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US taxpayers’ Afghan aid money buys rich Afghans’ Dubai villas

John Byrne
Raw Story
July 6, 2010

You already might have heard that it costs the United States $1 million for each solider per year in Afghanistan, to cover the cost of the soldiers’ benefits, troop transports and other materiel. What you might not have heard is that your hard earned taxpayer dollars are also being used to buy well-connected Afghans posh villas in Dubai.

Der Spiegel remarks curtly, “Amid concerns that the money could be the result of corruption, American politicians have temporarily cut off aid to the Afghan government.” The German daily adds:

…Huge amounts of money [are] regularly being secreted out of Afghanistan by plane in boxes and suitcases. According to some estimates, since 2007, at least $3 billion (€2.4 billion) in cash has left the country in this way. The preferred destination for these funds is Dubai, the tax haven in the Persian Gulf. And, given the fact that Afghanistan’s total GDP amounts to the equivalent of $13.5 billion, there is no way that the funds involved in this exodus are merely the proceeds of legal business transactions…

It is clear that much more money is making its way out of Afghanistan through Kabul’s airport than is being officially declared and logged. For example, important politicians and businesspeople can often board planes from the airport’s special VIP area without being searched. And if customs officials do conduct a search and find a suitcase stuffed with millions of dollars in cash, people with powerful connections often step in to make sure that the luggage makes it out of the country with its owner — no questions asked. “A couple phone calls are made,” General Jabarkhel says with frustration in his voice, “and the person can carry on.”

To where does this generous US foreign aid travel?

A number of Afghan businesspeople have purchased expensive villas in Dubai, once only attractive as a golfer’s paradise. These include a brother and a cousin of Afghan President Hamid Karzai, one of Karzai’s former vice presidents and the brother of Mohammad Qasim Fahim, one of the country’s two current vice presidents. Asking prices for the stylish, Roman-style houses built along the beaches of the man-made island Palm Jumeirah, for example, start at $2 million. Until just a few years ago, many of their current inhabitants were far from wealthy.

As the Washington Post has discovered, these properties are often only registered under the names of the individuals issuing the loans, such as Sherkhan Farnood, the founder and chairman of Kabul Bank, Afghanistan’s largest private bank, who was also a key supporter of President Karzai during his 2009 re-election campaign. Like many of his clients, Farnood now spends the majority of his time in Dubai. And among the 16 shareholders in his bank are Mahmoud Karzai, the president’s business-minded older brother, and Haseen Fahim, the brother of Afghan Vice President Mohammad Qasim Fahim.

Most financial transactions in Afghanistan continue to be conducted through so-called “hawalas,” traditional Islamic money-transferring outfits based more on honor and good faith than receipts, a fact that makes it more or less impossible for Western corruption investigators to trace the flow of money.

US taxpayers are also footing an enormous bill for the Pentagon’s use of fuel in the landlocked nation. In 2008, the price of gasoline in the United States topped the $4 per gallon mark.

This year in Afghanistan, the price has topped $400.

The stunning revelation emerged in October 2009 in a report from the Pentagon to House officials. The information conveyed offers new insight into a recent report by the Congressional Research Service, which found that the US spends $1 million per year for each servicemember on the ground in Afghanistan.

Why so much? The cost includes shipping, which sometimes includes the pricetag of a helicopter flight. Sending fuel by helicopter is woefully inefficient, because it uses up almost as much fuel as it carries.

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