Registan.net

The way we divide the world is problematic. The U.S. Foreign Policy establishment—from an official perspective, the Departments of State and Defense—divide the world into overlapping bureaus and commands. Some of this was rectified when SecState Condoleeza Rice reclassified Central Asia as part of “South Asia,” as Nathan and I both noted at the time. It was an imperfect match, but probably made more sense than considering Bishkek next to Paris.

From a policy perspective, though, this still creates problems. The DoD considers Pakistan part of the Central Command, or CENTCOM (which includes the Middle East and Central Asia), but places India in the Pacific Command, PACOM. Meanwhile, the State Department places all of Central Asia in the Bureau of South and Central Asian Affairs, while neighboring areas like the Middle East are a part of the Bureau of Near Eastern Affairs. How Africa policy is divided up is even more chaotic.

The end result is a confusing, bureaucratic mess, in which multiple and otherwise fairly independent military commands have to coordinate with multiple State Department bureaus to execute the President’s foreign policy goals, whatever they may be. (There is a side issue to this, which is that nearly 93% of the U.S.’s foreign policy budget is military and only 7% is diplomatic and aid, but that’s a larger post not entirely appropriate to this space.)

The reason I bring this up is several-fold: considering Pakistan in isolation from India, which the DoD does, is dangerous. Pakistan’s support for the mujahideen, the training camps in the NWFPs, and the Taliban, is directly related to its clash with India over Kashmir. Considering Central Asia a part of the “broader Middle East” (to borrow a phrase from our friend Joe Biden) is equally problematic. Similarly, considering Central Asia apart from its history and relations with Russia and in the Caucasus will lend an incomplete picture of the forces shaping the region.

It’s easy to say that, of course any diplomat or regional specialist will know better than to stick rigidly with the bureaucratic confines of either the DoD or the DoS. But that doesn’t happen, and the result has been some terribly short-sighted policy.

The United States is not, however, the only actor that does this. The World Bank, for example, considers Afghanistan part of South Asia because of its relationship with Pakistan, though this ignores the heavy influence of Central Asia on the country (tangentially discussed in my rambling essay on minorities in the country). The World Bank also considers Central Asia in the same breath as Europe, just as the pre-Condi State Department did. It is a stretch, however, to consider Dhaka and Kabul in the same report, just as it is a stretch (to say the least) to lump together Tashkent and London.

All the above was said as a way of excusing this reference to the World Bank’s build up to the 14th SAARC Summit, which is notable in The Registan’s context only for what it says about Afghanistan. The South Asian Association for Regional Cooperation is about increasing economic development in the area, and covers most areas of development. For our purposes, I want to draw attention to Afghanistan’s business environment (full report is here, PDF).

Thanks to years of World Bank oversight, Afghanistan has one of easiest startup environments, at least in theory. It is critically lacking in credit institutions, however, which are normally responsible for providing up-front capital for business ventures. That’s why I was happy to run across Kiva, which was brought to my attention by NextBillion.net and explored nicely in Foreign Affairs. The use of MFIs, or microfinance institutions, offers a clever way around Afghanistan’s business catch-22, which is the total lack of credit institutions creates a bad environment for credit institutions. Since it is so underdeveloped, small amounts of money can make a big difference, and Kiva’s brilliance lies in using the web to leverage financing across the entire Internet (see the NextBillion link for information about how Nicolas Kristoff did this, and further implications).

The security situation, however, is dire, and as a result the central government has little power to enforce contracts, handle licenses, protect intellectual property, handle property registration, and so on. This all amounts to Afghanistan having one of the worst overall business environments on the planet, placing it in the same realm as most of Sub-Saharan Africa.

Improving security so the central government can establish a good business environment is probably one of the biggest ways Afghanistan can be improved. Of course, the corollary issues like opium need to be dealt with, but NATO (though not the U.S.) has made some promising shrugs in the right direction. Legalizing opium is not the radical idea it’s sold as, given a similar policy’s successful history in both India and Turkey.

But think of it this way: what effect would a thriving, legal agricultural sector, even if it’s 2/3 opium, have on Afghanistan’s economy? What if opium were handled there the same way oil is handled in Norway, Kuwait, or Alaska, with profits going into a general fund for the country? This presents some incredible opportunities for getting around the standard development practices that just don’t work in a place as underdeveloped as Afghanistan. It will be interesting to see what may pop up at the SAARC Summit.

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