Afghan Bank Failure – More Corruption Trouble For U.S. Counterinsurgency

Fighting a counterinsurgency is a very hard and long proposition. It takes forever to bring the people of any nation involved in one out of fear of the insurgents and into a belief that they can rely on the government not just to protect them but to provide them with the kinds of freedoms and services that make it worth supporting.

This is the complicating factor in Afghanistan that does not see enough press in my not so humble opinion. The United States has an astounding war machine. We can pour resources for killing in like nothing seen previously. We can sort of pour resources in for rebuilding what is destroyed but it hardly matters is we can not change the correct impression that the Afghan government is corrupt to the core and really will not act in the best interest of the people but only its own best interest.

A glaring example of this is the near collapse of Kabul Bank and the flight of its Acting CFO and most of the finance department to Pakistan on 14th January. Yeah that’s right boys and girls, the Chief Financial Officer of what is considered to be the most sophisticated bank in Afghanistan fled the country two weeks ago and it has made hardly a ripple in our national consciousness.

Why did they skip the country? Well it seems that an investigation into the banks practices are starting to show a Wild West attitude toward finance that would make a Bear-Sterns banker blush. Or was it really their fault? In the Washington Post article about the investigation into the bank an unnamed source from the bank said that the managers were being made the scapegoats for the powerful shareholders who have been given millions of dollars in loans they have not even made an effortt pay back.

Among those who were the beneficiaries of the shady loans were the Mahmuod Karzi, the uber-corrupt brother of Afghan President Hamid Karzi and the brother of Vice President Mohammad Fahim. While the Afghan government is trying to round up managers of the bank, these two men have been allowed to leave (flee?) Afghanistan without a problem.

This bank looks as though it is a major scam from top to bottom. Most of the major shareholders, including Mahmuod Karzi, bought their shares with money from the bank itself. Loaning money to people who then buy shares of your bank is not exactly a best practice.

It is exactly this kind of thing that makes a people unable to trust their government. The U.S. has been pushing for a forensic audit of the entire bank since last September but was blocked by, you guessed it, the Karzi government. Finally after having poured more than 430 million into the bank to fend off a run where more than 800 million in deposits was withdrawn in two weeks the Afghan government has begun taking bids for the audit, but it will be under the auspices of the Karzi government and not independent.

I don’t know a lot about Afghan culture. I have herd it suggested that they have a culture that makes corruption endemic. That could be true I suppose, I have been around what you might call a “pirate culture” in working with some people from Mongolia. They have an attitude that makes getting away with skirting the rules a matter of pride, which is more than a little startling to a culturally Catholic guy from the Midwest. Still it was something that was amenable to change over time. And frankly what one person might call a scam another might call an over enthusiastic entrepreneurial spirit.

Even if Afghan culture allows for some gentile corruption as a matter of course the reality is that people on the ground there see the Karzi government and its supporters as only enriching themselves, at the expense of the people. This combined with the obvious and massive voting fraud in the past two rounds of elections make this government even less legitimate.

I have maintained for about a year and half that we can not succeed in Afghanistan. We have made our attempt and the factors for success are not their. Our military is over stretched our allies are ready to go home and the regime the controls the country is not interested in doing the things required to become legitimate, on just about every level.

The continued pattern of corruption makes it all but impossible to leave a stable government there. This combined with the recent uprisings against other autocratic governments in Tunisia and Egypt give the Afghan people little reason to invest in it either. There is a window opening in the Muslim world for a move to a more representative type of governance and seeing that others have chosen not to live under this kind of corrupt and thieving government it would be impossible for the Afghan people to just acquiesce to one of their own.

I don’t have a solution for Afghanistan. The best we can hope for is that we actually begin to leave this year and this gets the non-Karzi leadership of the nation to realize they have to make a change and soon, and then they follow through on that change. That is the best case scenario and it sucks. Worst case, the Afghan people continue to have the kind of civil strife that has engulfed that nation since the Soviets rolled in. Another lost generation of fighting and killing each other.

The floor is yours

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