Afghanistan is rich in natural resources, which optimists think will help the war-torn nation attract a steady stream of foreign investment that will dramatically improve local living standards and support the democratic reforms made during the recent U.S.-led occupation. But few business people know Afghanistan as intimately as Nasir Shansab, who isn’t in the optimist camp. Before he was forced to flee the country with his family in 1975, Shansab — who recently published Silent Trees, a novel that offers outsiders a unique glimpse into Afghan culture — was the nation’s leading industrialist. As a distributor for international manufacturers such as Toyota, Mercedes, Michelin and Bosch, not to mention a major contractor for infrastructure and irrigation projects, Shansab Services had few rivals in size and scope. In the 1980s, following the Soviet invasion, Shansab served as an advisor on Afghanistan to Washington foreign policymakers and Mujahedeen resistance leaders. In 2002, after the Taliban government was displaced by international forces, he returned to his homeland with big plans to invest. At the time, he expected the billions of dollar in foreign aid that followed the arrival of Western troops to translate into a new era of prosperity for Afghanistan. What he found, instead, was the opportunity to modernize the local economy being squandered by an expansion of corruption. In this issue of IBJ, Shansab talks about what went wrong and warns foreign investors to understand the risks that remain a barrier to economic development.
IVEY: For people who don’t know your history, can you briefly describe your background and career?
Nasir Shansab: Ethnically, I am a Pashtun, but I was born in the north of Afghanistan, where my father was building a factory and a power plant. When I was 12, I was sent to school in Europe. After I finished my education, I returned to Afghanistan and became a businessman like my father. My father had a very large company with several factories and power plants, but there was a wave of third-world socialism. Everybody wanted to nationalize big companies, so we shifted to trade and represented quite a number of large companies in Afghanistan. I became a distributor for Toyota and Mercedes and other manufacturers. I also did projects for the World Bank and the Asian Development Bank. My father, along with the people in political and military power, never expected that Afghanistan would go communist. But I had a distinct feeling in the late 1960s that it would happen. And in the early 1970s, a leftist coup d’état made it almost impossible for people like myself to stay in the country. In 1975, my family was forced to leave Afghanistan. I lived in Germany for five years and then moved to the United States, where I am now a citizen living in northern Virginia. I returned in 2002, planning to work on several projects.
IVEY: During the Soviet occupation, you developed relationships with resistance leaders as an advisor to the Mujahedeen and Washington. During this period, you also met in Pakistan with Osama bin Laden. What was your impression of the man?
NS: I met bin Laden for one meal and never saw him again. He was incredibly arrogant, almost imperial. He cursed our server for giving him orange juice that he said wasn’t fresh. I told him it tasted fine to me and that kept him quiet. I really didn’t like the man. And of course, I had no idea what he would become. When 9/11 happened, I was quite astonished. I had to sit down. By then, I knew he was doing bad things and had taken over part of Afghanistan, but 9/11 was a total shock.
IVEY: What was the economic environment like in the late 1960s before your family’s business success attracted the wrong kind of attention?
NS: Afghanistan is, primarily, an agriculturally-based economy. But comparatively speaking, in the late 1960s, we had quite a number of freedoms. We had, for example, a free currency market, so we could send hard currency abroad and we could receive hard currency from abroad. We could import almost anything we wanted as long as we could pay for it, and we could export anything we wanted to export. So in that sense, Afghanistan was a fairly liberal place surrounded by countries with quite strict rules and restrictions.
IVEY: Did you ever think about returning to Afghanistan prior to the American invasion?
NS: Early during the Taliban regime, I was approached by two government representatives. If I agreed to return and operate businesses in the country, they offered to return property and money that had been seized from my family by the Communists. I declined the offer, pointing out that adopting Taliban customs was not something I was prepared to do.
IVEY: So when you returned in 2002, did you see the displacement of the Taliban and the money that would obviously come with foreign aid as a golden opportunity to jump start the economy?
NS: Absolutely. There was no business environment. The private sector didn’t function. But I was very hopeful. I was prepared to start several projects. Unfortunately, I soon realized that the government in Kabul didn’t understand how to revive the economy. In fact, the people in charge didn’t care about planning for the future or the needs of the people. They expected to live well because they thought the international community would stay forever and give them money eternally. None of my projects got off the ground because the government simply refused to act on anything and I had a zero tolerance for paying the bribes required to get things done. The last time I was in Kabul, I was told one of the government’s vice presidents would be very interested in my ideas if I paid US$1 million to see him. I want to do something right and something good for everybody. But I won’t pay a million dollars to a government official. Encouraging that level of corruption is very destructive.
IVEY: What kinds of projects were you hoping to launch?
NS: I wanted to revive a factory in Gulbahar that was built by my father. It was once the largest industrial plant in Afghanistan, employing about 10,000 people. It survived the war, but it is idle and needs to be modernized. Another project I wanted to launch was a vocational training school. I wanted to do that immediately because many Afghans missed school and learned to carry guns instead. I wanted to give young and old alike a professional alternative to fighting for local clans. A third project I hoped to complete involved building a hotel in Kabul to support business traffic from abroad, offering potential investors in the economy a comfortable and secure place to stay that had the facilities they needed to communicate with the world. I also planned a very large program to bring water to the people of Kabul, where people still get up as early as 3 o’clock in the morning and head out to wells, where they lineup with buckets to manually pump water that they can bring home. These were the major projects that I wanted to do.
IVEY: Since 2002, the United States alone has injected more than US$100 billion into the economy as part of aid and reconstruction programs. Can you see significant improvement in the business environment as a result?
NS: No. People might think Afghanistan has changed because of international aid and the fact that it now has a constitution and presidential elections. All of this sounds wonderful, but the reality of the situation is unbelievable. Kabul is as dilapidated as it was 12 years ago. Traffic lights do not work. The vast majority of people have no running water. Electricity is scarce. The last time I touched down in Kabul, the computer guidance system at the international airport was broken, so my plane had to land without it. Why? The system needed a US$150,000 repair, but the government is broke, so planes landed without computer guidance for months until the international civilian transport system donated the money needed to have the system repaired. Think about this. I am talking about the government of a nation that could not produce US$150,000 to keep its international airport running safely without international assistance. I don’t want to say that nothing positive has happened in the last 12 years. University education has returned and about a million girls now go to school. There are hundreds of NGO workers in Afghanistan, most based in Kabul. And they rent homes and hire local drivers and cooks, so some Afghans have clearly benefited from the international influence. But on a national scale, you really can’t say anything of long-term consequence has happened. Nobody has built factories. Nobody built production facilities. No huge numbers of jobs have been created. The projects that were meant to be funded either never got off the ground or were very badly planned. Why? A lot of the money earmarked for Afghanistan never actually reached its targets. The rest has been wasted. And no big amount of private money has been invested.
IVEY: Can you offer examples of this failure?
NS: I can give you several. The Naghlu power plant is just one good example. Built in Soviet times, it was once the largest hydroelectric operation in Afghanistan with four turbines producing about 25 megawatts each for Kabul. During the wars, two turbines were destroyed and the others need work, so the World Bank signed a contract to restore it with the Russian company that built it. I actually invited the Russians to participate in the bidding because they knew the operation and had all the blueprints. The work was supposed to be completed by 2010, but while the two working turbines have been repaired, the damaged turbines have not been replaced. And yet, Afghanistan energy officials certified to the World Bank that all the work has been done. Thanks to corruption, I think the company has received almost the full payment for replacing the turbines without doing the job.
IVEY: Can’t someone force the job to be completed?
NS: The World Bank knows about the situation. I reported the corruption in 2007. Like the U.S. government, it didn’t do anything to battle corruption. Nobody wanted to rock the boat. I was totally disillusioned.
TW: So the once-in-a-lifetime opportunity to really help Afghanistan has been lost?
NS: It was absolutely squandered. The warlords and drug kingpins became richer and more powerful, but nothing lasting has been done for the people, who are poverty stricken and need to be helped. I’m very frustrated about this. I’m very disappointed in Washington, where everybody just closed their eyes while throwing public money away. All you have to do is look at the opium trade to see how things have evolved the wrong way. In 2001, when the U.S. entered Afghanistan, the country produced 185 tons of opium, according to the United Nations. Today, Afghanistan produces close to 9,000 tons of opium. This increase happened under the noses of highly- trained and enormously well-equipped international troops. Nobody cared.
IVEY: Are you saying the nation is more corrupt thanks to all the aid funds?
NS: Absolutely. The business environment has been almost completely corrupted. A select few have become enormously rich profiting from the war and drug economy. And they have no interest in building factories and creating jobs investing in legitimate enterprises. These people thrive with chaos and as long as they have influence, they will never allow the country to develop a lawful economy. This is the monster that has been created in Afghanistan over the last 12 years.
IVEY: What sort of business education is available in the country?
NS: In name, everything and anything. In reality, not much. It is like healthcare. I remember when President Karzai gave a speech in Washington a few years ago and he said 65 per cent of Afghans have access to medical support. Sounds wonderful, but 80 per cent of Afghans live in the countryside, where there are no doctors, no medical stations, no medical facilities of any sort.
IVEY: Afghanistan’s neighbours include major developing economies such as China and India and it has mineral resources worth an estimated trillion dollars. Why didn’t foreign investment flood the nation?
NS: The opportunities are indeed attractive, but only on paper. India and China have both expressed interest in developing mines, but nothing much has happened. The smart money will not invest in Afghanistan. There is no real law, security or infrastructure to support significant investment. Corruption is also a barrier because there is very little chance that any contract signed by government officials will be supported by the people. The Chinese were awarded a contract to develop a large mine. World newspapers reported it as a US$2.8 billion investment. That was five years ago. Since then, nothing has been done. Nobody knows the exact reasons why. But media reports claim the deal involved at least $30 million in bribes to one official alone, so I imagine it is quite a crooked contract that pretty much allowed the Chinese to do whatever they wanted. Whatever the case, the Chinese destroyed the relationship with the people who live in the surrounding area of the mine. The deal involved privately held land and, instead of sitting down and negotiating with local landowners, the government reportedly forced them to move and nobody paid them any money. And so when the Chinese came and built housing for their own people, the locals rocketed the place, forcing the Chinese to leave.
IVEY: So a lesson here for international business is to be very careful about negotiating a sweetheart deal with officials who don’t care about local interests, right?
NS: Absolutely right. I don’t want to disparage other people who have been exploited, but years ago when European mining operations went to Africa, they aligned themselves with a few corrupt leaders and managed to get away with what they did. Afghans are not going to let that happen. They can be your best friends or your worst enemy. They need to be treated well for development to take place and that isn’t happening under the corrupt conditions that exist.
IVEY: What do you see happening in the future with international influence declining?
NS: No matter what regime ends up in control in Kabul, I am almost certain there will be a civil war and I think the Taliban is primed to take at least half of the nation. And expecting the Taliban to accept the present constitution of Afghanistan is nonsense. The U.S. has to look at things in a more realistic way and start to talk to the Taliban. Keep in mind that Saudi Arabs are as fundamental as the Taliban. I believe that if Taliban leaders could be made to trust the rest of the world and believe nobody is out to destroy them, we can engage them and hopefully evolve them from within to accept a more peaceful and idealistic system for our times. I think that is the only option left.
IVEY: What about improvement in education and females attending schools?
NS: As things stand, there is a good chance those things will not survive much beyond 2014.
IVEY: And the opportunities for foreign investment?
NS: I think that even the Taliban realize you need money to run a country. I hope the country can attract more foreign investment. But anyone who wants to succeed must avoid corruption and have a business plan that includes a vision of helping the country by helping the local people. They will support you if you want to do something good for them.
IVEY: Taking into account the related risks, where are the big business opportunities?
NS: Natural resources and agriculture. If given the opportunity to invest in the mining sector without paying bribes, I will do it. There are also enormously big pieces of land in the north of Afghanistan that are very fertile but lack water. With expertise and money, you could go and irrigate large pieces of land and feed probably half a billion people just from Afghanistan. There are also some big “solutions economy” opportunities in Afghanistan. I know of a river where you could build four power plants, one after the other, and export electricity to countries like India and Pakistan. And you wouldn’t need to destroy agricultural land or take land from people, because it is within mountain terrain where nobody lives.
IVEY: Your book Silent Trees offers a rare glimpse into the Afghanistan that existed before the invasions by superpowers, not to mention the Mujahedeen, Taliban and warlords. But it is still a tale about unchecked pursuit of power. Why did you write it?
NS: It was a story that was moving about in my mind and needed to be told. The overarching subjects of the story—unbridled power, the lack of the rule of law—are not problems of Afghanistan alone. They are human problems. They have bedeviled people’s lives throughout history and still do so in many countries today. I thought it was useful to remind happier people, who enjoy rights and the rule of law, that freedom needs to be cherished, guarded even, as life tends to be quite fragile with danger lurking around the corner.