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  • Writer's pictureAbhijit Pandya

Afghanistan: A failure of a start-up business case (quasi-postscript):

Updated: Sep 25, 2021


Following the dark days of World War Two U.S. General Douglas MacArthur was appointed by the U.S. Government to oversee the reconstruction of the Japan. In a nutshell this was to build the Japanese economy and reintegrate it into global trade so as to prevent war. It was a step towards a remarkable turnaround. In less than three decades poverty was significantly reduced in Japan and standards of living were on the rise. It is said that around $18 Billion USD initially were directly invested in building the Japanese economy.

Why build a rival?

The answer is the mutual benefits that arise from developing competitive markets that can trade with yourself. The competition provided by Japanese industries in the world, in part stimulated by US investment in Japan, in part caused by new methods of efficient manufacture in Japanese industries, drove the US to ever higher economic standards. It also produced an ancillary market for American goods. It simultaneously produced a domestic consumer market for Japanese ones. It also aided geopolitical security and positioning of Japan in the Cold War in the great contest between liberal democracies and communism.

Fast forward to 2001 when the US invaded Afghanistan. In that instance there were no similar overarching long-term economic benefits planned for US policy through the development of a modern Afghanistan. The problem with the response of US foreign policy under the Bush doctrine was its total lack of clear medium and long-term objectives. Neither did it understand, or had any interest in, a long term economic development policy beyond retaliation or containment of terrorism. Serious contemplation of the latter ought to have brought about the scale of state building needed in Afghanistan that would make the project have a tangible benefit in increasing global stability.

This would have been different if a clear business case with commercial strategy alongside military objectives of security were created. When it randomly, and sporadically occur, it was far too little and beyond too late in the day. If the objective was solely to contain the Taliban, it is difficult to understand what the return on military investment would be or how it would be brought about. It is like trying to entrench a product in a market without understanding or debating the value of market expansion. What was to be gained to preserve the status-quo of entrenchment of a dysfunctional economy?

Even after 20 years Afghanistan did not the have the product of the democratic economy even installed. There was no long-term plan to install it in the world economy, nor did successive US (or its allies) administrations grasp the benefits of a longer-term economic building plan in Afghanistan.

Deference to the United Nations since the dismantling of the UN Trustee System (a system that had the potential to build nation states to what I would call functional independence) without building in a rapid-fire state building plan as part of a post-Cold War U.S. global economic policy was doomed to be without teeth. As some start-up veterans, albeit now touting venture capitalism, from John Doerr to Reid Hoffmann, would tell you it is easier to build objectives if you actually know what your target end game is. A trusteeship system in the modern sense for a dysfunctional company would be similar to a start-up incubator operating on a significantly large scale.

If you don’t have the ability to pivot your business strategy, assess why key objectives and stages are falling short, and how to overcome shortcomings through partnerships and reassessment of where capital is being spent, you are on a sticky wicket. Yet this has to be done at a planning stage. Had this sort of approach been detailed in Afghanistan (and why should it be any less so when the lives of peoples and generational hope are at stake rather than just business success), we would only be seeing the first stage of a multi-generational plan that would take around 50 years to get to an initial stage of a functional economy. In business value and profit should be in tandem. In Afghanistan the final implementation of US withdrawal by the Biden administration has made clear that neither were ever in the horizon to be achieved. This has left the military who busted the gut on the ground feeling even more short-changed than the Afghan people.

Dr Abhijit Pandya

CEO, Pandya Arbitration Global

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