Tomorrow is the first day the Taliban will be in sole charge of Afghanistan.
But are they really in charge?
Where’s the government? It’s been a fortnight since Kabul fell to the Taliban but we’re yet to hear who will head Afghanistan’s administration, who will be the finance minister, the foreign minister etc etc. Apparently, the Taliban said they would not announce a government until all foreigners had left, which is rather an extraordinary promise. Sounds a bit childish, right? Shades of “I’ll sing when you’re not looking”!
How will the country manage its finances? Until the Taliban’s reconquest, foreign aid accounted for 75 per cent of the Afghan government’s budget and some 40 per cent of GDP. That’s on hold, for now and the US has also frozen more than $9 billion in Afghan central bank assets.
Chatham House had a very good paper on the implications of the financial squeeze. First and foremost, it will drive up inflation, including food prices. Second, the Taliban government won’t have the money to pay civil servants or teachers “unless it can maintain its long-standing revenues from transport and illicit activities”.
Non-western countries, the paper noted, may offer some money but not as generously as the US. Saudi Arabia, for instance, has not been particularly beneficient to Pakistan of late. The UAE’s practice is to use “fairly small pots of money to cultivate specific political proxies and militias rather than give large financial packages”. Pakistan, of course, is in no position to help others. Iran too is in the economic doldrums because of US sanctions. China is the only country that could help a Taliban-ruled Afghanistan, but the paper points out, “has not rushed in to extract the presumed $1 trillion worth of minerals beneath the Afghan dust, much to the chagrin of the Ashraf Ghani government”.
Beijing is “concerned by security challenges and high levels of corruption in Afghanistan” so it bought just “a few licenses to preempt others but ended up investing little into building extraction infrastructure or actually extracting. Nor did China include Afghanistan in its Belt and Road Initiative”.
Afghanistan does, however, have a lucrative transport trade, which the Taliban could maintain if satisfies the counterterrorism interests of China, Iran, Russia, and Central Asia. “China opposes any support for Uighur militants from Afghanistan, including the Taliban’s Uighur units. Russia and Central Asia do not want to see any activities of the Islamic State (IS) in Khorasan to leak into Central Asia and beyond. Iran also does not want terrorism leakages into its territory”.
That might be a good way forward because the transport trade, in the last Taliban government, brought the Taliban as much money as drugs. Finally, there is heroin production. The poppy economy is a major source of employment in Afghanistan. The Taliban tried to ban it in the 1990s but failed.
Originally published at https://www.rashmee.com on August 30, 2021.