The Afghan banking crisis
Is the Kabul Bank "too big to fail?" Worried depositors have withdrawn several hundred million dollars over the past few days, raising serious doubts about the bank’s solvency. Its CEO, Khalilullah Frozi, reportedly said that "If this goes on, we won’t survive," adding that "if people lose trust in the banks, there will be a ...
Is the Kabul Bank "too big to fail?" Worried depositors have withdrawn several hundred million dollars over the past few days, raising serious doubts about the bank's solvency. Its CEO, Khalilullah Frozi, reportedly said that "If this goes on, we won't survive," adding that "if people lose trust in the banks, there will be a revolution in the financial system."
Is the Kabul Bank "too big to fail?" Worried depositors have withdrawn several hundred million dollars over the past few days, raising serious doubts about the bank’s solvency. Its CEO, Khalilullah Frozi, reportedly said that "If this goes on, we won’t survive," adding that "if people lose trust in the banks, there will be a revolution in the financial system."
Afghan President Hamid Karzai says that his government will guarantee the security of all deposits, and a White House spokesman said the U.S. government "are taking no steps" to prop up the bank. But this is kind of a meaningless distinction, however, insofar as the entire Afghan government is being propped up by outside aid, much of it coming from the American taxpayer. And could the United States simply stand by and let the Afghan financial system collapse completely? Need I mention that trying to create a modern financial system was yet another task that the United States took on when it decided to try to build a modern state in Afghanistan?
Juan Cole is pretty angry about the whole situation, and it’s easy to understand why. I’d put it this way. According to most experts on counterinsurgency — including commanding Gen. David Petraeus — winning this sort of war requires a reliable and legitimate local partner. If Juan is right, then this is just more evidence that the U.S. doesn’t have such a partner in Afghanistan and isn’t likely to get one anytime soon. And if that’s the case, and if we really believe what we claim to about the nature of COIN warfare — then what the heck do we think we are doing trying to "nation-build" there?
Stephen M. Walt is a columnist at Foreign Policy and the Robert and Renée Belfer professor of international relations at Harvard University. Twitter: @stephenwalt
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