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Iqbal Z. Quadir Headshot

Rockets to Markets

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It costs $250,000 per year to station an American soldier in Afghanistan. If anything happens to that soldier, the costs are immeasurable. Since finding an acceptable long-term order is necessary to defeat extremists and stabilize the region, how can this be achieved while keeping loss of life and costs down?

Military action, even when it is combined with aid to governments, is not a long-term solution. In this kind of war, killing the enemy does not weaken the enemy. When an insurgent is killed, others may rise up and join the fight. Aid to governments can distort the relationship between government and the people. When leaders are no longer beholden to the people who elected them, corruption results and the recruitment of extremists becomes easier.

The pernicious long-term effect of aid is evident in neighboring Pakistan, a recipient of U.S. aid for six decades, which has been plagued with problems rooted in the disproportionate power of the state. The press reports that the Pakistani army spends its resources and time removing the Taliban from the Swat Valley, but few are aware that the Taliban infiltrated the valley because of long-held economic grievances of landless peasants. These people became receptive to the Taliban after many generations of exploitation by a tiny landed upper class. This ruling class, in full collaboration with the Pakistani government, had been aided for decades from outside.

A lasting solution to conflict in the region lies with its people. Their economic strength would be the bedrock for democracy, an antidote to terrorism, a bulwark for stability and the key to good governance. This point is often ignored, as Afghanistan's former Minster of Finance, Ashraf Ghani, observes. He writes, "A contextualized, entrepreneurial approach to solving concrete problems often goes against official international advice because the bureaucratic community narrowly defines the skills and abilities of a nation to reside only in the government."

Farmers in Afghanistan have shown they can be a formidable, even innovative, force. Despite minimal infrastructure, low literacy rates, a small diaspora, and massive efforts against them, they have captured 90% of the world's illegal opium market.

There are other signs of commercial life. Many Afghanis want to go from drugs to rugs and terror to terracotta. Under harsh conditions, they managed to export $327 million of legal goods in 2007. The region is dotted with souks where local fruits and vegetables are hawked alongside colorful fabrics and handmade products of wool, silk, cotton, leather, wood, stone, brass, silver and gold. Age-old regional markets exist. Carpets are exported to Pakistan. Raisins, nuts, and even marble go to India. More than one quarter of Afghanis over the age of fourteen use cell phones, which are provided through commercial ventures and, in turn, used to facilitate commerce.

Sending 10,000 fewer soldiers to Afghanistan could save $2.5 billion per year, some of which could provide a significant economic stimulus package for many of the 18 million Afghani men and women in the 15-64 age bracket. For example, $1.5 billion could be doled out as $300 microcredit to 5 million Afghanis. BRAC, a Bangladeshi microcredit organization, already has 3,500 employees in Afghanistan.

The other $1 billion in savings could be used to boost external demand for Afghani goods. For example, it could be transferred to Western schools, hospitals, or resource-constrained organizations and put towards purchases of Afghani goods such as rugs.

The proliferation of poppy production in Afghanistan proves the power of external demand over the choices people make. Afghanis would have a greater incentive to engage in legitimate activities, and the stimulus package would go much further, if the problems of underground markets for illicit substances were minimized in the West. The prohibition period in the U.S. illustrates how pushing a substance underground does not solve the problem. In fact, it gives rise to corruption, crime, increased prices, and incentives to produce more illicit substances.

With a thoughtfully implemented stimulus program, Afghanis could go from lobbing grenades to exporting pomegranates. Entrepreneurs, armed with local knowledge, would emerge both within and outside of Afghanistan, exporting Afghani goods and importing raw materials. The support for products from the region could be channeled to favor many small producers and traders, ensuring competition and dispersion of revenue.

The history of Europe over the last several centuries provides clear evidence of the transformative power of commerce. Widespread commercial engagement of citizens did away with feudal hierarchies, religious zealotry, and violence -- the very problems that today mire Afghanistan. As citizens engaged in commerce, competition led to a virtuous cycle of innovations and economic vitality, allowing citizens to check the power and influence of feudal lords.

While the European transformation took centuries, the Afghani transformation could happen much more quickly. The rapid proliferation of cell phones in Afghanistan proves that anything that adds value to people's lives spreads like brushfire -- and commerce is certainly a force that could add value for Afghanis.

Military action or aid to governments may be unavoidable in the short run, but unless coupled with the creation of commercial opportunities for people on the ground, they are unlikely to be cost-effective and efficacious in the long run. A military or government hierarchy is anathema to the dispersed population and diverse tribes of mountainous Afghanistan. But trade and commerce could bring democracy and harmony from the bottom up, just as they integrated decentralized and mountainous Switzerland beginning in the 13th century.

In short, military action alone will not lead to order, but commerce will. Given the opportunity, Afghanis will make the fundamental shift from rockets to markets.

Professor Iqbal Z. Quadir is the founder and director of the MIT Legatum Center for Development and Entrepreneurship. He is a leading advocate of commerce-based solutions to challenges facing developing countries. In the 1990s, Quadir founded Grameenphone, which provides effective telephone access throughout Bangladesh, based on the principle that commerce can create prosperity in low-income countries. As a result of initiating Grameenphone, he is also credited as the earliest observer that cell phones could be a transformative force for the poor.