Sunday, 19 June 2011
The IMF's Second Biggest Problem After The Greek Bailout
Another British soldier, from the 3rd Battalion, The Mercian Regiment (Staffords), has lost his life in Afghanistan. He was shot on yesterday while on patrol on the Nahr-e Saraj District of Helmand Province.
He was killed on the same day as the US decided to announce they are already in talks with the Taliban and the week when the IMF rejected Afghanistan's plan to deal with a failed bank at the centre of a corruption crisis, a step that has blocked tens of millions of dollars in aid and may put development projects, worth billions more, at risk.
Corruption, bad loans and mismanagement cost the politically well-connected Kabulbank, Afghanistan's biggest private lender, hundreds of millions of dollars in what Western officials in Afghanistan now openly call a classic Ponzi scheme.
The Kabul Bank crisis began last year as the public discovered the bank made hundreds of millions of dollars in questionable loans to shareholders - including the elder brother of President Karzai. Some used the loans to buy luxurious mansions in Dubai, United Arab Emirates while others used the money to invest in risky prestige projects like an airline and shopping malls in Kabul.
The bank doled out nearly half a billion dollars in unsecured loans to Karsai's pals. Many of the loans were made 'undocumented' so there was no system to ensure they were paid back. It has about $926 million in loans of which around $900 million is considered at risk. Afghan officials say about $347 million will be recovered, but donors want more work done on asset recovery. One Western diplomat in Kabul, speaking on condition of anonymity, described the bank stalemate as "the IMP's second biggest problem after the Greek bailout."
Afghanistan's Finance Minister is in Russia on a 12 day visit. In july 2000, Russia scrapped almost all of Afghanistan's $12 billion debt. A Russian official said Zakhilwal was "in Russia for one goal only: debt relief."
The World Bank says 97% of Afghanistan's GDP is linked to spending by the international military and donor community.
So while our politicians continue to throw our hard-earned taxes at this corrupt country, our military continue to lose their lives. The only winners are those who cock a snook at Western governments. The situation can only deteriorate even more once civil servants find they won't receive any pay.
The total deaths of British military personnel in this war now stands at 374. The total injured runs into thousands.