Aug 30, 2021

Jennifer Murtazashvili on Recent Developments in Afghanistan and Lessons for State Capacity Building

The current events unfolding in Afghanistan present an important lesson that international state capacity building isn’t a straightforward geopolitical task.
David Beckworth Senior Research Fellow , Jennifer Murtazashvili

Hosted by David Beckworth of the Mercatus Center, Macro Musings is a new podcast which pulls back the curtain on the important macroeconomic issues of the past, present, and future.

Jennifer Murtazashvili is an associate professor of political science at the University of Pittsburgh and directs the Center for Governance and Markets. Jennifer is also an expert on all things Afghanistan, given her experience working there and advising governments and international organizations on issues related to Afghanistan. She also has a new book titled, *Land, the State, and War: Property Institutions and Political Order in Afghanistan*, and joins the show to talk about it. Jennifer and David also discuss the recent developments as well as long-term developments in the country and lessons for state capacity building.

Read the full episode transcript:

Note: While transcripts are lightly edited, they are not rigorously proofed for accuracy. If you notice an error, please reach out to macromusings@mercatus.gmu.edu.

David Beckworth: Jen, welcome to the show.

Jennifer Murtazashvili: Pleasure to be here. Thank you for having me.

Beckworth: Oh, I'm glad to get you on. For obvious reasons, I've reached out to you. You are an expert and not only you are an expert, but you are someone who's really popular right now, in high demand. You're actually a part of the transition of getting people out of the country, into the US. That's an interesting story in itself. I know it's been an emotional one for you. We want to get to that in a bit, but maybe tell the listeners a little bit about yourself. How did you get into this area? Tell us about your work in Afghanistan and how it led you up to this moment.

Murtazashvili: It's a long story and I'll spare your listeners the life biography. But, I spent five years living in Uzbekistan, right after college. I did two years in the Peace Corps and then I did three years working at the US Agency for International Development, USAID. I managed the democracy portfolio and one of the world's most authoritarian states. After that five years, I got really tired of the aid industry. I was very frustrated and I went back to grad school, thought I'd do a PhD in political science. I did a PhD in political science. Got very frustrated with political science along the way, I ended up doing a Master's degree in agricultural economics because I get very interested in local, micro-level institutions, micro-level understandings of the world and micro understandings of development, which we weren't really learning quite a lot about in political science.

Murtazashvili: I thought I was going to write a dissertation on Uzbekistan. Right through graduate school, there was a revolt against the Uzbek government. They blamed USAID among others, means I couldn't get back into Uzbekistan for about 15 years. But when I was in the Peace Corps, I learned a really funny dialect of Farsi in a Tajik speaking part of Uzbekistan. For that reason, I've spent pretty much the past 15 years focused, almost exclusively on Afghanistan. When I was working, for USAID in Uzbekistan, I was there on 9/11. So when all of that happened, before the war began, I was part of the mission to get humanitarian assistance into Afghanistan before the war began and really watched the beginning of the transition. I had actually started traveling to Afghanistan on my own to see if it was possible to do research, if it was possible to compare some of these countries.

Murtazashvili: I was really interested in local governance dynamics, at the micro level, and wanted to do broad comparisons. But I ended up for my dissertation did about three, two and a half years of field research in Afghanistan. Much of it was rural areas. It was just fascinating research looking at how villages govern themselves, when the state can't or won't. We hear Afghanistan has these traditional leaders and these chiefs and all these old ways of doing things. That's why it's been so hard to build the state. So I spent a lot of time sniffing around trying to understand how this traditional system works and what makes it tick and trying to sort of open up the black box of it, to understand the rules that govern it.

Murtazashvili: That's how I got started in Afghanistan so that my first book was called *Informal Order and the State in Afghanistan* was published by Cambridge University Press in 2016. A second book in Afghanistan's coming out…well, this is the end of this month, but, shortly called *Land, the State, and War.* That's a knockoff for your readers may not understand the reference, but there's a very famous international relations book called *Man, the State, and War* by Kenneth Waltz. So our take is land, the state and war because understanding property rights is so critical to understanding development.

Beckworth: Yeah. We'll get to your book in a bit when we talk about some of the longer run lessons and implications for economic development, state capacity building. But that's fascinating. You've been involved with Afghanistan the entire 20 years and then some that the US has been in there, militarily?

Murtazashvili: Absolutely, seen it from start to finish.

Beckworth: Yeah. So this is like, I want to say your baby, but definitely a project you have watched closely, you have a lot of your own sweat equity into this. You really have put a labor of love towards making Afghanistan a better place.

Murtazashvili: Well, trying to understand it. Right? I gave up a lot of my aid work and any of the work I did for governments or aid, it was really on the research side. So if someone had a survey, I did spend some time during the search, giving lectures to military officers because they were in the middle of doing this counterinsurgency effort that was focused on villages. I thought, better that I share research with them if that could save people's lives and prevent them from doing silly things, and hurting people. Because, I think that there were a lot of misunderstandings about what goes on in villages.

Beckworth: Let's talk about what's happened in Afghanistan most recently, and then we'll move to the longer-term implications I talked about a minute ago. There's been a lot of fast moving developments as all our listeners probably know. Kabul fell really fast. The evacuation has been chaotic. It's just been an amazing experience to watch, a sobering one, very sad, harrowing images of families throwing babies over barbed wires, people falling off of airplanes. Just the desire to get out of there is just so intense. It just seemed really sudden and surprising, I guess. I've listened to a lot of commentary, read a lot of commentary on this, and I know we were making progress. I know despite all the chaos I was reading today, we've got close to 60,000 people out of Afghanistan. Is that about right?

Murtazashvili: Yeah. I mean, around 50,000, I think.

Beckworth: 50,000, okay. Around 50,000. So we're making progress, but they're still a lot of people left in the country in many remote places, both Americans and Afghanistan citizens that we care about. So it's going to be a huge undertaking to get them all out. We also know that President Biden wants to get the troops out. His initial deadline was August 31st. I was reading today, in fact, today is August 24th that we're having this show recorded. But I saw an article that the US military has told President Biden he has to make a decision today if he wants to get the military out by the 31st, because it takes time to move all those soldiers out. Otherwise, we're going to have to postpone that deadline. Any thoughts on that, you think he's going to be forced to wait beyond the 31st?

Discussing the Recent Developments in Afghanistan

Murtazashvili: I don't think it's his choice. I think it's the Taliban's choice at this point. I think the Taliban from the latest, you're probably reading more recent news than I am, but It's been hard to keep up minute-by-minute, but my understanding, last I read was the Taliban wasn't willing to extend that deadline. Recall that we had a negotiated settlement with the Taliban, a "peace agreement" with the Taliban that said we'd get all of our troops out by May 1st when president Biden came to power, he extended that, said we'd get out by September 11th. The Taliban have said, now that since they became the government, they said, they thought the US was out, right? When they took over, the US came back in to do this evacuation, they've given the US a couple of weeks to do it. I think my understanding is the Taliban are not going to extend that deadline. That's going to be really hard because, the US now has 7,000 people in Afghanistan. It's going to take time to evacuate those people at the expense of the Afghans who were desperately trying to get out.

Beckworth: Yes. You think the Taliban, if the US president extends beyond the 31st, what would they do? I mean, if we break this agreement with them, will they start bringing violence back into the equation?

Murtazashvili: I mean, this is a really good question. I think if I knew the answer-

Beckworth: Okay. Fair enough.

Murtazashvili: No, but I think the United States has real leverage at this point over the Taliban. What they're looking, and this is... The economists in the audience will appreciate this, is the US government has frozen the central bank assets. So the Taliban very much... The country is actually broke right now. There's about a huge humanitarian crisis, it's about to unfold before our very eyes, because no government salaries can get paid, people are running out of money. The currency has lost half its value in the past two weeks. So we're about to see a major economic and humanitarian crisis unfold. The US has keys to that central bank, and if it opens them and the Taliban can start spending money, and it's clear that that's what the Taliban wants. So I think that there's some negotiations over this right now.

The country is actually broke right now. There's about a huge humanitarian crisis, it's about to unfold before our very eyes, because no government salaries can get paid, people are running out of money. The currency has lost half its value in the past two weeks. So we're about to see a major economic and humanitarian crisis unfold.

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Beckworth: Oh good.

Murtazashvili: Yeah.

Beckworth: Yeah. I was going to ask that later, but, the ace card that we hold is the money, right? The IMF funds, the central bank reserves?

Murtazashvili: Yes.

Beckworth: Okay.

Murtazashvili: That's it right now. Yeah. So I'm sure that's what they're bargaining over.

Beckworth: Okay. All right. We'll come back to that in a bit. We'll talk about the finances, the markets, the trading over there as well, but sticking with the recent developments, when I say recent, let's go back a year or so. You mentioned this deal with the Taliban that President Trump first signed and now President Biden fulfilled it, I've listened to some people in trying to understand what's going on, say that that deal was very demoralizing to the security forces, to people in government, to everyone who had given so much, I mean, thousands, 60,000 people or so have died from Afghanistan. Then to make this deal with the Taliban, which effectively, the government was cut out, it just really gave a lot of leverage to the Taliban. It was really demoralizing and it played a key role in the row that we saw, that the security forces didn't put up much of a fight. Do you think that's a fair interpretation, that this deal really was a gut blow to the Afghan state?

Murtazashvili: It was, but not for the reasons that you've laid out. So my take on this is probably a bit different from many of the things that you're hearing on the news. You're hearing on the news a lot of the people who've been very much involved in this for the past 20 years, and I'm just a little academic. I've been involved here and there, but, I've not influenced policy, at all. So basically the agreement between the Taliban and the Trump administration was for all intents and purposes, a withdrawal agreement, right? President Trump at some point, although in the beginning, he was actually surging troops. He surged a few troops that were going to stay the course, remember the mother of all bombs?

Beckworth: Oh, yes.

Murtazashvili: Right? That was under Trump. Then at certain point, reelection is looming and he's got to make a signature move. So he says, "I'm going to withdraw the troops from Syria." Which he never did actually. This is why it's really important because I tell my students as a political scientist, don't pay attention to the politician speeches, just watch what they do. Trump also said, "Getting out of Syria and we're getting out of Afghanistan." That was as he faced reelection and so he began this negotiation with the Taliban. Although to be fair, this was not something that he started completely. A lot of this happened under Obama, recall, for your listeners who may remember 2009, President Obama made a big speech at West Point, he announced a military surge in Afghanistan. The same moment he announced a surge, he says, In 18 months, we're bringing everyone home or we're going to be withdrawing."

Murtazashvili: So the withdrawal has gone on since 2009 for all intents and purposes. That's when you saw the money go to Dubai, right? That's when every... You knew that US was leaving and US wasn't going to be here. Trump negotiated this agreement with the Taliban. It was basically a withdrawal agreement. Yes, it did cut out the government of Afghanistan, but everyone should understand that the government in Kabul was not a reliable partner and was doing everything it could, it had every incentive that it had to keep the US there, not to make a deal because it was profiting quite handsomely as we now know. I've been screaming about it for years, but there was really a government in Afghanistan that was not pursuing US best interests.

Murtazashvili: So what we've seen over the past six or seven years is a massive increase in violence across the country, the central government, prior to this year only controlled uncontested, 30% of its own territory. In parts of the north, we've seen 30% of the population displaced or migrated since 2013. There's been a big humanitarian catastrophe, people have been dying during this war. You mentioned 60,000, I think that was just 2014. I could be wrong, but, lots of people die in this conflict, especially in rural areas. So, the peace agreement that Trump made… it looks like that the US is just not able to achieve its objectives.  I think the peace agreement gave way too much to the Taliban, but at this point I was not opposed to a withdrawal. We could talk about that. But it was very complicated… Yes, the US did keep... There were intra-Afghan talks that began in September and the government of Afghanistan really stalled on those negotiations. It had a lot of opportunities to come up with a power sharing agreement, it refused to do so and then you saw the consequence of that.

Beckworth: Okay. One other question related to recent developments, and that is the effort to get people out of there. You can maybe speak to what you're doing as well as you answer to this question. But another question is why wasn't more done before the city fell. Now, President Biden said, "Well, they didn't want to. We wanted them. They said that they didn't want to create a panic." But why wasn't there mass evacuations occurring, as soon as this deal was signed and the withdrawal was clearly written on the wall, that this was coming?

Murtazashvili: Well. I think when the agreement was signed last year, there was hope, that there'll be intra-Afghan talks. There would be some kind of peace agreement, right? And that people could stay. But in April, I think the big turning point was April when president Biden said, "We're gone.” I mean, Trump announced it, but there was some hope by the Ghani government, the Afghan government… They were really dragging and they were trying to convince the US to stay and protect the gains and all the women's rights will be lost. There was a big all-out effort made by some in Washington, some in Kabul to keep... But I mean, to me as an observer of this, I'm like, "Have you listened to President Biden speeches over the years? Have you heard about him talk?” He doesn't like Afghanistan. He was never for this broad effort. So there was delusion in the Kabul government about what was going to happen. So that government put pressure on the US, at least this is what president Biden said, not to evacuate people, right? Because, he said it would be too destabilizing. He said that in the speech last week, that was his reason. That's a little bit of CYA.

Murtazashvili: I think what we actually saw was many people calling for a program. The US government's asylum process is extremely bureaucratic. So we've had translators trying to get visas for years and years and years. It wasn't until August 2nd, that they announced a program that would give asylum to those who worked on USAID in different development programs. That's when you saw the flood gates open and all, 100,000 people who worked on civilian assistance, they were now eligible. That's where our center has tried to help people. I can talk a little bit about how we're-

The US government's asylum process is extremely bureaucratic. So we've had translators trying to get visas for years and years and years. It wasn't until August 2nd, that they announced a program that would give asylum to those who worked on USAID in different development programs. That's when you saw the flood gates open and all, 100,000 people who worked on civilian assistance, they were now eligible. That's where our center has tried to help people.

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Beckworth: Yeah. Tell us about what you're doing and you mentioned earlier how your email inbox basically is all from Afghanistan, all your emails, most of them are coming from people trying to get out of the country. So tell us what you're doing.

Detailing Afghanistan Evacuation Efforts

Murtazashvili: On August 2nd, President Biden announced this program called the P2 Visa Program. This is priority two. These are not the military translators that we've all heard about, but these are civilian assistants, people who are now eligible to apply for asylum. This program should have been announced months and months ago. This should have been announced in April, but they announced it August 2nd. So I started getting emails and messages from friends in Kabul, from all over Afghanistan saying, "Look, I want to apply. Can you help me?" And one of the things that folks who are applying for this visa need is a letter of authorization from their former employer, verification, a letter of verification saying that they worked at this American contracting company or this American aid company, and they have to submit that. I was getting dozens of requests and asked some students to help at my center at the University of Pittsburgh. "Can you help all of these people connect to their former employers?"

Murtazashvili: It was really fun for the students to feel helpful. I teach in the School of Public and International Affairs. Students were feeling really engaged. They were dealing with aid agencies and state department, and then I put out a call on the internet on Twitter to, you know, to see if we got a couple of hundred requests. It was good. We got about 10 volunteers, we're chugging along. Then last weekend, the government of Kabul fell and my email box, I think will never be the same. So everybody then, the urgency to leave was more pressing than ever, and everyone's looking to connect with their former employers. So now we have a team of more than 50 volunteers going, working through all of these requests to help Afghans connect with their former employers so they could get letters of verification, so they could apply for this visa so they could get on these planes to get out.

The urgency to leave was more pressing than ever, and everyone's looking to connect with their former employers. So now we have a team of more than 50 volunteers going, working through all of these requests to help Afghans connect with their former employers so they could get letters of verification, so they could apply for this visa so they could get on these planes to get out.

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Beckworth: That's a tough task, right? It's not easy to find former employers very easily. Is that fair?

Murtazashvili: It's very hard. You would think it would be quite easy. But the US has been in Afghanistan for 20 years now. "I worked as a driver," is a request. "I worked as a driver. My uncle worked as a driver." Right?  "For two years, for this aid company that's no longer in business. Can you help us find these people?" "Well, we're trying." Or, there was the big consulting firms that emerged. A lot of them were working, prior to financial crisis. You ever heard of Bearing Point, right? A lot of people worked for Bearing Point. Bearing Point doesn't exist anymore. How do these people deal with this? It was hard for me. It's been hard for me to find some of these people and I have a PhD.

Murtazashvili: Imagine you're in Afghanistan and it's the midst of conflict. You're running out of money because there's no more money in the banks and whatever cash you have is running out and you can't afford internet, and your internet top-up card is over and you don't want to leave your house. That's the frantic situation that we're dealing with right now. It's quite heartbreaking and it's really quite shameful that the US has created such a cumbersome, bureaucratic process for this visa. I mean, it is insane to me. It's actually quite cruel to me, and actually some background that your listeners may appreciate. We all have seen those horrific scenes at the airport in Kabul.  The reason those people were there, many of them, the people who were there were the ones who are working for the United States. Because, the rules say that you can't apply for this visa while you're in Afghanistan. You have to go to a third country to apply.

Murtazashvili: Now this is, we don't even know what the rules are right now because they're evacuating people directly and who knows what's going on. At this point, I'm just telling people to go to the airport because it seems like the rules, if they're evacuating 20,000 people a day, people inside are now telling me there's a network of us who are working on this and the best advice, it's hard to give people advice because there's so much insecurity. You don't want to give people bad advice, but, the window is closing in six days, probably even before that, because the US is going to stop evacuating people probably two or three days before. So it's a really desperate situation and a really messed up system, really messed up. You got to try to make a system so bad.

Beckworth: Yeah. I was reading an op-ed by Benjamin Powell and Alex Nowrasteh. The title is *Bring the Afghans to America.* It's in The Hill, we'll put a link to it. But they're going through this bureaucratic maze that these folks have to work through. They gave some numbers here, it’s a 14-step process, that on average takes 996 days. I mean, we don't have that kind of time, right? It's mind blowing and they mentioned there's been a letter from 46 senators to create a humanitarian parole category for women leaders, activists, human rights defenders, judges, parliamentarians, journalists, members of the Female Tactical Platoon of the Afghan Special Forces.

It's quite heartbreaking and it's really quite shameful that the US has created such a cumbersome, bureaucratic process for this visa. I mean, it is insane to me. It's actually quite cruel to me.

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Murtazashvili: These are a lot of the people who are writing to us and we look at the rules and we're like, "Sorry, you don't qualify." So there's nothing we can do and it's heartbreaking for us to turn these people away. I'm in touch with the people at Amnesty International, with the State Department. I have colleagues, dear colleagues, friends who I've known for 15, 16 years at the United Nations, who are from ethnic minorities. They can't get out because the UN isn't a country. But they're at enormous risk and the UN doesn't seem to be doing a lot for its employees, to help them get out. It's just a lot of anguish.

Beckworth: So looking ahead to that August 31st deadline, and this show may be out by that time. But if we don't get folks out by August 31, all the folks that we need to get out, and I think that's a high probability that would the case. What do you think is going to happen to them? I mean, will there be other opportunities for them to leave the country or will they be stuck?

Murtazashvili: I don't know. I mean, I think this is the million-dollar-question right now, and it's not one that I can really answer very well. I think none of us really know what the Taliban are going to do. Are they going to keep their borders open? They've opened the border with Pakistan, which is a positive sign. Will people be able to travel there and apply? Will they keep people in? Are they going to be as authoritarian as they were in the past? We don't know. This is where this tit-for-tat with the United States, the US doesn't have a heck of a lot of leverage over the Taliban. They've got financial leverage, but it would be interesting to see. I'm hopeful that people can get out, but people feel once that once the US has gone, there'll be retribution. The Taliban says that they won't punish people, but, their credibility on that is not very strong. So of course people don't believe them.

Beckworth: Yeah. Part of the question I have when I've heard these more progressive takes by the Taliban, "We're going to be more tolerant. We're going to be more collaborative. We're going to try to make the country run again." It goes back to the point you made earlier that in the past, it's been very hard for a central government to run all of Afghanistan. So even if the Taliban leaders in Kabul say this, how do we know throughout the rest of the country, they're going to follow the more moderate approach? I mean, is that a concern to think about that you may have different views within the Taliban and how to implement the new government?

I'm hopeful that people can get out, but people feel once that once the US has gone, there'll be retribution. The Taliban says that they won't punish people, but, their credibility on that is not very strong.

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The Taliban and the New Afghan Government

Murtazashvili: Absolutely. One of the things that we're really seeing, especially that I have observed over these past several days is the real sophistication with the Taliban, especially in the PR side. They are on social media, showing how well they understand grievances. They understand what has upset the Afghan people over the past 20 years. So some of this stuff may look really silly to us. I don't know if you've seen the Taliban sitting in these palaces. I don't know if you've seen some of the videos that have circulated. They're sitting in... They take over a palace, a warlords palace and they're sitting around at this fancy, I don't know the name of the architectural style, but it's the gilded chairs.

Beckworth: Right. Very gaudy, yeah.

Murtazashvili: So you see them and then there's these videos of the Taliban. There's this one where they're on treadmills and elliptical machines. Have you've seen that one?

Beckworth: Yeah.

Murtazashvili: So to us, that looks completely ridiculous, right? How silly? But I think to many Afghans, they look at this elliptical machine. They have no idea what that is and they see this, the wealth of these palaces and they look, "Look how ridiculous our leaders were, look what they were doing." The messaging that they have really shows a deep understanding of the inequities that have faced society, how people are plundered, the public purse, how public officials could pay to access electricity. There was one tweet… They went to the equivalent of the electricity utility, in Kabul. They took a picture and they said, "We are at the..." It's a state-owned enterprise, actually. "We are here at the electric company and we are here to tell you that everyone will be able to access electricity, not just those who could pay for a special line."

Murtazashvili: A lot of people I know, wealthy Afghans, you want electricity, you pay for that special line, you get connected. If you're not, you can't access until your electricity is highly variable. They're there saying, "We understand why so many of you were upset with your government, that electricity should be provided as a public good." To the extent they understood, even something like that, right? We think of these rural Afghans, the Taliban that are unsophisticated. But no, even in the cities, they understand that particular grievance. So they're really targeting the grievance, showing that they understand and they're going to be different, but they have to show that they're going to be different, not just show on social media, they have to deliver that difference. I think this is where this bargaining with the United States over the money, how they deliver is really crucial right now, to their credibility.

They're really targeting the grievance, showing that they understand and they're going to be different, but they have to show that they're going to be different, not just show on social media, they have to deliver that difference. I think this is where this bargaining with the United States over the money, how they deliver is really crucial right now, to their credibility.

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Beckworth: One more question about the Taliban and we'll move on. Going back to the question I had about the uniformity of how they implement rules and govern the country. I think in the west, we think we need a strong central government to make things happen, to bring order. I say that very guarded as a right-of-center person, I don't want to put too much weight on that, but we tend to look at you need a central government, a central bank, all these institutions. With the Taliban, again, my concern is that they're spread out. Maybe they have different views in different regions. But is there almost a religious adherence to the leader, or maybe deference to the leader? This is more than just a fight. It's a cause, it's a belief system. Therefore, if the ruler in Kabul, who's the Taliban leader says something we're going to follow it out here in the provinces. Is that there?

Murtazashvili: We don't know. We really don't know. So I think there's a lot of fragmentation, in the Taliban, at least we thought there was a lot of fragmentation, I should say, I'm not a scholar of the Taliban. I study more of the political economy stuff. But, we can see that the Taliban, this incredible military campaign that they put on over the past six months, shows a much more unified government than we thought. But I should say, this issue of state and local governance and how you put a state together, that's what I've worked on for the past 15 years. This top-down state building effort really undermined Afghanistan and the way that the US did it, the amount of money that the US spent, this form of government that the United States supported was this very, very hyper centralized government. In fact, I'm working on a book right now with a colleague from Afghanistan, and we basically show that what the US did after 2001 is resurrect the old communist government.

Murtazashvili: And I mean, the bureaucracy. Yeah, they slapped democratic institutions on top of the old monarchy’s constitution. They elected a president, they elected a parliament, but at the sub-national level, all public finance was controlled by Kabul. They used a budgeting, a public finance system required all local revenue to be sent back to the capital. Kabul would reallocate those resources. Each line ministry would do a plan. I mean, the Soviet institutions, actually, we think about the Soviet invasion in 1979 as being this pivotal year, but in the research that we're doing for this book, we see that the first five-year plan in Afghanistan began in 1956. So the Soviets really had a heavy impact on institution building, especially the economics, in the public sector. So when the US came in, it looks like democracy, but your listeners know all about regulations, right? And how regulations work. So you'll appreciate when I say all the administrative regulations of the state came from the Soviets, many of them.

Beckworth: Very fascinating.

Murtazashvili: That's what the US rebuilt. I was screaming about this. I said, "This isn't going to work, because this is central planning." It's not even central planning, because the Afghan communists werern’t just central planners. They were hyper central planners. They wanted to outdo the Soviets. That's what we built and so I saw Deloitte come in to Afghanistan to do public finance reform and they're training Afghan civil servants on Soviet public finance from the 1980s.

Beckworth: Really?

Murtazashvili: Yes. I'm not joking. I wish I was wrong.

Beckworth: This is mind blowing. Wow.

Murtazashvili: Yes. Because we were leaving for 20 years and I don't even know if Deloitte understood the full extent of what they were doing. They just said, "Okay, this is the Afghan government law. We're here to help the Afghan government build. This is the law. We're going to train people how to do it and make it more efficient, from the technical perspective." But this is a political question. So over the 20 years, each successive government wanted more control, more control. So all public finance issues came out of Kabul. So there was this huge disconnect between politics and practice, which was highly decentralized, highly informal. Then the politics of the state, which was highly bureaucratic and highly centralized. So rather than meet people where they were, the state building effort, tried to force people into the instruments of the state and they didn't want that.

Murtazashvili: I think what I want your listeners to walk away with isn't that the Afghan people don't want a state, that they didn't want state building, they didn't want government, is they wanted it government on their own terms. They want it to be included, they wanted a say, they wanted a voice. They didn't want to be told how to organize their villages, how to organize their lives, how to organize their communities. They didn't want to be told from Kabul where a school should be located in their village. This highly centralized system meant that the Ministry of Education in Kabul had made all decisions about what happened locally. There were no elections for local officials who had any say over anything locally. People understood after 20 years that this wasn't working. They were promised things would change. They immediately recognized that the old institutions are the international community built. They recognized it.

So there was this huge disconnect between politics and practice, which was highly decentralized, highly informal. Then the politics of the state, which was highly bureaucratic and highly centralized. So rather than meet people where they were, the state building effort, tried to force people into the instruments of the state and they didn't want that.

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Murtazashvili: I did so many interviews over the years. People would say, "You see that district government office, well, you guys promised democracy, but our district governor, he's appointed and he's appointed the same way he was 20 years ago and 30 years ago and 40 years ago, and Kabul decides who rules us." That never changed at a fundamental level. So to the US, it looked like, "Okay, we're doing democracy. We have elections and everyone has blue ink on their fingers. So we can celebrate and get excited about that." But what people experienced at the local level was not that. That's how all of this fell apart.

Beckworth: That is super fascinating. It resonates with what's going on, even in the US, to some extent, there's this discussion of centralization versus increased federalism. There's a debate, how can we move forward in a very polarized country here in the US? I'm more in the “let’s move to increased use of federalism”, but the other side, "Let's move to centralization." That same tension is on display here from what you've just said in a very vivid, graphic manner.

Murtazashvili: You'll appreciate this. I actually discovered Hayek, when I was in Afghanistan.

Beckworth: Really?

Murtazashvili: Right? Oh, yeah. Because I mean, this is a spontaneous order, and this is actually much better than the centrally planned alternative. So I became... I wrote a paper called *Informal Federalism.* We could put it in the show notes, on how federalism actually works in practice and why it's much more desirable and effective than the government-supported alternative. But, I mentioned that I used to do these lectures for the military. I remember it must've been like 2010 or 2011. I was at a big military base in North Carolina, Fort Bragg and I was giving a talk to senior military officers. I said, "Afghanistan has a lot of parallels to the United States." I said, "If you think about relations with the central government, that people in the United States focus a lot of this negative rights, what the government shall not do to me.” Right? So freedom of assembly, freedom of association, and that people want to be able to... It's not that they're against a federal government, but they want to be able to go to the federal government on their own terms to say, "This is what we need. This is what we want. This is what we can't fulfill on our own." This is why in a big country, like the United States, federalism is so important. Right? To account for local variation and preferences.

Murtazashvili: Well, I said, "Afghanistan is actually quite similar to the United States in that regard and there're not a lot of countries that I think are like this, where it's like the preservation of the community over national integration, especially when you're talking about rural differences is very, very meaningful to people culturally." This military officer, who's a two-star, he stood up and he's like, "Ma'am, you have just undermined everything I've been trying to tell these young men for the past two months, since they found out they were deploying." I said, "Why would you say that?" He says, "Look, I've told them that Afghanistan is not like the United States at all. So don't go there thinking you're building United States." I said, "Well, yes, I totally get your point. That is a very good point. Many of the people in the aid community need to hear that as well, right?" That they're not going there to build Denmark, but people can understand basic human dignity.

Beckworth: Yes.

Murtazashvili: Right? A big commonality I've found was that people just wanted to be respected. They want to be respected by the state. They want to be treated with dignity and they didn't want to be treated like they were stupid and they felt that way and their interactions with the state. I would argue that much of the international community made them feel that way.

A big commonality I've found was that people just wanted to be respected. They want to be respected by the state. They want to be treated with dignity and they didn't want to be treated like they were stupid and they felt that way and their interactions with the state. I would argue that much of the international community made them feel that way.

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Beckworth: That's great, and man, wow. What an eye-opening discussion this has been so far. Let's move to finances in Afghanistan and the economy more generally. As you mentioned, the US government has restricted access to the central bank reserves. If I got my numbers right, $9.4 billion that's being held here in the US and then the IMF also blocked 460,000,000 in funds that was supposed to be dispersed. They are a country that's highly dollarized, I learned, highly dollarized, even though they have their own currency and they run current account deficits. So they really need those dollars. It's going to be, already is chaotic and they really need those dollars there. So maybe tell us a little bit about what the economy's like, your day-to-day life transactions. For example, if they use dollars, they use the Afghani currency. What about digital wallets, cryptocurrency? Does that have any footprint there?

Detailing the Afghan Economy

Murtazashvili: I was last in Kabul last year, right when COVID hit. I didn't see a lot of the digital side in terms of the digital currency, but I just read a fascinating piece, I think it was CNBC reporter. We'll put a link to it on crypto in Afghanistan. It's that there actually is a small crypto community there. But you would think digital wallets would have more of an impact. I think they do in Kabul. Digital wallets, for sure. But, the currency was actually surprisingly stable for a very long time, but that had a lot to do with US support of the currency. There was some destabilization about 10 years ago, there were a big scandal with the central bank, Kabul bank was a private bank. There was a lot of corruption that was run through, hundreds of millions disappeared to Dubai. This is like 2013. There was some destabilization then, but, it's been around, 50, 60 Afghanis per dollar and your listeners, I'm sorry, should know that an Afghan is a person from Afghanistan and an Afghani is the currency. So if you call someone an Afghani, it's a deep insult to an Afghan.

Beckworth: This is good to know.

Murtazashvili: Yes, yes. So the currency is an Afghani. So yeah, I mean, the currency was pretty stable. People did use dollars, but actually in day-to-day transactions, they could use the Afghan currency because it was so stable over time and it was backed basically by the United States. It's unlike a lot of countries where I've worked and traveled where that is not the case.

Beckworth: All right. So they use their own currency. It was backed by the dollar, right now it effectively isn't backed because they've lost all those reserves and this could lead to what we've seen. It runs on banks, potentially high inflation taking off, if the government resorts to printing more Afghanis. I don't know if... In fact let's talk about that. Does the central bank even have the capacity to print more Afghani notes? If the Taliban said, "Hey, make it so."

Murtazashvili: Oh, it could. I mean, absolutely it could. I think the Afghan currency was produced in Afghanistan, but Afghanistan is actually quite famous for this, during the civil war in the '90s, you had different factions printing their own currencies.

Beckworth: Oh, okay.

Murtazashvili: Yeah, so they can easily print their own currency. It'll be interesting to see if they keep the Afghani as a currency or if they do something else. But yeah, sure, they could print more. But there's real risk. I know that the currency has lost half its value in the past two weeks or so.

Beckworth: How will the Taliban finance itself now that it's ruling the country? What are the sources of revenue for the Taliban government?

Murtazashvili: It's not looking good, right? Because 75% of the government's budget came from aid, aid represented 43% of the country's economy in 2020. That's according to The World Bank. That's a very heavily aid-dependent economy. Right? So how will it make up for that? Well, I think we're going to see impoverishment. I think we're going to see a lot of people having a very difficult time and think about the human capital flow that's just left the country. That's all of your IT engineers. That's I mean, the people who that the US has invested massively in, are the people on that plane, the people who are coming... America's getting a great gift of some of the Afghanistan's most talented and vibrant, and risk-taking people, to work for the United States in Afghanistan in the past 20 years wasn't easy, especially over the past five, when there are increasing attacks against US government offices, NGOs. So people who are coming here, they're the risk takers, they're the... A lot of entrepreneurs. One of the things I do want people to... I know it's hard because we think of this country as so aid-dependent. But I have a lot of hope for the people of Afghanistan because they're incredibly entrepreneurial.

Murtazashvili: I don't want to like jump into stereotypes here, but, the parts of the country that I was able to visit that were free from conflict over the past several years, past 20 years, they didn't need aid, because the private sector just took off. It's just a really vibrant private sector. The government held the private sector back, in fact. Huge state control, huge assets, state-owned enterprises, that Soviet legacy I talked about, still in full force. That made it really difficult for entrepreneurs to do work. So then everybody just moved to the informal sector because it was so hard to do things formally. But what will the economy look like? I think we're going to see a lot of, probably a return to agriculture. You probably have excess labor because people in cities can't do very much, so you’re going to see people return to fields. We'll probably see the illicit economy skyrocket. Drugs, opium, all that stuff.

What will the economy look like? I think we're going to see a lot of, probably a return to agriculture. You probably have excess labor because people in cities can't do very much, so you’re going to see people return to fields. We'll probably see the illicit economy skyrocket. Drugs, opium, all that stuff.

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Beckworth: There's some mining there too, right? In Afghanistan.

Murtazashvili: Yeah. People are making a lot about this. There's lithium, there's copper, there's some gold. It's got some of the largest, I think lithium reserves in the world, but a little bit of natural gas, gems, other kinds of resources-

Beckworth: But, you got have the people there to actually develop those industries, and you're telling me, most of them are leaving right now.

Murtazashvili: And they got to have security.

Beckworth: Yeah.

Murtazashvili: I mean, that's not going to be easy. We've been talking about this for 20 years, Afghanistan has all these minds, it could be this boon. Well, we've been waiting for that. I don't think that's going to happen anytime soon.

Beckworth: Yeah, Jen. I was looking at GDP per capita in preparing for the show, and you see a surge in the early 2000s, all the way up to 2012, 2013, and then it levels off and begins to go down a little bit. If you look at foreign aid, it seems they closely track each other. So going back to some of the points you've raised earlier, although there's still a vibrant private sector, as you mentioned.

Beckworth: Let's segue now into your book and these kind of bigger lessons for economic developments, state capacity building in Afghanistan and your book it's coming out this month and the title is *Land, the State, and War: Property Institutions and Political Order in Afghanistan.* We'll provide a link to it. But this book is based off of your many years of work and research and trying to understand Afghanistan. Walk us through this and tell us what you've learned.

Lessons from *Land, the State, and War*

Murtazashvili: After I wrote my first book on village governance on informal order, I realized that a lot of the disputes, I did ethnographic research in more than 30 villages for that book. I was interested in dispute resolution and local governance, how people solve problems. I had this 3000 pages of interview transcripts from this incredible work I was able to do with an incredible group of very talented, young Afghan scholars. I realized that a lot of the disputes that I was dealing with had to do with property rights and I am married to a scholar of property rights. And so every time I'd come across a property dispute, I would have a little story and say, "Oh, look, here's another one. Oh, here's another one." I was interested in the rules and how those conflicts were adjudicated less than the substance of the issue.

Murtazashvili: He's like, "You think you're writing a book on local governance, but you're writing a book on property rights." So we actually took some of that data from my first book, and then focused on all of the data and the interviews that were on property rights to understand property relations, informal property rights, how people adjudicate land disputes when you live in a very weak state like Afghanistan. We all understand the importance of property rights for development. So we understand the importance of securing legal title and how doing that leads to prosperity. But how do Afghans cope with this when their state is so corrupt? We look at this issue over the course of the past really 150 years of Afghan history to show when rulers are quite extractive to private property, this is actually one of the fundamental drivers of conflict in Afghanistan.

Murtazashvili: So, 1978 was really an important date in Afghan history. It's the date when this 43, 44 year civil war began. What was the trigger? There was a coup. The Afghan Communist Party, talked about them a lot. They took over, they eliminated the secular government, killed the president and they instituted land reform, was their first act. They wanted to eliminate all private property and collectivize agriculture. This is in a highly decentralized society. This triggered a revolt. These revolts led to the Soviet invasion because the Soviet saw the massive unrest that was caused just not even by the implementation of this law, just by it's annunciation.

Murtazashvili: Afghans were not happy about this and one of the things that we're studying, private property, how it works, and actually is a country with very rich, private property history. It has very small land plots and agricultural land, but people hold customary deeds. So we look a lot about how people resolve disputes over customary land issues, but we look at what are the ingredients of a healthy land to property rights system? You need effective administration. You need a [inaudible], you need people to enforce property disputes when they arise. So you need all of these ingredients.

Murtazashvili: So what we conclude is that property rights, actually formal property rights, should not be a priority in Afghanistan and many other weak states because you don't have these prerequisites that you need to have a healthy government system. In lieu of that, people should rely on the informal system. So I did, subsequently I ran a survey in Afghanistan. It was actually one of the largest public opinion surveys in Afghanistan at that time, about 8,000 households and 92% in rural areas have customary land deeds. Okay? Customary tiles.

Beckworth: That's a lot. Yeah.

Murtazashvili: That's a lot. And it means that these things are effective. So we also looked at other research that showed eight projects when people tried to give communities legal titles, people didn't want them, what does this tell us about the state? If people don't want a legal title for the state, it means they don't trust the state. They would rather rely on their community self-governing mechanisms to manage their land, they're deterrent to the state. This is like a fundamental misunderstanding that the international community had, was that you cannot come in and expect people to trust in the state, in a day. Often I would interview government officials at the local level, I would say, "Tell me about your land disputes. Tell me how you solve these issues." They say, "We go back to the villages and we say, okay, you two villages are having a dispute. If they're not getting along, we say, you, you solve the issue yourselves and then you come to us and tell us how you're going to solve it."

If people don't want a legal title for the state, it means they don't trust the state. They would rather rely on their community self-governing mechanisms to manage their land, they're deterrent to the state. This is like a fundamental misunderstanding that the international community had, was that you cannot come in and expect people to trust in the state, in a day.

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Murtazashvili: I would say, "Well, why would they listen to you?" The governor would say, "Well, if they don't listen to me, I told them I'm going to send the courts. And we all know the courts are just so corrupt." These were good governors. I didn't find too many of them, but these were good governors who people did not consider to be corrupt. You had a lot of other governors who would just take the land, who would assert themselves to this. Also, the communist legacy in Afghanistan means that the land... You find this in China, you find this in a lot of other countries, the land is actually not owned by the people. They actually lease it from the state. There is actually no private ownership of land, except the customary deeds. They don't even think about that. It's their land. So that means the biggest land grabber is the state. So a lot of the conflicts that we've seen locally over the past 20 years are from land grabbing and they're often people who are affiliated with warlords or militias, or even the Taliban. That means you can't grab land unless the state gives you the right to do it.

Murtazashvili: So the state has been a huge weapon, in fighting people. The state has abused people over these past 20 years, and that has driven a lot of conflict at the local level. So basically we use like tools of new institutional economics to look at the rules that govern land adjudication and we show that private property rights are protected by communities, much more effectively when they're protected by the state.

Beckworth: This is fascinating. It goes back to your earlier point that given the level of corruption, given the lack of state capacity by the central government in Afghanistan, over the past 20 years, there was probably too much centralization, that you didn't have enough of the informal sector allowing itself to determine these property rights, determine self-governance. So, your story lends support to that point. This also reminds me of Hernando de Soto's work. I'm sure you're familiar with him. Maybe even cite him in your book. But I remember he was really popular back in the early 2000s. He had that book, *The Mystery of Capital* and his big push was just to get everyone a piece of paper with a property right. But what you're saying is that doesn't work, right? That's not a sufficient condition for prosperity and markets to thrive.

The state has abused people over these past 20 years, and that has driven a lot of conflict at the local level. So basically we use like tools of new institutional economics to look at the rules that govern land adjudication and we show that private property rights are protected by communities, much more effectively when they're protected by the state.

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Murtazashvili: Our book is a huge critique of De Soto, right? So we agree with De Soto. Hey, we're with you De Soto. We believe in property rights, we believe in the power of collateral, right? That story that if people own their land, they unlock the mystery of capital. I think we get that, we're on board, but giving people legal titles does nothing. In order for a land system to work, I mentioned the elements that you need, you need administration, you needed enforcement, and you need the cadastre. So, just giving people legal titles does nothing unless the state has legitimacy and the state has capacity to do all of these things. The recommendations that he has, don't make a lot of sets for some of the poorest countries in the world. That's why we have to look at, we call them CBLAR, Community Based Land Adjudication Regimes. We talk about it in our book, we have an article, [about] land use policy, if anybody's interested, to talk about the different, and we talk about some eight programs that use community-based mechanisms that were much more successful than the ones that try to give people legal titles, a la De Soto. De Soto's argument's are compelling. I mean, we got into this because we thought De Soto… we believe in private property, but the unlocking the key to private property, isn't just handing people a piece of paper. Right? You got to believe what that piece of paper stands for and you've got to believe that who's ever holding that piece of paper has your interests in mind.

Beckworth: So for now then, the recommendation is, let's rely more on the informal sector to determine customary property rights. That's the best option at this point. But moving forward, I mean, what would you recommend to future leaders of Afghanistan to get us on the path where we do have state capacity, we do have good administration, good courts, good rule law, good institutions? Are there any steps that they could take, or is this an endless cycle of being locked out of that outcome?

Giving people legal titles does nothing. In order for a land system to work, I mentioned the elements that you need, you need administration, you needed enforcement, and you need the cadastre. So, just giving people legal titles does nothing unless the state has legitimacy and the state has capacity to do all of these things.

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Recommendations for Institutional Development

Murtazashvili: I think one of the keys is doing less. The state building effort was so ambitious, trying to do, build the scope of the state while building its strength. So you had aid programs. I mean, gosh, you know about the sustainable development goals, right?

Beckworth: Yeah.

Murtazashvili: I mean, you have this little poor little Afghanistan trying to manage, I don't know how many hundreds of SDGs for the UN, I mean, it was ridiculous. It was a lot put on a state that had very weak capacity, much of the money came in and funded fast corruption. So I think one of the lessons that we can take away for other states undergoing conflict is that what is the underlying source of that conflict? Often it's predatory states. The state itself is the source of conflict. And that's what we've seen throughout Afghan history.

Murtazashvili: We focus on a Taliban, we focus on extremism, but a lot of it is fueled by the state. The Taliban was the state, the communists were the state. Over the past 20 years, we've seen violence increase because the state was so predatory and allied itself with people who preyed on people. So disillusionment grew. So I think going forward, if we're really serious about this, it's really limiting the scope of any kind of external intervention, to really key areas. I would focus on education. I think in Afghanistan, we've seen there're huge, benefits of that. But also constraining state power. We think of state building rather than constraints on states. One of the challenges I see is the way that the international community, the US, the Department of Defense, Department of State, it's all about capacity building, rather than thinking about how you can tame states to respect people's rights. If people feel that and they sense that, they're much more likely to trust whatever institutions you put into place. So what does that mean? It means a focus on the rule of law. Right?

So I think one of the lessons that we can take away for other states undergoing conflict is that what is the underlying source of that conflict? Often it's predatory states. The state itself is the source of conflict. And that's what we've seen throughout Afghan history.

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Murtazashvili: Rather, I know there's a rush to build hospitals and a rush to do a lot of humanitarian stuff. Believe it or not, I think a lot of Afghans could figure this stuff out. Education, there's a huge private sector mark in education. I've not seen anything like it actually in the world. It's really been... It's so inspiring to watch people willing to pay for education. You wouldn't believe. I've never seen hunger like it, anywhere in the world. People had this opportunity, they jumped at it and it's just heartbreaking to see it all fall apart. But really focusing on the rules, the rule of law, making sure that people feel respected, making sure that who's ever charge of the judiciary can adjudicate fairly. This isn't easy at all. I don't think the international community can actually do this very well. I think this week goes back, takes us back to Hayek, right?

Murtazashvili: In the information problems. I think this has to come within. That's why I keep turning back to the customary system because it's one of these areas that communities were able to reinvigorate. I call it customary and not traditional because traditional is something that we think of as frozen in time, whereas a customary system evolves, changes, transforms. We have customary law here in the United States, actually that's the basis of our criminal law. We see how our own criminal law has evolved and changed over time. Right? The United States shares that with a lot of former British colonies, right? Our criminal law is based in custom. So we're not strangers to this. It can be done, but it has to be done with a lot less. That's how we really empower Afghanistan. I think that we've really failed to understand this.

Beckworth: Okay, well fed, our time is up. Our guest today has been Jennifer Murtazashvili. Jennifer, thank you so much for coming on the show.

Murtazashvili: A real pleasure. Thank you so much. Those are great questions.

Photo by Wakil Kohsar via Getty Images

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