Afghanistan’s Solitude
How Financial Warfare and an Islamic Revolution Leave Afghans at a Crossroads
It is a hot day in Rome, too hot even for the Italian spring. I head to the local agency to make a money transfer to Afghanistan. Since the Taliban took over in August 2021, the US and the other Western allies constrained the country into economic isolation. International bank wires are not allowed to Afghan banks, in loco cash withdrawals are limited, and international money transfer companies run on expensive fees and strict regulations.
I know because I am sending money to an Afghan friend who lives in Kabul. The money is not my own, it is a payment for his work with international organisations, who are not allowed to make the transfer directly to his bank account. Randomly, other friends and I function as mediators: we receive his payment on our European bank accounts, and then send it to him via one of those financial transfer services. It is a legal but costly procedure and much it is lost in the various transfer fees. Plus, money can be held for further controls for days.
Back in 2021, after decades of spring offensives, the Taliban took Kabul within the summer. Contrary to widespread belief, for many there was a shadow of hope that the move forward would endure longer than a season. In a city filled with men with rifles, even at the entrance of supermarkets and with at least a gun in every house, no one bullet was shot that day. Former President Ashraf Ghani and his close aides had already run away, and left Afghanistan to its destiny.
In Kabul, peace flew into the air like pollen, causing an allergy to some, but mainly making way for opportunities of renewal. Then the sanctions happened.
The UN first imposed sanctions on the Taliban in 1999. Then in 2011 they created a separate track that would distinguish the Taliban from other terrorist organisations, such as Al Qaeda and IS (الدولة الإسلامية/Islamic State). It is on that resolution that the sanctions on the Taliban were renewed in 2021. Furthermore, then US President Joe Biden froze about 7 billion dollars in assets that were held in the United States from the Afghan Central Bank. European countries followed this move and froze around other 2 billion dollars held in their reserves. The country’s access to IMF resources, including around $440 million in new monetary reserves, was also suspended.
The Taliban were free to establish a new government, but it was in the throes of a political crackdown and economic despair.
I left the country a year earlier for a sabbatical to study Arabic in Yemen, although friends kept telling me that that was not a good time to leave. The buzz of peace was refreshing the capital’s stagnant air caused by both the mountains and a diffusion of distrust in Ghani's leadership. Behind the concrete barrier walls built to contain the blast from possible explosions, embassies and international employees were escaping their boring compound life by murmuring about possible reconciliation and peace scenarios for the country.
The excitement was born from the 2016 Peace Deal with Hezb-i-Islami and the three-day historic ceasefire that happened in 2018 during the Eid al-Fitr (the festival celebrating the breaking of the fast, marking the end of Ramadan). The 2001 Bonn Agreement legacy, which had empowered the new generation of bureaucrats and blocked any internal reconciliation processes, was now an example of bad practices in peace studies. The lack of strategic commitment to pursue an effective reconciliation sparked a renewed Taliban insurgency in 2003. However, things changed, and engaging with the Taliban was suddenly no longer taboo.
A few pessimists distrusted the Taliban’s pragmatism; however, a majority were faithful in the international support and arrival of new funds that would have possibly ensured sustainable peace. Certainly, no one expected the world to act with such harsh economic retaliation in a country were children sell eggs in the street to support their families and where men wait in line outside the bakery to be given a free piece of bread.
Transition and the Run on bank
Forecasting events is a hazardous occupation. Observers and local analysts considered the possibility of a civil war, not a premature takeover of the Taliban just days before the US troops were about to exit the country. Afghanistan diplomatic and financial isolation came unexpectedly, and it was frightening, just like any political turmoil.
On the ground, people feared the consequences of another troubled political transition and so they ran to the banks to withdraw their funds. Access to personal savings was limited, such was the lack of available cash. The Taliban officially asked shops and markets to accept even extremely damaged banknotes, taped and adjusted already many times.
Friends told me about their queuing outside private banks covered in blankets all night. Some took shelter in cars, some sat on sidewalks, while others paid queue holders to guard their place in line for a few cents. A whole queue was allowed to withdraw a maximum of 30,000 Afghanis (AFN)—and no more—for a month. Everyone feared losing their spot in the queue since this translated to losing a month's payment and a chance to feed their family.
According to a former Central Bank officer I spoke with off the record, the Taliban had consulted with bankers from the former government to be advised on policy and measures to contain an economic collapse and they acted consequentially by applying withdrawal limits to avoid bank failures while engaging in other monetary policies. Other local analysts confirmed that the Taliban government was particularly active in containing these first wave of economic challenges.
They also ran a campaign aiming to collect a deed of indemnity for a decade of tax evasion that had affected the Republic years, which initially secured the revenue necessary to run public offices and pay government salaries despite the devastating foreign aid cuts.
These policies, however, were able only to contain—not fully control—the economic pressure that ordinary Afghans were forced to undertake. Afghan scholars Mustafa Disli, Ahmad Khalid Hatam, and Shakir Lalaly published in Economies stating that only 15% of the Afghan population who have bank accounts have done so primarily due to the government’s obligatory policy regarding salary disbursements and because legislation prohibits cash payments to contractors. Afghans generally mistrust the banking system and prefer to keep money at home or with family, thus the country has a vividly influential informal economic sector.
This informal economic sector might also have helped Afghans to counter the economic pressure caused by the imposed financial isolation. However, Afghanistan is a “deeply dollarised” economy, which means that a significant proportion of domestic transactions, savings, and even public revenues are tied to the US dollar. “In practical terms this means that any depreciation of the Afghani relative to the dollar directly raises the cost of imports (from basic food stuff to energy supplies), which are critical to daily life”, Dr Elif Kaya tells me. Kaya, a global political economy specialist and Vice Head of the Department of Economics and Finance at Istanbul Aydin University, has conducted research into how countries react to sanctions and the kind of strategies the Global South is implementing to resist these pressures.
The Afghan economy became the symbol for how geopolitical dependency makes national economies acutely vulnerable to external shocks. The price inflation that Afghans have witnessed regarding food prices was largely due to this structural externalisation of Afghanistan's monetary and economic sovereignty. The more the country had adhered to the World Bank policies, IMF indications and the proposals of foreign financial advisors, the more its economy was untethered from these larger transnational agencies and interests.
Weaponising growth
Many Afghans, of course, wanted to leave.
I watched the horrific images from the Kabul Airport, where people attached themselves to the engines of the aircraft, forcing their way onto the plane. If you enquired about what was happening, the mainstream news outlets reported: “They are escaping the Taliban.” But I knew how things were more complicated than they seemed. Any Afghan, even the most wealthy, faces enormous challenge to travel outside the country. Those who can afford it buy better passports from countries where owning property is enough to gain citizenship. For the majority, however, they must remain on a constant hunt for opportunities to leave the country.
Leaving was not much about escaping the Taliban as much as it was about looking for opportunities and testing promises that have been failing to materialise in Afghanistan for decades. When the US and the UN let people believe that anyone who worked for or with foreigners would be granted visas and allowed to leave the country, that seemed to most people the chance of a lifetime: to experience travelling abroad. This is ironic, of course, since they were evacuating youth while imposing financial and trade restrictions that would deteriorate the opportunity for the country’s growth that they were seeking. The saviour and the executioner indeed had the same face.
Meanwhile, truth also was in transition. Both fake and real social media accounts began engaging in an information war which amplified false narratives, discouraging any meaningful dialogue while also effectively preventing any political development. Many of those who found themselves in power in the post 2001 system had benefited from the narrative of the Taliban as “hostile” and as a “foreign force” and they were hoping this caricature would continue to work. All the international media circus was in Afghanistan, although even if the majority were correspondents who were not at all familiar with Afghan political or social dynamics. Take, for instance, the fake Somali pirate stories which proliferated for years, as the Somali born British journalist Jamal Osman reports—legacy media outlets carried interviews and stories while not engaging in truthful reporting.
Since 2001, blaming the Taliban without critical analysis was something quite common and that enforced so many stereotypes about Afghanistan within the international scope. For example, I often meet Afghan refugees here in Italy who tell bizarre stories about their asylum claims, always blaming some kind of Taliban persecutions. Such stories resonate with the average Western perception of the country due to how major media has converted the country since 2001, but these stories are incoherent to whomever is even minimally familiar with Afghanistan’s culture, history, and political landscape.
To counter this narrative though, the Taliban has also become quite active as a propagandising entity rebranding an old tale that has neatly framed them as a local, anti-colonial force fighting against western imperialism. The dynamic, over time, has become increasingly bizarre as foreign influencers and vloggers landed in the Kabul Airport, able to visit once unreachable provinces such as Wardak, Helmand, and Kunduz. Social media feeds have been filled with these travel activists praising a country at peace and echoing the words of old English, orientalist envoys, which described Afghans as people with wisdom and courteous manners.
The reality, however, was to be found in neither side of these stories. Since the Taliban abandoned their motorcycles transforming themselves into bureaucrats who sit in offices when they took power in 2021, they have become stuck at a crossroads, watching the people they claim to defend drown in deep misery.
According to the Food and Agriculture Organization of the United Nations (FAO), nearly 22 million people are going hungry, and unemployment is now stagnant after being on the rise since the governmental transition, with the International Labour Organization estimating a ratio of employment.to-population of about 34 per cent. Women suffer significantly from this economic and humanitarian crisis. Not only were they denied employment opportunities, they were also banned from attending secondary school and university.
The videos of girls crying after the Taliban renewed the order to keep high schools closed broke the hearts of people around the world. While lamenting western education as a tool to destroy Muslim values, the Taliban did not provide an alternative program of education which would guarantee woman higher education in observance of local practices. At the moment, there are many female madrasas in the country, but none have become a prestigious centre of learning able to compensate thee lack of formal education.
The Taliban’s lack of clear governance also in the other department of political affairs. Officers inside the various ministries claim that direction from upper management is always confusing, with one department establishing a practice that would then be denied by another. This is causing frustration, dissatisfaction, but more importantly, it is resulting in the slow disappearance of hope for the future of Afghans.
There is a high number of professional and skilled youth emigrated to neighbouring countries, who refuse to return until the current regime addresses the needs of a generation more urbanised and globally connected than any demographic prior. Add to this the large segments of the Tajik and Hazara ethnic groups who would like their role in thew country’s future to be acknowledged.
Also internationally, Taliban are in limbo. They are currently not allowed to deal with US and Western allies as no country has yet recognised the Taliban regime as the legitimate government of Afghanistan. However, they also seem not to engage with China or Russia, fearful of enraging the US and being dragged again into a conflict. If sanctions for some countries have been a means to reduce foreign dependency, while launching strategic sectors such as agriculture or mining, for Afghanistan this only highlights the country’s dependency and structural fragility.
I talked about this with Dr Simone Raudino whom I met in Kabul years ago when he was working as Financial and Economic Advisor for the European Delegation. Raudino believes that the main reasons for the stalemate on economic sanctions are due to the notorious human rights violations committed by the Taliban, especially regarding women's rights and other controversies related to their attitude toward the other ethnic groups, particularly the Hazara and the Tajik.
The Taliban are a largely Pashtun-dominated group and despite having repeatedly guaranteed security for other ethnicities and opposition forces, there have been reports of persecution and violence perpetuated against these groups. Their immediate implementation of strict social policies against woman—in particular, the ban on women's education from 12 years of age—was certainly a primary factor in discouraging countries around the planet from recognising the sovereignty of the Taliban-led government.
Dr Raudino explains: “If the objective of economic sanctions was to hold [the Taliban] accountable for these human rights violations, it was counter-productive. On the contrary, it lets them insist on their set direction. However, the objective could have been to weaken the population to create opportunities to enforce opposition forces.”
Mainly throughout the first couple of years of Taliban rule, between 2021 and 2023, international media focussed on reporting on the Taliban opposition forces. There was extensive coverage of the National Resistance Front of Afghanistan, largely based in the Panjshir Valley, a predominantly ethnic Tajik area located a couple of hours drive north of Kabul.
The national Resistance Front was led by Ahmad Massooud, the son of the notorious Ahmad Shah Massoud, the Tajik mujahideen protagonist of the Afghan Soviet resistance, assassinated two days before 9/11 by Al-Qaeda operatives. However, Massoud’s son has been leading from abroad, and his resistance was exploited as hype for foreign media as he was unable to effectively challenge Taliban on the ground.
The Islamic State of Khurasan also was firstly reported a threat to the Taliban government. Back in June 2019, ISKP (Islamic State—Khorasan Province) was on rising, paving its road to the north-eastern Afghanistan, and Taliban had in the valleys of Kunar a special unit, the red unit, assigned to defeat them. However, despite some hardcore Taliban members moving to the IS line as they were not happy about the ongoing US-Taliban peace talks, the group remained quite marginal. After the Taliban took over, the tragic blast at Kabul’s international Airport on 26 August which killed at least 170 people, served to revive the fear that the Taliban would ramp up their attack campaigns.
Nevertheless, both groups have not become a serious threat to the Taliban, which since the US troops left the country in 2021, led a generally peaceful and certainly safer Afghanistan than the previous two decades.
Soon thereafter, security was no more the main challenge faced by Afghan leaders.
Cycle of Dependency
According to the World Bank, 43% of Afghanistan’s GDP derives from foreign aid, and about 75% of public spending is funded by foreign aid grants. Moreover, for two decades, the country was flooded with income related to the development and security industry, sectors that largely cover the local employment market. The sudden excision of all these funds led to a 25 per cent contraction of the economy.
It was clear that the US was using its power within international financial institutions like the World Bank and IMF to block grants and abuse the position of the dollar as the world's primary reserve currency in order to block assets. Not surprisingly, the Trump administration shut down USAID and withdrew from the World Health Organisation—but he did not withdraw not from the IMF and the World Bank. According to the political economist Grieve Chelwa, these institutions with headquarters in Washington, have been an effective and efficient tools of US foreign and economic policy, and they continue to advance US interests at the expense of the country they are ostensibly assisting.
Meanwhile, major investors are waiting to enter the Afghan market willing to invest money in the country without much of a development cover-up. Mining and energy are just a few of the sectors of interest, but so too are the fields of banking and financial projects. As a foreign consultant explained to me, usually companies that invest and work in developing countries have to deal with two major challenges: security and corruption. In Taliban-led Afghanistan, these are not considered major challenges anymore. It is the legislative realm that remain unclear, thus, untrustworthy.
“Investors are willing to work in a high-risk environment, not an uncertain one”, one consultant explained to me.
I contacted Abdul Qahar Balki, the spokesperson of the Afghan Ministry of Foreign Affairs, to have get the comment from the Taliban on these topics. I had no luck. I spoke then with local and foreign observers, who seem to agree that there is a internal fracture within the Taliban government, with the segment led by the Supreme Leader and his close aide in Kandahar , the province in southern Afghanistan considered stronghold of the Taliban, resisting the private market encroaching the national economy, while others affirming that investors are welcome.
Afghanistan has always been a place moving on its own terms, becoming a symbol that has always represented more an idea than the place itself. Back in the days, it was on track for hippy spiritual seekers who often came to study and follow Sufism. Later, Islam within Afghanistan become famous for the mujahideen, coming from every corner of the Muslim world to stand against the Soviet invasion of Afghanistan in 1979. It also used to be known as the destination for solo travellers, including women, with many journals praising its hospitality. The same hospitality that made the Taliban deny the US demands of extradition without trial of Osama Bin Laden, causing them to go to war against the world. Or more appropriately, the world went to war against them.
As I write this, the world is still at war with Afghanistan.
On paper, humanitarian aid and basic business practices such as food imports, are allowed in the country despite the sanctions. Yet many international organisations and companies refrain from doing business in the country. Even if some financial interactions are allowed, people voluntary over-comply, which is a widespread global practice to avoid any risks, by extending de facto the boycott beyond the sanction rulings while triggering higher costs and delays in accessing humanitarian goods and services.
Meanwhile the Taliban are failing to outline a comprehensive finance law that could address political controversy while ensuring clarity amid the various Sharī'ah interpretations and offering investors the reassurance that their money will not to be lost. More importantly, they lack a vision that will offer Afghanistan’s economy a direction as a player in the modern world. The lopsided, coercive nature of the international economy did not allow for an organic rise or shift to a different path of economic reconstruction which could establish Afghanistan as an example within the scope of international cooperation for development.
What we are witnessing instead, is the clash between two forces, the international system and the deliberate establishment of a regime of exclusion from the global market, while the Taliban fail to engage in a radical vision that could pave the way to a unique political identity while also targeting controversial policies that only offend, enrage, and punish the local population.
Amid these two stalemates, the private sector waits quietly behind closed doors ready to push them ajar and barge in.
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