Afghan business thrives on Iran's border

When Hajji Zekrullah Ahmadyar drives out of Herat, he witnesses an urban tableau that is in many ways atypical of modern Afghanistan.

Mr. Ahmadyar navigates over smooth asphalt as the car passes this city's broad, clean-swept avenues. He soon reaches some 70 factories fed by 24-hour power. When he arrives at his own mineral-water bottling company, he strolls to the new plant he is building. Business is good, he says, so he is expanding his operations.

In many places, paved roads, clean sidewalks, constant power, and relative security would be considered modest achievements. But in Afghanistan, they make Herat a model for what the country could someday become. The city is a window on how Afghan entrepreneurism can take hold when given the time and security to flourish – and what role Afghanistan's neighbors can play in helping to create these conditions.

Yet Herat's culture is still unique among Afghan cities. Its success is a blend of geography and good business sense, each intertwined with this city's vaunted history as the Silk Road's gateway to Central Asia.

Where once spices and camels found passage through this parched desert outpost, now cars and televisions from the Middle East are taxed in its customs houses, generating the wealth for what one expert calls the Dubai of Afghanistan.

"This is the culture of the people of Herat, and this is the positive influence of Iran," says Mohammed Rafiq Shahir, president of the Council of Professionals, a group of analysts and businesspeople here.

In contrast with Pakistani border areas, which have been overrun by the Taliban, Herat – just 75 miles from the Iranian border – has flourished with the help of Iran, one of the Karzai government's strongest supporters. In Herat, for example, Iran has linked the city to the Iranian power grid and built a highway to the border.

More important, the border areas have been largely peaceful, allowing Herat to concentrate on what it does best: business. Since 2001, Herat has attracted $350 million in private investment for industry – more than any other Afghan city, including Kabul, which is some 10 times larger. In total, 250 medium- and large-scale factories have been built in Herat, according to the Afghan Investment Support Agency. The northern city of Mazar-e Sharif comes second with 100 fewer.

It is a legacy of Herat's location. As a trading hub for more than a millennium, Herat has always had money. By some estimates, the money collected at customs houses in Herat is Afghanistan's largest source of revenue, bringing in $1 million a day in duties on goods imported from Iran and Turkmenistan.

Successive administrations – from the Communists to the Taliban to the Karzai government – have sought to take their share. But strong local warlords and diffuse national authority have kept much of it here.

In the shade of Khorasan Street, beneath tarps strung from second-floor windows to offer relief from the desert sun, Herati shopkeepers say they are eager for Afghan-made products. Among the multicolored boxes and bottles that look like a rainbow avalanche of soaps, shampoos, and cookie wrappers, merchants say many of the goods were made locally.

"Compared with the past, we have fewer things from Iran and we have more things from Afghanistan," says Abdul Qader, a shopkeeper.

It is a sign that Herat has used its business acumen to stand on its own, says Gov. Syed Hossein Anwari. "Different parts of Afghanistan have different talents," he says, adding that what sets Herat apart is its creativity. "If I explain the success of Herat to other governors, I tell them that it is the people," he says.

Neighbors have collected money among themselves to pay to have their streets paved, taking bids from Afghan and Iranian contractors. The city's streets are relatively free of garbage. It is the culture of independence and pride drawn from Herat's legacy as a leading city of Khorasan, the ancient Persian homeland whose remnants still resonate from the blue-tiled mosques and minarets of Herat, says the governor. To others, however, it is merely the fresh expectations that have come with a prosperity unique in Afghanistan.

"It is possible if we speak of the culture of Herat, we are speaking of a culture that demands more," says Mr. Shahir.

With such wealth at hand, Herat has become Afghanistan's finishing school for entrepreneurs. "As our elders always said, 'When a Herati is born, a businessman is born,' " says Ahmadyar, the mineral water entrepreneur.

Though he was the youngest son of his family, Ahmadyar never had any notions of becoming anything other than a businessman. "I was not making castles in the sky," he says. "I was thinking I would make the business of the family."

That meant importing cigarettes from Bulgaria. And so he did for a time. But the new regime has brought new opportunities. "Since 2003, when the government of Afghanistan was established, the Herati people have started to focus more on industry – before that, we were just involved in trade," Ahmadyar says.

He now is involved in construction – Afghanistan's largest legal industry – and when the government offered land in a new Herat business park tax-free for five years, he saw another opportunity. He didn't even know what he would do – perhaps make soda. But a lab test of the water showed it was so pure that he decided to open a mineral-water business.

So far, he has invested $600,000 in Zalal water, and it is profitable, he says. With his new facilities coming on line, he might consider starting a soda brand, after all.

•Mr. Sappenfield is the New Delhi correspondent for the Monitor and USA Today.