Crumbs and insurance fraud

By Dave Anderson:

The US supply line from Karachi to Peshwar through the Khyber Pass and onto Kabul is a gravy train.  Everyone makes money on it. Truck owners and drivers have a deep-pocket bidder, security guards have plenty of work, peddlers have consistent traffic, whores have new drivers, the Pakistani military is getting plenty of new toys to point at India, and the local flavors of Taliban and other anti-government militias get a cut as well.  It is in no one's best interest to kill the golden goose.  It is in plenty of peoples' best interest to threaten to eat the gravy train to renegoatiate a better deal, but the cash flow is enormous and widely distributed throughout multiple layers of Pakistani society. 

It also creates numerous counter-productive incentives as I noted earlier this year:

The crumbs that fell off the US funded gravy train were more than sufficient to arm and sustain fighters who were able to deny the US its maximalist objectives.  The more we spend in Afghanistan, the more crumbs we generate, and the more the Taliban and other anti-government and anti-US groups can raise. 

The BBC reports this morning on an interesting set of comprehensive insurance fraud along the Karachi-Khyber-Kabul supply route. 

They say there is evidence to suggest that bombs have been planted in many of vehicles by the "Nato contractors" - individuals or companies who have been contracted by Nato to supply fuel and goods to forces in Afghanistan....

Dost Mohammad, an oil tanker owner from Nowshera district, said a Nato contractor had recently been caught trying to plant a bomb in an oil tanker...

"Only 2,000 litres from the original 50,000 litres had been left in the tanker to cover up the crime," he said.

Dost Mohammad said it is a win-win situation for the contractors.

"If an old vehicle is burnt, Nato gives them money for a new vehicle. In addition, they receive compensation for all the fuel lost as well."

48,000 liters or more of oil is worth $40,000 or more on the open market.  That is roughly 40 times the GDP per capita of Pakistan, so it is the equivilent of an armored car in America "losing" $2.5 million dollars.  It is serious money that is sufficient to set someone up for life especially since they are not on the hook for the replacement of the goods and services if they can plausibly blame the current enemy of the month for firebombing the truck.  Simple, basic insurance fraud that diverts significant money into the non-state networks of Pakistan.

At one level this is simple; at another, it is a continuation of the incentives of basically everyone who actually lives in the region to not see a decisive US victory in Afghanistan.  If the US wins, the gravy train is shut down and smuggling/fraud and honest delivery of services at massively inflated prices go away as well.