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Afghanistan’s looming financial collapse is little worry for the Taliban

By:   []

Date: 2021-12

Before the Taliban takeover of Kabul three months ago, three-quarters of Afghan public expenditure came from international donor assistance, including most public-sector jobs in the medical, teaching, policing and legal sectors. Some of the aid was multilateral, with much of it delivered through UN agencies such as UNICEF, while other support came from non-government groups such as Médecins Sans Frontières (MSF, or Doctors Without Borders). This assistance made up 43% of Afghan GDP – and most of it ceased within days of the Taliban forming a government.

Some UN agencies and a few NGOs are continuing to provide aid, and charities may be feeding money into the country, but reserves in the US held by the previous government are frozen and the overall picture in Afghanistan is of a near-collapse of the economy – with levels of hardship at risk of tipping over into a catastrophe as the winter takes hold.

Reuters reported this week: “The United Nations on Monday pushed for urgent action to prop up Afghanistan’s banks, warning that a spike in people unable to repay loans, lower deposits and a cash liquidity crunch could cause the financial system to collapse within months.”

Abdallah al Dardari, head of the United Nations Development Programme in Afghanistan, told Reuters: “We need to find a way to make sure that if we support the banking sector, we are not supporting [the] Taliban. We are in such a dire situation that we need to think of all possible options and we have to think outside the box. What used to be three months ago unthinkable has to become thinkable now.”

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There is little sign of that new thinking so far, and while more help may start to trickle through, especially via UN agencies, most Western countries, including those that have fought two decades of failed war, are refusing to provide general assistance to the country.

Their grounds for refusal are that any such help involves working directly with the Taliban government, and that is wholly unacceptable. And there is widespread sympathy for that view, especially in relation to the post-takeover position of women, so graphically described in Mahzad Elyassi’s recent report for openDemocracy.

The West backs off

Despite the fact that the West could intervene, the Taliban are generally being blamed for the impending crisis. The determination to resist formal diplomatic contact remains firm, and although some talks continue in Doha, these partly relate to the US fear of an al-Qaida resurgence.

What does that mean for the near future? Is the Taliban regime heading for collapse in the face of a humanitarian disaster? In even thinking that, any Western politician, policymaker or commentator needs to understand two key elements – one is linked to various factors in Afghanistan’s regional dealings with its neighbours, and the other is on the national level within the country. The two elements together make it likely that the Kabul regime is here to stay.

On the regional level, Russia sees the 20-year Western defeat as useful in terms of its own status, and so will be keen to avoid the collapse of Afghanistan into a failed state. It has a particular interest in Afghan drug production and trafficking. The drug issue is also of major concern to Iran. Although it is also satisfied with the West’s poor results, it fears a failed state on its border and losing its many links in Herat and across much of western Afghanistan.

Both Russia and Iran lack the means to pump substantial financial assistance into Afghanistan, but they are likely to privately support any UN initiatives. Insofar as it has influence, Russia will no doubt use its continuing diplomatic presence in Kabul to encourage some moderation in the regime, not least on women’s rights, but the influence is likely to be minimal.

Two other countries in the frame are Pakistan and China. The Islamabad government may downplay its influence in Kabul, but its powerful Inter-Services Intelligence organisation and armed forces have substantial influence on the Taliban. Pakistan’s main concern is to maintain stability.

In the short term, Pakistan has been the main winner in the Taliban takeover, primarily because India has been the main loser. For Pakistan, a failed state to its west would be a disaster, allowing India a possible re-entry, and so any risk of a Taliban collapse will therefore be met with plenty of military aid.
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