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. Last Updated: 07/27/2016

Kabul Drawing Foreign Businesses

KABUL, Afghanistan -- On the first day of her first business trip to Kabul, in January 2003, Virginia Sheffield found her car surrounded by "three very excited Afghans with guns." It was the sort of incident that plays to foreign fears of Afghanistan as a lawless, violent place that is best avoided by Western capitalists.

But contrary to that popular perception, Sheffield and other corporate executives say, Afghanistan is the place to be these days. Its economy is booming, opening up huge opportunities for foreign businesses small and large, they say, and the risk that looms so large in the American imagination of falling prey to thugs or terrorists is not only exaggerated, it is diminishing.

"This mentality that it's very risky is not the reality," Sheffield said.

Her encounter with the three men with guns took place as she and her husband were entering the grounds of the Presidential Palace to meet with President Hamid Karzai. Just as they drove past a sign warning that no photography was allowed, her husband fumbled with his camera, setting off the flash and prompting the rush of guards to their car. "I almost got arrested," she said, but after she showed them the photo her husband had inadvertently taken of his feet, they let the couple go through.

Since then, she says, she has spent more time in Afghanistan than in the United States to run Sheffield Advisors, a consulting firm for companies doing business in Afghanistan, and to help oversee International Business Services-Afghanistan, which provides temporary office space and other support to newly arrived companies.

Shaun Brogan, rooms manager at the $25 million, 177-room Kabul Serena Hotel scheduled to open this month in downtown Kabul, downplayed the risk of terrorist attack and says misplaced trepidation about it is bad for business.

In mid-2004, he says, he saw rockets exploding over the city and "heard the bangs, but it wasn't really scary." Foreigners tend to think rockets go off every day, he said, while they are in fact quite rare. But he said that perception made it hard to recruit employees from abroad.

In addition, he said, it is difficult to get international corporations to send people in to sell their products or to help train local employees. "It's very frustrating when you're here trying to set up your business," Brogan said. "That's a psychological barrier that things are scary, making them not invest."

To be sure, the threat of violence remains, but foreign businesspeople face up to it stoically, if not casually. "We have had plenty of close calls, rocket attacks in Kandahar which are very close to home," said Ben Preston, manager of the Kabul office of the delivery service DHL Worldwide Express.

In fact, it is more the chaos of everyday life -- the pell-mell pace of construction everywhere, the erratic traffic, the worsening pollution, the unreliability of the work force -- that bothers many foreign businesspeople more than the perceived security threats do.

The lack of oversight can creep into other areas, as well. "It's desperate," Preston said. "What is there in terms of contract law, or any kind of law?"

Noor Delawari, director of Afghanistan's central bank, acknowledged the regulatory confusion but said the economy was booming despite it, expanding at a projected 14 percent this year, up from 10.6 percent in 2004. Much of the expansion is being fueled by construction as the country rebuilds after nearly three decades of war.

Aside from the improving security picture, it is the bustle that is feeding the upbeat attitude of foreign business executives. Sheffield said that it was once possible to show visitors devastation from the wars. "Not any more," she said. "It's disappearing fast."