Afghanistan Merchants Turn Civil War Chaos Into Smugglers’ Paradise

Eleven years ago, Sarajuddin Aryobi was a small-time merchant struggling with the family livestock business. Then the Soviet army entered Afghanistan and Aryobi struck it rich.

Mohamad Fariq’s transport business barely paid expenses in 1975. Thanks to the 12-year-old civil war between the Soviet-backed government and Muslim guerrillas, Fariq now owns 250 trucks.

To celebrate his success, and display it, Fariq recently yanked out a front tooth and replaced it with a gold one.

War and political chaos have created a smugglers’ paradise.

The flood of more than 5 million Afghan refugees to Pakistan, Iran, Dubai, Western Europe and the United States has caused great misery, but from it has blossomed a global network of import-export businessmen.

Truckers, currency dealers, buyers and sellers are scattered around the world, and making money has become even easier since the government in Kabul discarded Marxist theory.

Kabul’s streets are lined with car repair shops that switch steering wheels from the left to the right so vehicles can be sold in Pakistan and India. Towers of new truck tires awaiting re-export stand like totem poles in alleys of the old city’s bazaar.

“Our business climate is better than paradise,” former Finance Minister H. H. Tarzi said in an interview. “I myself would like to be an Afghan businessman.”

Before the war, Afghanistan was dirt poor. Its per capita gross national product, $115, was among the world’s lowest. Twelve years of war and the failed communist experiment has made the country even poorer.

Afghanistan has no heavy industry and its natural gas wells have been capped for more than a year. Its only exports are traditional: carpets, dried fruit and karakul , the curly fleeced skin of newborn lambs.

The name of the game in Afghanistan is re-export--which usually means smuggling--to Pakistan, Iran and India.

Aryobi’s firm, Saraj Trading Co., operates from a mud-brick courtyard off an alley in Kabul. He estimates that $1 billion worth of goods are smuggled to Pakistan, India and Iran each year.

During the 1980s, re-export to the Soviet Union hovered around $400 million a year, said Aryobi, who got into the import-export business by selling Japanese TVs to Soviet soldiers. The Soviet trade dropped to about $50 million when the Soviet army left in February, 1989, after more than nine years in Afghanistan.

Smuggling profits don’t stay long in Afghanistan. Aryobi uses Deutschebank in Frankfurt and Fariq, his trucker, has accounts with Chase Manhattan in New York.

Afghan businessmen can make a success of smuggling because the economies of Pakistan, Iran and India remain generally closed to the outside world.

Ever since Pakistan and India won independence from Britain in 1947, they have tried to protect local industry by imposing huge tariffs on imported goods.

Customs duties are 150% for tires and can reach 200% for television sets. Iranian tariffs also are high.

Some countries, like Japan, make things better; others, like China, make them cheaper. Enter the smuggling Afghans.

Afghanistan always has been a marketplace. Centuries before Christ, traders crisscrossed its mountains on their way to the Middle East and Asia. Silk routes to China passed through Afghanistan, and Chinese curios still turn up in the dusty junk shops of Kabul’s Chicken Street.

Before the civil war, an estimated 50% of Afghanistan’s imports were re-exported. Now, with the collapse of the economy, the Chamber of Commerce says about 95% of imports are shipped out again.

The business centers on the aging warehouses along the muddy Kabul River.

Trucks heavy with goods inch out of dusty alleys and bounce over potholed streets. Boys prod tires with pressure gauges. Drivers with full black beards and wildly colored turbans check their AK-47s, firing rounds into the air.

A year after the Soviet army arrived in December, 1979, Aryobi abandoned his livestock business for import-export. A chance meeting with a Japanese businessmen brought him his first shipment of television sets.

Since 1980, Aryobi says, about 500,000 TVs have moved through his riverside warehouses to neighboring Pakistan and some have gone on to India. He also re-exports 100,000 pairs of tires a year, usually Indian tires to Pakistan and Japanese to India.

Aryobi, 35, does not flaunt his wealth, but 43-year-old Fariq is nouveau riche, his shirt unbuttoned, barrel chest draped in golden chains, fingers laden with rings of lapis lazuli.

When Fariq replaced the tooth with gold last year, he didn’t use a painkiller. “I wanted to feel my wealth,” he said, flashing a newly metallic smile.

In 1983, Aryobi’s profits became a political liability. The communist regime of Babrak Karmal imprisoned him for “price gouging” and he spent nearly three years in solitary confinement.

The government’s attitude toward business began to change after 1986, when the Soviets installed Najibullah, who uses only one name, as president.

Under a policy called National Reconciliation, Najibullah returned to the traditional Afghan way of solving problems. Merchants, tribes and local militias were given autonomy as long as they pledged loyalty to the government.

Afghanistan’s central bank recognized the bustling currency market in Kabul’s old city. State monopolies on sugar and food transport ended and some state-run firms were sold to private investors.

The biggest boon came when the state-run Afghan Cart Co. began to encourage smuggling by selling merchants licenses to import goods, including televisions and other electronic items.

“We needed the money,” explained Tarzi, the former finance minister. More than 15% of government revenues now come from sales of such licenses.

A recent Aryobi deal illustrates the intricacies of Afghan re-export.

In early February, a Pakistani trader wanted to smuggle Indian tires from Afghanistan to Pakistan.

He went to Peshawar, Pakistan, and deposited 50% of the purchase price with a currency dealer, a refugee from Afghanistan. The currency dealer sent a telex to his uncle in Kabul’s currency market, authorizing him to pay Aryobi the funds.

Aryobi, who doesn’t like to keep money in Kabul, transferred a portion to his bank in West Germany through Afghan money dealers in Dubai. He got in touch with Fariq and, within a week, drivers were hauling Indian tires east to Pakistan.

On the way, the trucks passed through hostile territory, controlled by Afghan rebels. Truckers paid off the guerrillas, who operated ad hoc “toll booths” along the way.

The tires arrived at the frontier at night and were smuggled into a warehouse. The next morning, a string of pickup trucks moved them to Pakistan’s biggest city, Karachi, where they were sold. The Pakistani trader then paid the balance in Peshawar.

“We always work like this,” Aryobi said, fingering copies of the telex traffic. “It’s pure trust. That’s the Muslim way.”