Talking Business

Another contradiction between perception and reality in Washington or in the mainstream media in the United States is that the insistence on having “liberal democracy” in Eastern countries overlooks the fact and the reality that strong, disciplined, and authoritarian regimes in the Eastern world who have zero-tolerance for corruption and graft are actually ideal environments and situations for foreign direct investment from the West. The biggest turnoff for foreign investors from the West, as I learned from my experiences assisting an Afghan ambassador, is the combination of corruption and insecurity as a result of Western-backed governments who do not have support from the locals.

Paradoxically, the situation in Afghanistan now is better for foreign investment from the West than it was in previous years when the United States occupied Afghanistan militarily and set up a puppet government which the locals did not accept because of credibility and legitimacy issues. I heard a story about an Iranian businessman who I know personally, who in the early years of the American invasion of Afghanistan in the early 2000’s went from Iran to Afghanistan with approximately 30 million dollars to invest there. Once the money exchanged hands, he never saw the light of day again, and the money was gone in the blink of an eye. And he had no recourse whatsoever to get the money back, because of a dysfunctional government which was thoroughly corrupt and illegitimate. Imagine 30 million dollars disappearing in the blink of an eye, because it exchanged hands and you do not know where it went. 

That was the situation in Afghanistan over the last couple of decades. If you cannot enforce and protect basic property rights because of a corrupt and weak government that is overrun by drug-trafficking militias and kidnapping mafias who take property that does not belong to them, then how do you expect business and investment to come to your country from the West? And the fact that basic property rights could not be enforced because of a corrupt and weak government was a major turnoff for investors from the West who were seeking to do business there over the course of the last couple of decades. There is no doubt that banks and business are yearning to go into places like Iran, Russia, China, India, Afghanistan, and perhaps even North Korea because they are essentially places with potential that has been largely untapped. The biggest obstacle towards an opening for Western banks and businesses, however, is a trivial matter of interpretation regarding “democracy” and human rights amongst certain circles in Washington as well as other Western capitals. 

Obviously, given the differences in culture and history, these aforementioned countries will have an interpretation of democracy and human rights that differs from a Western interpretation of democracy and human rights. The question is, will American banks and businesses allow a dumb and trivial difference in legal interpretation stop the influx of money and enterprise into places where the growth potential is higher than any other region of the world at the moment? If we do not allow an interpretation of democracy and human rights to stop us from doing business with Saudi Arabia, for instance, then why would a dumb and trivial interpretation of democracy and human rights stop these banks and businesses from doing business and investing in a region of the world – namely, Asia – which is expected to boom in the coming years? Some food for thought perhaps. 

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