I remain fascinated by this Kabul Bank story, for so many reasons. It shows the sharp contrasts between a pre-modern society moving into the modern world. But it also shows the easy corruption that can result from setting up civil society in a box, when the keys of civilization are handed over to people out for themselves. Seeing Afghanistan’s central bank try to manage monetary policy, when the crisis resulted from the brother of Hamid Karzai and several other cronies blowing the bank’s money on luxury villas in Dubai, is just too dissonant to even capture in words.
Struggling to contain an escalating crisis at Kabul Bank, Afghan authorities have barred the sale of Kabul properties held by the bank’s principal owners.
But the freeze excludes President Hamid Karzai’s brother, Kabul Bank’s third largest shareholder, who says he does not own property in the Afghan capital.
The Afghan Central Bank ordered the property-sale ban in a letter reviewed by The Washington Post. It was sent to Kabul municipal authorities and it targets five people, including Kabul Bank’s two biggest shareholders – who were ousted last Monday as executives of the bank – as well as the brother of Afghanistan’s vice president, who is both a shareholder and major borrower.
No restrictions were placed on the president’s own brother, Mahmoud Karzai, who has also borrowed money from Kabul Bank, including $6 million that he used to buy a 7 percent stake in the crumbling bank.
It’s pretty obvious that Mahmoud Karzai just has real estate in Afghanistan in another name. This is routine in Afghanistan. And it’s not much better that Mahmoud doesn’t own property in Kabul because his primary residence is one of those luxury villas in Dubai.
This goes back to a new strategy intimated over the weekend – that the US would tolerate more corruption from the Afghan government while focusing on fighting the Taliban. I think that really means they’ll tolerate the Afghan government, which is one big ball of corruption. And if this doesn’t sound like the same blunder as backing the corrupt governments of South Vietnam in preference to fight the “common enemy” in the north.
Military officials in the region have concluded that the Taliban’s insurgency is the most pressing threat to stability in some areas and that a sweeping effort to drive out corruption could create chaos and a governance vacuum that the Taliban could exploit.
“There are areas where you need strong leadership, and some of those leaders are not entirely pure,” said a senior defense official. “But they can help us be more effective in going after the primary threat, which is the Taliban.”
As Dexter Filkins explained this weekend, this is potentially a more dangerous view, and really seems to be one that the military and the Administration have talked themselves into. In fact, it is possible for Afghans to lose faith in their leadership, even if corruption is a recognized part of their society. You only have to look at the people queueing up every day in front of Kabul Bank to understand this. In fact, this is driving ordinary Afghans toward the Taliban. It’s not something to be tolerated.
You don’t have to look very hard to find an Afghan, whether in the government or out, who is repelled by the illegal doings of his leaders. Ahmed Shah Hakimi, who runs a currency exchange in Kabul, had just finished explaining some of the shadowy dealings of the business and political elite when he stopped in disgust.
“There are 50 of them,” Mr. Hakimi said. “The corrupt ones. All the Afghans know who they are.”
“Why do the Americans support them?” he asked.
They would say that they prefer them to the alternative. But you cannot force that on the population. And it shows the essential error of this entire project.
UPDATE: William Black has a great piece about Kabul Bank.