The UK and its partners must commit to Afghanistan

The Afghan people were promised a country where human rights are respected and protected. We cannot

Osama Bin Laden's death has fuelled questions about the UK's presence in Afghanistan. Amidst all the debate, we are in danger of losing sight of the crucial point: when the international forces leave Afghanistan, they must leave behind national forces capable and ready to protect the Afghan people – or risk the country plunging back into civil war.

July marks the start of yet another chapter in Afghanistan's story when international forces begin to hand over responsibility for security to the Afghan army and police. The handover is due to be completed by the end of 2014 – a dauntingly ambitious timetable in this fragile country.

It is far from certain that Afghanistan will have an adequately professional, accountable national security force by the time the international forces leave. Yet this, above all, is what will determine the legacy the UK and its partners leave behind after a long and costly war.

The ousting of the Taliban in 2001 was heralded as a defining moment for the Afghan people – a "triumph for human rights", in the words of the US state department. Four years later, when more than 50 nations gathered in London to discuss the rebuilding of Afghanistan, there was still a sense of optimism about the country's future.

The leaders at that conference knew that a professional, nationally respected and ethnically balanced police and army were vital to building a stable and prosperous Afghanistan. They agreed they would help to create these security forces by the end of 2010. That deadline has now passed – but few would claim that the expectations of the Afghan people have been met. Instead, amid dwindling hopes for Afghanistan, efforts to build the nation's security forces stand out as one of the greatest failures of the past decade.

Basic instincts

In February the head of Nato's training mission in Afghanistan, Lieutenant General Caldwell, candidly acknowledged the grave mistakes made in the attempt to rapidly develop the national security forces. In particular, he admitted the international military have prioritised quantity over quality, with devastating results.

As he said: "We sent [police] into service with no training, no police education, and with only the promise to train [them] some day . . . and we wondered why so many Afghans felt their police were corrupt and ineffective . . . Well, they were."

Indeed, one official working for the International Security Assistance Force (Isaf) said that, as late as 2008, "community members were basically rounded up off the street, told they were doing cash-for-work, and then they'd turn up at training and told they were police". There are currently an estimated 40,000 police who have not received even the most basic training. It's not surprising they're so derided by the Afghan public.

But it's not just about international governments keeping their promises. Afghan communities desperately want security and have high hopes for their own security forces. Training is a big problem, but so, too, is the lack of accountability of the police and army. Many Afghans believe – justifiably so – that Afghan soldiers and police are able to carry out abuse with impunity.

Last year, a young girl was raped by Afghan soldiers and then shot in the head when she tried to resist. The alleged perpetrator was assisted to flee the area by members of the security forces. An investigation was finally initiated under pressure from the army's legal advisers, but there was no investigation into the attempted cover-up.

In another incident, two women were lashed in public by local elders as police stood by laughing and clapping. The authorities told the Afghan Independent Human Rights Commission (AIHRC) that it wasn't possible to carry out an investigation.

When will they ever learn?

This perception that the Afghan police and army are able to get away with rape and other serious human rights abuses is undermining popular support for the Afghan government – with grave political implications. As one investigator with the AIHRC explained, "Everybody knows that the Taliban abuse human rights, but people have more hope from their own forces. And where there's a lot of hope, there's a lot of blame."

We know that the west's neglect of Afghanistan after the Soviet withdrawal contributed to the ongoing conflict and instability. Lessons need to be learned from past mistakes.

War in Afghanistan is not inevitable. If Afghans see justice being done, and feel protected from violence by an army and a police force that are accountable to the public, there's a vastly better chance that international efforts could succeed in breaking the seemingly endless cycle of war.

The Afghan people were promised a country where human rights are respected, protected and governed by the rule of law. We cannot afford to let them down – for their sakes and for our own. It's not yet too late, but without genuine political commitment at the highest levels of civilian and military leadership to build the kind of national security forces that Afghans can trust, it soon will be.

Rebecca Barber is a humanitarian policy officer with Oxfam and the author of a recent report on Afghanistan, No Time to Lose.

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We're racing towards another private debt crisis - so why did no one see it coming?

The Office for Budget Responsibility failed to foresee the rise in household debt. 

This is a call for a public inquiry on the current situation regarding private debt.

For almost a decade now, since 2007, we have been living a lie. And that lie is preparing to wreak havoc on our economy. If we do not create some kind of impartial forum to discuss what is actually happening, the results might well prove disastrous. 

The lie I am referring to is the idea that the financial crisis of 2008, and subsequent “Great Recession,” were caused by profligate government spending and subsequent public debt. The exact opposite is in fact the case. The crash happened because of dangerously high levels of private debt (a mortgage crisis specifically). And - this is the part we are not supposed to talk about—there is an inverse relation between public and private debt levels.

If the public sector reduces its debt, overall private sector debt goes up. That's what happened in the years leading up to 2008. Now austerity is making it happening again. And if we don't do something about it, the results will, inevitably, be another catastrophe.

The winners and losers of debt

These graphs show the relationship between public and private debt. They are both forecasts from the Office for Budget Responsibility, produced in 2015 and 2017. 

This is what the OBR was projecting what would happen around now back in 2015:

This year the OBR completely changed its forecast. This is how it now projects things are likely to turn out:

First, notice how both diagrams are symmetrical. What happens on top (that part of the economy that is in surplus) precisely mirrors what happens in the bottom (that part of the economy that is in deficit). This is called an “accounting identity.”

As in any ledger sheet, credits and debits have to match. The easiest way to understand this is to imagine there are just two actors, government, and the private sector. If the government borrows £100, and spends it, then the government has a debt of £100. But by spending, it has injected £100 more pounds into the private economy. In other words, -£100 for the government, +£100 for everyone else in the diagram. 

Similarly, if the government taxes someone for £100 , then the government is £100 richer but there’s £100 subtracted from the private economy (+£100 for government, -£100 for everybody else on the diagram).

So what implications does this kind of bookkeeping have for the overall economy? It means that if the government goes into surplus, then everyone else has to go into debt.

We tend to think of money as if it is a bunch of poker chips already lying around, but that’s not how it really works. Money has to be created. And money is created when banks make loans. Either the government borrows money and injects it into the economy, or private citizens borrow money from banks. Those banks don’t take the money from people’s savings or anywhere else, they just make it up. Anyone can write an IOU. But only banks are allowed to issue IOUs that the government will accept in payment for taxes. (In other words, there actually is a magic money tree. But only banks are allowed to use it.)

There are other factors. The UK has a huge trade deficit (blue), and that means the government (yellow) also has to run a deficit (print money, or more accurately, get banks to do it) to inject into the economy to pay for all those Chinese trainers, American iPads, and German cars. The total amount of money can also fluctuate. But the real point here is, the less the government is in debt, the more everyone else must be. Austerity measures will necessarily lead to rising levels of private debt. And this is exactly what has happened.

Now, if this seems to have very little to do with the way politicians talk about such matters, there's a simple reason: most politicians don’t actually know any of this. A recent survey showed 90 per cent of MPs don't even understand where money comes from (they think it's issued by the Royal Mint). In reality, debt is money. If no one owed anyone anything at all there would be no money and the economy would grind to a halt.

But of course debt has to be owed to someone. These charts show who owes what to whom.

The crisis in private debt

Bearing all this in mind, let's look at those diagrams again - keeping our eye particularly on the dark blue that represents household debt. In the first, 2015 version, the OBR duly noted that there was a substantial build-up of household debt in the years leading up to the crash of 2008. This is significant because it was the first time in British history that total household debts were higher than total household savings, and therefore the household sector itself was in deficit territory. (Corporations, at the same time, were raking in enormous profits.) But it also predicted this wouldn't happen again.

True, the OBR observed, austerity and the reduction of government deficits meant private debt levels would have to go up. However, the OBR economists insisted this wouldn't be a problem because the burden would fall not on households but on corporations. Business-friendly Tory policies would, they insisted, inspire a boom in corporate expansion, which would mean frenzied corporate borrowing (that huge red bulge below the line in the first diagram, which was supposed to eventually replace government deficits entirely). Ordinary households would have little or nothing to worry about.

This was total fantasy. No such frenzied boom took place.

In the second diagram, two years later, the OBR is forced to acknowledge this. Corporations are just raking in the profits and sitting on them. The household sector, on the other hand, is a rolling catastrophe. Austerity has meant falling wages, less government spending on social services (or anything else), and higher de facto taxes. This puts the squeeze on household budgets and people are forced to borrow. As a result, not only are households in overall deficit for the second time in British history, the situation is actually worse than it was in the years leading up to 2008.

And remember: it was a mortgage crisis that set off the 2008 crash, which almost destroyed the world economy and plunged millions into penury. Not a crisis in public debt. A crisis in private debt.

An inquiry

In 2015, around the time the original OBR predictions came out, I wrote an essay in the Guardian predicting that austerity and budget-balancing would create a disastrous crisis in private debt. Now it's so clearly, unmistakably, happening that even the OBR cannot deny it.

I believe the time has come for there be a public investigation - a formal public inquiry, in fact - into how this could be allowed to happen. After the 2008 crash, at least the economists in Treasury and the Bank of England could plausibly claim they hadn't completely understood the relation between private debt and financial instability. Now they simply have no excuse.

What on earth is an institution called the “Office for Budget Responsibility” credulously imagining corporate borrowing binges in order to suggest the government will balance the budget to no ill effects? How responsible is that? Even the second chart is extremely odd. Up to 2017, the top and bottom of the diagram are exact mirrors of one another, as they ought to be. However, in the projected future after 2017, the section below the line is much smaller than the section above, apparently seriously understating the amount both of future government, and future private, debt. In other words, the numbers don't add up.

The OBR told the New Statesman ​that it was not aware of any errors in its 2015 forecast for corporate sector net lending, and that the forecast was based on the available data. It said the forecast for business investment has been revised down because of the uncertainty created by Brexit. 

Still, if the “Office of Budget Responsibility” was true to its name, it should be sounding off the alarm bells right about now. So far all we've got is one mention of private debt and a mild warning about the rise of personal debt from the Bank of England, which did not however connect the problem to austerity, and one fairly strong statement from a maverick columnist in the Daily Mail. Otherwise, silence. 

The only plausible explanation is that institutions like the Treasury, OBR, and to a degree as well the Bank of England can't, by definition, warn against the dangers of austerity, however alarming the situation, because they have been set up the way they have in order to justify austerity. It's important to emphasise that most professional economists have never supported Conservative policies in this regard. The policy was adopted because it was convenient to politicians; institutions were set up in order to support it; economists were hired in order to come up with arguments for austerity, rather than to judge whether it would be a good idea. At present, this situation has led us to the brink of disaster.

The last time there was a financial crash, the Queen famously asked: why was no one able to foresee this? We now have the tools. Perhaps the most important task for a public inquiry will be to finally ask: what is the real purpose of the institutions that are supposed to foresee such matters, to what degree have they been politicised, and what would it take to turn them back into institutions that can at least inform us if we're staring into the lights of an oncoming train?