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Alternative Economic Systems for Afghanistan

Published online by Cambridge University Press:  29 January 2009

M. Siddieq Noorzoy
M. Siddieq Noorzoy
Affiliation:
The Middleeast Studies Association of North America, Cambridge University Press
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Extract

Pending a peaceful solution to the current war of liberation in Afghanistan, any consideration of alternative economic systems, as raised in some circles, must be based on the given structural conditions of the Afghan economy. Contrary to expectations by some, the basic structure of the economy in terms of size distribution of sectoral output is unlikely to change significantly despite any changes in the share of resources between the private and public sectors.

The Afgham economy is based on agriculture and it will continue to derive the major portion of its national income (output) from this sector in the foreseeable future. The potential for economic development, based on domestic resources, is also largely founded in agriculute.

Type
Articles
Information
International Journal of Middle East Studies , Volume 15 , Issue 1 , February 1983 , pp. 25 - 45
Copyright
Copyright © Cambridge University Press 1983

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References

NOTES

2 The coalition of Khalq (Masses) and Parcham (Banner) parties took power in a bloody coup d'etat on April 27, 1978 that cost an estimated five thousand lives (New York Times, 04 30, 1978). Noor Mohammad Taraki became president in April 1978 and held that post until September 1979, when Hafizulla Amin assumed power through a coup with the help of his supporters in the Khalq party. While Amin was still in office the Russians invaded on December 27, 1979. Amin was killed and Babrak Karmal, head of the Parcham party, was proclaimed the new president.Google Scholar

3 These data are based on The First Seven Year Plan, vols. I and II, and Key Indicators ADB (Manila, 04 1980). pp. 22–23.Google Scholar

4 See First and Seven Year Plan, II, 22–23.Google Scholar

5 Ibid., I, 104.

6 Cf. ibid., I, 59–99.

7 See Ibid., pp. 100–133, especially p. 104.

8 Ibid., pp. 3, 59–99.

9 Ibid., p. 59.

10 Given the limitations on the availability of information on events in Afghanistan, only a broad outline for these costs could be indicated on a rough basis. Foremost among these costs are the losses of Afghan lives resulting from the communist coup d'etat in 1978, the ensuing civil war between April 27, 1978 and December 27, 1979, and the Russian invasion on the latter date. Since then the Afghan civilian population, especially in the rural areas, have been bearing the full brunt of Russian aggression deploying more than 100,000 men and war-making machinery of a superpower. Estimates of the total losses of Afghan lives are high; a previous official of the Karmal regime has recently put the estimate at one-half million Afghans killed (New York Times, 05, 1981). The intensity of these losses has been particularly conspicuous among the small class of professionals and the educated. Soon after taking power on September 16, 1979 Amin put up on public display in Kabul the names of 12,000 Afghans who had been executed between April 1978 and September 1979. Actual numbers were probably much higher for the whole country. These individuals were from a cross section of intellectuals (including university staff and students), members of the previous government, army officers, professionals, businessmen, religious leaders, and farmers. Clearly these tragic losses in lives are irreplaceable in human terms and accordingly their real costs are inestimable. However, the concomitant losses in human capital that Afghanistan has suffered are in part estimable. These losses, discounted to their present values, are the opportunity costs of using resources to train individuals in the different fields in which such losses have occurred, plus the value of foregone output (including intellectual output) that these individuals would have produced during t … t+n where t is the time period when these losses occurred and t+n isthe replacement period for the human capital. These losses are real. But not all of them can be measured quantitatively and qualitatively, since among other things, for example, there are no units of measurement to gauge intellectual output; it cannot be monetized meaningfully in all cases.Google Scholar

Moreover, a whole separate area of losses suffered relates to the refugees. The total number of refugees outside the country was probably 2.5 million in the first quarter of 1981 and over 3 million by the end of the year. In addition, large numbers may have left their homes in the rural areas for the urban centers to avoid indiscriminate Russian bombardments of villages. Estimates are that between 3,000 and 4,000 or 15–20 percent of the total number of villages in the country may have been destroyed by Russian bombardments. The human sufferings associated with these atrocities are innumerable. But clearly there is also a large-scale loss of output associated with these massive dislocations and social disorder of the population.

Moreover, the destruction of villages implies that between 363,000 and 484,000 dwelling units may have been rendered uninhabitable. These figures can be extrapolated from the basic data on population and its rural composition. Thus, given the population of 15.11 million in 1978 (Key Indicators, 1980, p. 53), 80 percent of whom lived in 20,000 villages in the pre-Russian invasion period, we obtain an average village size of 604 persons and 121 household units per village if an average of five persons per rural family is assumed. Therefore, a minimum of 363,000 ( = 121 × 3,000) and as many as 484,000 ( = 121 × 4,000) dwelling units may have been destroyed by Russian bombardments between December 1979 and May 1981.Google Scholar

Multiplying the guesstimated number of villages destroyed by the average village population (604) will give a range for the number of persons. i.e., 1.812–2.416 million, who probably have been dislocated, with unknown numbers having been killed by the bombardments, Refugees abroad largely come from this range of the dislocated rural population. However, a strict correlation between the number of refugees abroad and the number of the villages destroyed cannot be established since there are several factors that separate them: First, the number of total refugees (i.e., those who are refugees outside Afghanistan and those who are seeking refuge in urban areas) would be less by the number of persons killed in the rural areas than the estimated number of displaced persons; second, part of the refugee population abroad comes from among the nomads who ordinarily live outside settled villages and therefore fall outside the range of displaced village population. Finally, a cross section of the rural population including nomads have moved only to the urban areas. No data about any of these categories are available.

In any measurements of the total costs of this invasion to Afghanistan, the list must also include the costs of destruction of property in the small towns and in the cities; damage done to agricultural land; destruction of crops; and loss of agricultural output. Further, the forgone income from lost output in other sectors of the Afghan economy resulting from wartime disruptions and wastage of resources must be added to the total. In addition, clearly there are costs inflicted on the Afghan people resulting from the continued presence of the Russian army and its war-waging operations against the Afghan people. These costs are twofold; first, the deployment of Afghan resources including the Afghan army against the Afghan people; and second, the use of Afghan resources for the Russian army on Afghan soil. Clearly, these are real costs rather than hypothetical, only their magnitudes are not known.

11 An increase of 774 percent in loans and project assistance was projected for the period 1976/77– 1982/83 over the previous comparable period (1969/70–1975/76). In total the plan projected that 73 percent of investment expenditures of Afs.. 174 billion ($3.87 billion at an exchange rate of Afs. 45 per dollar) would be forthcoming from external sources (Seven Year Plan, I. 48).Google Scholar

12 We have argued that the basis for the growth of national income lies in agriculture. Increases in agricultural output could also be a direct source of saving when the surplus output is monetized in the domestic market. But growth of output in agriculture will also lead to higher saving through increases in exports. For the estimated effect of exports on saving, see Noorzoy, M. S., “Planning and Growth in Afghanistan,” World Development, 4, 9 (1976), 761–773.CrossRefGoogle Scholar

13 It seems that good weather alone cannot be assigned the role for the rapid increase in farm output. The seven year plan reports that actual public investment in agriculture for the period was 39 percent of the total investment in domestic currency, a figure much higher than expected (Seven Year Plan, II, 22–23).Google Scholar

14 Cf. ibid., pp. 247–259.

15 Ibid., pp. 144–146.

16 Ibid., p. 146.

17 A review of this plan is given by the author in “The First Afghan Seven Year Plan, 1976/77– 1982/83: A Review and Some Comparisons of the Objectives and Means,” Afghanistan Journal, 6, 1 (04 1979). 15–23.Google Scholar

18 Details are given in Seven Year Plan, I, 100–143 and II, 24–143.Google Scholar

19 Kabul Times, 08 15, 1978. The new five year plan was announced barely three months after the communists took power.Google Scholar

20 Indications are that no new assistance is forthcoming or in many cases the previously agreed- upon international assistance under the seven year plan from other Middle Eastern countries, principally Iran and Saudi Arabia, and from the western governments as well as the World Bank and the Asian Development Bank (ADB) will not be forthcoming to the present regime (New York Times, 01 14, 1980;Google ScholarManchester Guardian, 02 10, 1980;Google ScholarFar Eastern Economic Review, 05 9, 1980).Google Scholar

21 New York Times, 05 4, 1981.Google Scholar

22 New York Times, 02 4, 1980.Google Scholar

23 Seven Year Plan, II, 71, 79.Google Scholar

24 Seven Year Plan, I, 141.Google Scholar

25 Kabul Times, 04 15, 1979Google Scholar and Far Eastern Review, 05 16, 1980.Google Scholar

26 Afghanistan Council Newsletter, 01 1980, p. 141.Google Scholar

27 Nove, Cf. Alec, The Soviet Economic System (London: George Allen & Unwin, 1977).Google Scholar

28 There does not seem to be any new inflow of development capital from the Soviet Union. Most of the contracts signed since 1978 are covered by the $500 million undisbursed loan from a total of $1.3 billion in economic loans that Afghanistan has received from the Soviet Union since 1954 (Afghanistan Council Newsletter).

29 This point was indicated to me by Professor Gregory Grossman.

30 In recent years (1975–1977) this trade in total has averaged 23 percent with the Soviet Union and 25 percent with Eastern Europe (New York: U.N. Yearbook of international Trade Statistics, 1979).Google Scholar

31 These figures are quoted from a bank report by Far Eastern Economic Review, 01 23, 1981.Google Scholar

32 The value of gas exports was $17.097 million in 1972 and $18.477 million in 1973. The quantities of gas exported were for each of these years 98.179 bcf and 97.119 bcf. Dividing the values of exports over their quantities yields the above average prices (New York: U.N. Yearbóok of International Trade Statistics, 1977).Google Scholar

33 Amuzegar, Jahangir. Iran, an Economic Profile (Washington, D.C.: Middle East Institute, 1977, p. 72).Google Scholar

34 Imports of gas by the Soviet Union in 1973 were 402.62 bcf at a total value of $114.76 million. Afghan gas exports of 97 bcf amounted to 24 percent of total Soviet gas imports. But the value of Afghan gas export ($18.5 million) was only 16 percent of the total value of Soviet payments for gas imports during 1973. These figures offer a cross check of the losses in revenue to Afghanistan mentioned below in the text. They indicate a lower than average import price paid to Afghanistan (New York: U.N. Yearbook of International Trade Statistics, 1975). The quantity data are given in mcm. They are converted to cf = (cm) (1.308) (27).Google Scholar

35 These losses are obtained, by multiplying the Iran-Afghan price differential by the quantity of gas exported for each year.

36 Price information for the regional trade is unavailable. Iran began exporting gas to the Soviet Union in 1971 (Amuzegar, , op. cit.. p. 72)Google Scholar and data on gas imports by the Soviet Union Only seem to be available beginning in 1971 (see New York: U N. Yearbook of International Trade Statistics, 1975).Google Scholar

37 There is one report which indicates that the Karmal regime has actually turned over some government monopolies to private hands (Manchester Guardian, 02 10, 1980). However, even if this report is reliable, it cannot be expected that this kind of policy will be maintained in the long run.Google Scholar

38 Statistical Pocketbook of Afghanistan, Ministry of Planning. Kabul. 1971–72, tables 17–18, pp. 25–27.Google Scholar

39 With no basis as to how the information was derived, Taraki's regime reported (Kabul Times, 04 25, 1979)Google Scholar the following statistics on landownership on which the land distribution program was to be based: Percent of land owners Percent of land owned Amount of land 90 44. 2–4 ha. (1–20 jeribs) 6 15 4–6 ha. (20–30 jeribs) 4 41 6+ ha. (30+ jeribs)Plotting this information on a scatter diagram, the land reform program was seen as correcting deviations from a correlation line (Lorenz curve) gf equal distribution. Decrees (no. 6 and no. 8) were issued in succession beginning in August 1978, dealing with dismantling of private holdings (decree no. 6) and detailed divisions of land holdings according to the quality of the land (decree no. 8, reported in Kabul Times, 01 31, 1979).Google Scholar The ceiling on total holdings by a family was set at 6 hectares. By comparison, the land distribution program of the seven year plan (Seven Year Plan, pp. 247–250)Google Scholar envisaged the following limits to landholdings per family: First-grade land (multiple crops) 20.23 ha. (100 jeribs) Second-grade land (single crops) 30.35 ha. (150 jeribs) Third-grade land (dry farming) 40.47 ha. (200 jeribs) This program was to have been achieved over a ten-year period after the completion of cadastral survey, which itself was to take seven years. Following the proclamation on the size limitation of land holdings, Taraki's regime announced (Kabul Times, 01 31, 1979)Google Scholar that 1.38 million hectares or 25 percent of the land under cultivation was slated for redistribution. Three months later (Kabul Times, 04 25, 1979)Google Scholar it was reported that 286,000 hectares were distributed to 138,000 landless farmers (deservers). A year later, however, the regime of Babrak Karmal reported (Kabul Times, 03 17, 1980)Google Scholar that the land reforms under Hafizullah Amin (i.e., under Taraki and Amin) were disastrous since distributed land had been left fallow and neglected. The explanation of the smaller size limitation of land holdings under the communist regimes of Taraki and Amin lies in the attempt to obtain the loyalty of larger numbers of the peasantry. However, the peasantry had found themselves holders of titles of land without the required provisions for the complementary factors of water rights (so crucial in so many instances throughout Afghanistan), seed, implements, and fertilizer. The formation of some regional cooperatives (Kabul Times, 02 12, 1979) did not alleviate these problems either. Further, the peasants also faced a system which aimed at the disruption of their religious order in Islam and their whole societal way of rural life, while demanding loyalty from them in support of a revolution which had no meaning to them other than titles to confiscated lands taken from the people with whom the peasants had much in common in their total value system. These landowners were not viewed by the Afghan peasants as the kulaks of the Soviet system were viewed by Russian peasantry. Thus the Afghan peasants chose to reject the approaches of the communist government, returned the land to their previous owners, or simply ignored their endowed titles to the land and joined the general uprising.Google Scholar

40 The total of 2.5 million refugees is an unofficial estimate based on partial information. There were 2,083,688 Afghan refugees in Pakistan on May 31, 1981 (Afghan Refugee Information Network [ARIN], London, Newsletter 6, July/August 1981) according to UNHCR. Further, the same issue of ARIN points out that Iranian estimates put the number of Afghan refugees in Iran at 500,000. Other unofficial estimates put the maximum at 300,000 claiming that some Afghans in Iran were probably workers who went to Iran before the exodus of refugees began in 1978. The essential issue here, however, is if the Afghan guest workers in Iran cannot safely return to Afghanistan under current conditions then they must be considered refugees in a broad sense. Since these figures are guesstimates. taking an arithmetic average of the upper limits for Afghan refugees in Iran gives an estimate of 400,000. Finally, sources close to the refugee situation state that probably more than 20,000 Afghan refugees are in West Germany, India and the United States. Some of these refugees have changed status particularly in the United States and West Germany. Nonetheless, aggregating the above figures yields a total refugee population of over 2.5 million by the first quarter of 1981.

The rate of increase of the outflow of Afghan refugees to Pakistan for April–May 1981 is given in ARIN (op. cit.), whereas the rate of 70,000 per month is mentioned in The Quarterly Economic Review of Afghanistan et al., The Economist Intelligence Unit, 3rd quarter 1981.

41 Reports on shortfalls in domestic grain production and issues relating to the distribution of grain supplies were contained in the Kabul New Times, 03 10, 04 4, and 05 5, 1980.Google Scholar

42 Cited in The Quarterly Economic Review of Afghanistan et al., 4th quarter 1981. This seems to be also approximated in information given in Trends in Developing Asia, ADB (04 1981), chart 12.Google Scholar

43 See Quarierly Economic Review 3rd and 4th quarters 1981.Google Scholar

44 Foreign Trade of the USSR in 1980; Statistical Compendium (Moscow, 1981), p. 197. I would like to thank Professor Gregory Grossman of the University of California, who provided a translated version of the trade information between the Soviet Union and Afghanistan.Google Scholar

45 See Time (Canada), 04 5, 1982, pp. 19, 22 on the range and intensity of chemical poisons used by the Soviet army against the Afghan people.Google Scholar

46 For 1969/70 the sheep population was put at 15 million and karakul sheep at 6.4 million. The drought conditions during 1969/70–1971/72 resulted in severe livestock losses, but by the mid-1970s these losses were recovered. The earlier breakdown of livestock population is given in the Statistical Pocketbook, table 15, p. 22.Google Scholar

47 See Statistical Pocketbook, table 16, p. 23.Google Scholar

48 For the details of what collectivization involved in the Soviet Union, see Yaney, G. L., “Agricultural Administration in Russia from the Stolypin Land Reform to forced Collectivization: An Interpretive Study,” in Millar, J. R., ed., The Soviet Rural Community (Urbana: University of Illinois Press, (1971). pp. 3–35.Google Scholar See also Nove, Alec, An Economic History of the U.S.S.R. Harmondsworth: Penguin, 1969).Google Scholar

49 The inefficiency of Soviet agriculture is evidenced by the fact that generally not only is the labor–land ratio much higher in the Soviet Union by comparison with the United States but private farming, which holds a small fraction of the total land, produces large volumes of that country's agricultural output. Thus it required forty Soviet farm workers to produce the same amount of food that can be produced by six farm workers in the United States. Further, the private plots amounting to only 3 percent of agricultural land produced in one year (1964) 33 percent of farm output and 50 percent of the output of livestock, whereas the rest was produced by a combination of the state (sovkhoz) and collective (kolkhoz) farms (Locks, W. N. and Whitney, W. G., Comparative Economic systems [9th ed.; New York: Harper & Row, 1979]. pp. 278–288, 304–317).Google Scholar

50 I am grateful to Gregory Grossman for providing the information on the Soviet demographic data (Tsentral noe statisticheskoe upravlenie pri SM SSSR, Naselenie SSR 1973: Statisticheskii Sbornik, Moscow, 1975). Grossman's figures are based on the latter source (p. 7).

Since other sources (e.g., Nove, , Economic History of the U.S.S.R., p. 180) give lower figures (10 million in this case) for the loss of population it is of interest to briefly state the basis for the higher estimates. Lorimer (table 53, p. 134) extrapolates population figures from the census data for 1929 and 1939 for the intermediate years for which no Soviet official data were available. He uses a growth rate of 2 percent based on official birth and death rates for 1927/28. He finds that the Soviet population should have been 182.799 million on January 1, 1938, but in fact it was-only 166.859 million, thus a 15.9 million shortfall. In using the 1929 official population data as a base, Gregory Grossman (private communication) estimates that with a growth rate of 2 percent also implied in the 1937/38 official data, the population of the Soviet Union on January 1, 1937 should have been 179.746 million, whereas officially is was shown at 163.772 million, resulting in a 16 million shortfall.Google Scholar

51 Nove, , Economic History of the U.S.S.R., pp. 174–175.Google Scholar

52 ARIN, July/August 1981.

53 Key Indicators, p. 59.Google Scholar

54 Wall Street Journal, 09 16, 1981.Google Scholar