The Cost of an Emirate

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The Taliban’s Pending Economic Crisis

As the Taliban move out of the shadows into their new more luxurious accommodations in the presidential palace and other government buildings in Kabul, they are scrambling to find the money needed to prevent a crippling economic collapse and keep key civil servants at their desks. Large swaths of Afghanistan’s work force is employed directly or indirectly by the government, including technocrats whose expertise is needed to keep Afghanistan’s infrastructure running. Already scared of how the Taliban will treat them, keeping these civil servants working after they don’t get paid will be a tall order, and compelling them purely by force would be a massive drain on the Taliban’s limited resources and manpower. Significant and long-lasting economic turmoil or collapse will also drive more and more people to support rebellion against the Taliban, a fact they seem very cognizant of as they continue to try and consolidate their grip on the country.

The majority of Afghanistan’s economy is propped up by donations, with 75% of government spending coming from foreign aid. The Taliban have asked to continue to receive aid as world governments and the International Monetary Fund freeze the Afghan central bank’s assets and suspend payments. Without that money (Kabul received $4.2 billion in development assistance in 2019 alone) their government is already bankrupt. Afghanistan is a cash economy and 90% of its adult population does not have a bank account. Its currency, the afghani, is supported by regular bulk shipments of U.S. dollars from the Afghan central bank’s foreign currency reserves. The majority of the banks $10 billion in reserves is held oversees, with the Taliban able to access less then one percent of it since they’ve taken Kabul. The lack of currency has already led to a spike in commodity prices, triggering protests in major cities. Western Union and MoneyGram, popular services that Afghans use to receive remittances from family members working abroad, have also suspended their services, exacerbating the money crunch across the country. These remittances totaled $788.9 million last year, representing 4% of Afghanistan’s gross domestic product.  

It could be assumed that the Taliban don’t care about widespread unrest or economic collapse as long as they can implement their brutally hardline version of sharia law. However, the Taliban were able to take over the country as quickly as they did because they successfully convinced people that the collapse of the government was inevitable and they were the only group capable and competent enough to effectively run the country and prevent mass chaos in the wake of U.S. troops leaving. They managed to preserve their strength by avoiding getting into prolonged fights with Afghanistan’s numerous militias or alienating influential strongmen. Afghans may have bargained it was better to accept theocratic tyranny over anarchy, but if they get stuck with chaos and beheadings they may rethink the deal they took. The Taliban have to walk a fine line as well, as their best shot at getting the tap of foreign aid turned back on is to show restraint in how they enact their agenda. Brutal crack downs on dissent, broadcast over social media for the world to see would likely ensure they remain cut off.

But who knows, the Taliban have a few bargaining chips of their own. The chaotic evacuation that is ongoing at Kabul’s airport, along with the desire by western countries to extend it gives them leverage. President Biden has said he may consider keeping troops at the airport beyond the end of the month, and CIA Director William J Burns recently met with the Taliban leadership in Kabul. Perhaps a deal, cash for time, was struck to allow the evacuation to continue safely. It’s not likely, the U.S. has plenty of other negotiating tools, but worst deals have been struck for the sake of expediency in the realm of geopolitics. Either way, the Taliban have inherited a very different Afghan economy than what they dealt with twenty years ago, and will need to get a grip quickly if they want to avoid another bloody civil war that may engulf them.

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