Afghanistan’s New Rich Navigate the Pullout

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By Mujib Mashal,

from Bloomberg Businessweek,

“My only wish is to prove to the American public that … your tax money has not been wasted.”

Sarai Shahzada, the central currency exchange in Kabul

In the U.S., wartime contracting is often associated with such names as Blackwater (now known as Academi), DynCorp International, Triple Canopy, and others, but on the ground in Afghanistan, the Pentagon depended on a small army of locals. And as hundreds of billions of dollars in U.S. taxpayer money poured into the country, it created a new class of wealthy, entrepreneurial Afghans.

The October 2001 U.S.-led invasion and the subsequent allied military campaigns transformed the country. At the end of 2014, however, as the American troop presence draws down to 10,000 from a height of 98,000, it’s becoming clear that the U.S. dollar has reshaped Afghanistan even more than the military did. In private, U.S. officials admit they don’t know how much they’ve spent on the Afghan war. Independent analysts estimate its cost at about $1.6 trillion—factoring in inflation and long-term care for veterans. The money found its way not just into the hands of ruthless oligarchs, as in post-Soviet Russia, but also into those of teachers, translators, restaurant owners, and drivers who tapped into the gusher of cash to become millionaires and multimillionaires.

In the five years that Mullah Omar and his Taliban regime dominated Afghanistan, “foreign currency was rare. There probably wasn’t even $2 million in the market,” says Khan Mohammad Baz, the bespectacled head of the currency exchange union at Sarai Shahzada, Afghanistan’s central exchange market. “By 2003 there was probably $1 billion circulating.” These days, Baz says, about $20 million worth of business deals are made in a day. The central bank alone pumps about $60 million a week into the market to buy back the Afghan currency and keep it stable.

About 36 percent of Afghanistan’s 30 million people live below the poverty line. “If you ask people on the streets whether we have a billionaire, they will shrug and say no,” says a senior Afghan economic official, who asked to remain anonymous because he is privy to sensitive information. “But I can tell you with confidence we have many. If the top 10 wealthy men in Afghanistan—I would say 9 of them products of the past 10 years—came together, they could buy this government, the bank, this whole system.”

Afghanistan’s megarich are not shy about their wealth. Many are driven around in $150,000 armored vehicles, trailed by convoys of cars and pickup trucks full of security guards. Several live in Wazir Akbar Khan, Kabul’s diplomatic enclave, but others have illegally carved up Sherpur, an historic hill district in the capital. Some have second homes in Dubai, Istanbul, or various European cities. Just like Russia’s oligarchs, many members of this wealthy class owe their fortunes to politics. Some are warlords who helped the U.S. topple the Taliban; others are technocrats who returned from abroad to work in the new government. Both groups enriched themselves through the country’s system of patronage and influence—and by drawing on the immense sums of American cash flowing into it. Afghanistan runs on connections, and many of the biggest dealmakers operate with impunity. A clan can have one brother in the administration, another in parliament, and yet another running a huge company or state enterprise. The family of former President Hamid Karzai was the object of much criticism for that reason.

There’s still money to be made from the American military—though it’s a much smaller pie, and more local contractors fight over it. The U.S. and its NATO allies will continue to provide Afghanistan with more than $5 billion annually for its security forces and $5 billion to $8 billion for reconstruction.

The new president, Ashraf Ghani, is promising to bring order to procurement and contracting, but transparency may be difficult to achieve. Among Ghani’s first appointments was Hazrat Omar Zakhilwal, a finance minister under Karzai who was entangled in the country’s biggest banking scandal, among other controversies. Zakhilwal, who denies any wrongdoing, now has oversight over the entire financial portfolio of the country.

Because the prosperity of [the] newly rich class often stems from loose American money, it can carry the odor of malfeasance and corruption. The office of the U.S. Special Inspector General for Afghanistan Reconstruction (SIGAR) is investigating several cases, following the money to see if American funds were misappropriated or even spent to support the insurgency. Double-dealing is almost instinctive here, part of a survive-at-all-cost mentality ingrained by decades of chaos and war. When the country emerged from Taliban rule at the end of 2001, “it’s like we were stuck in a dark well of isolation, then someone threw us a rope to pull us up,” says Naseem Akbar, a former economic official in the Afghan government. “But we somehow got all strangled up in that rope.”

Hikmatullah Shadman doesn’t look like Robin Hood, though the American investigators have grave suspicions about him. Shadman prefers not to talk too much about his philanthropic activity—though it has earned him a degree of influence with the public as well as the government. Shadman is trying to create a different kind of Afghan identity and nationalism—out from the shadows of the white-robed jihadis. In October he announced he would build a mausoleum for Malala of Maiwand, perhaps the most famous woman warrior in modern Afghan history, whose campaign against British invaders in 1880 led to her being described as the country’s Joan of Arc.

Shadman also traces his riches back to U.S. military money. The son of a literature teacher in Kandahar, he sold almond sweets in the bazaar after school. When the U.S. ousted the Taliban, he went to work for a local mason rebuilding the airport. Soon, he became an interpreter for a U.S. Army Special Forces unit that, within six months, conducted more than 50 combat operations in the area. Accompanying the U.S. soldiers kept Shadman away from home for weeks at a time but allowed him to save much of his monthly salary. He bought a Land Rover for about $4,000 and leased it back to the Special Forces. “I was making two salaries after that. I made $800, and my vehicle made $800.”

In a couple of years, he’d purchased hundreds of vehicles, renting them to the U.S. military and foreign contractors who came to Afghanistan. He also started doing construction projects for Canadian units that were part of the International Security Assistance Force, as the U.S. and its allied troops were called.

Shadman is accused of defrauding the U.S. government of $77 million. According to court documents, SIGAR alleges that Shadman managed to expand his trucking empire only because he “bribed and paid kickbacks” to managers of the Hungarian contractor, who then allegedly inflated prices for Shadman so he could charge the ISAF even more. In October 2012, at 4:30 a.m., the U.S. military raided his compound in Kandahar. He says they flashed a light in his eyes, blindfolded him, tied his hands, and flew him to the prison at the American military base at Bagram. He was held there for 74 days and accused of funding the enemy and supplying women to the Taliban and alcohol to U.S. soldiers. In a civil forfeiture lawsuit, SIGAR and the U.S. Department of Justice asked for Shadman’s accounts in an Afghan bank to be frozen. However, they were quickly unfrozen by Afghan authorities and some of the money has made its way to Dubai, where he has three homes.

Shadman says he is heartbroken by the way the Americans turned against him. “I grew up with them, with their soldiers.” He insists he’s not afraid of litigation, because the evidence against him is flimsy. “My only wish is to prove to the American public that … in my case your tax money has not been wasted.” Then he turns from being politic to blunt. “My money is clean. I don’t hide it. It’s there in the open, for America to see it, for London to see it. I have no fear.”

With U.S. money now being dispensed by the political elite, contractors … who aren’t at the top of the food chain have to change gears completely.

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