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Afghanistan's Squandered Foreign Aid Has Young Businessmen Worried About Future

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An elderly Afghan man passes by a postcard shop in Kabul, in May. Many young entrepreneurs in the country say they have less than two years -- until 2014 -- to get rich, before it's too late.
An elderly Afghan man passes by a postcard shop in Kabul, in May. Many young entrepreneurs in the country say they have less than two years -- until 2014 -- to get rich, before it's too late.

KABUL, Afghanistan -- About three years ago, Abdul Fattah grew tired of seeing his cousins driving fancy cars, impressing girls and earning the respect of strangers, and decided it was his turn to get rich.

It seemed like an opportune moment. With the surge in foreign troops, Afghanistan was experiencing a renewed sense of stability and promise; meanwhile, international development assistance was pouring into the country at an incredible rate: $7 million per day, according to one count.

Fattah, who is now 23 years old, comes from an educated, relatively prominent family in the north. From what he could tell, there was still only one sure way to make it big: win a piece of that development assistance with a service contract from an international aid organization.

He and a friend formed a company -- Babakarkhail Jalali Logistics -- and started submitting bids to procure and ship supplies for international agencies like the U.N. Development Program and International Relief & Development.

And then: nothing.

"It's frustrating, that's obvious," Fattah said recently as he sat smoking a cigarette in his tiny, bare-walled storefront office in a commercial district of central Kabul.

On the table before him, Fattah had spread out the paperwork from a half-dozen failed bids, and a glossy brochure he and his partner had once put together, filled with ambition and clip-art of shipping containers and office furniture. Inside, a mission statement boasted a "staff of 100."

"Obviously it is not possible for a new company to have all that," he said, with a sheepish shrug. "We had hoped to get all these things."

Now, Fattah says he feels like time is running out for his dreams.

"It's clear that we have less time now -- until 2014," he said. "When the foreigners leave, with those people working at NGOs, there will be a lot less work, and a lot less money."

For some time, the 2014 deadline -- the year that most foreign forces will leave Afghanistan -- has inspired concerns in Kabul and across the country about whether the security gains of the past few years can be maintained by Afghan military forces.

But among Kabul's entrepreneurial youth, the deadline has also brought tremendous anxiety about the state of the economy without the constant infusion of foreign funds, and has given rise to a dubious mantra: "Get rich by 2014."

"There are a lot of people who do say they have only two years to get rich, so get rich fast," said Khaleeq Ahmad, a young business owner in Kabul. "But what will they do after 2014?"

FUNDS THAT NEVER MADE IT

President Barack Obama has repeatedly promised that the United States would not turn its back on Afghanistan, militarily or economically. The recent 10-year strategic partnership agreement signed between the two nations included a pledge to "help strengthen Afghanistan’s economic foundation and support sustainable development and self-sufficiency."

This weekend, coalition partners from the North Atlantic Treaty Organization will meet in Chicago to discuss long-term pledges of security and development aid for Afghanistan. There is little doubt, however, that those international contributions will amount to far less than they have been over the past decade: some $60 billion dollars in total foreign assistance, according to estimates.

But for the young businessmen of Afghanistan, whose aspirations are closely linked, and finely attuned, to the vagaries of the market, it may not matter how far the spending cuts go, or even what happens to the security situation after 2014.

Instead, a growing chorus of them say, it is already too late: The billions of dollars that has flowed through the country for the past decade may have made some people rich, but has failed to create the kind of environment that would allow businesses to sustain themselves after the international community withdraws, or the kind of businesses that might choose to stick around.

"Paving roads, building schools with donor money is not investment," said one young Afghan business owner, now a government official working on economic matters. "Of course they don't invest in the country, they just come here to bid for projects and then move to Dubai or elsewhere."

The official estimated that the vast majority -- up to 90 percent, he said -- of companies formed in Afghanistan in the past decade were in the construction business, and exist solely to reap the benefits of foreign contracts.

"The Afghan private sector investments have been really fake for the past 10 years," he said.

Indeed, in 2008 a handful of studies painted a dire picture of how little the billions of dollars in international aid had done for Afghanistan's economy.

"Despite a few meaningful private initiatives which have been taken by the military and the civil society, impact of aid on the local economy remains low," one report, by the consulting group Altai, concluded.

Part of the problem has to do with a fundamental flaw in how development assistance is spent, which results in much of it going to inflated salaries and corporate profits for the companies that implement the aid. Another 2008 study, by international aid group Oxfam, estimated that "a staggering 40%" of international development aid was spent in the donor's home country -- which, in the American case, often means companies based in suburban Virginia.

Add to that endemic Afghan corruption and a system of subcontracting that funnels off huge portions of aid before it can be spent -- experts say that many basic infrastructure projects in Afghanistan can have as many as seven or eight subcontractors -- and the final amount of money that hits the local streets is often a small fraction of what was appropriated.

Ryan Crocker, the U.S. ambassador to Afghanistan recently suggested that these inefficiencies may end up having a positive side effect, by inadvertently reducing the economic impact when western funding draws down.

"Ironically, the fact that vast sums of money have been expatriated may lessen the impact on the overall economy of the true drawdown, because the money, in many cases, never made it into the Afghan economy," he told NPR. "I'm not saying that's a good thing, but it may significantly lessen the blow when we get to the end of 2014."

But for Afghans struggling with businesses, that wastefulness can border on the insulting, and it regularly comes up in casual conversation, accompanied by the latest rumors of some pointless western NGO project.

The gulf between the money said to be spent and the evident payoff has also contributed to what some Afghans call an unhealthy "expectations gap" among the population.

"It gets billed to you, the taxpayer, but it also gets billed to us," said Haseeb Humayoon, the young owner of an Afghan public relations business. "We are told that we were given all this money, this huge number, but we don't see it."

LOOKING FOR HOPE

The Western aid that has reached Afghanistan has not been insignificant: It has paved highways, improved electricity and brought 3G wireless to major cities.

"The changes you see here since 2001, they are incredible, it was like magic," said Sami Sadat, the 27-year-old owner of Blue Sea Logistics in Kabul. Sadat recalled that before 2001, Afghans had to travel to Pakistan in order to make international phone calls, and now most people have cellphones.

"We are grateful for what the international community has done for us," he said. "But now we have a completely aid-dependent culture here in Afghanistan. The U.S. didn't do it intentionally, but that's what happened."

The unpleasant prospect of economic life without its international assistance lifeblood is starting to take shape.

"How can I continue this business?" Azizullah Gulzada, the young owner of Zuhaak Tours, a taxi company popular with foreign aid workers and journalists in Kabul, asked during an interview in his office. Gulzada pointed out that if foreign non-governmental organizations leave town, he will not only lose their business, but that of their Afghan employees who would no longer have the disposable income to spend on his services.

Hamayoon, the public relations business owner, describes this as "the market slowly becoming more real."

"The time of get in and get rich fast is gone," he said. "Now it's more of a 'survival of the fittest' situation -- the game of whose model is viable and whose is not is playing itself out."

But it remains to be seen how much hope there is in the long game as well. Some, like Arian Sharifi, think it's worth trying. A few years ago, Sharifi, who is 32, partnered with a friend who had started a financial firm on the western edge of Kabul, called Afghanistan Financial Services. Their plan was to begin with basic services -- accounting, tax preparation -- before eventually moving on to more glamorous work like financial planning and investment banking.

Sharifi of course worries about the end of the international presence in Afghanistan: Given the nature of his business, if other companies working in the country leave or go under, so will he.

But he refuses to submit to living in dread.

"Everyone has that mindset -- there are only two more years left, so we've got to get the money or we're stuck," Sharifi said. "But not us. This is what we're trying to do here [at A.F.S.]. We're not only thinking about quick money. A lot of people say we are stupid -- maybe we are. I don't know yet."

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