An article in the September 11 edition of the Economist, "House of Karzai", sheds light on the corrupt regime of Hamid Karzai. It investigates the causes of a run on an Afghan bank, Kabulbank, mired in corruption and on the brink of failure. The Economist describes a group of people working together, including Mahmoud Karzai, president Karzai's brother, who have managed to control Kabulbank and use it to invest in their own speculative ventures. Mahmoud Karzai apparently is the 3rd biggest shareholder at the bank. It is well known that he holds a 7% share, which he purchased for $5million by first borrowing the $5m from Kabulbank itself.
The article describes an area on Dubai's famous palm shaped peninsula refered to as "Little Afghanistan" where are found luxury mansions for "Afghanistan's business and political elite." The article asserts directly that Kabulbank was used improperly in the funding of these Dubai real-estate ventures when it says "Hundreds of millions went into Dubai properties then handed to shareholders and their friends" and "the bill was picked up by ordinary Afghans who put money into Kabul Bank, a scandal-wracked institution..." Little Afghanistan is but one example of the missappropriation of the banks funds and lending. According to the Economist, there is a string of loss generating companies owned by Kabulbank shareholders, into which Kabulbank loans and funds were siphoned, including an airline and a cement factory.
Thus a run on Kabulbank? Some may wonder how it could not have come sooner. In proper form, Mahmoud Karzai has publicly solicited a bailout for the bank from the American taxpayer, which is hilarious and revealing on its own- after all, why shouldn't he just go right to the source? That being turned down flat by the Americans, the article reports that the "Afghan government" aka Hamid Karzai, "said it would give the bank whatever it needed from its own reserves". Though "American officials" have pushed for an inquiry into the fiasco, to no one's surprise, the Afghan government, aka Hamid Karzai, is not forthcoming. The Economist article concludes first by stating that the bank is "too important to fail", and it evokes the image of civil strife should the bank "enrage almost a quarter of a million armed customers". Are they not yet enraged?
Inquiry or not, it seems the use of the Afghan treasury to rebuild Kabulbank is inevitable. While for all parties this is a more politically palatable solution than that proposed by Mahmoud- a direct bailout from the US treasury, it is only so because most Western voters are not aware that roughly two-thirds of the Afghan treasury is funded by their taxes, through their governments via aid payments and the World Bank. Western nations with military involvement have already seen their voters sour at the thought of risking more lives and spending further military resources to prop up the corrupt Karzai government, but the decision to use the Afghan treasury for such a payoff should in fact raise the ire of the hundreds of millions of taxpayers in all Western nations who have invested in Afghanistan, or the World Bank for that matter. In either case, it is the Karzai family getting the best of people of Afghanistan, the US and the rest of the world.
To be fair, it may be that the Karzais are merely a product of the system of patronnage, curruption and elitism that has divided Afghanistan for so many generations. And while the legitmacy and the exact reach or sustainability of the institutions created under the Karzai regime are in constant question, episodes such as the Kabulbank fiasco should inspire debate in Western Democracies as to the methods and motives of their own governments and businesses, who after 8 years of war and 9 years of standing behind Mr Karzai, have managed only to help create for themselves another corrupt and dictatorial client state. One can hope.
Read the Economist article at http://www.economist.com/node/16996926
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