Tuesday, 10 April 2018 15:02

The Economic Modernization of Uzbekistan

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1804-Tsereteli-CoverBy Mamuka Tsereteli

 

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Executive Summary

 

When Shavkat Mirziyoyev succeeded Islam Karimov as President of Uzbekistan, many observers expected his tenure to represent continuity rather than change.  And while continuity is present in terms of the focus on independence and sovereignty of Uzbekistan, Mirziyoyev also showed a pro-active desire to improve foreign relations and initiate major economic reforms, designed to strengthen the strategic position of Uzbekistan. 

Mirziyoyev inherited an economic structure left behind by his predecessor, who consistently emphasized that his approach to economic change had been based on gradualism.  The Uzbek government was cautious; but it was not opposed to change. Small-scale privatization was quickly implemented after independence, based on an appeal to a tradition of family homes and small businesses. In the 1990s, the Uzbek economy benefitted from an abundance of cotton, which was relatively easy to bring to world markets at prices that were buoyant at the time. The state’s marketing monopoly ensured that a substantial share of the higher cotton revenues went to the government, which, as a result, was able to maintain social services better than other Central Asian countries. By some measures, Uzbekistan was the best-performing of all Soviet successor states in the 1990s, despite its rejection of the rapid reforms recommended by International Financial Institutions: by the end of the decade it was the first Soviet successor state to regain its pre-1991 real GDP level.

However, falling cotton prices in 1996 led the government to abandon its commitment to make the currency convertible and instead introduce strict exchange controls. When global demand dipped a decade later, the government again tightened forex controls, leading to the emergence of a substantial black market. Very much as a result of this multiple exchange rate economy, Uzbekistan also failed to further diversify its economy. Also, Uzbekistan’s borders remained tightly controlled, both for reasons of security and to protect import-competing industries.

Governance inefficiency became one of the major societal challenges for growth and development in Uzbekistan, contributing to many illnesses of the Uzbek economy, including unemployment. As a result, several million migrants were forced to move abroad, primarily to Russia, in search of work.  By the 2010s, Uzbekistan’s social policies – once a source of pride – were perceived to be deteriorating. 

Despite many shortfalls, Uzbekistan by the end of 2016, remained an economically stable country, but with the need to transform in order to meet the challenges it was facing. It was from this position of stability, but also a sense of urgency, that the newly elected president Mirziyoyev started implementing reforms. President Mirziyoyev had a very good idea where to start, since some of these reforms were designed during his tenure as Prime Minister, and they only required political will to be implemented.  On October 5, 2016, Mirziyoyev signed the decree "On Additional Measures to Ensure the Accelerated Development of Entrepreneurship, the Full Protection of Private Property, and the Qualitative Improvement of the Business Environment." This initiative sent a clear signal as to his priorities: an understanding that the private sector will be the key driver for economic growth and job creation in Uzbekistan going forward.

In February 2017, Uzbekistan adopted a 2017-2021 National Development Strategy, which identified five priority areas: 1) Reform of public administration; 2) Reform of the judiciary, strengthening the rule of law and parliamentary reform; 3) Reforms in economic development and liberalization, focusing on modernization of Uzbek agriculture and industry and oriented towards greater competitiveness of the products and services;  4) Social reforms, based on higher incomes and better jobs, oriented on higher quality health care, education, housing etc. 5) Reforms in the security area, focusing on improvements to ensure domestic stability and balanced and constructive foreign policy with the ultimate goal of strengthening the independence and sovereignty of state.

Following this strategy, President Mirziyoyev signaled new directions in both foreign economic relations and domestic economic policy. The areas were well-chosen: the adoption of foreign exchange controls and the high costs of conducting international trade were the two outstanding flaws in the economy.

A most significant reform came in September 2017, when the Central Bank of Uzbekistan reunified Uzbekistan’s exchange rates, and President Mirziyoyev promised freely floating market-determined rates for the future.  Simultaneously, restrictions were lifted for legal entities and individuals to convert currency. The currency reform was followed by increased activity in foreign financial markets.  This included substantial deals totaling over $1 billion with, among other, Deutsche Bank, Commerzbank, and the EBRD.

Mirziyoyev’s first year in power saw a flurry of reciprocal foreign visits that enabled the new President to establish relations with leaders of neighboring states and great economic powers. Mirziyoyev’s outreach to Uzbekistan’s neighbors signaled a shift in policies and priorities, and the meetings with Turkmen, Kazakh and Tajik leaders in particular highlighted connectivity, and hence Uzbekistan’s reintegration into a regional economic circle. This has begun to deliver results, including new direct air connections linking Tashkent to Dushanbe and Kabul, greatly facilitating travel, as well as growing trade figures.

Uzbekistan is making progress in reforming governance and public services, taking steps that are having an impact on the lives of ordinary citizens and makes it easier for businesses to operate. As a result of those reforms, the country has moved up to 74th place in the World Bank’s “Doing Business” ranking, from 87th in 2015.  

Reform has also reached the cotton sector. The ban on child labor in cotton picking was broadened to include education and health workers, and in September 2017, the government ordered all forced labor to be sent home.  Henceforth, wage increases may make cotton-picking more attractive to voluntary labor, while mechanization is also being considered. These reform policies were positively assessed by many international institutions, including the IMF and other International Financial Institutions.

Looking forward, Uzbekistan will need to work to reverse the bias against exports left over from the previous years.  South Korea accomplished this in 1964 after a decade of mild import substitution, suggesting it can be done successfully. There are already positive signs: exports increased by more than 15 percent and the country signed export deals worth $11 billion dollars in 2017.

The experience of 2017 is encouraging, but Uzbekistan’s reforms are at an initial stage, and the key issue is how successful the Mirziyoyev administration will be in implementing these systemic reforms. The initial steps have yet to create free pricing and competition in fuel, because the centralized management and pricing system remains in place.  This example highlights the multifaceted needs (e.g. enterprise reform and institutional change as well as price liberalization) if market mechanisms are to function well. In general, economic reform rarely yields immediate benefits, and requires some degree of patience.

The timing of Tashkent’s reforms is also auspicious because of the revival of continental trade linking Europe and Asia through Central Asia. Centrally located in the heart of Asia, Uzbekistan could serve as a transit hub for cargos coming from China, India, Pakistan, Afghanistan, and even Southeast Asian countries. China’s Belt and Road Initiative is providing a major impetus to develop infrastructure in the region. Other regional initiatives also work in Uzbekistan’s favor, including the launching of the Baku-Tbilisi-Kars railway, Turkmenistan’s interest in this project, and the Lapis Lazuli corridor linking Central Asia with Afghanistan. With Uzbekistan an engaged participant in these processes, the prospects for the development of continental trade are greatly improved.

In sum, in about 18 months, President Mirziyoyev outlined a very ambitious reform agenda and started to implement it. He undertook a full travel and meeting schedule to restore the country’s international links and, in particular, to repair Uzbekistan’s fractured relations with its Central Asian neighbors. He removed a millstone around Uzbekistan’s economy by unifying the exchange rate and liberalizing access to foreign exchange. Even though it is too early to draw definitive conclusions, these steps appear to have been harbingers of a shift from economic control to greater confidence in market mechanisms. An important signal that Uzbekistan is more open for business would be to complete negotiations for accession to the World Trade Organization (WTO). On March 13, 2018, the Government of Uzbekistan hosted representatives of the World Bank, Asian Development Bank, USAID and other donor organizations and discussed a detailed 34-point accession plan “Road Map” for Uzbekistan’s entry into WTO, thus demonstrating a clear determination to join the rules-based international trade system.

If Tashkent stays on course and liberalizes all prices, improves governance, encourages foreign direct investments, opens trade, and invests in greater connectivity with neighbors, the pay-off from this shift could be large, directly reflecting on job creation and greater prosperity for citizens of Uzbekistan.

 
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  • Protests in Georgia | Laura Linderman
    Monday, 18 November 2024 16:37

     

    In Georgia, opposition parties have accused the pro-Russian Georgian Dream party of stealing recent elections, leading to protests and calls for an investigation into electoral violations. Discrepancies between official results and exit polls have sparked demands for snap elections supervised by an international body. The European Union has called for a thorough inquiry into allegations of voter intimidation and multiple voting. The protests are also a response to fears of Georgia shifting closer to Russia, with Western support at stake. The situation could lead to EU sanctions, further complicating Georgia’s aspirations for EU and NATO membership.

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  • Greater Central Asia as a Component of U.S. Global Strategy
    Monday, 07 October 2024 13:50

    By S. Frederick Starr

    Central Asia-Caucasus Institute & Silk Road Studies Program
    Silk Road Paper
    October 2024

    Click to Download PDF

    Introduction

    Screenshot 2024-10-07 at 9.55.36 AMWhat should be the United States’ strategy towards Central Asia, the Caucasus, and the region of Greater Central Asia (GCA) as a whole? Should it even have one? Unlike most other world regions, these lands did not figure in US policy until the collapse of the USSR in 1991. Though the new Baltic states entered Washington’s field of vision in that year, in those cases the Department of State could recall and build upon America’s relations with independent Estonia, Latvia, and Lithuania during the inter-war decades. For the US Government after 1991, GCA was defined less as sovereign states than as a group of “former Soviet republics” that continued to be perceived mainly through a Russian lens, if at all.  

    Over the first generation after 1991 US policy focused on developing electoral systems, market economies, anti-narcotics programs, individual and minority rights, gender equality, and civil society institutions to support them. Congress itself defined these priorities and charged the Department of State to monitor progress in each area and to issue detailed country-by-country annual reports on progress or regression. The development of programs in each area and the compilation of data for the reports effectively preempted many other areas of potential US concern. Indeed, it led to the neglect of such significant issues as intra-regional relations, the place of these countries in global geopolitics, security in all its dimensions, and, above all, their relevance to America’s core interests. On none of these issues did Congress demand annual written reports.  

    This is not to say that Washington completely neglected security issues in GCA. To its credit, it worked with the new governments to suppress the narcotics trade. However, instead of addressing other US-GCA core security issues directly, it outsourced them to NATO and its Partnership for Peace Program (PfP). During the pre-9/11 years, PfP programs in the Caucasus and Central Asia produced substantial results, including officer training at the U.S. Army’s program in Garmisch-Partenkirchen, Germany, and the Centrasbat, a combined battalion drawn from four Central Asian armies. But all these declined after 9/11 as America focused its attention on Afghanistan. 

    Today this picture has dramatically changed, and the changes all arise from developments outside the former Soviet states. First came America’s precipitous withdrawal from Afghanistan, which brought important consequences. As the U.S. withdrew, new forces—above all China but also Russia and the Gulf States—moved in. Also, America’s pullout undercut the region’s champions of moderate Islam and reimposed a harsh Islamist regime in their midst. And, finally, because Central Asians have always considered Afghanistan as an essential part of their region and not just an inconvenient neighbor, they judged the abrupt U.S. pullout as a body blow to the region as a whole. Now the scene was dominated not by the U.S. but by China and Russia competing with each other. Both powers presented themselves as the new bulwarks of GCA security, and reduced the U.S. to a subordinate role. 

    While all this was going on, the expansion of China’s navy and of both Chinese and European commercial shipping called into question the overriding importance of transcontinental railroad lines and hence of GCA countries. Taken together, these developments marginalized the concerns and assumptions upon which earlier US strategy towards GCA had been based. With Afghanistan no longer a top priority, American officials refocused their attention on Beijing, Moscow, Ukraine, Israel, and Iran, in the process, increasing the psychological distance between Washington and the countries of Central Asia and the Caucasus.  

    It did not help that no U.S. president had ever visited Central Asia or the Caucasus. This left the initiative on most issues to the GCA leaders themselves. Thus, it was Kazakhstan and not the State Department that proposed to the U.S. government to establish the C5+1 meetings. It was also thanks to pressure from regional leaders that the White House arranged for a first-ever (but brief) meeting between Central Asian presidents and the President of the United States, which took place in September 2023 on the sidelines of the United Nations General Assembly in New York. By comparison, over the previous year Messrs. Putin and Xi Jinping had both met with the regional presidents half a dozen times. Hoping against hope, the Central Asian leaders hailed the C5+1 meeting as a fresh start in their relations with Washington. Washington has done little to validate this 

     

    Additional Info
    • Author S. Frederick Starr
    • Publication Type Silk Road Paper
    • Published in/by CACI
    • Publishing date October 2024
  • Press-Release: The "International Kazak Language Society" Presented the Kazakh Translation of "Geniuses of their Time Ibn Sina, Biruni and Lost Enlightenment", in Washington DC
    Tuesday, 22 October 2024 13:36

     

     

    PRESS-RELEASE

    THE INTERNATIONAL “KAZAK LANGUAGE” SOCIETY PRESENTED THE KAZAKH TRANSLATION OF “GENIUSES OF THEIR TIME. IBN SINA, BIRUNI AND LOST ENLIGHTENMENT”, IN WASHINGTON D.C.

     

    Author Dr. Frederick Starr places great importance on  making his work accessible to a broad audience

    October 21, 2024, Washington D.C. | The American Foreign Policy Council (AFPC) in Washington, D.C., hosted the presentation of the Kazakh translation of the book, “Geniuses of Their Age: Ibn Sina, Biruni, and the Lost Enlightenment”, authored by the renowned American historian Dr. Frederick Starr. This translation was initiated and realized by the International Kazakh Language Society (Qazaq Tili), with the support of Freedom Holding Corp., and in collaboration with the Embassy of the Republic of Kazakhstan in the USA.

    Dr. Starr's book, “The Genius of Their Age: Ibn Sina, Biruni, and the Lost Enlightenment “, explores the lives and contributions of two outstanding figures of the Eastern Enlightenment, Ibn Sina and Biruni, whose intellectual legacies shaped both Eastern and Western thought. It highlights their significant contributions to science, medicine, and philosophy, and their role in the broader development of human knowledge. A major portion of the narrative details their biographies, achievements, and the lasting impact of their work on the intellectual heritage of the world.

    This is the second translation of Dr. Starr's work into Kazakh, following the successful release of his first book, “Lost Enlightenment: Central Asia's Golden Age from the Arab Conquest to Tamerlane” by the International Kazakh Language Society.

     

    The translation of this latest work was inspired by and aligns with the vision outlined in Kazakh President Kassym-Jomart Tokayev’s recent article, “Renaissance of Central Asia: On the Path to Sustainable Development and Prosperity.” In support of promoting a shared vision for Central Asian prosperity, the book, which sheds light on the region’s profound intellectual legacy, was translated into Kazakh and made accessible to the public.

    The book presentation was attended by the author of the book Dr. Frederick Starr, member of the Board of Directors of Freedom Holding Corp. Kairat Kelimbetov, and Rauan Kenzhekhan, President of the International Kazakh Language Society (Qazak Tii).

    "This book is a tribute to the brilliant minds of Ibn Sina and Biruni, who made monumental contributions to science and thought long before the European Renaissance. The book also honors other scholars such as al-Farabi, al-Khwarizmi, Omar Khayyam, Abu-Mahmud Khujandi, al-Ferghani, and others whose names have entered the world's intellectual heritage. These two geniuses from Central Asia not only pioneered in various fields of knowledge but also developed research methods that are still relevant today,” said Kairat Kelimbetov, member of the Board of Directors of Freedom Holding Corp. 

     

    Rauan Kenzhekhanuly, the President of the International Kazakh Language Society, emphasized the significance of making Dr. Starr's work accessible to Kazakh readers: "The translation of this book into Kazakh is significant for us. Dr. Starr's work offers profound insights into Central Asia's historical contributions to global knowledge and underscores the region’s role as a vibrant hub of intellectual and scientific discourse during the Enlightenment. By reconnecting with the foundations of our region's 'golden age' and learning from both its successes and declines, we can pave the way for a collective future of prosperity and innovation."

    The book was translated and published by the International "Kazakh Language" (Qazak Tili) Society with the support of Freedom Holding Corp. Thanks to the support of the American Foreign Policy Council and Rumsfeld Foundation for hosting and partnering. 

    The International "Kazakh Language" Society (Qazak Tii: www.til.kz) is the largest non-profit organization dedicated to preserving and promoting the Kazakh language and cultural heritage. Through education, translation projects, and international collaborations, the organization aims to bridge cultures and empower future generations to embrace their identity while contributing to a more interconnected and culturally diverse world.

    Freedom Holding Corp. is an international investment company that provides a range of services, including brokerage, dealer, and depositary services, as well as securities management and banking services. The company was founded in 2013 by Timur Turlov, a Kazakh entrepreneur and financier.

    The book is available in the libraries of educational institutions in Kazakhstan, the digital version can be accessed for free on the Kitap.kz portal.

  • Dysfunctional centralization and growing fragility under Taliban rule
    Wednesday, 11 September 2024 14:35

    By Sayed Madadi

    One year ago, on Aug. 31, 2021, the last foreign soldier left Afghanistan. Since then, the situation in the country has only grown more fragile, marked by deteriorating living conditions, widespread human rights violations, and increasing political instability. One key contributing factor to the crisis is a dysfunctional centralized governance structure that has become more paralyzed and unresponsive under Taliban control. The group has greatly aggravated the problem with its rigid religious ideology and exclusive political agenda, but it well predates the Taliban takeover. The situation has steadily deteriorated over the past two decades as a result of a system that undermined local mechanisms of resilience, deprived people of access to basic public services, and marginalized them politically. With the Taliban at the helm, the system now only perpetuates further political exclusion, economic deprivation, and human suffering. The worsening economic conditions and political environment in the last year offer ample evidence of this.

    Ever hungrier population

    According to the most recent data from the World Bank, Afghanistan is now the poorest country in the world and the per capita income has declined to 2006 levels. The Taliban’s return to power exacerbated an already worrisome economic and humanitarian situation. Pushed to the brink by recurrent droughts, chronic cycles of violence, and poor governance, the insurgent offensive that captured Kabul last August created a shockwave that neither the economy nor the people could absorb. Before 2021, the latest poverty rate in Afghanistan was 47% and 35% of people reported that they were unable to meet their basic needs for food and other essential goods. Now, according to the World Bank and the United Nations, more than 95% of the population is poor, with more than 70% suffering from food insecurity. In an undiversified and limited economy that does not have much to offer, only a staggeringly low 2% said that they did not face limitations in spending. Rising prices caused by high inflation, the liquidity crisis, and a massive drop in international trade, coupled with sharply decreased household incomes, have reduced purchasing power for millions and increased unemployment to record levels, even as an estimated 600,000 people enter the labor force annually.

    Many of these sources of fragility, of course, existed before the Taliban came to power. For over a century, Kabul has grown in monetary wealth, human capital, and opportunities at the expense of the rest of Afghanistan. The economic wealth and metropolitan character of the capital has come with the centralization of state power and revenue collection since 1880. For decades, lack of opportunities — and later on conflict — brought the best and the brightest from around Afghanistan to the capital, thus gradually draining the provinces of intellectual capital and economic resources. Historically, the Kabul-based kings gave land titles and trade monopolies to traditional power-holders in return for revenue, while the latter extorted the local population to raise what was required to pay Kabul. The central state relied on the periphery for resources, soldiers, and legitimacy, but hardly provided anything in return.

    The 2004 constitutional architecture did little, if anything, to change that. As foreign funding flowed in at unprecedented levels, the concentration of political power and economic planning in the capital continued to draw resources and talent from the periphery, eroding the foundations of local resilience. Local and provincial power holders and economic tycoons survived only because they maintained strong ties with those who controlled financial wealth and political decision-making at the center. The immense wealth that the Karzais gained in the south or the riches that Atta Mohammad Noor was able to raise in the north were not possible without the backing of central authorities, which in both cases were highly formalized: Ahmad Wali Karzai was the head of Kandahar’s provincial council and Atta served as the governor of the lucrative Balkh Province for over a decade. Staggering levels of corruption and state capture enabled a select group to easily gain control of the country’s economic riches and move them abroad.

    The population was already struggling by the time the Taliban returned to power. Studies and analysis by the U.N., the World Bank, and independent observers had long warned about increasing poverty, unemployment, and cyclical droughts. After last August, the depletion of human resources and economic wealth and the withdrawal of the international presence in Kabul disrupted value production and business enterprise around the country. The crisis has left millions of people helpless, not only because of their reliance on the Kabul-centric legal regulatory framework, but also because most of the job market — the public sector and the NGOs — was funded by donor money from Kabul. The full international withdrawal shrank the economy by more than one-third and the implications of the political crisis disrupted the markets for much longer than the country could afford. After severe drought and conflict displaced over 700,000 people last year, hundreds of thousands have left Afghanistan since August 2021 in search of a better life.

    The Taliban's inability and unwillingness to provide public services and reinvigorate economic activity led to the further deterioration of living conditions and heightened the people’s vulnerability. The World Bank reported that more than 81% of household heads were self-employed after Aug. 15, 2021. An absolute majority of them are not business owners but job seekers turning to physical labor and street vending to avoid starvation. The Taliban authorities claim that they have increased revenue collection at border crossings, mainly by curbing corruption and expanding ports with taxable trade. However, the regime does not provide even basic public services such as education and health with that revenue. For example, nearly half of schools are closed as the Taliban still refuse to allow girls to access secondary education, resulting in a major decline in public spending. Most of the health infrastructure is supported through international humanitarian aid by the U.N. and ICRC, and the extravagant Afghan National Defense and Security Forces no longer exist. On top of that, only a fraction of public servants go to work, and after months of delays they now receive far lower salaries based on the regime’s new pay scale — labor earnings in the public sector have declined by 69%.

    Therefore, without offering social protection, public services, and economic opportunities, the centralized revenue collection continues to further deplete the provinces of resources that could otherwise help them mitigate the risks of economic and environmental shocks. The Taliban's interference in the distribution of humanitarian aid takes away from the neediest people their only means of survival in the midst of destitution, further compounding local fragility. Despite a year of trials and the infusion of more than $2 billion in aid into Afghanistan, the economic and humanitarian situation continues to deteriorate. Although conventional humanitarian assistance programs help people get by in the short term, they also reinforce a relationship of dependency on aid without developing opportunities for employment and private enterprise, thus reinforcing deeper vulnerability. These approaches — coupled with the Taliban’s centralized and unaccountable governance — build on ineffective modalities that disenfranchise local communities, compound economic deprivation, exacerbate environmental shocks, and intensify human suffering.

    A totalitarian regime

    The political and human rights situation has equally deteriorated under the Taliban. While the Afghanistan Independent Human Rights Commission says more than 1,500 people have been killed by the regime since last August, some independent observer groups report that around 2,000 civilians from the Hazara ethnic community alone have been killed. Protests by women have been repeatedly suppressed and participants have been imprisoned, tortured, and killed. The government is populated entirely by Taliban clerics, excluding all other political forces and non-Pashtun groups. The persecution of Tajiks in the name of quelling the military resistance in the north and of Hazaras justified by ethno-sectarian divisions — the latter are mostly Shi’a — continue. Afghanistan is the only country in the world that prevents girls from getting an education by barring them from secondary schools. Most women cannot work, and a woman’s political agency and social status are tied to that of a man, who has to accompany her, fully veiled, anywhere she goes outside the home. According to Reporters Without Borders, 40% of all media outlets in the country have disappeared and 60% of journalists have lost their jobs. The figure for female journalists is even higher, at 76%.

    The Taliban have managed to consolidate their power within an Islamic Emirate that borrows significantly in structural design from its predecessor Islamic Republic, rather than introducing a new institutional architecture. Save for a few tweaks, the broader framework of the system has remained the same. The judiciary system, for example, and its relationship with the head of state have not changed. The Taliban have kept most political and governance institutions as they were, filling positions across the ministries and provinces with their own appointees. The major institutional change the Taliban have brought has been the removal of elections to establish popular legitimacy: The head of state is now a divinely mandated supreme leader, and there is no legislative branch. These alterations, while substantial on paper, have not changed much in practice. Given the highly centralized nature of the republic with an overly powerful president at the top, electoral processes had failed to produce either legitimacy or accountability for much of the last two decades. In many instances, elections provided opportunities for embezzlement and corruption by enabling actors with ulterior motives to buy votes and then abuse public office to enrich themselves. This was particularly true in the case of the parliament and provincial councils, institutions captured by a handful of kleptocrats who failed to keep an overly strong executive in check.

    The binary division of a republic versus an emirate was what bogged down the peace talks until they fell apart in the run-up to the Taliban’s takeover of Kabul. The fact that the group has consolidated its power through the very system it so vehemently rejected says a lot about the actual democratic character of the centralized political institutions. The narrowing of the public space under the Taliban, for example, indicates that the degree of openness for debate and democratic practices before 2021 was not necessarily a byproduct of a meticulous institutional design that checked the use of power and ensured accountability. Rather, it was attributable to the personal commitment to democratic values of those in control. For over a decade, Hamid Karzai, who ruled through tribal consensus and appeasement, enabled a conducive environment in which a vibrant media industry and civil society took root. Across Afghanistan, especially in Kabul and other key urban centers, demonstrations against the government were ubiquitous.

    After 2014 when Ashraf Ghani came to power, the democratic space began to shrink for a variety of reasons, chief among them the intolerance of the president and his inner circle. Crackdowns on public protests, silencing of independent media and civil society, and marginalization of political opponents and critics, including through the use of force, became increasingly common. In order to act with the utmost impunity, Ghani maintained a facade of accountability through the ministries while monopolizing state functions by creating parallel institutions at his own office. Since last August, the Taliban, undeterred by any prospects of accountability, have further centralized the structure by removing the subsidiary units of the Arg, Afghanistan’s presidential palace, and have instead directly utilized the formal government bureaucracy to consolidate their power, implement their extremist views of what an Islamic society should look like, and silence any voices of dissent. In other words, the centralized political and governance institutions of the former republic were unaccountable enough that they now comfortably accommodate the totalitarian objectives of the Taliban without giving the people any chance to resist peacefully.

    What lies ahead

    The Taliban, who claimed to represent rural Afghanistan, have further oppressed and marginalized Afghans outside Kabul as their core members continue to settle in the now dual capitals of Kabul and Kandahar. The Taliban’s thinking about governance based on a rigid interpretation of religion and ethnonationalist politics, as much as it evolves in practice over time, has further centralized political decision-making and economic resources in the hands of a few. As economic resources become more scarce, wealth will be controlled by those who hold political power at the highest levels.

    This will only deepen the drivers of fragility and conflict, including poverty, exclusion, and discrimination. With drought likely to become an annual occurrence by 2030, the financial and banking crisis set to continue for the foreseeable future, and the economy expected to keep shrinking, people across Afghanistan are becoming increasingly vulnerable. Moreover, the unsustainably large but still inadequate humanitarian aid budget, which has offered a minimal lifeline to the country, will be in danger of getting smaller in light of recent security developments that further limit the parameters of international engagement with the regime. The United States has reportedly withheld talks about the possible unfreezing of Afghanistan’s central bank assets held by the U.S. Federal Reserve and the U.N. Security Council has not extended travel exemptions for 13 Taliban leaders. These developments also mean that potential foreign investment, even from friendly partners of the regime, such as China, will likely take a long time to materialize. The overall impact of all of this will be to push Afghans across the country further and deeper into cycles of economic deprivation and political instability with substantial implications for health, education, and human rights, especially for women and children.

    However, as much as centralization allows the Taliban to consolidate power in the short run, it equally makes its long-term survival unlikely. The group led a highly decentralized, mobile insurgency where local commanders oversaw the war in their areas in whatever way they saw fit. That was vital to withstand the republican army and its partners, as well as recruit non-Pashtun commanders in the north, which later proved fatal to the republic. But now they are struggling to transform from a decentralized insurgency into a centralized government and what were previously strengths have become weaknesses. Commanders such as Fasihuddin, once trusted with complete authority, are expected to give up their autonomy and obey orders. The regime is also facing difficulties integrating key battlefield leaders into its new official structures in an appropriate way, as the appointment of Qayum Zaker to an arbitrary assignment managing the resistance in Panjshir illustrates. These trends stemming from the centralization of power will eventually push away those who were key to the Taliban’s success — similar to how President Ghani’s exclusionary politics alienated the republic’s natural allies. The Taliban have long prioritized their cohesion over any other political objective. Now, unable to govern and unwilling to share power with other political forces, the centralized regime’s disintegration becomes increasingly inevitable — and arguably has been expedited — as it fails to incorporate even its own senior political and military leadership into decision-making processes.

    Sayed Madadi is a Reagan-Fascell Democracy Fellow at the National Endowment for Democracy’s International Forum for Democratic Studies and a Nonresident Scholar with the Middle East Institute’s Afghanistan and Pakistan Studies Program. You can follow him on Twitter @MadadiSaeid. The opinions expressed in this piece are his own.

     Read at Middle East Institute