By Rob Taylor
KABUL (Reuters) - At a small shop a stone's throw from the Ghazi Stadium where Afghanistan's former Taliban government used to stage its public executions, Mohammad Hashem is worried about the death of his carpet business.
Carpets are the country's best-known export, but prices, driven sharply higher by war, competition from abroad, red tape and corruption have taken the industry over a cliff, with a 70 percent drop in production over the past few years.
"In three months I have not sold even one," said Hashem, glumly eyeing piles of plush crimson carpet as his breath steams in the winter air filling the room.
"My shop sells mostly to Afghans and the people are very poor right now. There is no money for most people even for food," he says. Hashem has no spare money even to heat his shop, which is open at the front to a snow-lined street.
While Afghanistan's economy has averaged growth of 9.1 percent in recent years as war and reconstruction spending drive up prices, an estimated third of the 30 million population live under the poverty line on less than $1 a day.
And a fall in carpet production, which directly or indirectly employs six million people, or a fifth of the population, will add to economic worries ahead of the withdrawal of foreign troops in three years' time.
Afghanistan's Carpet Exporters' Guild, which overlooks the street on which Hashem's shop is jammed up against others, says prices overseas for Afghan carpets are up to $8,000 a square meter, but local prices at a tiny fraction of that and monthly pay of around $70 are driving workers in search of better pay.
Afghanistan exported almost 388,000 square meters of carpet and non-pile "kilim" rug last year, down from 1,370,000 square meters of carpet and kilim in 2010.
"This year it will be close to 300,000 square meters," said the guild's deputy president, Zarif Yadgari. "No one comes here to buy wholesale. Traders don't come here to buy our products and we are not allowed to go to Europe or America to sell."
Afghan carpets are keenly sought by overseas collectors, but the industry, built upon people working in homes in often remote rural provinces, faces intense competition from machine-made carpets and refugees now producing them from shelters in neighboring Pakistan and Iran, the guild said.
Exiles also have a currency advantage over Afghanistan's economy -- inflated by NATO spending and development contracts pushing up electricity and raw material costs -- while a lack of infrastructure means carpets have to be sold almost solely through middlemen in Pakistan, again pushing up costs.
"The biggest challenge we face is that we don't have direct export access from Afghanistan," said the guild's finance director, Alhaj Samiullah.
Industry representatives blame government red tape and endemic corruption for blocking improvements and marketing that they hope would bring fresh expansion.
"In the past people in provinces could earn good money. But now there are machine-made carpets which people have mostly turned to. We have people inside the country who want to kill our carpet industry," Samiullah said.
The government says it has tried to kick-start production, allocating land for an industry park in the eastern city of Jalalabad.
But at a dusty carpet weaving workshop on the sprawling southern fringes of Kabul, workers pile wool into a steaming vat for dyeing and say the government is not doing enough to sever reliance on sales and exports through Pakistan.
"The big challenge we face is that the number of carpets in the market is down, and so we have to cut our production. We demand the government help traders to find a better market and lift the price," said worker Mohammad Taqi.
Inside, 19-year-old Zahra sits huddled over a loom with her two sisters, copying complex designs from paper into intricate knotted designs.
"The prices of carpets are very low," she said. "It is hard work for us, but we earn less income and our economy is weak. We cannot go to school because we have to work all the time here in order to make money and feed our family."
(Additional reporting by Mirwais Harooni and Samar Zwak; Editing by Nick Macfie)