Can Afghanistan, Iraq and PAK tackle corrpuption?

http://thediplomat.com/2012/11/30/china-introducing-the-middle-easts-future-hegemon/ November 30, 2012 By J. Michael Cole While China's oil dealings with countries like Iran and Sudan receive global attention, its budding relationship with Iraq may turn out to be the most important. A lot of attention has been paid in recent years to energy-hungry China’s billion-dollar bids on oil fields in Canada and the Asian giant’s reliance on oil from countries like Iran and Sudan to fuel its growing economy. But its growing interest in another major oil producer has gone largely unnoticed, and if current trends continue, that Middle Eastern country could become the world’s next “oil superpower,” with China, not the West, acting as both Iraq’s main partner and top beneficiary of its rich resources in what some now call the B&B trade axis (Beijing and Baghdad). In the past decade or so, China waited patiently on the sidelines while the U.S. and its allies coped with Iraq’s new, and often times messy internal dynamics that followed the 2003 overthrow of Saddam Hussein by a U.S.-led coalition. China reemerged in 2008, however, to sign post-Saddam Iraq’s first major oil deal with a foreign country. While the majority of Iraqi oil deals in the post-Saddam era were awarded to Western firms, the Western shift to a more amenable and independent oil-rich Kurdish region in the north amid disenchantment with southern Iraq is creating a vacuum that China has found hard to resist. Even more so than Russia, a traditional player in Iraq during the Soviet era, China has the capital that Baghdad is desperately seeking to build its oil and gas infrastructure, while Iraq has crude potentials that are alluring to a China that seeks to diversify its energy sources. Already, Chinese oil firms have taken an active interest in acquiring deals that had been awarded to Western firms in 2009-2010, which the latter are now relinquishing so they can focus on alternative oil fields in Kurdistan. Although talks between China and Iraq go back to at least 1997, major investments have only occurred in recent years, with Chinese National Petroleum Company (CNPC) focusing on the 17 billion barrel Rumaila field — Iraq’s largest — and Halfaya, both in the south. As of 2010, China had made five major oil investments in Iraq since the overthrow of Saddam Hussein, one of which was in Kurdistan. Relations are already on the right foot. To create goodwill with Baghdad, Beijing in 2010 forgave about 80 percent of Iraq’s $8.5 billion debt to China and has signed multibillion-dollar trade deals in various sectors, including industry, government, tourism, and transportation. As China seeks to expand its fledging defense industry, it is not unreasonable to think that at some point Iraq will turn to it for military hardware, which in turn would create incentives for greater military cooperation between the countries and further entrench China’s presence in Iraq. Photo Credit: Government of China ============ Can Afghanistan tackle corruption? A scandal has cost Afghanistan's Kabul Bank hundreds of millions of dollars. And a new report now says political meddling is preventing efforts to find out why it happened. The scandal began nearly three years ago. "Within the government, within the cabinet of President Karzai, there was immense pressure and immense understanding between all of them that we have to, really, flourish this bank. So it is very crystal clear that President Hamid Karzai and his royal family, royal team, or his political allies - whatsoever people called them - they were all together into it." - Najeeb Azizi, from Kabul University And now, thanks to an independent audit, Kabul Bank is once again in the spotlight. The report says the bank funneled $900m into the pockets of the country's political elite. Dragan Kos, who heads up the committee that produced the report, says that what many in Kabul have long believed is that a corrupt elite benefitted at the expense of other Afghans, and did so with the help of those close to Hamid Karzai, the president. There is no evidence that the president benefited from the loans, but his brother, Mahmood Karzai, did. He denies any wrongdoing, and says he has paid back the loan. But while the political elite allegedly siphoned off money from Kabul Bank, Afghanistan remains extremely poor, with 36 per cent of its population living below the poverty line. Kabul Bank was founded in 2004. And five years later, in 2009, Afghan authorities learnt that it was smuggling money out of the country. After fears of its collapse led to customers taking their money out, it was bailed out by international donors in 2010. "What is at stake here ... is whether the international community are building a system that can sustain itself and whether Afghans themselves are being part and co-opted into a system that they can feel is legitimate." - Peter Middlebrook, from Geopolicity Inc. In April last year, President Karzai announced that the Bank would be put into receivership - a process in which most of its assets were transferred to a new bank. Then in May of the same year, a report by an anti-corruption office said $467m worth of loans were made without proper collateral. So, how will Hamid Karzai handle the aftermath of the Kabul Bank scandal? And what can be done to deal with corruption in Afghanistan? To discuss this, Inside Story, with presenter Ghida Fakhry, is joined by guests: Najeeb Azizi, a former economic adviser to the Afghan ministry of finance and a visiting professor at the economic faculty at Kabul University; Fahim Dashty, the chief editor of Kabul Weekly and president of Afghanistan's national journalist union; and Peter Middlebrook, the managing director and CEO of Geopolicity Inc., an advisory consulting firm specialising in political and economic intelligence. -------------------------------------------------------------------------------- THE KABUL BANK SCANDAL: •A report says Kabul Bank was involved in the embezzlement of almost $900m •The report was funded by international donors and released by Kroll Associates •The brother of President Karzai is alleged to be a beneficiary of fraud •The missing money is said to be equal to five per cent of Afghan GDP •The bank gave illegal loans to a group of 19 individuals and companies •Kabul Bank employed people to forge documents for fake companies •Investigators found 114 rubber stamps used for fake companies •The embezzled money was moved to foreign accounts in 28 countries •The report says the money was smuggled out of Afghanistan by Pamir Airways •The now defunct Pamir Airways was set up with loans from Kabul Bank •Officials promoted Kabul Bank as a model of Western-style banking •The US has threatened to cut Afghan aid unless the guilty are prosecuted •In 2010, revelations of corruption led to a run on the Kabul Bank •The Kabul Bank had to be bailed out by international donors =====================