Magazine

Afghanistan: Land of War and Opportunity


Where most people see only deprivation and misery, Paul Brinkley sees potential. With luck, business will agree

The skyline of the city of Herat, in the westernmost corner of Afghanistan, is dominated by the Qala Ikhtyaruddin, a 700-year-old stone citadel. On a chilly December afternoon, as the sun begins to dip, the citadel's grounds are largely unoccupied. The general public isn't allowed in until renovations to the time-ravaged site are finished. Paid for in part by a $725,000 grant from the U.S. government, the project is scheduled to be completed at the end of 2011.

Paul A. Brinkley isn't the general public. As U.S. Deputy Under Secretary for Defense, he moves freely behind the barricades, ushering a handful of American visitors, including Silicon Valley executives Atul Vashistha and Mike Faith, the heads of Neo Group and Headsets.com, through dark corridors and up steep stairways to the highest reaches of the fortress. The tour comes after a morning of meetings with the provincial governor and the local university's chancellor and students, all of them pushing, along with Brinkley, for the executives to consider a noble and dangerous proposition: opening up shop in Afghanistan. "I've never regretted taking a businessperson to the theater," Brinkley says. "This is about getting their eyes on the problem."

In Herat, Kabul, and cities large and small, Brinkley serves as tour guide, ambassador, fixer, motivational speaker, and leader of the unofficial Afghanistan chamber of commerce. With all of his titles and duties, he prefers to think of himself primarily as a matchmaker, negotiating high-stakes unions between multinational companies like IBM (IBM) and JPMorgan Chase (JPM) and Afghan officials and entrepreneurs. Building a culture of business is the only way Brinkley and General David Petraeus, commander of NATO forces in Afghanistan, believe they can counteract the legendary forces of destruction here—from decades of war and deprivation to the brutal rule of the Taliban and a reliance on opium as a chief export. "It's an infusion of optimism in what can seem like a hopeless situation," Brinkley says. "The Afghans say, 'People actually want to do business with us? Maybe there is something at the end of the rainbow.'"

The Task Force for Business & Stability Operations was launched in 2006 as part of the Defense Dept.'s effort to link military strategy and economic development in Iraq. For four years the task force recruited Western companies in an attempt to modernize Iraq's banking system and reopen factories. Early results were unsuccessful. Security concerns prevented staff from restarting most heavy manufacturing sites, and overseas companies balked at doing business in Iraq because of the very real possibility that their employees could be wounded or killed. A former chief information officer at JDS Uniphase (JDSU) in California, Brinkley joined the Defense Dept. to help with internal business operations. His work in Iraq spurred the creation of the task force. "When we started our work in May 2006," he says, "[Iraq] was in a complete daily deterioration."

The task force ultimately sponsored more than 200 visits by corporate executives and investors, including Honeywell International (HON) Chief Executive Officer David M. Cote and Boeing (BA) CEO James W. McNerney Jr., which generated investment commitments of more than $5 billion, according to task force data.

That doesn't include oil-related investments; Iraq, home to the world's fifth-biggest oil reserves, has, finally, seen some success in reconstructing its energy industry. On Jan. 3 the country agreed to build pipelines across its shared border with Jordan. "The idea of what the military is trying to do is a constructive one," says Isobel Coleman, a senior fellow at the Council on Foreign Relations. "If you're there for the long haul, creating jobs and sustainable businesses is crucial."

With the Iraq project coming to an end, Brinkley shifted his focus in 2010 to Afghanistan, an even more daunting task. More than 30 years of economic and political distress dating to the Soviet invasion of 1979, and spanning the Taliban era and nearly a decade of war, have turned the country into a synonym for hopelessness. Corruption is rampant—accusations reach all the way up to President Hamid Karzai's family—and unlike Iraq, Afghanistan didn't have much of an economic base to begin with: Afghanistan's gross domestic product in 2009 was $26.9 billion, ranking it 110th in the world. Iraq is 65th, with a GDP of $109.9 billion, according to the CIA World Factbook.

In Iraq, thanks in part to Brinkley's efforts, General Electric (GE) is building power plants to meet the country's power shortages; Honeywell opened an office last year to sell equipment to the oil and gas industry; and Daimler (DAI), having created a motor vehicle training workshop in 2008, established a Baghdad office a year later. "Success depends on those iconic companies," Brinkley says. "You augment them with mid-tier companies who are more risk-oriented. Your agility and speed comes from there." Brinkley needs to replicate and expand on the process in Afghanistan, using the military's own spending power to promote local companies and convincing multinationals that Afghanistan is not just a safe place but also a land of real opportunity.

Brinkley and his team allowed a Bloomberg Businessweek reporter to shadow them for five days in December as they went about their Red Bull-fueled, stubbornly optimistic work. Arriving in Kabul on a commercial flight, the task force team and one of two business delegations in the country at the time spent a day in the capital before flying to Herat, then back to Kabul for three more days of tours and meetings. From the natural resources buried in the mountains and valleys where blood is still shed almost daily, to the women-run workshops tucked in corners of Kabul, to the restless students unwilling to become another lost generation, Brinkley sees huge potential. Whether he can convince anyone it's worth the risk is another matter.

With his shaved head, tieless suit, and black leather jacket, Brinkley cuts a distinctly non-Afghan figure. He peppers his conversations with simple phrases such as "Tashakor" (thank you) and frequently puts his right hand over his heart, an Afghan gesture of respect. In meetings, he listens more than he speaks, usually making introductions and then retreating with a self-effacing remark. During an encounter with Herat University's chancellor, he introduces Vashistha and Faith, plugs their Silicon Valley credentials, and then says, "That's my entire contribution, so I'm going to step back."

Brinkley, 44, grew up outside Dallas and earned undergraduate and master's degrees in engineering from Texas A&M University. He is now known, to members of the task force, as "Mr. Brinkley" or "the boss."

Brinkley's pitch to executives starts at home. In the months before the December trip he was in San Francisco, Los Angeles, Dallas, Houston, and New York—and working the phones in between from his Pentagon office—to make his case. Like any good salesman, he believes that if he can just get the customer onto the showroom floor, he can close a deal. "We tap into something," says Brinkley. "There is a huge desire to support the mission among all Americans. People want to help and are at least willing to take a look at it. We just tell them, 'Come over and see for yourself.' "

Once the executives are in the country, Brinkley the matchmaker emerges. Between meetings one day in Kabul, Brinkley mentions the similarities between his job and eHarmony, a website that uses technology to figure out which singles will make the best married couples—only instead of producing children, these partnerships are meant to nurture Afghan industries and generate profits for both parents. Like any good coupling, what comes of it isn't ultimately up to the person who made the introduction. "If there's money to be made on a risk- adjusted basis that makes American CEOs comfortable, they're going to do it," says the Council on Foreign Relations' Coleman. "Having a nice dog and pony show may speed that process, but it's not going to change the calculus."

In Afghanistan, Brinkley has assembled a 75-person team with a $150 million annual budget. The group is culled from his own business network, other parts of the government, political campaigns, and nongovernmental organizations. The apparent camaraderie between its members stems from the nomadic circumstances of the job. Stretches of typical Pentagon life back in Washington alternate with long visits to a country where the mood can swing from uneasy to scary, depending on the day and location. "We live where we work," Brinkley says. "You get to know aspects of people you normally wouldn't see."

The task force's work in Afghanistan consists largely of an endless stream of meetings, many of which are conducted over platters of nuts and raisins and cups of green tea. Sleep is elusive. That owes in part to the brutality of time zones: Just as a Kabul workday ends, Washington and New York, nine and a half hours behind, are getting started. A second workday essentially begins after dinner, with BlackBerrys buzzing throughout the evening. There's no delineation between weekday and weekend, especially given that the Afghan weekend falls on Friday and Saturday. Clothing retailer kate spade new york's chief merchandising officer, Sydney Price, arrived on a Saturday, had what amounted to a working dinner with the task force, and then started Sunday morning with meetings and tours. Brinkley and his staff use their proximity to the guests for the soft sell, talking about what they saw that day, sharing stories aimed at emphasizing the country's humanity.

Security concerns mandate meticulous planning. Over the course of a two-week period, Wall Street bankers, Silicon Valley executives, and Los Angeles-based investors were ferried around Kabul and other parts of the country in armored vehicles for meetings with local business owners, artisans, government officials, and students. To deal with the unpredictability of airline schedules and traffic, team members and visitors often leave their quarters before dawn. Most meals are taken inside the compound; occasionally they are at a hotel restaurant. "I expected it to be a lot more chaotic," says Vashistha. "What I saw was much more of a high-security zone than a war zone."

The Brinkley team typically isn't embedded with the military, which allows them more freedom to work with a range of officials and executives. The group is closely connected to the military mission, though, and Brinkley is exuberant in his loyalty to Petraeus. "He has a phenomenal intellectual range and capacity," Brinkley says of the general. "We're in tight partnership."

Over the course of three December days, Petraeus meets with two separate delegations, including Vashistha's, and has a separate briefing with Brinkley. The general is appreciative of the visitors' curiosity about Afghanistan—and quick to press them to move beyond interest and into commitment. "Just like you can't commute to a fight, you can't commute to business," Petraeus says. When one member of a delegation says the task force has provided a keyhole into what's happening here, Petraeus responds: "We need you to do more than look through the keyhole. We need you to go through the door."

Kabul's infrastructure was designed for about half a million people. The city currently has a population of more than 3 million. Traffic barely moves, and the crumbling roads and bridges are constant reminders that it will take decades before Kabul joins the ranks of modern cities.

Yet flashes of 21st century life are evident. Mobile phones, sold by five different carriers, are everywhere. Afghanistan, with a population of 29 million, boasts 15 million wireless subscribers. This gives hope to outside investors that there's a technological backbone to exploit. "My cell service is better here than in the Bay Area," says Faith of Headsets.com, part of the Silicon Valley delegation. He's a colleague of Vashistha's through their local chapter of the Young President's Organization. Faith says Afghanistan's not yet a big enough market for his company, but he's surprised by the progress he sees. "I'm excited about the possibilities."

Brinkley and his visitors troop up several flights of stairs to visit with Amir Zai Sangin, the government's Minister of Communications and Information Technology, who has the enviable job of proselytizing for what is arguably the most advanced sector of the Afghan economy. An Afghan flag sits in a corner of his wood-paneled office, a large portrait of Karzai hangs behind his desk. Over juice, tea, and cookies, Sangin recounts how Afghanistan created a communications infrastructure from nothing in 2002. "People had to travel to another country to make a phone call," he says. "Now, in Kabul, even the poorest have mobile phones. The beggars have mobile phones."

There are five major telecommunications companies and dozens of domestic Internet service providers. About 80 percent of the population is covered by the telecom infrastructure—a bigger portion than in India, he says. "Our strategy for the last five years was infrastructure. The next five is applications."

While Afghans have been busy talking on their phones, their banking system lay fallow. Historically, Afghans have tended not to trust banks and have avoided using them. When money needed to be moved, transfer agents called hawalas were called in. The notion of a bank as an institution that secures savings and lends out money is still quite alien.

Nadia Dawood, an Iraqi-American, left her job on Wall Street six years ago and started working with the U.S. Agency for International Development. Eventually she landed alongside Brinkley and was charged with trying to build a modern banking system in Iraq. Saddam Hussein's government had set up a network that drove all funds through state-owned and -controlled financial institutions. The task force automated the banking sector and helped install modern services at more than 200 bank branches throughout the country. Like the rest of the task force's members, Dawood has turned her attention to Afghanistan, where among the first orders of business was persuading the government to pay its soldiers and police officers through electronic funds transfers. By the end of last year all of the military and 80 percent of the police were paid on that basis. The next step was persuading them to actually leave their money in a bank.

What the banks were—and where they were—was a question not easily answered when Dawood arrived in February 2010. Now she has a spreadsheet detailing banks' deposits and the number of branches. Getting that data was crucial for the next stage—bringing in a global financial-services company that would connect Afghanistan's monetary system to the rest of the world.

The first bank the team approached was Citigroup (C), which had played a similar role in Iraq. The financial conglomerate was a natural choice, given that it processes the U.S. government's payments abroad and has shown an appetite for working in emerging markets. Still, the work was neither fast nor easy. Citigroup conducted six months of due diligence in Afghanistan, including a weeklong road show with executives at the country's handful of domestic banks. The company made a deal with Afghanistan International Bank, and now the two are helping process payments made by NATO forces to local contractors. "By paying invoices in local currency, it ensures the money stays in the country to stimulate the economy," says Kevin Fitzgerald, the head of Citigroup's public-sector unit in North America, who oversees the company's contracts with the U.S. government. "The entire amount is deposited directly in a bank without being diverted or delayed by a local government agency."

Progress in Afghanistan is never linear. While the implementation of a modern banking system has shown promise, Kabul Bank, one of the country's largest institutions, was beset by a corruption scandal in 2010. Last summer six private security guards were also poisoned and stabbed at a Kabul bank branch in Mazar-e Sharif. Nothing is easy.

Noorullah Delawari, who returned to his native Afghanistan in 2002 after a career spent mostly in Southern California, where he worked at Lloyds Bank's operations there, is one of those pushing to improve the financial system. After a stretch running Afghanistan's central bank, he's now an adviser to Karzai and serves as president of the Afghanistan Investment Support Agency, whose motto is "the Silk Road to Opportunities." AISA is one of the task force's many partners, organizing road shows and pitching businesses in China, Washington, and India. During a meeting in his office with one of the task force's delegations, Delawari rattles off statistics: Through August 2010, 3,267 companies were established in the country, with 38,000 new jobs tied to the investment. "Any positive development will help end this vicious war."

As Delawari speaks, Brinkley sweeps in, straight from the airport. The men embrace. "One of the pleasant surprises coming to Afghanistan was AISA," Brinkley tells the group. "It's like a massive accelerant." At the end of the meeting, Delawari insists that Brinkley accept a small carpet sample, produced at a new factory that AISA and the task force worked to get started, as a gift.

Corruption is often cite


The Good Business Issue
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus