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 An Ariana Media Publication 02/05/2012
 Lessons in Crony Capitalism

The Huffington Post
09/02/2010
By Malou Innocent

[Printer Friendly Version]

From this week's Washington Post:

Afghanistan's Central Bank has taken control of the country's biggest and most politically potent private bank and ordered its chairman to hand over $160 million worth of luxury villas and other real estate purchased in Dubai for well-connected insiders, according to Afghan bankers and officials.

Farther down the page the article continues:

Kabul Bank previously had been shielded by the political clout of its shareholders who, in addition to Mahmoud Karzai [President Hamid Karzai's brother, who partly owns Kabul Bank], include Haseen Fahim, the brother of Vice President Mohammed Fahim.

If this hostile takeover wasn't questionable enough, the article goes on to report:

Kabul Bank's biggest creditor, bank insiders said, is Haseen Fahim, a minority shareholder, who borrowed tens of millions of dollars to fund various business ventures, which in turn won contracts at U.S. bases and sites in Afghanistan operated by the CIA.

So, in an effort to stamp out corruption, which U.S. officials have prodded Afghanistan's President Hamid Karzai to do, he orders his Central Bank to take managing control of the country's largest private bank, which, I might add, "also contributed to President Karzai's reelection campaign last year."

At the risk of oversimplifying, the above-cited transaction sounds like a stark lesson in crony capitalism: an allegedly capitalist economy based on close relationships between politically connected business figures and the state. This U.S.-led nation-building charade in Afghanistan sounds eerily reminiscent of the state-controlled corruption surrounding Afghanistan's mineral mining laws:

"Article 4: Ownership of Minerals

(1) All naturally occurring Minerals and all Artificial Deposits of Minerals on surface or subsurface of the territory of Afghanistan or in its water courses (rivers and streams) are the exclusive property of the State."

Well, it's nice to see that we are exporting our system around the world!



Malou Innocent is a foreign policy analyst at the Cato Institute

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