Analysis of World Bank

DAIMG’s Analysis of the World Bank’s Afghanistan Development Update December 2024 This DAIMG Report assesses the World Bank’s current Operational Strategy in the Islamic Emirate as reflected in the document Afghanistan Development Update (dated December 2024). It is principally addressed to macro-economic policymakers of the Islamic government. It is divided into three sections (a) the orientation of the World Bank and its operational ideology (b) analytical limitation of the World Bank’s document and (c) recommendations made by the World Bank. Orientation and Ideology Underlying the Update The World Bank is an imperialist agency principally serving America since its establishment. Since 1945 its president has always been an American citizen. It has served as an instrument for the exercise of American Soft power throughout Asia, Africa and Latin America for over 80 years. It serves both as a forum/advisory agency and as an organization of subservient national economies to global financial markets and imperialist American power. Policymakers of the Islamic government must not assume that the World Bank is a neutral policy advisor and implanter. Its policy advice and its operational projects are principally concerned with integrating subservient economies within the riba based international order dominated by America. Its ideological perspective is Neoclassical political economy. Neoclassicism is one of several modernist/postmodernist schools of thought – post-Keynesian, neo-Sarafan, institutionalist, psychological Economics – that currently dominate policymaking. Neoclassicism presumes that men are naturally selfish – selfishness dominates all other moral drives in social order. Economic policy is thus seen as an instrument for facilitating specific behavior. The capitalist market is the natural arena for the flourishing of selfishness. This is the neoclassical perspective. The purpose of economic policy is the capitalist marketization of social order. The state is advised to serve as a vehicle for the fostering and promotion of capitalist/selfish individuality. He riba based interactional order is designed to ensure that all national states serve this purpose by subordinating their national sovereignty to global capitalist governance norms and procedures. This is the ideological perspective underlying the policy analysis and advocacy presented in the Update. In Section III of the DAIMG Report we assess the recommendation provided in the Update in the light of this ideological perspective. However adherence to this ideological perspective has led the World Bank to make several unjustified claims and factually patently false statements. Section II presents these false claims to illustrate that World Bank’s policy advice is partially clouded by its ideological lenses and prejudices. The Update False Claims The Update’s claim that Afghanistan’s growth during 2023-24 is mainly driven by private consumption is not justified since data on the expenditure consumption of GDP (presented in National Statistics and Information Ministry’s Afghanistan’s Statistical Yearbook 2023-24 are deliberately ignored by the Update.

There is no justification for the false claim that imperialist humanitarian inflows had a positive impact on GDP growth – indeed the Update does not quantify the source of GDP growth. There is no justification for the claim that the Islamic government (which the World Bank continues to call the Interim Taliban administration, ITA demonstrating its subservience to imperialism) provided limited support to GDP growth. The claim that businessmen worried about … increased is not referenced by any named survey or source. There is no justification for regarding the Afghan recovery on profit. The concept of ‘profiting’ is not defined. ‘damaging effects’ of presumed ‘deflation’ are simply presumed – in fact there is no deflation in Afghanistan. The economy is growing. The highly biased World Bank’s Welfare Monitoring Survey’s claim that ‘a significant number of Afghan households continue to struggle to meet their basic needs (p. 16) is given without providing the representativeness of AWMS. Throughout the Update the claim is made that unemployment is rising without presenting any employment data at all. Similarly concepts of ‘quality goods’ and underemployment are used without defining what they mean (p. 16). No data is presented to show that economic activity is ‘stagnant in urban areas’ (p. 16). How can this be so if – as the update itself recognizes – the industrial growth has outperformed all other sectors. (p. 11) The Update claims that there is a “crisis” (p. 16) which is patently false. No evidence is presented to show that women are trapped in low paying jobs (p. 17) No evidence is presented to substantiate the claim that the morality lashes dealt a blow to Afghanistan’s broader development goals …stifle investment, reduce household income and hinder the nation’s ability to recover from the current economic crisis (p. 17). There is no “current economic crisis” in Afghanistan and these claims solely reflect the prejudices underlying the analysis in the Update. Development expenditure by the Islamic government in 2023/24 is deliberately ignored. No evidence is presented to show that “domestic revenue is already stretched” or that “the fiscal space is shrinking” (p.20) and the country “remains heavily reliant on foreign funds” (p. 21) Price elasticity of Afghan exports is not estimated so the claim that export growth was restricted by Afghan appreciation is not justified (p. 22). Nor the claim that cheapening imports “crowded out” domestic production (p. 22) justified. The claim that foreign …… asset was appreciation $36 billion is undated (p. 26) and seems to be grossly exaggerated. No data is presented to substantiate the claim that US dollar inflows played a crucial role in stabilizing (the Afghan) (p. 28) No evidence is presented to show that “the policy of ….on strong currency … at cost to Afghan’s domestic economy …(that it reduced effective demand, exacerbated) unemployment etc. (p. 28) since employment elasticity of import growth is not estimated and the industrial (import competency) sector has had the highest sectoral growth rate during 2023-24

Nor is any evidence presented to justify the claim that Afghan appreciation “limited Afghanistan’s export potential” (p. 28). There is no evidence for the claim that in 2024 “the ADB’s ability to support the Afghani (has) diminished” (p. 28). To attribute the decline in foreign currency demonstrated bank deposits decline as a measure of “declining public ….in the banking sector” (p. 30) is clearly false as Afghani demonstrated deposits have risen by 19 percent during 2022-24. There is no justification for the claim that DBI regulation of the monetary system “constrained business activity and hampered private sector growth”. The expectation that DBI’s removal of …….measures in October 2024 will necessarily reduce over all bank payments are false. The forecasts presented for the period 2024 to 2026 are entirely pessimistic. The forecasting model underlying these forecasts are not described so these forecasts are of no credible value as no one can assess the realization of the assumption these forecasts. The World Bank is notorious throughout the World for its inaccurate and unrealistic model based macroeconomic projections. These projections are not worth the paper they are printed on and policies crafted on their bases will be counter-productive and severely flawed. No forecasts of agricultural sector growth during 2024-26 as reported. Industry sector is said (falsely) to be constrained by Afghani appreciation. The models presume that political conflicts will continue restricting agricultural growth. That much interest “deflation” is also expected to continue. Finance, trade and communication growth are expected to be constrained by Afghanistan’s …...international isolation consumption growth is fastened to yield low term stagnation, factor productivity will not improve, investment and export growth are expected to stagnate, foreign direct investment will fall, inflationary pressure will explode – rising to 10 percent by 2026. The Afghani will depreciate. The fiscal and current account balance will significantly deteriorate. Export growth will fall DBI’s ability to manage the Afghani will deteriorate. Domestic revenue collection will fall while the Islamic government expenditure will rise severely constraining development expenditure. Policy ….will balloon. Government will become unstable. Poverty will increase exponentially. All this is wishful thinking. It has little representation of reality. This is what the World Bank hopes will occur so that the non-existing crisis become a reality leading to a collapse of the Islamic government by 2026 if not earlier. We will take this advice to commit national suicide. Policy Recommendation As an imperialist agency the principle concern of the World Bank is to delegitimize Islamic government. For this purpose the World Bank and other UN imperialist agencies are pursuing what they call a “bottom-up” strategy – that is strategy fostering the capitalist organization of society. It is hoped that as capitalist values and practices take root at the mass level. The Islamic state will be forced to adopt capitalist policy postures at the macro level and with regard to its instrumental transaction forms. The Interim Taliban Administration (ITA) will collapse and the rule of imperialist quislings will be restored.

Therefore World Bank policy recommendations based as they are on its liberal theoretical perspective advocate a withdrawal of the state from …governance and from investment participation in the commodity producing sectors (agriculture, manufacturing, mining, IT services etc.) “Stable governance” in this perspective is one which “imports the business environment (through) reforms aimed at reducing regulating barriers, improving (capitalist) property rights, enhancing access to (capitalist) finance, and fostering (capitalist) private sector growth (p. 36). It is assumed that “sustainable growth” will be automatic ….of market liberation – despite the fact that liberating economies, throughout the world, have a very poor record as far as “sustainable growth” stabilization is concerned. The Update also advocates the fostering of capitalist individuality – it calls in “human capital formation” reflecting its ideological perspective that men are just instruments of production and economic exchanges. The purpose of investments in the health and education sectors should be the building of “human capital” – i.e. capitalist individuality is dominated by hirs and hasad. The Update stresses the man to convert “women and girls” into “human capital” (p. 36). State investment, the Update argues should be concentrated on the health, education and social production provisions for the purpose of the development of ‘human capital’. Programs of conditional cash transfer, linked to education (p. 37) should be designed to promote human capital formation. It sees the fast growing population growth and high fertility rate as an obstacle to human capital formation and exerting pressure on the economy (p. 13). A convergence of market liberation is price volatility. Normalizing price stability since 2022 has been a major achievement of the Islamic government which alarms imperialist agencies such as the World Bank. The Update advocates a return to inflation as a means to counter its fictiously presumed “stagnation” (p. 15). It refuses to recognize the achievement of the Islamic government in stimulating growth while maintaining price stability attributing price stability entirely to its presumed unproven aggregate demand insufficiency and non-existing food incentives (p. 15). As an imperialist agency committed to the capitalist individualization of women leading to the secularization of Afghan Society the Update reflects the World Bank’s fierce opposition to the 2023 Morality Law. It claims that the introduction of this law is “dealing a blow to Afghanistan’s broader economic goals”. It “stifles innovation…and hinders the nation’s ability to recover from the (fictitious) current economic crisis, it deepens poverty…and fosters non-inclusive growth (p. 17). The Morality Law should be repealed therefore. All these assertions are made opposing a shred of ……. Bringing women into public life is a key measure for this capitalist individuation – i.e. for their conversion into human capital. The Morality Law safeguards women’s chastity and sanctity and is therefore a thorn in the flesh of imperialist interests.

It is so significant that the Update has no recommendation with regard to enhancing domestic fiscal resources. Its general conclusion seems to be that this is impossible and the Islamic government will “remain heavily dependent on extend finance to support basic service. The underlying, unstated conclusion is that the Islamic government must surrender its economic sovereignty to imperialism by liberating the economy and bringing women into public life, thus laying the foundation for secularizing social order to ensure access to global (both public and private) investment and capital (p. 20/21). Capitalization to imperialism requires increase in dollarization of the domestic economy and weakening of the Afghanistan. The Update advocates for and accelerated depreciation of the Afghani. The outstanding success of the DAB in managing the Afghani over worked. DAB is advised to abstain from foreign exchange market intervention and abandon its commitment to a strong Afghan policy. The growth of (fictitious) “unemployment” is attributed to Afghani appreciation is “falling growth in domestic industries” (p. 28). Afghani appreciation is also said to have negatively effected export growth (p. 28). The 2024 reduction in DBA market intervention is applauded and DAB is advised to “shift away from” direct intervention and allow the currency (to depreciation) as to ensure Afghanistan’s subordination of global capitalist money markets (p. 28). The Update is alarmed by the substitution of domestic denominated diprates for foreign currency denominated diprates in 2023-24 since this indicates the gradual de-dollarization of the economy – another major achievement of DAB. Liberalization of the banking sector is strongly recommended. Withdrawal limits on corporate accounts should be further reduced. The bank guarantee systems should be liberalized and “private banking” sector growth should not be hampered” (p. 30) by policy mechanism. Bank sector operations should be “normalized” (p. 31) i.e. developed along capitalist lines. DBI’s governing role in monetary management must be reduced. “Tight constraints on financial transactions should be abandoned” (p. 31). The economy should be gradually financialized through the introduction of sectoral liberalization measures. The World Bank strongly advocates the “transition to Islamic finance” . it hopes that the Muslim masses will adopt capitalist practices under a Shariah façade. Islamic finance has served as a conduit linking Muslim wealth to global capitalist financial markets – billions of dollars are transferred every year from Muslim countries (Bahrain, Malaysia, Qatar, Pakistan, the UAE) to most of capitalist markets in Europe, America and the Far East. Islamic Finance can also pave the way for a re-dollarization of the economy and a reversal in the decline in foreign currency denominated deficits. Islamic banking serves to legitimize interest based transactions through the façade of Shariah compliance. Nevertheless according to the update the conversion to Islamic banking should “not be mandatory” (p.32) as this is alleged to depress bank …… Interest based transactions specially in relation to foreign exchange transactions should be tolerated and the implicit advice is that a conventional i.e. riba based financial system should at least with Islamic banking, as in Malaysia, Bahrain and Pakistan.

The Update also advocates the expansion of digital payment system and Afghanistan’s clearing and settlement system (ACSS) should be modernized. Straight through processing (STP) should be introduced within a reformed ACSS. Electronic money institution should be introduced. That is seen as means to overcome the continual limited supply of Afghani bonds – the national printing of currency is not advocated. All that is seen as a means for subordinating Afghanistan financial system to global money markets. Conclusion The imperialist subservience of the World Bank is illustrated most graphically by its access to American militaristic surveillance data that is granted by the satellites espionage system that monitors activity in Afghanistan (as in most other Muslim countries) through space flights. The surveillance satellites system yields night time lights data covering economic activity throughout the length and breadth of Afghanistan. The World Bank have used this data to manage economic activity in all provinces of Afghanistan during 2018-2024. This along with the ongoing collection of data and information through AFMS and other ground and telephonic surveys clearly illustrate that for World Bank is principally a spying agency (as has been demonstrated in several Latin American countries) his activities must be drastically curtailed – principally eliminated – in the terms of national security. The policy advice, taken as a whole, must be rejected because it is disguised precariously to delegitimize Islamic rule and facilitate the Islamic government – that is why like all other imperialist agencies, the World Bank continues to label the Islamic government of Afghanistan as the Interim (i.e. illegitimate) Taliban Administration. Moreover we need to explicitly reject policy paradigm and ideology underlying World Bank advocacy i.e. capitalist neoliberalism. It the social order in Afghanistan embraces capitalist ideology and practices, Islamic rule cannot survive. Furthermore the neoliberal policy paradigm is fundamentally flawed. Its application in even the most advanced capitalist economies has led to persistent growth stagnation during the past four decades and the frequent recurrence of economic crises – in 1997, 2001, 2007-8 and 2020-21. There is ample evidence to illustrate that macro economic policies based on the neoliberal paradigms leads to ….growth. The Islamic government’s policies have been successful – successes which the World Bank downplays. We have succeeded in achieving positive growth within two years of revolution – it took the Soviet Union six years to do so. The Islamic government has established an effectively functioning judicial system. It has eliminated system wide corruption. It has virtually eliminated terrorist related insecurity. It has eradicated poppy cultivation. It has stabilized prices and the foreign exchange rates. It has enhanced investment and employment growth, reduced depreciation levels and promoted food security. We have made significant progress in eliminating capitalist vices and Islamising society. That is why the popular support of the Islamic government has been increasing throughout the country. There is no crisis in Afghanistan. We thank Allah Almighty for enabling the Islamic government to achieve so much within such a short period and despite continued imperialist attempts at social sabotage and subversion through its “bottom up” strategies.

This does not mean that challenges do not remain salient. An alternative socioeconomic strategy – alternative to that suggested by the World Bank and other imperialist forums – needs to be crafted. The central focus of this strategy must be on strengthening the role the state plays in developing Islamic community formation and functioning and safeguarding urban and rural communities from imperialist intervention and financing – safeguarding our women from imperialist propaganda and associated corruption is of special importance. Below DAIMG suggests some policy measures to strengthen the …….. in community building and market governance. Introduction of National Economic Policy Comprehensive system wide socioeconomic planning is an essential step towards the creation of a non-capitalist economy. We must immediately counterdesign the annual budget with an Annual Development Plan and work towards the development of a medium term national development plan outlining output, investment, employment, prices, exports and imports targets over a five year period at the national, provincial, district and enterprise level. The planning process must be fully decentralized and planning units should stretch from the central planning office through provincial and district towns to the market and enterprise levels. Plan targets must reflect physical resources available abilities and be based on an input-output framework. Planning must be seen as the main vehicle for state governance of the market and community building along Islamic lines in Afghanistan. Industrial Policy Afghanistan’s development requires the implementation of a proactive industrial policy articulated through both large scale state investment in key sectors (mining, military equipment, steel, energy, machine building, chemicals) and the development of industrial programs for domestic and foreign direct investment. There is a special need for a public sector industrial rehabilitation program to revive each industry. Currency and Credit Planning It is clear that imperialism is targeting the financial sectors as the main vehicle for infiltrating the Afghan economy. This imperialist intervention by adopting the following measures: Printing the Afghani nationally. Our reliance on foreign printed bank notes is a major cause of our financial vulnerability. We must urgently acquire the ability to print our own currency notes. Without doing this control of the money supply is impossible. Introduction of currency and credit planning. The volume of currency in circulation must not be linked with any commodity or country’s foreign exchange reserves. It must be linked to real GDP growth and the system wide allocation and distribution of currency and credit must be in accordance with the investment and employment targets of the annual and medium term national economic plans. This will eliminate financial (against real) constraints on investment and expenditure growth. Transition towards a tamveeli system. Islam prohibits the commodification of money (on which capitalism thrives). Islamic banking and finance as currently practiced is a means for legitimizing capitalist finance through the introduction of riba equivalent shariah compliance transaction firms leading to an absorption with global money markets. A tamveeli system based on musharka and modaraba and ijara (not mirabaha) transaction firms should be created. Otherwise a speculation based money market will gradually emerge. The de-commodification of money requires that banks are not allowed to function as profit making institutions. This require the nationalizing all financial institutions within the country.

Continued management of the exchange rate in accordance with the pricing and trade strategy outlined in the national annual and medium term development plan. All foreign currency inflows should be managed and controlled by DBI. Strict capital controls should be instituted. De-dollarization of the domestic economy should be prioritized. Eliminating dependence on foreign grant inflows should be a key objective of both local fiscal and monetary policy. Avoiding international isolation. Association within the global capitalist system amounts to committing national suicide by the Islamic government. Our economic policy must therefore focus on the development of self reliant national capacity to achieve sustainable economic development. Nevertheless expanding trade, investment and technology flow relationships with foreign partners is necessary and possible. The global capitalist order is unraveling and several countries are being thrown out of international trade and financial network and as in BRICS plus are considering viable alternative management processes and procedures. These countries include Belarus, Cuba, Iran, Nicaragua, Russia and Venezuela, all subject to sanctions, embargos and financial and technological boycotts and restrictions. The Islamic government should seek to negotiate trade, DFI and technology transfer deals on our own terms with such “outcasted” countries. Iran and Russia are particularly important trade, FDI and technology transfer partners and expanding economic ties with Iran and Russia and much to lessen the impact of deteriorating trade ties with Pakistan. Da Afghan Iqtisadi Mushawarti Group