Afghanistan's forgotten crisis: its economy As long ago as 1841, those who tried to govern Afghanistan complained about the country's paltry income. "But what can be done with a Kingdom whose net revenues are only fifteen Lakhs [1.5m] of Rupees per annum?" wrote a frustrated Sir William Macnaghten from Kabul to his East India Company bosses. IN Afghanistan Nearly two centuries later, those sentiments are echoed by the foreign advisers who have struggled to revive the Afghan economy since the overthrow of the Taliban government in 2001. Amid all the security concerns over the current withdrawal of Nato forces from Afghanistan after their failure to defeat the resurgent Taliban, the disastrous state of the landlocked Afghan economy has been all but forgotten. But once most Nato troops have gone in 2014, billions of dollars of annual aid for Afghanistan will be essential for decades if the country is to manage its own security, educate its children and modernise the economy, according to foreign donors and international financial institutions. The International Monetary Fund estimates Afghanistan's current account deficit at 45 per cent of gross domestic product, and has postponed the prospect of "fiscal sustainability" until after the distant year 2032. Last year's legal exports, including fruit and nuts, handmade carpets and semi-precious stones, were estimated at $376m by the US Central Intelligence Agency - about one 17th of the value of imports. According to the World Bank, annual aid flows of more than $15bn a year, roughly the same as Afghanistan's GDP, are a sign of extreme and growing dependence and "cannot be sustained." Aid comes on top of the treasure already spent by the west: the US, says the Centre for Strategic and International Studies, has incurred direct spending of $642bn on the Afghan war. Yet western governments are weary of paying for Afghanistan and enraged by unrestrained corruption, as well as by what they see as President Hamid Karzai's ingratitude towards his western allies. So there are risks not only of more terror and instability because of the departure of 100,000 Nato troops, but also of an economic crisis that could stoke yet more violence as growth slows. "I am getting the feeling that we will experience an economic shock in the country, whether it's 2014 or 2015," says Niamatullah Ibrahimi of Afghanistan Watch, a group promoting human rights, accountability and transparency. It's already showing signs in the property market, in supermarkets. People are losing jobs, the power to buy. The main problem with the legal Afghan economy, donors say, is that it has been largely sustained by a flood of aid money. Small businesses that used to export fruit or make plastic shoes for local consumption have collapsed as dollars have poured in, making the local currency uncompetitively strong and boosting wages. Afghanistan has thus suffered the kind of "resources curse" afflicting countries that experience a sudden rush of revenues from oil. "Here you can call it an aid curse," says the head of one foreign agency, who asked not to be named. A lot of exports have dried up because it's more interesting to go into servicing the donors. There's more rewards in that than in trying to export more nuts or pomegranates. It is not all gloom. Businesses serving domestic consumers have expanded rapidly. Entrepreneurs have launched scores of private schools, and the number of mobile telephones has increased from nothing in 2001 to around 18m today. "This country is very young, very aspirational and still not that depressed or frustrated," says Saad Mohseni, the ebullient Afghan television mogul who chairs the Moby Group. There's an enormous opportunity to keep the momentum going. Afghanistan's business climate remains so daunting, however, that investors typically keep their surplus wealth in the Gulf or in the West. Corruption is the biggest problem. Kabul Bank, which accounted for more than a third of Afghanistan's banking assets, turned out to be a billion-dollar fraud for the benefit of a few well-connected Afghans, including associates of Mr Karzai, according to an international investigation. As a share of national GDP, the scam exposed in 2010 was one of the world's biggest bank failures. "Aid inflows," says the World Bank in a report entitled Afghanistan in Transition, "have become a source of rents, patronage and political power." Oil and gas, and the mining of copper, iron and other minerals, are the sectors most likely to produce exports and economic growth. "If Detroit is cars, Afghanistan is minerals," says David Bolger of the Pentagon's Task Force for Business and Stability Operations, estimating Afghan mineral wealth at $1-3tn. A crucial mining law, however, has yet to be passed by the parliament, and neither military security nor the power and transport infrastructure are good enough for most projects to proceed. Afghanistan's biggest export industry by far is opium. But that mostly benefits the Taliban, and researchers say the rebels run the expanding opium trade better than the Afghan state manages its own businesses. Foreign donors are divided over whether Afghanistan should be weaned gradually off outside aid or subjected to a sharp cutback to force it to adjust. Either way, it will not be easy. The foreign donor chief in Kabul likened Afghanistan to a patient lying on a bed for the past 12 years while being nourished intravenously with glucose. "Now they are telling him to walk, and saying "You're not going to get your glucose.""