Afghanistan Looks to Bitcoin as an Economic Revival After Never Ending Wars in the Country
Afghanistan has been a victim of war for decades which has turned the country into rubble and dust wherever the eyes see. The country is a victim of proxy wars between the United States of America and Russia, who have been using the war-torn nations to propagate their agenda of controlling central Asia through Afghanistan. Despite numerous presidents of the US promising to retrieve troops, nothing concrete has been done to help the nation get back on its feet. As per the calculations, it would take hundreds of billions of dollars to revive the infrastructure which neither US or Russia is willing to pay.
As it has been the case lately, those nations which have been failed by the current system controlled by rich and powerful have turned towards Bitcoin as the last hope of survival. Be it Venezuela or Zimbabwe or various other developing nations which have all doors of help closed on their face, and an imminent doom was certain. Afghanistan is looking to issue sovereign bonds to raise around $5.8 Billion for its various infrastructure projects.
Khalil Sediq, the governor of the Central Bank of Afghanistan said that they were trying to leverage Bitcoin and couple it with their $3 million worth of untapped Lithium market. The plane is to generate government-issued digital bonds which would be offered to investors and use Blockchain technology to store it.
Bitcoin Has To Undo Three Decades of War Turmoil
Afghanistan’s financial troubles started three decades ago with a political coup in the 1970s which later led to the assassination of the then president Mohammed Daoud Khan, which gave the Soviet Union a free hand to invade the politically unstable Afghanistan. and by 1980s, Afghanistan became the common battleground for proxy wars between the Soviet Union and the United States, which many believes also gave uprise to the Taliban terrorist group.
However, the Soviet Union lost in 1989, and the US decided to leave the country in the hands of its allies, the Taliban. The then ally left no stone unturned to take the country to the stone age. Taliban became very powerful in Afghanistan and turned against its allies, and later also led to the world’s deadliest and symbolic terrorist attack in US history by crashing two planes into the World Trade Center, which at that time was the most famous building in the world. This started one of the longest war by the United States against the Taliban in Afghanistan. The conflict is now in its 18th year.
Such prolonged war tussle made Afghanistan every major advancement be it technical or social, pegging the country back by a few decades. Mind you Afghanistan used to be a progressive nation with equal rights for men and women and working opportunities for everyone. The country was among the richer and developed nations before the Taliban took over.
The continuous turmoil led to a downfall spree in its GDP starting in the 1980s owing to the loss of capital, labor, infrastructure, trade, and transport. The nation’s 25-percent population is now unemployed and lives under poverty.
The International Monetary Fund (IMF) compiled a report in 2017, which highlighted that the country’s external debts are at an all-time high risk. The report revealed that the country’s debt sustainability largely hinged on donor grants’ inflows – which was 39-percent of the total GDP – against substantial fiscal and external deficits. It read:
“Even a gradual replacement of donor grants with loan financing (a customized illustrative scenario) would quickly lead to an unsustainable debt burden.”
As a result of its high external debt, the World Bank put several restraining order that refrained the country from borrowing any more money. The move by the World Bank left the already economically insufficient nation in a state of high financial emergency. The country can not solely survive on its mining and agricultural projects.
Where There Is No Hope, There Is Bitcoin.
Bitcoin can prove pivotal in helping Afghanistan to get back to its feet, as Bitcoin would open the gates for international markets which have been shut by the various sanctions and restrictions put on it by the same power which was responsible for ruining the country in the first place. Sediq believes there is a great demand for Lithium in the world market given the increasing focus towards creating electric cars. With bitcoin, Afghanistan can make use of its untapped Lithium reserves to revive its economy.
Christine Lagarde, the managing director at the IMF lauded the efforts being put in by Afghanistan to use Blockchain and Bitcoin to help it come out of the decades worth of distress but suggested that the country must make a trial run and start sandbox projects to help it implement the bonds over the blockchain.
Testing is very important since it is pretty evident from Venezuela’s example that how decisions are taken in a hurry can lead to a certain disaster as evident in the case of Petero, the national crypto token issued by central banks. The move was initiated to counter the sanctions put on by the United States. But, the project was completed in such a hurry that it became an utter failure and analysts went as far as calling it a scam.