How does the Taliban engage in the economy?

  It has been a month since the Taliban returned to power in Afghanistan, ending the 20-year military presence of the United States while also pacifying the domestic opposition. Now they are trying to transform military victory into lasting peace and governance, but developing the economy and stabilizing the society is a more difficult task than the military seizure of power, because Afghanistan is on the verge of a double crisis of national economic collapse and food shortages for the people.
  Decades of war have brought Afghanistan not the aura of the “cemetery of the great powers”, but the extreme poverty where 90% of the population lives on less than US$2 a day and the pre-modern tribal society cut off from world civilization. Although the Americans have invested more than US$2 trillion in the past 20 years to promote Afghanistan to build a modern country, the Afghan economy is still a feather in the corner.
  ”After a long period of war, Afghanistan’s domestic economic situation is very bad, people’s livelihood is difficult, unemployment rate is high, and people’s hearts are unstable, foreign capital is withdrawn, and the Taliban are facing huge challenges in developing the economy and improving people’s livelihood after coming to power.” Zou Zhiqiang, a young researcher at the Center for Middle East Studies, Fudan University Analyzed to the reporter of Caijing.
  Being extremely fragile and heavily dependent on foreign aid, the World Bank made a disturbing generalization a few months before the Taliban changed the situation in Afghanistan. The US$2 trillion did not allow Afghanistan to establish a national economic system. This country still relies mainly on financial support from various parties. Some experts even joked: In fact, the Taliban did not mess up the economy when they first came to power, because they did not. The economy messed them up.
A country that depends on funders for food

  Afghanistan’s dependence on foreign aid is shockingly high. When a country with 10% or more of its gross domestic product (GDP) comes from foreign aid, it is considered a country dependent on aid. Afghanistan’s GDP in 2020 is 19.8 billion U.S. dollars, and its per capita GDP is only 510 U.S. dollars. According to World Bank data, about 40% of Afghanistan’s GDP comes from international aid. In 2020, for example, foreign aid led by the United States accounted for more than 42% of Afghanistan’s GDP and provided funds for three-quarters of the country’s public expenditures.
  ”Afghanistan has been dependent on foreign aid for a long time since it got rid of the British threat of independence in 1919. After ‘9.11’, the degree of economic dependence on foreign aid was once as high as 80%, and it has not established a self-sufficient economic system, which is very difficult.” Peking University South Asia Research Wang Xu, the deputy director of the center, pointed out to the Caijing reporter that this long-term foreign aid model has caused four “deficiencies” in Afghanistan-lack of food, lack of medicine, lack of money and lack of people.
  Food shortages are the top priority now facing Afghanistan. About half of the population (18.5 million) of Afghanistan rely on emergency assistance to meet basic needs, more than half of Afghanistan’s children under 5 are severely malnourished, and one third of the population cannot get enough food. Today, the situation is even worse. According to data from the World Food Program, about 40% of Afghanistan’s crops have failed this year due to drought. The new crown pneumonia epidemic has prevented many families from obtaining basic food rations. Wheat prices are 24% higher than the average of the past five years.
  Food prices in Afghanistan are skyrocketing and there is a severe shortage. Kabul resident Abdullah said, “Every Afghan, children, they are very hungry. They don’t have a bag of flour or cooking oil.” Some merchants even said helplessly, “ The thieves are gone, and the bread is gone.”
  Drought and famine are forcing thousands of people to flee from the countryside to the cities. However, the WFP’s stock of aid to Afghanistan may be exhausted by the end of September, and the WFP needs 200 million. U.S. dollars buy food for 20 million Afghans, otherwise it will be an unprecedented humanitarian crisis.
  ”We have 20,000 tons of food in Afghanistan, and 7,000 tons in transit. We still need 54,000 tons of food to support the Afghan people until the end of December. By September, our food will start to be short.” World Food Said Andrew Patterson, deputy director of the Afghan Affairs Department of the Planning Agency.
  ”The economic situation in Afghanistan is not optimistic.” Professor Zhu Yongbiao, director of the Afghanistan Research Center of Lanzhou University, told Caijing reporter that Afghans thought that the Taliban would improve the security situation, but the domestic economy has not recovered. At present, many Afghan people are facing food and clothing problems. Although the international aid is 1 billion U.S. dollars, even if it is fully in place, it will only be enough for Afghans not to starve to death and cannot solve the problem of economic development.
  Food shortages are only a microcosm of the collapse of Afghanistan’s economic and social order. This crisis also includes the lack of medical care and medicine during the epidemic, and the extreme overload of the public health system. Wahid Majrooh said that hospitals are running out of medical supplies, including COVID-19 test kits, some medical staff have not been paid for several months, and international aid is gradually running out. Majruh was the Minister of Health of the former government of Afghanistan. After the Taliban took over, he continued to serve as the Acting Minister of Public Health.
  Women and children are the first to be affected. The Afghan public medical system usually performs 150 caesarean operations every day. The freezing of international aid funds means that 150 mothers will not be able to perform caesarean operations every day, and many people may die, as do babies. In terms of child health, about 5,000 children will be deprived of immunization services every day. Approximately 20,000 children will not receive nutrition services, and staff morale will be severely affected. In addition, with funding from the World Bank, about 500 major operations are performed every day, of which about 50% are emergency cases. These people are also facing death threats without funds.
  ”Our employees have not been paid. It is not just a matter of their wages. We cannot provide food for themselves and their patients, nor can we provide them with medical facilities and the means to help them heal the suffering of their patients. Therefore, this is both A management failure is also a challenge and an emotional trauma.” Majruh said.
Money scarcity may force the Taliban to sell drugs again

  Not only is the public health system short of money, Afghanistan is now falling into a money shortage all over the country, because the external sources of funds have been cut off, and Afghan banks are extremely short of cash. In order to protect the country’s dwindling foreign exchange reserves, the Bank of Afghanistan has set a withdrawal limit of US$200 or 20,000 afghanis per person per week. The Taliban also prohibits the transfer of U.S. dollars abroad, and offenders will be punished.
  According to World Bank data, in addition to relying heavily on foreign aid, remittances from relatives and other overseas accounted for 4% of Afghanistan’s GDP, which means that Afghanistan is one of the most remittance-dependent countries in the world. However, because the Taliban is in power and has not yet been recognized by the international community, Western countries have announced that they will stop their financial assistance, and international money transfer companies Western Union and MoneyGram have also suspended their services in Afghanistan, which effectively cut off the source of overseas remittances. It is now difficult for Afghan civilians to obtain US dollars. Due to the unstable political situation, the local currency Afghani has been depreciated repeatedly.
  Not only is it difficult for ordinary people to obtain funds, the Taliban regime is also facing a serious money shortage. Western powers including the United States and Germany have suspended aid to Afghanistan. The Biden administration has made it clear that any bank assets of the Afghan government in the United States will not Provided to the Taliban.

  Approximately US$9 billion in foreign exchange reserves of the Central Bank of Afghanistan are frozen, most of which are in the United States. Ajmal Ahmady, the former governor of the Central Bank of Afghanistan, who left by a military plane earlier, revealed that most of the reserves of the Central Bank of Afghanistan hold safe and liquid assets, such as U.S. Treasury bonds and overseas gold, while the Taliban The funds available may only account for 0.1%-0.2% of Afghanistan’s total international reserves.
  In addition to Western governments such as the United States, the World Bank and the International Monetary Fund have also halted supplies to Afghanistan, including hundreds of millions of dollars in special drawing rights, which can be converted into currency in times of crisis. As long as the majority of shareholders of these two international financial institutions do not officially recognize the Taliban as a legitimate government, the Taliban will not be able to obtain these funds.
  More than half of Afghanistan’s $5 billion annual working capital comes from foreign aid, which helps the Afghan economy avoid collapse. The Afghanistan Reconstruction Trust Fund, managed by the World Bank, provides approximately US$3 billion a year.
  Freezing foreign exchange reserves and international aid makes it difficult for the Taliban to govern effectively because they need these funds to prevent a complete economic collapse. If the economy collapses, there will be social chaos in this country, and they may not be able to control it. Afghanistan is a country with a high illiteracy rate, a high unemployment rate and an average population age of 18, which can easily trigger social unrest.
  Although financial bargaining chips may force the Taliban to comply with the peace agreement, some experts have also reminded Western governments, led by the United States, to relax, because these extreme pressure methods may be futile and will push the Taliban back into the old business. Earning income from illegal activities, after regaining power, he promised to give up these illegal income.
  “Before taking power, the Taliban’s income mainly came from taxation, drug trade, mineral income and external donations in the controlled area. After taking power, the Taliban’s fiscal expenditure increased sharply, but it lacked national economic governance capabilities, lacked a stable and effective source of fiscal revenue, and the withdrawal of external investment. With the suspension of international aid, large sums of funds have been frozen by the United States, and the Taliban have promised to give up illegal income such as drugs, domestic minerals are unable to develop independently and cannot be converted into effective fiscal revenue in the short term.” Zou Zhiqiang said.
  The Taliban’s drug trade is an important concern of the international community. The UN Security Council monitors the sanctions against terrorist factions in Afghanistan. Many reports point out that the Taliban obtained income through drug smuggling before taking power, and even established a shadow government, including the Ministry of Mines and customs agencies. There is a department to help the disabled.
  The annual comprehensive income of the Taliban is between 300 million and 1.6 billion U.S. dollars, but only 2.4 million U.S. dollars has been frozen in the financing of terrorism by international agencies. This shows that relevant departments are facing difficulties in cracking down on Taliban financing activities.
  Another major source of income for the Taliban is illegal mining. According to reports, Afghanistan has 1.4 million tons of rare mineral reserves, including 17 elements that can be used in large-scale manufacturing of consumer electronics and military equipment, such as lithium, iron, copper and cobalt, with an estimated value of US$1 trillion.
  The most prominent potential among these minerals is lithium used in mobile devices and electric vehicle batteries. The application of this metal will become extremely important as the automotive and transportation industries transition to zero carbon dioxide emissions. An internal memo of the US Department of Defense even pointed out that lithium in Afghanistan can be as important as oil in Saudi Arabia, and Afghanistan can become “Saudi Arabia in the field of lithium ore.”
Why pull China to open a mine

  To develop minerals and realize realization, at least there must be a stable environment. The Taliban’s acting foreign minister, Amir Khan Muttaqi, stated that security throughout Afghanistan has been maintained and is open to foreign investment. But this is far from enough, because the development of minerals also requires supporting infrastructure, systematic economic planning and policy implementation, which are currently invisible.
  “It’s easy for foreign investors to chant slogans, but it’s not easy to put them into practice to reassure the international community. The Taliban has not resolved the concerns of the international community. Investment requires risk assessment. The Taliban has not yet been recognized by the international community. The members are still on the UN sanctions list, so there is no investment.” Zhu Yongbiao said.
  Although the development of minerals is far away, some Western and Indian media have begun to hype. These articles believe that China is vigorously developing new energy industries and is therefore preparing to cooperate with the Taliban to develop minerals. Some Chinese self-media also followed suit to exaggerate the strategic value of Afghan minerals to China, and some articles called on Chinese companies to invest in mining in Afghanistan.
  Zhu Yongbiao believes that this view is purely Western speculation. China’s investment in Afghanistan was not good before, and the landing was only US$300-400 million, mainly copper mines and a small oil field. The largest investment in Afghanistan is India, with billions of dollars, mainly iron ore, and the effect is not good. Exaggerating the value of Afghan minerals is obviously a narrative that the Western media has created for China to seek benefits in Afghanistan. Chinese self-media following the trend will mislead Chinese companies, making them think this is an opportunity and get caught in it.
  Mining in Afghanistan has not only explicit costs such as infrastructure and security, but also hidden costs, which are the local complex social conditions and customs. In Wang Xu’s view, the people who wrote this article lacked a basic understanding of Afghanistan. Even if the Taliban can provide security, the pre-modern tribal society of Afghanistan cannot be handled by Chinese companies. From development to transportation of minerals, many tribal villages are involved. Benefits need to be dealt with one by one, this kind of hidden cost is too great.
  The hidden and explicit double costs have delayed the development of the mineral potential of Afghanistan, and the Afghan people have not benefited from these potentials. Before the U.S. occupation, the Taliban found that it was not easy to benefit from these mineral reserves on a large scale, but the situation remains the same after the withdrawal, because the socio-economic situation in Afghanistan has not changed.
  From a risk perspective, the Americans did not engage in mineral resource exploration during the occupation period. As early as the 1970s, although the former Soviet Union entrusted the Republic of Kazakhstan to conduct mineral resources surveys in Afghanistan, and had basically figured out the status of Afghanistan’s mineral resources, it did not set foot in this field.
  Zou Zhiqiang pointed out, “Afghanistan does not have minerals or other products that China urgently needs or cannot do without. Resource development is a mutually beneficial thing. If it cannot profit economically, China will not go. The “Belt and Road” does not have to pass through Afghanistan. , Copper mines and other minerals are also available in other places, and they are better developed and purchased. Why do you have to go to Afghanistan?” The
  United Nations data also indirectly shows that investing in Afghan minerals is a difficult bone. In the past two years, Afghanistan has not had any new greenfield investment ( greenfield investments), that is, the new investment business of foreign companies. Since 2014, there have been only four new investment projects of this type. Take the other two countries with relatively small populations in South Asia as an example. During the same period, Nepal had 10 times the number of such investment projects as Afghanistan, and Sri Lanka had 50 times that of Afghanistan.
  If it is not possible to open mining through normal investment and investment, Ahmadi, the former central bank governor of Afghanistan, believes that it will be difficult for the Taliban to earn enough income from illegal mining, opium production or trade routes alone. If it were just to launch a rebellion, the money would be more than enough, but it would not be enough to maintain the normal operation of the government.

  Attracting foreign investment also requires a systematic economic development plan as a guarantee. It is no easy task to develop the economy in a pre-modern society like Afghanistan. The World Bank describes Afghanistan’s private economy as “narrow”, and employment is mainly concentrated in the agricultural sector with low productivity. . Currently, 70% of Afghans live in rural areas, and agriculture provides livelihood benefits for 80% of the population.
Take advantage of the contradictions of big powers

  The Taliban has not yet introduced a decent economic development plan, but only appointed acting cabinet members. Among them are the acting governor of the Central Bank Haji Mohammad Idris (Haji Mohammad Idris) and the acting Minister of Finance Gul. Aga (Gul Agha).
  The outside world knows little about the information of these two individuals, and no relevant background can be found on the Internet. According to foreign media reports, Idris has no higher education and no working experience in the international financial field. He previously served as the chairman of the Taliban Economic Committee and the governor of Juzjan Province in northern Afghanistan.
  ”The Taliban realized that they wanted to develop the economy, but they didn’t have a clear economic development plan and guarantee measures. They only had ideas and slogans. Although this was a little better than last time, it was unsuitable and lacked professional talents.” Zhu Yongbiao told the reporter of Caijing. .
  Compared with lack of money and food, the Taliban faces a large-scale brain drain, which is more difficult to make up. Many former government workers, intellectuals, and technical talents escape the Taliban’s rule through various channels. They may go to the United States or Go to neighboring countries such as Iran and Pakistan, as well as the Gulf countries. Coupled with the Taliban’s restrictions on women’s roles in government and socio-economic life, this will make it even more lacking in the professional talents needed to govern society and develop the economy.
  Although the Taliban has always claimed to establish an inclusive Islamic government, judging from the announced personnel arrangements of the interim government, the main positions are controlled by the Taliban, which does not show much inclusiveness, and there is no female minister.
  How to treat the status of women is an important indicator for the outside world to recognize the Taliban government. On the issue of women’s rights and interests, although the Taliban expressed a moderate stance and claimed to protect women’s rights to education and work, they also clearly imposed many restrictions, showing a distinctive feature of conservativeness.
  ”From the perspective of the nature and philosophy of the Taliban, this is not surprising. The outside world cannot hold higher expectations. However, after 20 years of secular republic, a new generation of Afghan women have participated in the country’s economic life. If the current Taliban restricts women to their homes across the board and does not guarantee women’s education and work rights through certain forms, it will undoubtedly aggravate economic difficulties.” Zou Zhiqiang believes.
  The treatment of women is one of the important indicators of whether the Taliban can be recognized by the international community. The recognition of the international community is crucial to the long-term governance of the Taliban, because the economy cannot be separated from politics and cannot be recognized by the international community. It can be a fantasy, and it is likely to repeat the same mistakes.
  At present, no country in the world recognizes the new Kabul regime. As Afghanistan’s main neighbor, China’s attitude has attracted much attention. Regarding whether China recognizes the government of the Taliban in power, Foreign Ministry spokesperson Hua Chunying stated at a regular press conference on August 16 that on the basis of fully respecting Afghanistan’s national sovereignty and the will of various domestic factions, China maintains contact with the Taliban in Afghanistan and others. And communication has always played a constructive role in promoting the political settlement of the Afghan issue. As everyone knows, on July 28, State Councilor and Foreign Minister Wang Yi met with Baradar, head of the Taliban Political Committee of Afghanistan, and his party in Tianjin.
  On September 2, Assistant Foreign Minister Wu Jianghao had a telephone conversation with Hanafi, Deputy Director of the Afghan Taliban Political Office in Doha. The two sides exchanged views on the situation in Afghanistan and issues of common concern. Wu Jianghao said that the situation in Afghanistan has undergone fundamental changes, and the future and destiny of Afghanistan are once again in the hands of the Afghan people. China always respects the sovereignty, independence and territorial integrity of Afghanistan, and pursues a friendly policy oriented towards all the Afghan people.
  Hanafi said that China is a trustworthy friend of Afghanistan, and the Taliban are willing to continue to develop friendly relations between Afghanistan and China, and will never allow any forces to use Afghan territory to threaten China’s interests, and will take effective measures to ensure the safety of Chinese institutions and personnel in Afghanistan. . The “Belt and Road” cooperation is conducive to the development and prosperity of Afghan and this region, and Afghanistan continues to actively support and participate in it.
  On September 21, Taliban spokesman Mujahid once again expressed his gratitude to China for its long-term support to Afghanistan and recent statements, and hoped to establish a good relationship with China. He also said that in fact “this process has already begun.”
  This ambiguous statement made by the Taliban was interpreted by the Western media as that China has recognized the legitimacy of the Taliban regime. Zhu Yongbiao believes that this is an over-interpretation. He explained that the Taliban hope to be recognized by the international community. If the West does not recognize it, they hope to use the contradictions between China and the United States to engage in strategic games, show that they are close to China, and demonstrate against the United States, trying to make the international community feel that China is behind. Manipulation, but this is not true. China has expressed a cautious attitude to help the Afghan people from the perspective of resolving the humanitarian crisis, but this does not mean that China has recognized the Taliban regime, and other countries have similar contacts with the Taliban.
  In view of the historical history of Afghanistan’s “third-nation” diplomatic tradition, that is, to instigate the contradictions between major powers and regions, and profit from it. Zou Zhiqiang also believes that it is necessary to maintain pragmatic communication with Afghanistan. This is also what other countries are doing, but at present they still have to watch their actions, and absolutely cannot lean on and bind them. Faced with external recognition pressure and domestic economic difficulties, the Taliban frequently show their favor to China. They look forward to receiving China’s recognition and assistance. They also show an attitude of learning from China’s development experience. The two sides interact positively, which is beneficial for China to improve its surrounding environment and promote the “Belt and Road” initiative. The construction is favorable. However, the main concern of the Taliban is short-term interests, focusing on stabilizing the regime and actual interests. It is hard to say that they have long-term goals and plans to support and participate in the construction of the “Belt and Road”.

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