Professional Documents
Culture Documents
2 INTRODUCTION .............................................................................................................. 1
2.1 WHY AFGHANISTAN ...................................................................................................... 1
2.2 STRUCTURE OF PAPER ................................................................................................... 2
3 COUNTRY BACKGROUND............................................................................................ 2
3.1 GENERAL INFORMATION ............................................................................................... 2
3.2 THE PASCHTUNWALI ..................................................................................................... 4
6 ECONOMIC STRUCTURE.............................................................................................. 9
6.1 AGRICULTURAL SECTOR ............................................................................................... 9
6.2 INDUSTRY SECTOR ....................................................................................................... 10
6.3 SERVICE SECTOR ......................................................................................................... 11
9 LIST OF REFERENCES................................................................................................. 18
10 AFFIDAVIT ...................................................................................................................... 25
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2 Introduction
2.1 Why Afghanistan
"Whatever countries I conquer in the world, I would never forget your beautiful
gardens. When I remember the summits of your beautiful mountains, I forget the
greatness of the Delhi throne."
Afghanistan is a country which suffered from war for decades. Also, with the
takeover of the Taliban a reign of terror started for the population. The country
was set back in shambles. Violence, suffering and terrible poverty is mostly what
gets on television. I am sure, it was not always that way. In the 1960s the country
was known as the exotic stop. Mountains, relics of empires thousands of years
old, deserts, little valleys and many other things have been the characteristics of
Afghanistan. This time was a brief, relatively peaceful era. The country appeared
to be on a path toward a more
open and prosperous society. It
seemed to be that Afghanistan
could become an independent
country, maybe poor but free to
make own decisions.
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3 Country Background
3.1 General Information
Afghanistan, which literally means Land of the Afghan, with its capital Kabul is a
mountainous land-locked country located in Central Asia with Iran to the West
and Pakistan to the east.2 3 Beside of the mountains, dry deserts cover most of the
landscape of Afghanistan.4 The Hindu Kush Mountains run northeast to southwest
and divide the Northern Province from the rest of the country. The highest peaks
are in the northern Vakhan.
The country has an area of 652,230km2 and is slightly smaller than Texas. 5
At the 1st of January 2016 the population was estimated to be 33 045 4406. The
Afghan society is a mix of several ethnic groups, whereas 42% are Pashtuns,
which is the largest ethnic group in Afghanistan, followed by the Tajiks, the
Hazaras, the Uzbeks, and other minor groups.7 The official religion in
Afghanistan is Islam, which is worshipped by 99.7% of its citizens. The official
languages are Afghan Persian or Dari, which is spoken by 50%, and Pashto,
which is spoken by 35% of the citizens.8
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Cf. Qazi, A (2016)
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Cf. Central Intelligence Agency (w/o Y)
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Cf. National Geographic Kids (w/o Y)
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Cf. Central Intelligence Agency (w/o Y)
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Cf. Worldmeters (w/o Y)
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Cf. SAARC Tourism (w/o Y)
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Cf. Central Intelligence Agency (w/o Y)!
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Afghanistan was founded in 1747 by Ahmad Shah Durrani and won independence
from national British Control in 1919.9 A long and destructive war was caused by
the Soviet Union, who supported the Afghan communist regime. With the help of
the anti-communist mujahidin rebels, which were internationally supported, the
USSR withdrew in 1989. After a series of civil wars Kabul finally fell to the
Taliban in 1996, which were partly defeated in 2001 by the NATO.10
The election in 2014 featured the top two vote-getters from the first round,
Abdullah ABEDULLAH, who was elevated to the newly-created position of chief
executive officer, and Ashraf GHANI as the president. Since this election the US-
Afghan bilateral security agreement and NATO Status of Forces Agreement,
which were signed by the GHANI administration, provide the legal basis for the
post-2014 international military presence in Afghanistan. However, the Taliban is
still a serious challenge for the Afghan Government. It remains a confident force
that declares it will pursue peace deal with Kabul only after foreign military
forces depart.
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Cf. LIPortal (w/o Y)
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Cf. Bundeszentrale für politische Bildung (2014)
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Cf. Central Intelligence Agency (w/o Y)
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The Pashtuns, who still believe in their tribal faith called Paschtunwali, do not
agree and did not agree in the past with the way the government were ruling the
country. Pashtunwali is a non-written ethical code, traditional lifestyle and a
system of law and governance that began during prehistoric times. It is still in use
today, widely practiced among Pashtuns and also be interpreted as “the way of the
Pashtuns” or “the code of life”.1314 The Taliban’s interpretation of Deobandi Islam
is also strongly marked by the code of ethics, the Pashtunwali.15
Furthermore, for almost 30 years Afghan children face a dangerous life due to the
internal conflict. 97 children out of 1000 die before the age of five and when they
survive they have no prospect of education or a good life. Female children are
seen and treated as objects. 17
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Cf. SAARC Tourism (w/o Y)!
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Cf. Afghan Aid (w/o Y)
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Cf. University of West (w/o Y)
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Cf. Cf2R (2013)
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Cf. Trust in education (w/o Y)
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Cf. Trust in education (w/o Y)!
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There is no way to grow their infrastructure or their industry without help from
outside. No investors are willed to invest in a country that seems to be in an
instable situation and without a view of success, but there will be no improvement
if there are no investments made in education in order to improve skills and
knowledge that are needed to develop the country. Afghanistan appears to be in a
vicious circle.
4 Economic Policy
4.1 Development policy approach
Afghanistan is one of the poorest countries and its economy is one of the weakest
in the world.18 It was destroyed by decades of war, which started in the 70s.
Consequently, the Islamist powers were strengthened. In addition, successfully
completed development aid projects were destroyed by fighting.19
As significant barriers of the economic development are seen the high rate of
unemployment, poor education, drug trafficking, corruptions, and the tension in
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the security situation, but there already have been measures implemented in
order to improve the weak areas of the country.
For example, the German-Afghan development cooperation has the aim to reform
the professional education and to build training facilities, in order to qualify
young people in professions. In addition, Germany stood up for human rights
within the “Tokyo Framework” (TMAF), by which “The Elimination of Violence
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Against Women Law” (EVAW), the “National Action Plan for Women”, the
“Millennium Development Goal” (MDG), which target improving health, gender
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18
Cf. Auswärtiges Amt (2016)
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Cf. Deutsches Evaluierungsinstitut der Entwicklungszusammenarbeit gGmbH (2014)
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Cf. Germany Trade & Invest (2013)
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Cf. Deutsche Welle (w/o Y)
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Cf. Die Bundesregierung, Dr. Michael Koch (2014)
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equality, education, environment and food security, and many other indicators are
mentioned.23
For 2016 a further growth in economy and a slow recovery over the next three
year is expected. The security environment is not allowed to experiences a return
in order to ensure further growth.26
There are many reasons for low domestic revenues collection. Some of these
reasons are the small private sector, the large informal economy with a dominant
agricultural sector, and the low performance and mobilization.
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23
Cf. AG Friedensforschung (2012)
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Cf. Central Intelligence Agency (2016)
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Cf. Die Bundesregierung, Dr. Michael Koch (2014)!
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Cf. The World Bank (w/o Y)
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Cf. The World Bank (w/o Y)
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Cf. Da Afghanistan Bank (w/o Y)
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In Afghanistan, the demand for national currency, which is the New Afghani since
200229, is linked to the rate of national economic activities, also it depends on the
tendency of people to use the national currency. The main source of demand for
Afghani is the government spending. The increase or decrease of money supply,
also called monetary policy, is based on the demand for the national currency. For
this reason, monetary policy and fiscal policy are connected. The real sectors are
also responsible for the demand for national currency.30
It must be noted that the economic performance remained at the same level since
the withdrawal of ISAF troops in 2012 and therefore stagnated.32 While the
economic growth was about 14% in 2012, in 2013 it was down to 3,6%.33
Accordingly, it showed a growth of 1,3% in 2014. Nonetheless, the GDP growth
started to increase from 2015. An actual figure shows a growth of 1,9% in 2016
and an estimation of further increase in 2018 with an GDP growth of 3,6% in year
2018.34
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Cf. Umrechnung von Währung und Einheiten (w/o Y)!
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Cf. Da Afghanistan Bank (w/o Y)
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Cf. The World Bank (2016)
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Cf. The World Bank (2016)
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Cf. Das Länder-Informations-Portal (w/o Y)
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Cf. The World Bank (2016)
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5.2 Inflation
The Consumer Price Index is made up by two main groups. 61,3% of the total
Consumer Price Index (CPI) includes Food Items, while the remaining 38,7% are
made up by Non-Food Items. Bread and cereals (28%), meat (6%), milk, cheese
and eggs (5,6%) and oil and fats (5,3%) are the most important food-items.
Housing, clothing, household goods, transportation, and health belong to the
mainly non-food items.35
The historical highest Inflation Rate was at 13,97%, while the lowest inflation rate
was -18,39%.36 In this year the inflation rate is 3,01%, compared to 2015 with an
inflation rate of -1,55%.37
5.3 Unemployment
Up to the half of the workforce in Afghanistan seems to be unemployed or
underemployed while the Afghan population is growing rapidly38. Since 2001 the
total population has increased from 20,500,00039 to 33 045 440 (01/2016)40,
which means that more and more training positions are going to be needed.
In 2014 the country already needed long term training positions for about 1,7
million young people. The Federal ministry for Economic Cooperation and
Development of Germany is leading a programme for continuing vocational
education, which aim it is to build vocational training facilities and to reform
vocational training. The programme is geared to reduce poverty risks and to create
future prospects. In this context, the Afghan Vice Ministry of vocational training
is going to be supported in the reconstructions of a vocational school system for
education and training in Kabul and Mazar-e Sharif.41
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Cf. Trading Economics (w/o Y)
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Cf. Trading Economics (w/o Y)
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Cf. Das Statistik-Portal (w/o Y)! !
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Cf. Die Bundesregierung, Dr. Michael Koch (2014)
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Cf. The World Bank (2016)
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Cf. Central Intelligence Agency (2016)
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Cf. Bundesministerium für wirtschaftliche Zusammenarbeit und Entwicklung (2014)
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6 Economic Structure
6.1 Agricultural sector
The economic performance has been achieved through three industries, which will
be discussed more deeply in the following chapters: Agriculture, Industry, and
Services. The agricultural sector had the large share in the GDP with 30,3% in
year 2004, but decreased to 23,5% in year 2014.42 While the proportion of
industry in the GDP has hardly changed and stayed at 24% in average, the service
sector has developed positively and has the largest share in GDP with 54% in
2014.
Agriculture is a very important part of the economy in Afghanistan and the share
of agriculture in GDP accounted for 24% (data exclude opium production) in
2014.43 80% of the population live in the countryside, many of them live a life of
poverty44 and about 60% of the population rely on agriculture.45 Either they need
a workplace on a farm, food for their family or animals, or complements
additional to their own food. Agriculture has the potential to reduce poverty in
each of the aspects. Therefore, according to the government the agricultural sector
has priority.46
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Cf. Das Statistik-Portal (w/o Y)
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Cf. Central Intelligence Agency (2016)
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Cf. EU The European Commission, International Cooperation and Development (2016)
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Cf. USAID (2016)!
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Cf. Auswärtiges Amt (2016)
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Cf. The World Bank (2014)
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Cf. Central Intelligence Agency (2016)
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20% of the raisins on the world market. Also, it was self-sufficient in meat and
milk. Today these markets are taken over from other countries and the country
depends on imports.49
Today, there are many projects of the World Bank, the USAID, the EU and the
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UN-FAO, which aim to improve the situation. Projects of the FAO especially
aim to encourage and develop women in agriculture.51 Also the EU carries out
projects, which aim to protect water resources through legal frameworks. One of
these efforts consists of increasing the productivity and reliability of harvests
through construction of irrigation canals.52
The mining industry is still in its initial phase, but promises the largest growth in
tax revenues and the opportunity to attract foreign investors and their private
capital. For this the occurring mineral resources such as cooper and raw iron have
the biggest potential and coupled with an individualised focus Afghanistan has the
potential to become a major trading partner for Asia. The Afghan building law of
August 2014 creates finally a legal basis for the mining industry in Afghanistan,
which is seen as a central requirement for international investments by experts.
The Aynak-Cooper-Project of the Chinese in the southeast of Kabul could also
been seen as very attractive for foreign investors due to its high expected volumes.
The mining sector should be accepted through training of Afghans in order to
protect this sector from exploitation by foreign companies.
The telecommunications sector was the fastest growing sector over the last ten
years. It grew more than 50% annually, on average, between 2003 and 2013. The
Afghan government focused on expansion of W-LAN, access to internet and on
television channels. For this, the government signed an agreement with the
Chinese ZTE Corporation and an allocation of $65,5 million.59 This project
contributed to improvements. In 2014 about 90% of population had access to
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Cf. Central Intelligence Agency (2016)
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Cf. Economy Watch (2010)
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Cf. Central Intelligence Agency
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Cf. Embassy of Afghanistan (2006)
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communications products, while there were 23,4 million mobile phone users.60
Also, the amount of internet users rose from 1 million to 3 million between 2011
and 2014. This is mainly due to 3G licenses for GSM funk operators, the
development of the fibre optic network in further provinces of the country and an
increasing number of internet providers in the market. In the same period the price
of 1 megabit of bandwidth declined from $900 to $35 per month.61
The financial service sector has to cope with different challenges driven by weak
governance. In particular the crisis of the New Kabul Bank, which is the biggest
credit institute, threats the sector development.
The poor population only has limited access to banks. Less than 10% of the total
population uses banks, while the rest prefers to rely on hard cash. The Asian
Development Bank (ADB) sees a continued mistrust in banks due to the grave
Kabul Bank Crisis and the weak financial sector in general.63
Important trade partners are Pakistan, India, Iran, Russia, and the United States of
America. Especially Pakistan plays a central role, due to its geographic location,
and because of Afghanistan’s lack of access to the oceans.64 Afghanistan is also
Pakistan’s second largest export market. Both countries face substantial
challenges. They have to deal with their respective security, political and
economic level. Their trade relationship has suffered in the past, due to several
tensions.
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Cf. Central Intelligence Agency (2016)
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Cf. The World Bank (2015), Afghanistan Development Update!
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Cf. The World Bank (2015), Country Snapshot October
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Cf. U.S. Department of State (2016)
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Cf. Germany Trade & Invest (2013)
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Trade between Afghanistan and Pakistan has increased noticeably, from $0.83
billion in 2006 to $2.1 billion in 201367. Of Afghan’s total imports Pakistan makes
the largest share, at 24,3% in 201368. Its share has declined since 2011, due to
many issues, such as political instability.
In return Iran’s share is greater than before, because a draft for a new transit trade
agreement was completed by India, Iran and Afghanistan. A land route has been
planned to run from Iran’s Chabahar port, in the Gulf of Oman, connecting
Afghanistan to the Persian Gulf, which allows the movements of goods from
South Asia into Afghanistan and Central Asia.
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Cf. United States Institute of Peace (2015)
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Cf. Central Asia Regional Economic Cooperation (w/o Y)
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Cf. United States Institute of Peace (2015)!
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Cf. United States Institute of Peace (2015)
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Cf. The Diplomat (2015)
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In the same year, fuels are counted among to the largest part of import products,
which make 8.4% of total exports, followed by vegetable products, including
wheat, rice, and minor others (12% of exports), food and textiles (22% of
exports), and machines (11% of machines).70
In the last ten years, the trade balance has always shown a negative figure.
7.4 Migration
Although Afghanistan has made an improvement in economy and social, it still
remains one of the world`s least developed countries.72 Also, it ranks 169th in the
Human Development Index out of 187 countries.73 Therefore, migration is
nothing new, because it has been existing for decades. There has been a lot of
emigration of Afghan refugees mainly to the neighbouring Islamic of Republic of
Iran and to Pakistan since the late 1970s when the Soviet Union invaded into the
country. About 1.5 million Afghans are estimated to have left the country between
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Cf. OEC (w/o Y)!
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Cf. Auswärtiges Amt (2014)
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Cf. United Nations (2016)
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Cf. Auswärtiges Amt (2016)
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1979 and 1980. The war got stronger and in 1985 1,7 million total refugees which
fled to Pakistan were estimated.74 The second migration wave began with the
Taliban regime in 1992. Particularly, the urban and educated middle class fled to
the Islamic Republic of Iran and Pakistan. With the rise of the oppressive Taliban
regime from 1994, the emigration wave started again until 2000. The third and
largest migration wave was caused by the war between the Taliban and United
Stated 2001.75 2.7 million refugees came back from Pakistan and about 800,00
from the Islamic Republic of Iran, with the help of UNHCR between 2002 and
2005.
UNHCR was created in order to help millions of people who had fled or lost their
home and more than 80% of the returns were assisted by them.76
The following instruments are used in order to implement the SAFTA Agreement:
The Liberalisation Programme; Rules of Origin; Institutional Arrangements;
Consultations and Dispute Settlement Procedures; Safeguard Measures; Any other
instrument that may be agreed upon.78
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Cf. Deutsch-Afghanische Initiative (w/o Y)
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Cf. International Organization for Migration (w/o Y)!
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Cf. UNHCR (w/o Y)
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Cf. SAARC (w/o Y)
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Cf. SAARC (w/o Y)!
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The central bank monitors the exchange rate behavior and puts its effort to
prevent serious fluctuation.
There you can see that the drug trade seems to be a barrier in the development of
many areas of the country82. As the state is not able to make revenues, because
drug trafficking is not legalized, and the Taliban-regime, the warlords, becoming
more powerful, the country seems to be in a vicious cycle. The farmers are willed
to support them for their security.
Nevertheless, there are seen potentials for the development of the Afghanistan in
the mining sectors. There are rich mineral mines found in various regions of the
country. The Afghan Ministry of Mines claimed in 2012 that the minerals are
worth about §9 trillion. This deposits could have huge potential for economic
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Cf. United Nations – Office on Drugs and Crime (2003)
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Cf. United Nations – Office on Drugs Crime (2003)
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Cf. United Nations – Office on Drugs Crime (2003)
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Cf. Foreign Policy Journal (2015)
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Cf. CAPS (w/o Y)!
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9 List of references
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EEAS (2016): Afghanistan and the EU, Delegation of the European Union to
Afghanistan, in http://eeas.europa.eu/delegations/afghanistan/index_en.htm
(accessed on 08/10/2016)
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SAARC (w/o Y): South Asian Free Trade Agreement (SAFTA), in http://saarc-
sec.org/areaofcooperation/detail.php?activity_id=5, http://www.saarc-
sec.org/userfiles/saftaagreement.pdf (online publication, accessed on 09/18/2016)
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Shichiri, T. (2015): Afghanistan and FAO Partnering for food security through
gender equality, in http://www.fao.org/3/a-az491e.pdf, (online publication;
accessed on 08/10/2016)
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United Nations – Office on Drugs and Crime (2003): The Opium Economy in
Afghanistan, p. 10, 69, in
http://www.unodc.org/pdf/publications/afg_opium_economy_www.pdf (online
publication from 2003; accessed on 03/09/2016)
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