with an annual USD 7.2 billion bill for at least the next decade.
The detailed research reveals that even on optimistic predictions about Afghanistan's future the cost of running the country will be twice what it can afford.
The report, prepared for next month's conference of world leaders in Bonn, says a sharp decline in foreign spending on Afghanistan after the departure of most of Nato's 130,000 troops will drag economic growth down by almost half.
Even increased government revenues will be nowhere near enough to pay for the 352,000 security forces being trained and equipped as well as the cost of sustaining roads, schools and other infrastructure built in the last decade.
The bleak outlook assumes that massive copper and iron mines will be developed, that insecurity will be no worse than today's high levels and that the country will enjoy several drought-free years of high agricultural output.
The USD 7.2 billion annual shortfall, averaged out over the next decade means Afghanistan will remain the world's biggest recipient of foreign aid for years to come. Some diplomats estimate the annual bill could be closer to USD 10 billion once the cost of a much reduced but still sizeable foreign military mission is included.
Ms Josephine Bassinette the World Bank's country director in Kabul said that the international community should try to avoid an aid shock that could imperil many of the gains made over the last 10 years. Although it is clear overall levels of international assistance will decline, it is really important these declines are gradual, predictable and orderly."
The Afghan government is placing high hopes on the mining sector to deliver strong growth, although many observers say that is unrealistic and even the World Bank's projections suggest it will add only a few percentage points to GDP. The Guardian has learned that the government has chosen an Indo-Canadian mining consortium as the winning bidder of USD 10 billion plan to exploit Asia's biggest iron ore deposit at a remote site in the central highlands known as Hajigak.
The winning bid, to be officially announced soon, is likely to infuriate Pakistan which is concerned about the growing activities of its arch enemy India inside Afghanistan. As well as Hajigak, there are plans to start rapidly offering contracts for 24 monster deposits of gold, iron, copper, lithium and oil in Afghanistan to overseas investors.
A European diplomat said he had been unable to convince any companies from his own country to invest. They just shrug and say we needed 15 years of security, stability and growth, can you guarantee us that?
China Metallurgical Group, a Chinese state-owned mining company is already a year behind work at Mes Aynack the huge copper deposit south of Kabul to which it won the rights in 2008. Many foreign observers believe the Chinese never intended to honor their agreement to mine in the near term, instead preferring to squat over the asset for later use.
According to diplomatic cables published by WikiLeaks, the US embassy concluded MCC was never going to build an agreed railroad over the Hindu Kush linking the copper mine with central Asia, a line that will be critical to the success of Hajigak which it will also serve.
(Sourced from www.guardian.co.uk)
