Assessing Afghanistan

 | Oct 18, 2011 | 4:00 PM EDT
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The U.S. has had a military presence in Afghanistan for more than 10 years now. The countries annual GDP is $15 billion, while the U.S. is spending $100 billion a year to be there with the goal of convincing the Afghans that the U.S. is their friend. 1,811 U.S. service personnel have been killed in the country. President Hamid Karzai was installed and has been kept in power by the U.S. -- while arguably holding the U.S. in contempt. The country's natural resources have been contracted out to Chinese firms to mine and export back to China. The U.S. has already lost.

The three questions I am most often asked about Afghanistan are:

  1. What went wrong?
  2. Why are we still there? and
  3. Are we ever going to leave?

This is a complex subject but it has profound consequences for the U.S. economy and financial markets, the U.S./Western model of globalization, and the relationship between the U.S., China, and Russia. (For more background and perspective, please check out a few of my previous columns: China: We've Been Here Before, Don't Be Afraid of the Dark, and my Columnist Conversation post, Addendum to Don't Be Afraid of the Dark.

The principal failure in Afghanistan has been to treat the operation as the adoption of counterinsurgency rather than a war. General David Petraeus codified the overall operational strategy in Afghanistan as a tactical counterinsurgency with the prime goals of removing the Taliban while simultaneously fostering an alliance with the indigenous people and their civilian government. It has failed to achieve these goals and now the Afghans and Chinese are somewhat patiently waiting for the U.S. to exit.

Petraeus' counterinsurgency plans are similar to those of the Vietnam-era McNamara's doctrine of "proportional response" and "the winning of hearts and minds" -- which also failed. The basic rationale behind the adoption of the counterinsurgency strategy was that Russia had waged an opposite kind of war in the area throughout the 1980s and failed.

The northeastern part of Afghanistan that borders Uzbekistan, Tajikistan, Pakistan and China is considered to represent the global center of the world's human population. The panhandle of Afghanistan extends from the northeastern part of the country with a small sliver of land separating Tajikistan from Pakistan and providing the country with a border to China. The sliver of land is called the WA khan Corridor, and it runs through the mountains of the Hindu Kush. It is the same overland trading route the Chinese used a thousand years ago to trade with Western Asia: the Silk Road.

However, the Silk Road had two primary routes. It started in the northeastern part of China and spread directly west to the desert of Taklamakan. One route then went north into northern Africa, the Mediterranean, the Caucasus, Russia and Europe. The other went south through the Hindu Kush and into the "Stans." Today, many of the world's principal oil fields are found there.

The Silk Road ceased being used almost a thousand years ago in preference for water/sea/ocean trade, which favored the Europeans. Since the British Empire failed in the early 20th century and gave rise to the current U.S. empire, the U.S. has attempted to preclude those overland trading routes from being opened again. The U.S. has fostered distrust between the Russians and Chinese throughout this time frame in order to prevent this area from coalescing economically again.

The reason is that Central Asia and the satellite states around it make up about 75% of the world's human population and natural resources. The fear is that if this area were to coalesce economically again, the existing western ideal of globalization would be terminated. So the U.S. stays in Afghanistan with the goal of being to impede the rate at which the Chinese move in economically.

Zbigniew Brzezinski, President Carter's National Security Advisor, warned about this eventuality and wrote about it in his 1998 book, The Grand Chessboard.

As it stands now, regardless of pronouncements to the contrary, it does not appear that the U.S. has any plans of leaving that area. Just as the U.S. has had military personnel stationed in South Korea below the 38th parallel since the 1953 armistice between North and South Korea, the U.S. appears set to stay in Afghanistan in perpetuity.

As the costs of occupation without the opportunity for a corresponding economic return increasingly become unsupportable by the U.S. economy, our country will eventually be faced with having to consider war with China or retreating.

As the conventional wisdom is that this is the fulcrum in determining the trajectory for U.S. primacy, hegemony, and globalization, it is not an issue for investors to take lightly.

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