In December 2001, a number of prominent Afghans met under the United Nations auspices in Germany to decide on a plan for governing the country. As a result, the Afghan Interim Administration (AIA) – made up of 30 members, headed by a chairman – was inaugurated on December 22, 2001, with a six-month mandate to be followed by a two-year Afghan Transitional Administration (ATA), after which elections are to be held. Some provisions in the agreement have expired, due to the creation of the constitution. Still, the agreement paved the way for the creation of a democratic Afghanistan.

Hamid Karzai served as the Chairman of the Interim Administration from December 2001 to June 2002. He then served as the Interim President between June 2002 to October 2004. He officially became the President of the Islamic Republic of Afghanistan after winning the 2004 presidential election

An independent commission found evidence of fraud, but ruled that it did not affect the outcome of the poll and Karzai won with 55.4% of the vote. He was inaugurated as President on December 7

Hamid Karzai was declared the first ever democratically elected head of state in Afghanistan in 2004, winning a second five-year term in 2009. The National Assembly is Afghanistan’s national legislature. It is a bicameral body, composed of the House of the People and the House of Elders

. Before the election of 2004, Karzai led the country after being appointed as President of the Afghan Transitional Administration at the 2002 loya jirga in Kabul. While supporters have praised Karzai’s efforts to promote national reconciliation and a growing economy, critics charge him with failing to stem corruption and the illegal drug production

After winning the 2004 election and removing many of the former Northern Alliance warlords from his cabinet, it was thought that Karzai would pursue a more aggressively reformist path in 2005 but he proved to be more cautious.

 Ever since Karzai’s new administration took over in 2004, the economy of Afghanistan has been growing rapidly for the first time in many years.

Government revenue is increasing every year, although it is still heavily dependent on foreign aid. During the Karzai administration, public discontent grew about corruption and the civilian casualties in the fight against the Taliban insurgency

The Constitution of Afghanistan creates  a strong presidency, serving as the head of state and Commander-in-Chief of the Afghan Armed Forces.   A president is elected with two vice-presidents. The president appoints cabinet ministers and provincial governors, which are to be approved by the national assembly(parliament).

The 2009 presidential election was characterized by lack of security, low voter turnout and widespread ballot stuffing, intimidation, and other electoral fraud

Two months later, under heavy U.S. and ally pressure, a second round run-off vote between incumbent President Hamid Karzai and his main rival Abdullah Abdullah was announced for November 7, 2009. On November 1, however, Abdullah announced that he would no longer be participating in the run-off because his demands for changes in the electoral commission had not been met, and a “transparent election is not possible.” A day later, on November 2, 2009, officials of the election commission cancelled the run-off and declared Hamid Karzai as President of Afghanistan for another 5 year term

Three months after the 2009 election, President Karzai was officially declared the winner. The Obama administration urged Karzai to exclude ineffective or corrupt officials from the new government, while powerful Afghans who helped deliver his re-election were demanding positions. According to political analysts, the list of ministers Karzai presented to the Parliament was “not encouraging”, but it reflected realpolitik. Slightly more than half were ministers who would stay in their current positions or who had served previously in Karzai’s government. In January 2009, the Afghan Parliament rejected 17 of Karzai’s 24 cabinet nominees, approving only seven. Relations between US President Barack Obama and Karzai were not so great in the beginning but by 2012 they slightly improved, especially after the death of Osama bin Laden and the assassination of Karzai’s brother, Ahmed Wali Karzai. President Obama made two official visits to Afghanistan between 2010 and 2012. The relations again began to decline in late 2013 after Karzai decided not to sign the Bilateral Security Agreement (BSA) with the United States until April 2014.

The 2014 presidential election was held in April 2014, followed by a run-off in June 2014. The results of both ballots were challenged by the losing candidate Abdullah Abdullah, who claimed the results were manipulated to ensure his opponentAshraf Ghani was declared the winner.

 The results of the election remained in dispute through until September 2014, despite a proposal by the United States that the candidates agree to a power-sharing deal, which was initially agreed to. A UN-led audit failed to sway Abdullah as he insisted the audit team could not explain a million extra votes counted in the run-off. Ghani supporters insisted they wanted to do a deal and were leaving the door open to negotiations

Nevertheless, there has been some progress. In 2004, President Karzai signed into law a new constitution granting equality among all its citizens and ensuring women’s rights.  And in 2009 the country passed the Elimination of Violence Against Women Law, intended to protect women from abuse, rape, and forced marriages

Afghanistan has long-produced about 90 percent of the world’s opium, a paste from the poppy plant that is mad into make heroin.  At the end of the Taliban’s rule, the government worked with the U.N. to cut production by around  90 percent.

In the last decade, opium production increased again., In 2001, girls were denied an education under the Taliban regime and only 900,000 children were enrolled in school throughout Afghanistan.  Today, at least 7 million children are attending classes and 2.5-million are estimated to be girls, according to Amnesty International. In the cities, you see women in the workforce again, doctors, politicians and even business owners.

the politics of Afghanistan have been influenced by NATO countries, particularly the United States, in an effort to stabilise and democratise the country  The United Nations Security Council authorized the creation of the International Security Assistance Force (ISAF) to help provide basic security for the population of Afghanistan. Members of the United States Armed Forces and other NATO countries began sending large number of troops to Afghanistan. They began to train the Afghan National Army and Afghan National Police as well as fight insurgents and take part in the reconstruction of Afghanistan.

. The United States is the leading nation in the rebuilding and democratization of Afghanistan. United States-Afghanistan relations have improved since late 2001, especially after the Karzai administration was formed. Foreign relations of Afghanistan with other NATO members and regional countries have also improved under the Karzai adiministration.

Over the last decade, billions of aid dollars have flowed into Afghanistan, and thousands of foreign soldiers and tens of thousands of civilians have died during the effort to bring peace and a modicum of prosperity to the country

Meanwhile, the government of President Hamid Karzai has passed laws meant to improve the lives of his citizens.  Nevertheless, Afghanistan still faces huge problems, such as widespread violence, official corruption, grinding poverty and a booming narcotics trade

Afghan security forces face big challenges, such as attrition, illiteracy and insurgent infiltration They fear hunger and worry that they and their families won’t survive another winter.

Afghans are among the poorest people on earth.  According to the World Bank, per capita GDP was around $576 in 2011, up from $158 in 2002. More than half of children under the age of five are malnourished, according to the World Food Program.

Afghanistan remains largely dependent on foreign aid – the World Bank says that 90 percent of the country’s national budget is still financed by governments and other foreign organizations.

 Political parties In Afghanistan are influx and many prominent players have plans to create new ones. Some of the political parties in Afghanistan are as follow:

Afghan Social Democratic Party (Afghan Mellat)

Hezbi Islami

Jamiat-e Islami

National Islamic Front (Hezb-e-Mahaz-e-Mili Islami)

Islamic Dawah Organization (Tanzim Dawat-e-Islami)

National Movement of Afghanistan (Hezb-e-Nuhzhat-e-Mili Afghanistan)

National Solidarity Movement (Hezb-e-Nahzat-e-Hambastagee Mili)

National Islamic Unity Party (Hezb-e-Wahdat-e-Mili Islami)

National Solidarity Party (Hezb-e-Paiwand Mili)

Islamic Movement of Afghanistan (Harakat-e Islami-yi Afghanistan)

National Congress Party (Hezb -e-Congra-e-Mili Afghanistan)

Afghanistan’s Economical Improvement Within The  Last Decade

Afghanistan’s economy is recovering from decades of conflict. The economy has improved significantly since the fall of the Taliban regime in 2001 largely because of the infusion of international assistance, the recovery of the agricultural sector, and service sector growth. Despite the progress of the past few years, Afghanistan is extremely poor, landlocked, and highly dependent on foreign aid. Much of the population continues to suffer from shortages of housing, clean water, electricity, medical care, and jobs. Criminality, insecurity, weak governance, lack of infrastructure, and the Afghan Government’s difficulty in extending rule of law to all parts of the country pose challenges to future economic growth. Afghanistan’s living standards are among the lowest in the world. The international community remains committed to Afghanistan’s development, pledging over $67 billion at nine donors’ conferences between 2003-10. In July 2012, the donors at the Tokyo conference pledged an additional $16 billion in civilian aid through 2015. Despite this help, the Government of Afghanistan will need to overcome a number of challenges, including low revenue collection, anemic job creation, high levels of corruption, weak government capacity, and poor public infrastructure. Afghanistan’s growth rate slowed markedly in 2013.

Afghanistan ranked No. 1 in progress last year on the U.N.’s Human Development Index Despite incomplete and questionable data on the country, this is an impressive achievement.

Since 2001, Afghanistan’s economy has grown very rapidly. Numerous roads have been constructed and rehabilitated across the country, 7.8 million children attend school – 38 percent of them are girls, healthcare is now less than an hour’s walk for most Afghans, and about 85 percent of Afghans are using cell phones regularly.  Last year, Afghanistan was ranked as the No. 1 country in the world for progress on the United Nations Human Development Index.

“It is the economic side that we, and many Afghans, are very much interested in,” Robert Saum, World Bank Country Director for Afghanistan and Bhutan, said during an April 15 panel discussion at USIP, “This relates to jobs, contribution to stability, contribution to growth, regional integration, and support for human development and poverty reduction

But Afghanistan’s economic development has been uneven, and Afghanistan still lags far behind many other low-income countries in social and physical infrastructure. Maintaining progress and protecting gains is going to be critical as international aid begins to drawdown and security transfers to Afghan control

Otherwise, it is unlikely that the economy can succeed in an unstable state fraught by corruption and the persistent danger of physical attacks such as suicide bombings.Despite these unpredictable circumstances, USAID Senior Economic Adviser Borany Penh rejected predictions of a worst-case scenario.

“Economic growth is likely to slow, but it is not doomed to collapse,” Penh said during the April 15th event. There are several actions that Afghanistan and the international donor community need to start addressing now to increase the likelihood that Afghanistan’s economy will emerge intact after most U.S. and other foreign troops in the NATO-led coalition leave at the end of 2014.

2010-2011 aid (including funding to the security sector) accounted for more than 104 percent of Afghanistan’s GDP, according to a World Bank report released earlier this year. This assistance funds many of Afghanistan’s essential services, including education, healthcare, and infrastructure. Such public spending will be unsustainable once international aid draws down over the coming year.

While undergoing substantial political, economic, and social transformation over the past decade, Afghanistan has achieved rapid yet volatile economic growth. The construction and agricultural sectors have been the key contributbrors to economic expansion, which has averaged around 10 percent over the past five years. There have been noticeable improvements in such areas as health, education, and microfinance, but dependence on high levels of foreign aid continues.

The economy of Afghanistan has improved significantly since 2002 due to the infusion of billions of dollars in international assistance and investments, as well as remittances from Afghan expats. The help that came from expats and outside investments saw this significant increase when there was more political reliability after the fall of the many terrorists groups in the early 2000s like the Taliban. The recent improvement is also due to dramatic improvements in agricultural production and the end of a four-year drought in most of the country.

The government of Afghanistan claims that the country holds up to $3 trillion in proven untapped mineral deposits, which could make it one of the richest mining regions on earth. However, due to the conflicts, it remains one of the least developed countries in the world, ranking 175th on the United Nations’ Human Development Index.

About 35% of its population is unemployed and 36% live below the national poverty line, suffering from shortages of housing, clean drinking water, and electricity. The Karzai administration along with international donors have remained committed to improving access to these basic necessities by prioritizing infrastructure development, education, housing development, jobs programs, medical care, and economic reform.

Historically, there has been a lack of information and reliable statistics about Afghanistan’s economy. In the early modern period under the rule of kings Abdur Rahman Khan (1880–1901) and Habibullah Khan (1901–1919), a great deal of Afghan commerce was centrally controlled by the Afghan government. The Afghan monarchs were eager to develop the stature of government and the country’s military capability, and so attempted to raise money by the imposition of state monopolies on the sale of commodities and high taxes. This slowed the long-term development of Afghanistan during that period. Western technologies and manufacturing methods were slowly introduced during these eras at the command of the Afghan ruler, but in general only according to the logistical requirements of the growing army. An emphasis was placed on the manufacture of weapons and other military materiel. This process was in the hands of a small number of western experts invited to Kabul by the Afghan kings. Otherwise, it was not possible for outsiders, particularly westerners, to set up large-scale enterprises in Afghanistan during that period

The first prominent plan to develop Afghanistan’s economy in modern times was the Helmand Valley Authority project, modelled on the Tennessee Valley Authority in the United States, which was expected to be of primary economic importance. The country began facing severe economic hardships during the 1970s when neighboring Pakistan, under Zulfikar Ali Bhutto, began closing the Pakistan-Afghanistan border crossings. This move resulted in Afghanistan increasing political and economic ties with it’s northern neighbor, the powerful Soviet Union of that time.

The 1979 Soviet invasion and ensuing civil war destroyed much of the country’s limited infrastructure, and disrupted normal patterns of economic activity Eventually, Afghanistan went from a traditional economy to a centrally planned economy up  until 2002 when it was replaced by a free market economy.

According to the International Monetary Fund, the Afghan economy grew 20% in the fiscal year ending in March 2004, after expanding 30% in the previous 12 months. The growth is attributed to international aid and to the end of droughts.

The Afghan economy has always been agricultural, despite the fact that only 12% of its total land is arable and about 6% is currently cultivated. Agriculture production is constrained by an almost total dependence on erratic winter snows and spring rains for water. As of 2007, the country’s fruit and nut exports were at $113 million per year, but according to an estimate could grow to more than $800 million per year in 10 years given sufficient investment.

The current trade between Afghanistan and other countries is at US$5 billion a year. In 1996, legal exports (excluding opium) were estimated at $80 million and imports estimated at $150 million per year. Since the collapse of the Taliban government in 2001, new trade relations are emerging with the United States, Pakistan, Iran, Turkmenistan, the EU, Japan, Uzbekistan, India and other countries. Trade between Afghanistan and the U.S. is beginning to grow at a fast pace, reaching up to approximately $500 million per year Afghan hand wooven rugs are one of the most popular products exported from the country. Other products include hand crafted antique replicas as well as leather and furs.

Afghanistan signed a copper deal with China (Metallurgical Corp. of China Ltd.) in 2008, which is to a large scale project that involves the investment of $2.8 billion by China and an annual income of about $400 million to the Afghan government.

After the formation of the new Karzai administration, production of natural gas has been restored again. A locally owned company, Azizi  Hotak General Trading Group, is currently the main supplier of diesel fuel, gasoline, jet fuel and LPG in Afghanistan. In December 2011, Afghanistan signed an oil exploration contract with China National Petroleum Corporation (CNPC) for the development of three oil fields along the Amu Darya river. The Afghanistan is a member of SAARC, ECO, OIC, and has an observer status in the Shanghai Cooperation Organisation (SCO)

. It seeks to complete the so-called New Silk Road trade project, which is aimed to connecting South Asia with Central Asia and the Middle East.

In 2006, President Hamid Karzai established an independent board for the development of Kabul New City. The board brought together key stakeholders, including relevant government agencies, representation from private sector, urban specialists and economists, with cooperation from the government of Japan and French private sector, to prepare a master plan for the city in the context of Greater Kabul. The master plan and its implementatiion strategy for 2025 were endorsed by the Afghan Cabinet in early 2009. The initiative turned into one of the biggest commercially viable national development project of the country, expected to be led by the private sector.

As part of an attempt to modernize the city and boost the economy, a number of new high rise buildings are under construction by various developers

In the last decade, companies  such as Coca Cola Company and PepsiCo launched or re-launched operations in Kabul. In addition, a number of local mineral water and juice plants, including factories of other products, were built. This not only promotes foreign investment but also makes the country less dependent on imports from neighboring countries and helps provide employment opportunity to many Afghans. Watan Group is a company based in Afghanistan that provides telecommunications, logistics and security services.

Prepared By: Elyas Roein Noorzai