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The Political and Economic Situation in Afghanistan Report

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Updated: Dec 2nd, 2021

September 11, 2001, is a day that will forever be etched in the memories of millions of Americans. It was the day the twin towers were bombed which then sparked the war against terror. Afghanistan, a little known country, was brought into the map as a result of the war on terror. The then President Bush, who was convinced that Osama bin Laden, who was said to have been responsible for the terrorist attacks, was hiding in Afghanistan consequently attacked the country. The attacks have had a considerable impact on the political and economic situation of the country.

Political situation

According to research, the amount of resources that has been spent by the US in the war on terror and consequently in Afghanistan are of immense proportions. Stiglitz & Bilmes are of the argument that billions probably even trillions of dollars has been spent. Operations in Afghanistan alone cost the American government about 16 billion dollars in one month. All this money spent and it does not even factor in the 500 billion dollars spent each and every year as part of the Defence Department’s regular expense.

All this spending was spent for purposes of controlling Afghanistan. The former President George Bush first invaded Afghanistan so as to remove the Taliban from power, displace any Alqaeda training camps and set Afghanistan on the path to democracy (“Focus on the greatest danger”). However, as is evident, the US seemed not to be in complete control of the situation in Afghanistan for the simple reason that it does not spend quite a sizeable chunk of the money like it did in Iraq. On more than one occasion, Bush even had Congress pass the funding bills, including the famous emergency war spending bill. The funds were to be used for such activities as helping the democratically elected government in Iraq deal with the wide spread violence (McKeeby). However, the same was not done for Afghanistan; the US government spent less in Afghanistan and it was not even directed towards the formation of a central government, something that has been lacking in Afghanistan for a very long time. Consequently, with no government in place, terrorist activities, law and order, plus security have been very hard to achieve in Afghanistan. Terrorists are often a threat to national and international security. With most troops withdrawn from Afghanistan and instead transferred to Iraq, the Afghan government was greatly weakened. This then made it unable to exert authority outside the capital city of Kabul as other regions outside of Kabul were and still are to a great extent, Taliban strongholds. These regions under the control of the Taliban again double up as training grounds for terrorists.

Without government control, corruption then becomes a major issue. Since they have no one to hold them accountable, government officials may ask for bribes so that they may permit foreigners to transact businesses in Afghanistan. As a result, lawlessness and corruption are the major hindrances to the conduct of business. A weak government can also be described as an ineffective and inefficient government. Coupled with insecurity and the lack of support, it becomes that much harder to provide vital infrastructure such as roads and bridges. Even water and sewerage facilities become scarce.

In the war against terror, most resources, including the military, were diverted from Afghanistan. Thus, not only was the country left unstable as they found it, but also the Al-Qaeda leadership was once again given the opportunity to escape. With too few troops in Afghanistan, the Taliban are rising fast and are a threat to both the US and NATO forces. As President Barack Obama put it, there is a need for more troops, more resources, and urgency to deal with the Taliban before the situation gets out of control (“Middle Eastern Times”).

Hence, Afghanistan presents very serious and complex security issues. Not only is the leadership of Al Qaeda located therein, but Afghanistan is also the hub in the trafficking of narcotics. Afghanistan produces 93% of the world’s opium. With no strong government in place to control the production and export of opium, the Taliban are then using proceeds of the drugs to fund train and fund terrorists (Kavanagh). The fact that corruption is rampant does not help the situation. In addition, there is the whole issue of Pakistan and its nuclear weapons. Clearly, the security risks are plentiful in Afghanistan. (Singh)

However, all is not lost, the international community has been very helpful as far as stabilizing Afghanistan is concerned. Up to 15000 soldiers who are part of the International Security Assistance Force (ISAF) are expected to be deployed into Afghanistan so as to assist the Afghan government in its quest to control the country, maintain law and order and therefore guarantee security to the locals and foreigners (Ponzio 2). Security in the end is bound to attract investments. With the help of the ISAF, the government will be able to control, crime warlords, the illicit opium economy in addition to keeping the terrorists and insurgents in check, all of which are a threat to the political and economic progress of Afghanistan.

Economic Situation

Afghanistan still remains one of the most challenging environments to conduct business in. For many years, the country has been economically unstable. It is worth noting that when a country is not sound politically, the economy tends to suffer. Consequently, because of the political situation that has prevailed in Afghanistan for some time, access to basic infrastructures and business services are highly restricted (“Business environment”).

While there are road and rail networks in Afghanistan, they are either unavailable or run down. For any businesses wishing to invest in Afghanistan, it is worth noting that there are very poor roads, the vehicles are also in poor conditions, and there are frequent customs delays. Thus, the road network is not to be relied upon by any means if anyone hopes to conduct any meaningful business in Afghanistan (“Business environment”). However, while the road network is greatly run down, air transport remains a viable option. The airports remain functional and the runaways are in good condition. It can be argued that since the importation of arms required a fast means of transportation, air transport was frequently relied upon. This then meant that the airports had to be properly maintained. It is estimated that over 74% of all the goods that arrive into Afghanistan arrive by air. Air transport in Afghanistan is said to be the only form of transport that is openly fast and reliable since very few good get lost while on transit. Goods travelling by road or rail even take up to 9 days to arrive at their destinations. (“Business environment”) Other forms of infrastructure such as water, power and sewerage, are also greatly limited in Afghanistan. When investing in Afghanistan, businesses should be prepared to invest in generators of their own as there is no reliable power supply (“Business environment”).

Labour is an integral component of the business process. Without labour, goods and services may not be produced. Most businesses prefer cheap labour because then they are able to considerably lower their business costs. Cheap labour is in plenty in Afghanistan for the simple fact that the unemployment rate is very high. For instance in Kabul, which is one of the larger regions, the unemployment level is estimated at 50%. There is unskilled labour from the uneducated afghans and skilled from the educated. Nonetheless, they are all charge reasonably for their labour for instance; the average monthly salary in Kabul is between 75 and 100 US Dollars (“Business environment”).

Corruption is a big impediment in business. Afghanistan is one of the most corrupt nations in the world. According to a survey by transparency international in 2005, Afghanistan ranked 117 in the corruption perceptions index, out of 159 nations that had been surveyed. It is estimated that foreign companies spend about 35000 dollars yearly, paying out bribes. Still, as compared to its neighbours Pakistan and Tajikistan, Afghanistan is regarded to be considerably less corrupt (“Business environment”). Corruption has the negative effect of raising business running costs which turns away investors (Herold)

Afghanistan can be considered to be one of the poorest countries in the world (“Focus on the greatest danger”). The political and the economic situation are to blame. When a country cannot maintain law and order and therefore guarantee security development becomes that much harder. Without security, investments may not be realised, which ultimately means no funds for development. Consequently, the majority of the people are poor, with most living on less than a dollar a day.

While security is clearly an issue in Afghanistan, research reveals that the locals seem to perceive the inherent security risks lower than foreigners do. This is to say that international multinational companies rank security as one of the top factors to consider before they venture into the Afghan market. However, it was then noted that security then ranks much lower in their concerns once they break into the market. This is because other issues take centre stage. For any business that is considering starting operations in a new area, infrastructure and red tape are the main issues of concern as they make the difference between successful and efficient businesses and those that are not. Consequently, it can be argued that security risks in Afghanistan are both real and perceived (“Business environment”). In order to deal with security issues in Afghanistan, it is important for business to heavily rely on local employees because, in most cases, they are usually better informed on the local circumstances. More over, it is advisable that if a company decides to send expatriates into Afghanistan, there are carefully chosen, taking into consideration the religious, cultural and ethnic factors. In addition, cooperation with national and international authorities is crucial (“Business environment”).

Security risks are by far the biggest impediments to business in Afghanistan. Since the September attacks in the US, security has been a major risk factor in Afghanistan (“Focus on the greatest danger”). Nonetheless, for business to thrive and flourish in Afghanistan and in any country for that matter, it is imperative that there be a resalable level of security in the country. The Afghan government has to be able to maintain basic law and order so as to encourage business from the locals and investments from abroad. This then means that security risks have to be sustained at a manageable level.

Security risk management is defined as the systematic process used for purposes of gauging threats that are likely to harm individuals and assets and the actions to be taken that may reduce the threat of the risk. According to the principles of risk management, while risk may not be completely eliminated, it is possible to prevent (Decker). Risk management helps to guide programs and responses as a country prepares for terrorism and other threats to security. Without a risk management approach, programs to combat terrorism and insecurity would fail (Decker).

According to Gabrielse, success is only likely to result if all the international partners coordinate in Afghanistan (2). This is one approach of managing security related issues. It is not enough that some international partners are only concerned with development matters when they could also double up as informers on the situation on the ground on possible security threats. For instance, they could provide meaningful information to ISAF on how strong the Taliban are on the ground and the gambits they use to intimidate the people (Scheffer). The only thing that is needed is the implementation of systematic means of sharing information related to security threats (Bollentino 263 279).

Another approach of managing security-related issues is by supporting the Afghan government and its national army. Long-term stability may not be achieved in Afghanistan without a stable government and a strong army. Funds should be provided to get the government settled. A strong government will be able to fight corruption and spearhead development through the provision of infrastructure. On the other hand, the government should be properly trained and equipped with the necessary equipment. Intelligence training is of primal importance as it is the only effective way of dealing with the Taliban and other insurgents (“Focus on the greatest danger”).

The political and economic situation in Afghanistan appears precarious. There is rampant lawlessness and insecurity for the simple fact that there is no strong government in place. The US spent millions on the war against terror. While it succeeded in removing the Taliban government from power for some time, it, however, failed to sponsor a strong Afghan government into power. Consequently, with few troops and the lack of commitment from the US, the Taliban who had fled into the mountains were able to regroup and are currently posing security threats in Afghanistan. They are using the million-dollar opium industry to fund their activities. Without a strong government in place, law and order cannot be maintained, which also means investments crucial for development may be lacking. But there is hope. With support from the international community, a stable government can be put in place so as to deal with the lawlessness and the insecurity. It will also provide the infrastructure necessary for development. This will, in turn attract the necessary investments. More over, the international community will assist in the formulation of a workable security risk management plan that will greatly reduce the security threats in Afghanistan which are impeding political and economic development.


‘Focus on the greatest danger’. N.d. National Security Network. Web.

Bollettino, Vincenzo. ‘Understanding the security management practices of humanitarian organizations. Disasters 32. 2 (2008).

‘Business environment’. N.d. Afghanistan Support Agency. Web.

Decker, Raymond. ‘A risk management approach can guide preparedness efforts. 2001. Homeland Security. Web.

Gabrielse, Robbert. ‘A 3D approach to security and development’. The Quarterly Journal. (2007). Web.

Herold, Marc. ‘Foreign investors take a pass on Karzai’s Afghanistan’. 2003. Empty Hat. Web.

Kavanagh, Patrick. ‘Managing opium policy choices for Afghanistan’. 2009. International Development Research Centre. Web.

McKee, David. ‘Bush urges Congressional support for Iraq, Afghanistan mission’. 2007. America.gov. Web.

Middle East Times. ‘Bush orders more troops to Afghanistan-five years too late. (2008). Web.

Ponzio, Richard. . N.d.2009.

Scheffer, Jaap. . 2007. North Atlantic Treaty Organization.

Singh, Vikram, ‘Afghanistan is not Iraq: Reasons to be wary of another surge’. World Politics Review. (2008). Web.

Stiglitz, Joseph & Bilmes, Linda. ‘The three trillion dollar war: The cost of the Iraqi and Afghanistan conflicts has grown to staggering proportions. The Times. (2008). Web.

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