Juan Cole on the collapse of Afghanistan’s major bank:
I write in anger. Not blind rage, mind you. A cool, searing, steady anger. I think it is a righteous anger. It is not consequential, but it is my reality. I am angry about the 1,172 US troops dead in the Afghanistan War, and all the other brave NATO and Afghan soldiers who gave their lives for a new Afghanistan. Because they haven’t gotten a new Afghanistan. They have paid the ultimate sacrifice for a ponzi scheme masquerading as a reformist government. And, as usual, you and I may well get stuck with the bill for the economic damage done by the fraud.
The house of cards that is the Hamid Karzai government in Kabul may be falling before our eyes, as vast, globe-spanning webs of corruption, formerly hidden in shadows, have suddenly had a spotlight thrown on them. The crisis raises the severest questions about whether the Obama administration can plausibly hope to stand up a stable government in Afghanistan before US troops depart.
As with the second phase of the Great Depression in the United States, the crisis begins with a run on Da Kabul Bank. Depositors took out $85 million on Wednesday, after a damning story appeared in the Washington Post. They took out another $70 million on Thursday. The bank, which owes $300 million, may now have as little as $120 million left in the kitty, though it had once been worth over a billion. But the problem is not just a run on one bank. Can Afghanistan’s whole financial system and economy emerge unscathed?