Livin' Large Inside Karzai's Reconstruction Bubble

by Marc W. Herold
Departments of Economics and Women's Studies
Whittemore School of Business & Economics
University of New Hampshire


In mid 2003, Domenic Medley, the British author of Kabul's first tourist guidebook since 1972, noted that aside from opium production, which has soared since the Taliban were tossed-out by U.S. bombs, serving foreigners is "the only real economy."1

"Even though the British didn't call it a conquest, they were there in support of the shah - just as we're in support of Karzai - the Afghans realized this was a conquest, this was an occupation for all practical purposes....the thing that we have over the British is airpower. We won't have an army wiped out in the passes."2
-- Afghanistan: A Military History from Alexander the Great to the Fall of the Taliban, Peter Tanner [De Capo Press, 2002]

In a forthcoming book, I argue that the descent from a predictable, frugal existence for the average Afghan before 1950, into an uncertain condition of modern impoverishment by the late 70s, has been exacerbated by periodic droughts and two decades of war.3

In effect, three forces --modernization, war and drought -- explain the misery of contemporary Afghanistan. Certainly drought, landmines and the destruction of Afghanistan's traditional irrigation system have deepened rural misery. But the most important factor has been a failed modernization which, predictably, has gotten the least attention in the West [and its local allies whether King Zahir or Karzai] given that it is precisely this import from the West which has been the prime culprit.

Modernization has meant the uprooting of age-old tribal-peasant, rural, village communities which gave way to the isolated, individualism of the cities. With modernization, large-scale rural-to-urban migration took place, with the new city dwellers unable to find gainful employment. The impoverished rentier state was unable to garner sufficient resources to launch a profound process of capital accumulation.

I shall argue herein that social class might just have a tad to do with what an observer "sees." Little hope for the future is warranted as the Karzai regime is inspired by an upper middle class, urbanite, westernized "vision." The brief Taliban interlude [1996-2001] represented the brutal imposition of a particular, distorted interpretation of rural mores and vision upon a handful of urban centers and given the dearth of state resources simply resulted in a socialization of poverty [especially felt by westernized urban women]. One could construe it as the revenge of the village clerics, or mullahs, not the resurgence of Pashtun tribal codes and power.4

The successor, U.S-handpicked Karzai regime merely acts as a toll-gate for some of the foreign resources which have flowed into Afghanistan during 2002-3. The foreign community recognizes this and has wisely preferred so-called project aid, which frustrates the Karzai clique insofar as it has a dearth of resources with which to buy allegiance and build up its internal forces of repression [police and military].

The only vibrant element in Afghanistan today is the bustling informal market---epitomized by the endless cheery accounts in the West of Kabul's Chicken Street--- which exists notwithstanding and outside of, the Karzai "vision." As Andrew Bushell caustically wrote in the Boston Phoenix, "The new government of Afghanistan is a failure, but you wouldn't know it by listening to the U.S. and U.N. spinmeisters."5 Add the U.S. corporate press, although it took about a year after Bushell's article for it to raise many of the same misgivings. In September 2003, Paul Watson of the Los Angeles Times wrote about mismanaged projects, graft, "Mafia NGOs", luxury hotels in Kabul arising amidst absence of sewers and clean water, though the author could not admit the class bias of so-called reconstruction.6

Another "economy" exists in the urban centers, primarily Kabul (which today accounts for 40-50% of Afghanistan's urban population). This economy is indulging in a huge consumption bubble, fueled by massive foreign "aid" inflows which in 2002, amounted to over 40% of Afghanistan's gross domestic product [as I have calculated elsewhere7]. Granted much of the aid has been in-kind relief. Add to that the $1.2 billion in gross income from heroin sales in 2002.8 In other words, the money inflow from drugs production just about matched all reconstruction aid flows in the year 2002. Such funds lubricate the numerous mafias openly operated in the Karzai bubble economy: the timber, housing, drugs, fur and NGO mafias.

This is the bubble economy of the wealthy and the wannabees, including the returned 'necktie' Afghans and the proliferating 'expat' community. They populate the state and services sectors, earn high incomes which are spent on consumption of imports and local services catering only to this strata, e.g., beauty salons, hotels, foreign travel, gardeners and security personnel, weekend parties, golf clubs, Toyota Land Cruisers [the vehicle of choice] , the Excelnet Cafe - the Intercontinental Hotel's cyber-cafe9, bars and restaurants (like B's Place where a pizza costs $12, when the average daily wage in urban areas is $110). On Christmas Day 2001, Variety Magazine carrolled, "In Kabul, Hooray for Bollywood." An article in the Boston Globe, announces "Hotel Critical to Rebirth of Kabul."11 For whom, when rooms at the refurbished Kabul Hotel will cost $125/night single occupancy?

Popular nightspots now include an Afghan-Italian pizza and kebab joint, an Iranian restaurant, and a couple Chinese places [including one where waitresses dress in miniskirts, though in April 2003 these were replaced with sarongs slit to the thigh]. Another article in the New York Times breathlessly announced how Vogue was rushing to Afghanistan to assist Afghan women "to be beautiful again." Hip Kabulis are now donning "skin-tight jeans and waist-high tops with short young people adopt the clothing they see in the movies from India and Hollywood," but the bluejeans for sale in the Jemhoriat Market sell for $5 - $25 a pair.12 Income in Afghanistan for most people today is $30 - $50 a month.

Thousands of well-heeled foreign "aid" workers and Afghan expats partake in raucous weekend parties, their Landcruisers parked in a smart Kabul street. Imported alcohol flows and Madonna echoes in the street outside.13 Peter Essen, German owner of the giant Supreme Food Service warehouse which initially supplied only the international ISAF force [whose members can only eat imported food for security reasons], caters to diplomats. Foreign aid workers, international journalists, etc.14 Essen said, "we've got beer, wine, whiskey, pork - anything you want." Reuters reported some locals in Kabul mentioning foreign women engaging in solicitation on street corners near foreign offices in downtown Kabul.15

Mrs. Lalita Thongngmkam's new Thai restaurant is the fashionable place to be seen in Kabul,

"at Lai Thai, in the Wazir Akbar Khan neighborhood once preferred by al-Qa'ida leaders and Taliban commanders, slim waitresses in silk sarongs help guests out of their bulletproof vests and dish up green seafood curry under fairy lights in the walled garden. Bulky bodyguards wait patiently in dozens of foreign 4x4s parked outside."16

Sean McQuade who had worked in Afghanistan as an engineer, opened the Irish Club on St. Patrick's Day 2003, in the posh Wazir Akbar Khan neighborhood of Kabul. The bar is located in a mock Tudor house surrounded by high walls. Several soldiers paid for by McQuade prowl the street in front armed with AK-47s. The Karzai regime licensed the bar to sell alcohol, but only to foreigners. Inside, hosts crowd around a wooden bar with a top made of green marble imported from, yes, Ireland. The male staff is Afghan, but all have been given Irish names - Kevin, Jimmy, George, etc.. Outside, Afghan drivers slump in four-wheel drive vehicles waiting for aid workers and diplomats to finish their evenings, hoping it won't be very late. McQuade observed,

"we're the first people to stick our necks out and say this can be a cosmopolitan city."17

In July 2003, Atlanta-based World Airways Inc. got a $102 million, two-year contract to run twice-a-week flights from Washington D.C. to Kabul, with a coach round-trip fare costing $3,500 and business class going for $7,500. The drug, fur and timber mafias are doing a raging business. Dozens of new shops have sprung up in central Kabul selling furs of wild animals - like wolves, lynxes, and the endangered snow leopard - to foreigners.18 The export of timber to Pakistan from the forests of Kunar and Nangarhar is soaring despite calls from Kabul to desist.

Mercedes cars proliferate on Kabul's old Soviet-paved thoroughfares. Tawdry Pakistani-style mansions covered with marble and fake Roman pillars are sprouting up. In early September 2003, Karzai's chief of police in Kabul led officers in bulldozing away homes that some thirty poor Afghan families had built for themselves on open land in the posh Wazir Akbar Khan area, to make way for houses for high-ranking Karzai officials. Even the United Nations felt obliged to issue a mild protest against the new "housing mafia." The preferences of the "Gucci guerrilla", Hamid Karzai, are revealed in actions, again.

Many complain of blatant corruption.19 The extent of corruption amongst Afghan officialdom is allegedly legendary, though of course direct data is lacking. But Marshal Fahim has been able to buy up a whole block of real estate in Kabul's Wazir Akbar Khan neighborhood. Indeed, even a U.N.-appointed, independent rapporteur dispatched to assess housing in Afghanistan in September 2003, reported that top Afghan ministers - he specifically named Defense Minister Fahim and Education Minister Qanooni - have illegally grabbed valuable land and displaced locals.20

A couple days after the U.N. complaint, the Afghan Independent Human Rights Commission [AIHRC] expanded the list of Karzai government officials accused of graft to include the governor of the Central Bank [Mr. Anwar Ahady of the royalist Peshawar exile group and formerly political science professor at Providence College], the planning minister [Haji Mohammad Mohaqiq], the mayor of Kabul and his deputies, and even the minister of women's affairs [Ms. Habiba Sorabi]!21

A couple days later, the special U.N. envoy was publicly chastised by Lakhdar Brahimi, head of the U.N. in Afghanistan, who has faithfully backed his U.S. allies in just about all matters pertaining to Afghanistan, especially in his unequivocal support of the U.S.-anointed regime of Hamid Karzai.22 Brahimi scolded the hapless envoy for having gone too far in naming the Karzai regime officials, saying that such concerns are better kept private. In other word, no criticism of the Karzai regime however founded it might be, deserves public airing, the carefully constructed image of a sovereign and competent Karzai needs to be kept.

America's mainstream press has been predictably silent on this profound though revealing embarrassment for Karzai, just as it had been on civilians killed by U.S. bombing.23 It took a British paper, The Independent, to plainly state the truth, "Afghan Elite Seizes Land for Mansions as Poor Lose Homes."24 General Momen Atahi is one such owner of a plot of prime land in Sherpur on which his mansion adorned with balconies commanding a glorious view of the mountains is slowly rising,

"the city's chief of police will live over there...the Minister of Defence has a place over there, the deputy mayor of Kabul is there. And there's the Minister of Water and Power's plot."

But the housing mafia extends beyond Kabul into, for example, Jalalabad where houses are destroyed, evictions undertaken, owners forced to sell, and arbitrary beating, arrest and torture occurs as reported by the AIHRC.25

Patrick de Saint-Exupery, senior correspondent for France's Le Figaro, wrote in the context of discussing the imminent return to Europe of King Zahir Shah,

"Many Afghan military high-ups and government officials dispose of enormous amounts of cash, so the sale (of Zahir Shah's land) gives them a perfect opportunity not only to conveniently launder their money, but also to do a favor to the (former) king and his family."26

A favorite U.S-supported warlord, General Rashid Dostum is, of course famous for his mansions in the north. In 2002, Dostum added an indoor swimming pool to one of them, which he inaugurated in a midnight swim with some of his U.S. Special Operations Forces buddies of A-Team Tiger 02, who helped him re-capture Mazar on November 9, 2001.

Dostum's newly completed private swimming pool

Dostum's newly completed private swimming pool [Source: AFP photo]

Dostum's Jamiat militia thugs control the border checkpoint with Uzbekistan at Hayratan and plunder millions in customs revenues.27 Even the Karzai-appointed Planning Minister complained that a person lucky enough to find a job as a government employee will earn $30 to $50 a month, but well-connected persons involved in "reconstruction" can get their hands on as much as $ 15,000 a month.

With the exit of the Taliban from Jalalabad in mid-November 2001, that city returned "to [the] rule of the thieves."28 Foremost amongst these, figures the favorite regional warlord of the United States, Hajii Hazrat Ali, who amongst many other things took possession of the city's only major hotel, the Spin Ghar, where he has shown tremendous ingenuity at extorting foreign patrons. Veteran Afghan correspondent for the Associated Press, Canadian Kathy Gannon, wrote how

"Afghans [are] losing faith in U.S. as corruption runs rampant."29

Aside from the unwarranted conflation of all Afghans into a single category, the article points out [again] what has long been known. She quotes a local man from Jalalabad who states that the warlords so maligned in western press accounts, are in fact local military commanders and Karzai government officials, specifically mentioning a favorite U.S. client, Hazrat Ali, who, along with Haji Zahir Qadir [son of the slain governor of Nangarhar, Haji Abdul Qadir] are part of the timber mafia, extorting vast sums from timber merchant truckers both in fees and 'protection money.'30

These unsavory elements also deal in drugs, extort, possess beautiful new mansions, and enjoy the support of both Karzai and the Americans. The Jalalabad narco-mafia goes back to the 1980s anti-Soviet struggle, including former commanders like Haji Abdul Qadir, Haji Mohammed Zaman, and Hazrat Ali, who in November 2001 returned from exile to re-take control. Even MSNBC commented on the opium-dealing businesses of U.S. warlords like Hazrat Ali and the infamous governor of Kandahar, Gul Agha Shirzai whom the U.S. protects with a detachment of Special Forces and who is said to control the heroin trade in southern Afghanistan.31 One of Gul Agha's closest associates is the major Pakistani drug trafficker Ayub Afridi.

This is the world of Hamid Karzai and his 'necktie' associates. No connection exists between this economy and that of the hundreds of thousands in the informal, urban economy or of the millions in Afghanistan's rural lands. A bifurcated economic system exists, as it has since the onset of western modernization in the 1950s. But, to assert that such a bifurcated economic system exists, does not mean - contra Rubin32 - that the subsistence sector is non-monetized. It is, as revealed in the very large role played by agricultural indirect taxation.

The small urban upper and middle class lives today in a world disconnected from the tribal-peasant sea, just as its predecessors under Zahir Shah and the Soviet-leaning regime did. In matters of daily life - work, entertainment, consumption, dress, education, pace of life, desires - it "sees" only its cohorts who, in turn, provide it with meaning, money, services, goods and friends.

The all - civilization restored and the bubble economy - "protected" by 12,000 foreign troops, as a tragic epiphany of the later Roman Empire [only the Praetorian Guard in Kabul is not even Afghan].

In what must be one of the more unusual insights into economic development, on a visit to New Delhi in March 2003, Karzai summed up the achievements of his government during the last year, with

"Traffic jams are a sign of prosperity and this is what my government has managed to achieve."33

Grasping for "evidence" of Afghans' improving lives since the fall of the Taliban, Mark Memmott, economics editor of USA Today, invokes the "picnic in Istalif" criterion. In recent times, some Kabul families have taken to Friday picnics in the old royal mountainside village of Istalif, 90 minutes north of Kabul. Memmott solemnly proclaims,

"It takes an Afghan, someone who knows that this country was one of the world's see a picnic as a sign of something larger."34

The Christian Science Monitor's Scott Baldauf has tried to provide another positive "spin" to Afghanistan's alleged reconstruction and "how much ordinary life...has changed."35 He points successively to: over 2 million refugees returning from Pakistan; the enormous growth of small businesses and house construction in major cities; the large wheat crop in 2003; and the oft-mentioned rebuilding of the Kabul-Kandahar highway. Offsetting such changes, he notes only minor project funding, escalating violence, perception by Afghans of Americans supporting the Tajiks, etc.. But refugees returned with Pakistani encouragement, many refugees found only grinding poverty and no employment in Kabul but are too poor now to return to Pakistan, small business has grown in spite of Karzai's policies, the weather is responsible for the good wheat crop, and the highway reconstruction is progressing very slowly and is a glamour project which will only marginally affect most Afghans.

As Wolfgang Sachs so cogently put it, monetary-based poverty

"...affects mostly urban groups caught up in the money economy as workers and consumers whose spending power is so low that they fall by the wayside. Their capacity to achieve through their own efforts gradually fades, while at the same time their desires, fueled by glimpses of high society, spiral toward infinity. This scissor-like effect of want is what characterizes modern poverty."36

Under U.S-anointed [and personally protected by about 50 U.S soldiers serving as his palace guard] Karzai, the scissor-like effect has fueled modern poverty like never before in Afghanistan.

What we "see" says a lot about who we are. The wealthy Pashtun, Hamid Karzai, leader of the Popolzai clan, "sees" traffic jams, whereas others "see" begging, an urban landscape of modern poverty, and a Hamid Karzai - "the chicquest man on the planet" - wearing his trademark karakul hat made from the downy fur of aborted sheep fetuses.37

Switan, 10, looks through restaurant window in Herat. She survives by begging, earning about $2.50 a day

Switan, 10, looks through restaurant window in Herat. She survives by begging, earning about $2.50 a day

In the words of an reporter for the Associated Press, many of the returned refugees

"Now view Karzai's government as serving the rich and doing little for the poor."38

-- 30 --


1. From Andrew Higgins, "After Cities Crumble, Thai Woman Builds Eateries," Wall Street Journal [May 11, 2003]

2. Bill Putnam, "Parallels Through Afghan History," Armylink/U.S. Army [July 23, 2003]

3. 'Modernizing' Afghanistan' : How 80 Years of Intervention Impoverished a Frugal Society [Monroe, Me.: Common Courage Press, forthcoming 2004]. This essay is based upon Chapter Four therein.

4. For details, see Barry Bearak, "Afghans Ruled by Taliban: Poor, Isolated, but Secure," New York Times [October 10, 1998]. A more academic treatment emphasizing the Taliban as imposing a new clerical order, unknown in Afghanistan, with an interpretation of the shariat often at odds with the Pashtun tribal code [pashtunwali], is found in Gilles Dorronsoro, "Pakistan and the Taliban: State Policy, Religious Networks, and Political Connections [Rennes, France: manuscript of the I.E.P., Universite de Rennes, October 2000], at:

5. Andrew Bushell, "Big Decision. The New Government in Afghanistan is a Failure. But You Wouldn't Know It By Listening to the US and UN Spinmeisters," The Phoenix [August 29, 2002]

6. Paul Watson, "Afghan Aid Faces Hurdles. Reconstruction Effort is Plagued by Mismanagement, Confused Priorities and Sheer Need, Although Large Projects Are Planned," Los Angeles Times [September 1, 2003]

7. See my "Empty Hat: Foreign Investors Shun Karzai's Afghanistan" dated September 2, 2003, at:

8. according to United Nations Office on Drugs Control in "UN Anti-Drugs Chief Visits Leading Drugs Producer Afghanistan," Agence France-Presse [August 24, 2003 at 3:31 AM]

9. See Sanjoy Majumber, "Kabul's Cyber Cafe Culture," BBC News [June 16, 2003] and his "Kabul's Cyber-Cafe Culture," BBC News [June 13, 2003] at

10. All dollars cited herein are in current dollars.

11. Victoria Burnett, "Hotel Critical to Rebirth of Kabul," Boston Globe [February 23, 2003]

12. Rahimullah Samander, "Kabulis Dress Up After a Fashion," IWPR [July 17, 2003]

13. Nick Meo, "Afghanistan Gets Its First Party Town," Sunday Herald [U.K.] [August 3, 2003]

14. "Grenade Fence' Doesn't Deter Crowds at Kabul Restaurant. Scarcity of Western Fare Creates a Seller's Market - if there's stability," Associated Press [November 26, 2002]

15. "Afghan Paper Urges Kabul to Act on Moral Crime," Reuters [August 25, 2003]

16. Jan McGirk, "Have Wok Will Travel: How Thai Expat Spices Up World's Hot Spots," The Independent [July 13, 2003]

17. The above is from Todd Pitman, "Irish Pub in Kabul a Have for Some - But Not for Afghans," Portsmouth Herald [April 17, 2003]

18. Jannat Jalil, "Afghans Flout Fur Ban," BBC News [July 21, 2003 at 04:44 GMT]

19. Meo, op. cit.

20. "UN Accuses Top Afghan Ministers in Land Grab," Dawn [September 12, 2003], at:

21. "Afghan Ministers Accused of Graft," Dawn [September 14, 2003]

22. "UN U-Turn on Afghan Land Grab," BBC News [September 15, 2003]

23. Elaborated upon in Marc W. Herold, "Truth About Afghan Civilian Casualties Comes Only Through American Lenses for the U.S. Corporate Media [Our Modern Day Didymus]," in Peter Phillips & Project Censored [eds], Censored 2003. The Top 25 Censored Stories [New York: Seven Stories Press, 2002]

24. Phil Reeves, "Afghan Elite Seizes Land for Mansions as Poor Lose Homes," The Independent [September 19, 2003], at:

25. "Property Disputes Top Afghan Rights Violations," Associated Press [September 14, 2003]

26. "Zahir May Quit Afghanistan, Says Paper," Dawn [August 13, 2003]

27. Pepe Escobar, "Kabul: Rocking, Rolling and 'Carpet Bombing'," Asia Times [September 4, 2002], at:

28. C.J. Chivers, "Afghan City, Free of Taliban, Returns to Rule of the Thieves," New York Times [January 6, 2002]

29. Kathy Gannon, "Afghans Losing Faith in U.S. as Corruption Runs Rampant," Associated Press [September 8, 2003]

30. "Timber Imports From Afghanistan Increase," Dawn [September 13, 2003]

31. Ron Moreau and Sami Yousafzai, "A Deadly Habit. Afghan Warlords - Most of Them U.S. Allies - May be Making a Fortune Off the Country's Drug Trade," [July 14, 2003]

32. Barnett Rubin, "The Political Economy of War and Peace in Afghanistan," World Development 28, 10 [October 200]: 1791

33. Siddharth Srivastava, "Karzai Sees Traffic Jams as Sign of Prosperity," Times of India [March 7, 2003]

34. Mark Memmott, "Afghans Can See Progress Since the Fall of Taliban," USA Today [July 7, 2003]

35. Scott Baldauf, "Nation Building, Redoubled," Christian Science Monitor [September 8, 2003]

36. Wolfgang Sachs, " 'Poverty' - In Need of a Few Distinctions. You Can't Measure Wealth by Cash Alone," In Context [Winter 1993]

37. Gucci's Tom Ford calls Karzai "the chicquest man on the planet." See "Karzai Heads for Hat Trouble," BBC News [April 28, 2002]

38. Matthew Pennington, "Returning Afghan Refugees Struggle to Survive in a Ruined Capital," Associated Press [September 14, 2003], at:



Professor Marc Herold's Afghan Canon