Saturday, September 4, 2010
Afghanistan Economics
Well, it looks like Afghanistan is going to have its' first economic crisis. The main major bank, the Kabul Bank invested heavily into real estate in Dubai. With the collapse of the real estate market worldwide, the Kabul Bank is not unstable. The Afghan government has asked the United States Treasury Department in order to help shore up the Kabul Bank. The government owned Central Bank is thinking of doing an American style bail out.
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Today, much discussion is centered on the proper and sufficient role of the US government in the US marketplace. This article, however, introduces a new concept that has become increasingly relevant since the beginning of American hegemony in the world: the role of the US government in the marketplaces of other countries in which the US has vital security interests. It is easy to make the argument that the US government should not help the struggling Afghanistan bank. But, as the main architect of their current financial institutions, is the US obligated to help? Furthermore, is it in the US government's national security interests to play a role in revitalizing the Afghan economy? Most would argue that it is, since one of the primary objectives of the US intervention is to stabilize the Afghan state.
ReplyDeleteI wonder if the Afghan government could do much to help it's banks without US financial support. It does seem like it would be in our own best interest, let alone Afghanistan's, to help keep their banks afloat. Financial uncertainty and instability would be some of the worse things to further add to the situation in Afghanistan right now. I think that aside from long-term economic benefits and a moral point of view, it would also be in the political and military interest for the United States to help Afghanistan's banks.
ReplyDeleteA country as politically and economically unstable as Afghanistan probably wouldn't ever be able to keep afloat without the help of a richer country like the United States. Like Jay says, it's probably both in our best interest and Afghanistan's best interest to keep some sort of stable bank in place. Since the article mentions how the government itself is a client of the bank, the salaries of 250,000 public sector workers are at stake in the event of a bank collapse. And at this point, a strong government is one of Afghanistan's top priorities. I wouldn't worry too much about the level of American influence really. So long as the US isn't using any American taxpayer funds, I do not believe that helping the government of Afghanistan is in any way inappropriate.
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