One way or another, the war in Afghanistan will eventually wind down. On Tuesday, the Washington Post announced that the Obama administration is seeking to “speed up” its direct talks with the Taliban to end the fighting. By all accounts, there will be a substantial reduction of U.S. forces by the end of 2014, withdrawing upwards of 70,000 troops and support personnel. What happens then? Both Afghanistan and the U.S. stand to face substantial economic disruptions when the war does end.
Withdrawing 70,000 troops from Afghanistan is an enormous undertaking: leaving aside the logistics of moving the people (which really involves packing them onto C-17s and flying them out), there are a host of economic dependencies to consider.
For starters, there are the bases. The Federal Business Opportunities website, a central clearinghouse for new government contracting, lists new base construction contracts worth tens of millions of dollars on almost a daily basis. Looking at the most recent solicitation, for a brigade garrison for the Afghan National Army, the government estimates this single construction project will have an estimated cost of between $100 and $250 million. After 2014, that sort of business will end, and along with it so will hundreds of millions of dollars flowing into the defense contractor community.
But it’s not just construction. Once bases are built, they need to be supplied. While most of the media attention to NATO’s supply trucks focuses on the relative minority that are ambushed by the Pakistani Taliban and lit on fire, these trucking companies — almost all owned by Afghans and Pakistanis — make millions of dollars every year. Once NATO shuts down its bases, that revenue will vanish. In the 1990s, these shipping companies (Ahmed Rashid called them the “trucking mafia” in his 2000 book, “Taliban”) made their money through smuggling drugs, illegal gemstones, and timber from Afghanistan to the outside world. They literally stripped the country bare. We can assume they’ll revert to form once the U.S. money spigot runs dry.
But bases also need to be protected. While one might assume troops do that (and many do), the U.S. hires local Afghan mercenary companies to handle perimeter security in some areas of Afghanistan. Part of the impetus behind Hamid Karzai’s political games with private security firms is his desire to control these groups (in December he dropped a push to disband most of them). Once the U.S. withdraws its troops and leaves its bases empty, many of these armed Afghan contractors will not have employers, leaving the country awash — yet again — with young, armed unemployed men. Very few people, if any, are making plans for demobilizing these contractors and finding them suitable employment elsewhere.
One can go down that rabbit hole forever. Suffice to say, the economy of Afghanistan is substantially dependent on the U.S. — in the form of military expenditure, but also in aid money. The Special Inspector General for Afghanistan Reconstruction tracks both programs and while the numbers are eye-popping (hundreds of millions of dollars are spent each year), SIGAR also notes how the military and USAID have a difficult time tracking the effects of the money they spend. We know this money flows into the economy of Afghanistan but we don’t know what effect it really has. As a result, we just don’t know what effect pulling all this expenditure out of Afghanistan will have, either, beyond guesses and estimation.
Meanwhile back in the U.S., we will have to deal with some unpredictable consequences of withdrawing so many troops, as well. According to Inc. magazine, “government services” is the second largest industry sector in the American economy. Within Afghanistan, more than 60 percent of the Department of Defense’s workforce is contractors, meaning contractors are the majority of the U.S. presence in the country. With the war winding down they’ll be coming home to uncertain employment prospects. After all, one of the biggest appeals of a contractor workforce is that they can be hired for a time, and fired when they’re no longer needed.
Very few who are pushing for immediate withdrawal from Afghanistan contemplate the economic consequences of ending the war. The economy can probably handle 100,000 underemployed war contractors, but it will take some adjustment. It’s not just the psychological cost of seeing the Taliban use equipment we leave behind to crack jokes about us. The war in Afghanistan is more than just the troops and contractors who are deployed: there is a vast ecosystem of small, medium and large companies back here that support those deployed workers. Without a hundred billion dollars in war costs every year, those companies will struggle to stay in business.
An executive at a small defense contractor recently joked to me, “Afghanistan is our business plan.” I asked him what he would do if the war ended. He stared at me for a moment and said, “Well, then I hope we invade Libya.”
This executive wasn’t actually hoping to occupy Tripoli. But he was expressing a worry many in the defense industry have about how they will run their companies and employ their workers once the wars are over. Ten years of war have established a discrete class of entrepreneurs, mid-level workers and administrators who are completely reliant upon the U.S. being at war to stay employed.
Drawing down the war in Afghanistan will generate substantial savings for the government. And, ultimately, removing a hundred billion dollars in government deficit spending could mean good news for our economy and for our national credit rating. But there will be economic and social ramifications from ending the war in Afghanistan that will be hard to predict. The mere prospect of tens of thousands of people thrown out of work by the end of the wars should be spurring both worry and planning, both by the government that indirectly employs these people and the companies that write their checks.
Assuming the defense budget follows the same trajectory as the war budget, the next few years will see an influx of highly skilled workers into the labor market. Such a pool of skilled labor can either be a boon or a catastrophe, depending on whether smaller companies find new ways to put those skills to use or as those workers languish in uncertainty. We should start planning and adjusting for what those new workers will mean for our economic future.