With Security, Business Booms In Mazar-e Sharif

With Security, Business Booms In Mazar-e Sharif by Charles Recknagel MAZAR-E SHARIF -- As the heat of the day subsides at dark, hundreds of families gather in a large amusement park on the outskirts of Mazar-e Sharif.

There is a Ferris wheel, a spinning carrousel of swings filled with jubilant teenagers, and a child-sized train that chugs around the perimeter. A large video screen shows Afghan music videos in one corner.

The women lift the burqas that cover their faces on the street during the day and picnic with their families on the grass. And in the colorful, neon-lit night, everyone enjoys that rarest of commodities in Afghanistan: a sense of security.

Mazar-e Sharif, close by the Uzbek border, is one of Afghanistan's safest cities in a region where the Taliban is rapidly reviving. While most of Balkh Province around Mazar-e Sharif is peaceful, the neighboring province of Konduz to the east is riddled with conflict zones where people fear to go.

The city's good security is widely attributed to Mohammad Atta Noor, a former Northern Alliance (aka United Front for the Salvation of Afghanistan) commander who shaved his beard, shed his mujahedin fatigues, and today wears a business suit and ties.

Like elsewhere in Afghanistan where militia leaders came to power, he and his fellow commanders have grown immensely rich. Their homes, the size of palaces, rise up around Mazar-e Sharif with fantastic Bollywood architecture. Ordinary people whisper the homes were built with pocketed aid money and that the ruling party, the Jamiyat Islami, monopolizes the province's richest business activities.

Attracting Business

But the security the governor provides has also made Mazar-e Sharif a magnet for foreign businesses and even Afghan companies from less stable parts of the country. And that attraction is helping fuel an economic boom that is lining the main streets with new buildings under construction and small shops of all kinds.

Mazar-e Sharif's Blue Mosque "Turkish companies have come from Turkey to invest in Balkh Province in food products, and the production of oil and pasta," Ahmad Tamim Sediqi, a professor of economics at Aria Institute of Higher Learning, the city's private university, says. "And some petroleum companies from Uzbekistan have come to prepare [for oil production], and some fertilizer companies have come from Russia to produce fertilizer because Afghanistan needs more fertilizer for agricultural activities."

The good security has also encouraged a motorcycle-assembly business from Herat -- another wealthy but less stable corner of the country -- to expand its operation to the north. The business assembles motor rickshaws out of parts from Iran and is flooding the streets of Mazar-e Sharif with cheap transport for passengers and cargo.

More importantly, Mazar-e Sharif's security makes it the highly profitable hub for trade across the Uzbek border. That trade supplies half of Afghanistan's imports, according to the Asian Development Bank. To send the imported fuel, building equipment, and grain on to points across Afghanistan, Mazar-e Sharif has warehouses, truck parks, and a growing banking and service sector.

Sediqi says that the income of Balkh Province has jumped from some $5 million in 2004 to some $115 million this year, thanks largely to the border trade. It is likely to only grow further as a recently completed railroad linking Uzbekistan to Mazar-e Sharif via the Hairaton border crossing becomes operational in the coming months.

Not Without Obstacles

Still, the growth in income is a fraction of what it could be if the rest of Afghanistan, too, were secure.

Motorized rickshaws in Mazar-e Sharif Sayeed Satar Moosavi, another professor of economics at Aria, says that since 2006 as the Taliban has gained strength, so has the outflow of capital from the country. It is only in a handful of cities such as Mazar-e Sharif and Kabul that the security is strong enough to encourage businesses to reinvest at home instead.

The relative success of Mazar-i-Sharif can't help but raise larger questions about what creates economic growth in Afghanistan and at what price.

Here a big part of the price is clearly the cornering of the most lucrative forms of business -- especially the import of fuel -- by big traders with ties to the governor's powerful party.

Moosavi says the traders can, and do, set fuel prices at will simply by slowing down distribution to reduce supply.

"A number of merchants have created a kind of monopoly or we can even say a kind of oligopoly in Afghanistan. So they import a few products and they distribute them to the market per their own [profit] expectations," Moosavi says. "I mean, whenever they want, they can increase the prices; and whenever they want, they can decrease them. But they never decrease; we haven't seen that, they usually increase the prices."

Militia Rule

Another part of the price for the security in Mazar-e Sharif seems to be the limited space for political challengers left by its powerful ruling party. Many observers say the only other political parties able to survive at all in the city are those of other former militias. The ruling Jamiyat Islami denies the charge, but the city remains clearly in its hands.

A new building arises in Mazar-e Sharif. But many people in Mazar-e Sharif also say that the security the city enjoys is worth the high price the city's power holders exact. Governor Noor by many accounts is popular enough to win an election even though he has never run in one.

Instead he became governor through a local power struggle and has kept the post despite the fact governors are supposed to be appointed by Afghan President Hamid Karzai. Now, he is the only governor in the country not appointed by the president and the only one strong enough to have defied Karzai and not be removed.

Why would anybody in Mazar-e Sharif support such a leader?

The answer lies in the city's booming economy, which makes the rich and powerful grow still more so but also benefits the smaller businesses on the city's streets. It may be an imperfect success story by most standards, but it's still more than what insecure cities offer.

Copyright (c) 2010. RFE/RL, Inc. Reprinted with the permission of Radio Free Europe/Radio Liberty, 1201 Connecticut Ave., N.W. Washington DC 20036.