Opinion Brief

A bank bailout for Afghanistan?

A run on Kabul Bank — the nation's largest — is triggering fears of an Afghan financial meltdown. Should the U.S. step in?

Panicked customers are pulling money out of Afghanistan's largest bank as rumors spread of its possible insolvency. Now, Kabul Bank's executives and investors are calling for a U.S. bailout to prevent a full scale run on the financial institution. American and Afghan officials are worried that a collapse at the bank, which allegedly blew a fortune on bad investments, could trigger a meltdown of the country's financial system that would overwhelm the government and aid the Taliban. Should Washington step in and bail out the bank?

Sadly, we may have no choice: We must act now, says Amy Davidson at The New Yorker, to prevent our war in Afghanistan from being "compromised by a bank." Letting Kabul Bank collapse would leave Afghan police and soldiers without pay, provoke civil unrest, and undermine our efforts to win hearts and minds against the Taliban. With so much at stake, American taxpayers may "end up bailing this bank out" whether they like it or not.
"Too corrupt to fail?"

A bailout will do nothing unless we get rid of Karzai: Kabul Bank is run by President Karzai's cronies and family members, says Juan Cole at Informed Comment, which is why nothing was done about its irresponsible loans and investments. A bail-out won't tackle the root of the problem: The "Ponzi scheme" that is the Karzai government. Until this "corrupt and rotten" president is impeached, we will be throwing our money down a drain.
"Collapse of Kabul Bank points to fatal corruption of Karzai government"

Obama is facing a serious dilemma here: There are good reasons for the U.S. to guarantee Kabul Bank's deposits, says Adam Rust at Bank Talk. That money belongs to "teachers, police officers, and soldiers" — the very people that "Afghanistan needs... if the country is going to move toward a modern economy." But if Obama is seen to be helping "looters in Kabul" while Americans suffer at home, it could cost his administration dearly, too.
"Problems with Kabul Bank"

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