Afghanistan on brink of economic and humanitarian collapse

0
23
Afghanistan on brink of economic and humanitarian collapse

KABUL, Afghanistan – Ever since the Taliban took over Afghanistan’s capital of Kabul on Aug. 15, the country’s already fragile economy has spiraled into despair.

Foreign assistance, which previously propped up the nation of 38 million, was immediately frozen. The US halted $9.4 billion in reserves to the country’s central bank. The International Monetary Fund (IMF) and World Bank have also halted loans, and the Financial Action Task Force, the France-based global terror-funding watchdog, warned its 39 full member nations to block Taliban assets.

With much of the international community refusing to recognize the Taliban regime, officially termed the Islamic Emirate of Afghanistan, hard cash is barely trickling in.

The currency has been crumbling, all while prices for essential goods have been soaring. And the financial crisis is fast morphing into a humanitarian catastrophe.

The United Nations this week pledged more than $1 billion in aid for Afghanistan, cautioning that 97 percent of the population could soon plummet below the poverty line, up from the pre-Taliban takeover figure of 72 percent.

A Taliban insurgent guards hundreds of Afghans waiting to withdraw from a bank in Kabul, Afghanistan.
A Taliban insurgent guards hundreds of Afghans waiting to withdraw from a bank in Kabul, Afghanistan.
Jake Simkin

“We had a fragile economy before the takeover. Although there was a lot of (foreign) money thrown at it, very little time or attention was given to the economy and economic development in the last 20 years,” laments Muhammad Suleiman Bin Shah, the Deputy Minister of Commerce and Industries in the last Afghan government. “Money was mostly spent on security and political issues. And right now, we are communicating anything in terms of trade and finance with the rest of the world. Whatever processes were started, even if they were moving at a snail’s pace, they have stopped now.

“People need to be working, not lining up at the bank. Even I found out that (the Taliban) has frozen my accounts. Accounts belonging to ministers, deputy ministers, deputy governors and MPs have been frozen.”

Taliban guards hand out water bottles to Afghans waiting to withdraw cash.
Taliban guards hand out water bottles to Afghans waiting to withdraw cash.
Jake Simkin

Most Taliban members themselves are said not to have received money in months. As a result, a significant portion of foot soldiers in areas outside major cities subsist on little food and carry around thin blankets to sleep in trucks or wherever there is suitable shelter.

Sources tell me Taliban members get “sponsored” by community members who give them food and other needed supplies. They can also get handouts from commanders when they take over new areas or find cash.

Second hand traders markets have emerged in Afghanistan following the Taliban takeover.
Second hand traders markets have emerged in Afghanistan following the Taliban takeover.
Jake Simkin

Afghans come from miles away to wait in line for the opportunity to withdraw the equivalent of $200USD, the maximum any Afghan can take from their bank account per week given the drastic cash shortage the newly Taliban-controlled country is now facing.

“I didn’t receive (my military) salary in months, and now I have been waiting three days to get some money out,” says 22-year-old Zargai, an Officer in the now-disbanded Afghan Security Forces, who traveled some 250 miles from Badakhshan to Kabul in a bid to provide for his mother, brother, wife and daughter. His military salary would have paid roughly $300 a month. “I have no choice but to join the Taliban military again if asked.”

Afghans wait up to five hours to withdraw a limited $200 amount from ATMs in Kabul, Afghanistan.
Afghans wait up to five hours to withdraw a limited $200 amount from ATMs in Kabul, Afghanistan.
Jake Simkin

And Azizi, a 28-year-old Parwan native and Commander in the former Army, tells me he has not been able to find any work since the defeat.

“The last time the government paid me was two months ago,” he continues. “I don’t know what to do.”

According to many economic experts, an informal economy – known as the hawala banking system – may be the only way for Afghans, including the new government to stay afloat. Hawala, an Arabic word for transfer, originated in the 8th century, primarily for trading along the Silk Road. While still widely used in parts of the Middle East, Africa and Asia, it is based entirely on the honor system in which a sender is issued a tracking number to give to the recipient, who then picks up the money from an associated hawala merchant in another village, province or country.

Many Afghan men have been unemployed and not paid since the defeat of the Afghan security forces.
Many Afghan men have been unemployed and not paid since the defeat of the Afghan security forces.
Jake Simkin

But the off-the-grid approach is despised by global regulators. Incidentally, the Taliban itself primarily relied on Hawala to survive during its insurgency years.

Relying almost solely on such a system, as the country has little choice but to do now, risks plunging the country further into becoming an international pariah cut off from the international banking system, akin to North Korea and Iran.

Mohammad Yousuf Hamidi, a 37-year-old cashier at Exchange Money, points out that the Taliban banned even hawala in its first two weeks of rule as the banks were shuttered. While the financial institutions have since been ordered to re-open, the scenario is precarious as the currency is continuing to lose value, and Afghans cannot afford the surging costs of goods and services.

A 1000 Afghanis is worth approximately just $12USD.
A 1000 Afghanis is worth approximately just $12USD.
Jake Simkin
Afghans have resorted to the hawala market to get cash.
Afghans have resorted to the hawala market to get cash.
Jake Simkin

“People used to come (to the exchange market) a lot,” he says. “But now there is no money in the market, and business is down.”

The Taliban historically leaned heavily on the illicit taxing and trading of opium to bolster its bloody revolt. Yet since the Emirate has come to power and vowed to enforce a stringent interpretation of Islamic Law, the leadership has pledged to not only stop the export but burn the crops to stop regular Afghans from partaking, too.

Only the worse the economic impasse gets, the more unrest the Taliban will be forced to combat – with violence or otherwise – as embattled Afghans push back. Over the past week, protests have ignited on an almost daily basis in several major cities and have been met with dispersal gunfire and mass arrests.

Gold traders attempt to exchange gold for cash outside the Hawala market in Afghanistan.
Gold traders attempt to exchange gold for cash outside the Hawala market in Afghanistan.
Jake Simkin
Stacks of 500 Afghanis bills are seen, which are worth approximately $6USD for each bill.
Stacks of 500 Afghanis bills are seen, which are worth approximately $6USD for each bill.
Jake Simkin

The Emirate last week drew additional condemnation from the outside over the announcement of its hardline government – which includes at least one US designated terrorist in that of Sirajuddin Haqqani – and could encounter further international economic sanctions in the weeks and months to come.

“We have a Ministry to manage all of that,” one Taliban Commander from Kandahar, Haji Asad, responds after I question the country’s economic and security situation. “We want good relations with all countries. The only issue we have is that we do not want occupation.”

Yet for regular Afghans, the economic meltdown marks the beginning of yet another era of struggling to survive after decades of bloodshed and suffering.

Lal Aqa Aziz, who runs the popular Hamid Exchange Market, asserts that he has to trade on the small amount of emergency reserves he had before the abrupt governance change. He also observes that previous leadership would hold frequent auctions for licensed exchangers to obtain large amounts of USD – that way, officials could control the flow and ensure the value remained relatively stable – it’s unclear the Taliban, opposed to U.S. dominance, will continue such a practice.

“We are just waiting for their policies. Everyone is in financial despair. Nobody knows what the next days will bring,” he says softly from his dark basement office, below the once-bustling exchange. “Money is still going out, but nothing is coming back in.”

Source link