Afghanistan and UAE finance capital

A little while back I made a note on the importance of the United Arab Emirates (UAE) in the ongoing war in Afghanistan.  I took a closer look and found some interesting reports about the cozy economic relationship between Afghan and UAE elites, which gives insight on the financial/economic dimensions of imperial governance.

The 2010 Cablegate leaks of the US State Department communications revealed the way powerful Afghan elites used the UAE as a nexus for money laundering and graft, with hundreds of millions of dollars passing to and fro Emirati banks on a monthly basis.  The Vice-President was in one case observed to have flown into Dubai with $52 million in cash, and the disgraced ex-chairman of Kabul Bank at the center of the 2010 banking crisis, who helped steal nearly $1 billion, holds numerous pieces of lucrative real-estate in the UAE.  The property market in Dubai generally seems to be a favored vehicle for investing ill-gotten gains by warlords, drug traffickers, and corrupt political officials (none of which tend to be mutually exclusive categories).

As this Financial Times article points out, the flow of money is a result of a deep connection between Afghan businessmen and UAE banks.  Many elites fled to Dubai after the Taliban took over in the ’90s, infusing their capital into local conglomerates and business ventures.  Indeed, the famous Palm Jumeirah development apparently took in a large amount of Afghan capital.

Brought to you by Afghan oligarchs! (And South Asian indentured labor)

The current flow of capital out of Afghanistan is even higher than it was prior to the Kabul Bank crisis:

…the Afghan business council estimates about $10bn flows between Dubai and Afghanistan every year. Analysts and Afghans say most of it leaves the country and some of it is derived from corruption and shady business deals. “The closest functioning banking system is here, so a lot of the money coming in could be legitimate but a lot of it is not. It’s drug money, graft money, extortion money,” says Theodore Karasik, a director of the Institute for Near East and Gulf Military Analysis (Inegma).

And it is worth reminding ourselves of the deep connection between the Afghan political economy and US/NATO/UN military presence.  As I noted from Ahmed Rashid’s 2013 book on the Af-Pak region, an overwhelming majority of Afghanistan’s economy — 97% as estimated by the World Bank in 2011 — was linked with foreign military spending.  Individual programs, like the USA’s “Commanders Emergency Response Program” had bigger budgets than the Afghan government itself.  Much of this unaccountable military spending is done in coordination with pro-US Afghan elites, who of course tend to be the same people who have deep connections with the UAE.  In other words, a substantial portion of the billions of dollars spent on Afghanistan has likely been recuperated back into the currents of international finance capital — and little, if any, has reached the Afghan people.

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