If the liberation of Egypt weren’t in progress, this story from Afghanistan would be huge front-page news. The losses at Kabul Bank, first reported to be several hundred million in the Times last summer, are actually in the neighborhood of $900 million. Apparently, the bank directors–perhaps including Hamid Karzai’s brother Mahmoud–took a substantial portion of the assets, leveraged them and invested in Dubai real estate, which promptly crashed. The Afghan government does most of its business through Kabul Bank; if it fails, the government won’t be able to pay its civil servants–and a fair amount of international aid, deposited in the bank, may be washed out as well.
The question now is: bail out Kabul Bank or let the Karzai government collapse? The answer, I think, is bail out Kabul Bank, but only if Karzai steps aside in favor of Abdullah Abdullah, who finished second in the rigged presidential election–or a respected technocrat like Ashraf Ghani, who could lead a caretaker government until new elections are held.
The estimable Dexter Filkins, who broke this story last summer, has left the Times for higher ground at the New Yorker and has a piece on this subject this week, which I haven’t read yet but will recommend sight unseen.
Note: Several commenters below seem to think I’m suggesting that the U.S. bail out Kabul bank–an understandable mistake, given our recent history. But I think this is a job for the international community, especially those countries–I’m talking about you, China–who are getting the benefits of the stabilization of Afghanistan (mineral extraction contracts etc.) without helping to pay for the war. The U.S. can play a role in this, but it certainly shouldn’t be the lead dog. We’re doing plenty already.