In Afghanistan, it is no longer about what might happen. It’s already happening.
When the last U.S. soldiers left Kabul, President Joe Biden pledged to “stand by the Afghan people,” who, already ground down by years of war, drought and persistent poverty, faced uncertainty, Taliban rule and the prospect of wholesale destitution. Just three months later, according to a World Food Programme (WFP) survey, 98 percent of Afghans didn’t have enough to eat. Seven in 10 were borrowing food to survive.
Fueling this humanitarian inferno is an unprecedented economic collapse triggered after the U.S. delivered a parting gut punch.
In the aftermath of the American withdrawal and Taliban takeover, much of the world’s attention focused on the evacuations and the fate of ordinary Afghans — women, journalists and other vulnerable groups — under the new regime. But there was another, silent crisis looming — and now that crisis has arrived. The U.S. and other countries refused to recognize the Taliban as a legitimate government, thereby blocking the country’s new leaders from accessing more than $9 billion in Afghan government reserves housed abroad. Meanwhile, U.S. sanctions against the Taliban meant foreign banks and donors risked blowback if they engaged with the new regime.
For Washington, the rationale for freezing the billions is twofold: First, the money should be used as leverage, to pressure the Taliban to change its ways. Second, it’s too early to accept and recognize the legitimacy of the Taliban — a group that provided al-Qaeda with a base to plot the 9/11 attacks and then terrorized Afghans and Americans alike in the two decades that followed.
The result: Ordinary Afghans have been buried under the debris of a collapsing economy. Basic services — from healthcare to banking to sanitation — have broken down. Significant gains made during the U.S. occupation — in those service areas as well as in education, press freedom and human rights — are at risk. Famine isn’t so much knocking as banging on the doors of ordinary people. Already battered by poverty, the coronavirus pandemic and drought, the country has a deepening desperation that is evident inside and out: At least 300,000 Afghans have fled to neighboring Iran since the U.S. left, part of a wider exodus since August.
Now a growing chorus — Afghans, humanitarian organizations, other nations, members of Congress and former U.S. diplomats and commanders — is calling on the U.S. to moderate its stance.
The Biden administration has loosened some restrictions, but the fundamental question remains unresolved: What to do now that the Taliban — the United States’ sworn enemy — and the Afghan government, which relied on U.S. military and economic patronage to function, are one and the same?
For the 20 years of the American presence, the Afghan state relied to a staggering degree on international support. The math was straightforward and mind-boggling: The Kabul government spent around $11 billion a year; its revenues were about $2.5 billion, according to the World Bank. The remainder — nearly $9 billion — came from international donors, the vast majority from the U.S. The money funded everything from government salaries to electricity supplies to infrastructure maintenance. Civilian salaries alone accounted for around $1 billion a year.
In other words, three-quarters of what it took to keep the country going — to fund the government payroll, pay for its security services and keep the day-to-day business of a state together — came from international grants and donors, led by the U.S.
When the U.S. left and the Taliban took power, the economy was effectively placed in financial quarantine. The $9 billion-plus in reserves was frozen. Other funding was cut. U.S. policy influences other international players: The International Monetary Fund blocked the Taliban from accessing hundreds of millions of dollars in emergency reserves, and the World Bank suspended payments to the country. The combination of existing sanctions and the withholding of formal recognition meant that any international transactions with a Taliban-run Afghanistan were now suspect — and potentially criminal.
“The U.S. took the most drastic possible step,” Michael Kugelman, the deputy director of the Wilson Center’s Asia Program, told Grid. “No one is under any illusion about what [the Taliban] are. But another choice that the U.S. and its partners had was to freeze some but not all of the assistance, and then threaten to freeze the rest if the Taliban didn’t do certain things.”
The consequences became clear almost immediately. Prices for basic goods soared. Hospital workers, teachers and tens of thousands of civil servants went without pay. Aid agencies entered the business of administering payroll: In November, the U.N. took over the disbursement of millions of dollars of healthcare aid across the country, including paying the salaries of some 23,000 health workers. Meanwhile, fears of legal blowback spread among outside lenders.
“The [global] banking industry is reading this as, ‘the entire government is now the Taliban,’” a former U.S. Treasury Department official was cited as saying in a recent International Crisis Group (ICG) report.
Though still poor, Afghanistan had made great strides over the last two decades in areas such as living standards and healthcare. Maternal mortality rates improved by some 50 percent compared with the 1990s, when the Taliban last held power. The banking system had been another example of progress; before 2001, people in Afghanistan typically relied on informal financial networks.
In a matter of months, all these gains have been called into question.
“It’s very bad. Even bad is probably not the right word to describe it,” M. Ashraf Haidari, a former Afghan diplomat and ambassador under the U.S.-backed government, told Grid. “Any economic activity has come to a standstill. The banking sector is completely collapsed.”
A group of more than 40 Democratic members of Congress has called for a release of the frozen funds. Whatever the official view of the Taliban, they wrote in a letter to Biden, “punitive economic policies will not weaken Taliban leaders, who will be shielded from the direst consequences, while the overwhelming impact of these measures will fall on innocent Afghans who have already suffered decades of war and poverty.”
David Beasley, the former Republican governor of South Carolina who now leads the World Food Programme, told the New Yorker that “If you unfreeze the money, then you can put liquidity back into the marketplace, and the economy will start to come back up. If you don’t … this country will absolutely collapse.” And last month, several former U.S. military commanders and ambassadors who served in Afghanistan implored the White House to act. “Ordinary Afghans deserve access to their own funds, now frozen in banks wary of U.S. and international sanctions,” they wrote in a letter published by the Atlantic Council. “The longer decisions are postponed, the more difficult it will become to prevent the looming humanitarian catastrophe in the country and the deaths of many Afghans.”
The U.S. and the Taliban
The U.S. has eased some restrictions while holding fast to the principle of pariah status for the Taliban. The Treasury has issued general licenses, giving aid groups latitude to operate in Afghanistan without risking breaches of the sanctions regime. The U.N. Security Council cleared a resolution that gave breathing space to humanitarian groups, exempting them from international sanctions targeting the Taliban and others. Backed by the U.S., a World Bank-administered fund has also released $280 million to the WFP and UNICEF.
Other aid commitments have been made. As of this week, U.S. contributions and pledges of aid since the troop withdrawal amount to more than $780 million. The European Union, meanwhile, has promised more than $1 billion, and a group of Islamic nations pledged in December to set up a fund to assist with humanitarian operations.
But these measures are limited in scope and reach. They are designed to allow the flow of aid and help with humanitarian work, but they continue to limit the Taliban’s access — by extension, the new Afghan government’s access — to other funds. And the aid pledges come nowhere near the billions of dollars still frozen. Nor do the policy tweaks do anything to restore the banking sector or remove the uncertainty plaguing the wider Afghan economy.
For the U.S., accepting the Taliban as legitimate custodians of Afghanistan would mean recognizing a government that features cabinet members known for attacks on U.S. forces. The FBI currently offers $10 million “for information leading directly to the arrest of Sirajuddin Haqqani,” a man described in a U.N. report last year as “a member of the wider Al-Qaida leadership.” Today, Haqqani is the Interior minister in the new government.
It would also mean recognizing a group that continues to turn back the clock for women and girls, whose freedoms have been severely curtailed since August. Rights groups have documented incidents of violent retribution against those linked to the previous regime. What had been a vibrant free press — a standout achievement under the U.S.-sponsored Afghan state — is now a shadow of its former self. Since the Taliban’s arrival in Kabul, more than 40 percent of Afghanistan’s media outlets have closed and thousands of journalists have lost their jobs, according to Reporters Without Borders.
For the Biden administration, all this rules out recognition, no matter the trauma affecting the nation.
“We’re also talking to the Taliban and telling them that to the extent they would like direct assistance from any country, including the United States, they need to live up to their basic obligations,” Jake Sullivan, Biden’s national security adviser, said at the Council on Foreign Relations in December, “their international humanitarian obligations, their human rights obligations, and their commitments on questions of counterterrorism.”
For many, that stance is too rigid. “I think the question goes beyond the frozen funds,” John McLaughlin, a former acting director of the CIA, told Grid. “The question to ask is how will we engage with the Taliban?”
Many former officials believe the Biden administration should work with the Taliban to restore basic services — and that failure to do so risks not only humanitarian disaster but the likely aftereffects: a spike in the drug trade, mass migration and violent extremism.
“We need, first, to accept the reality that they are in charge and then to sort out how to have a relationship with the Taliban that isn’t based entirely on hostility,” McLaughlin said. “Don’t just sit there and have your whole policy be, ‘They’re bad.’ We also need to acknowledge that this is a situation we helped create.”
The 9/11 families
More recently, a new wrinkle has appeared in the form of a completely different group laying claim to those frozen funds.
After the Sept. 11, 2001, attacks, some relatives of victims sued several parties, including the Taliban, and were awarded damages that are now worth around $7 billion, according to a New York Times calculation. The ruling was seen at the time as purely symbolic; the Taliban was a group of insurgents, far from the reach of the law. But the group’s new status as the government in Kabul opened an avenue for the families and their lawyers; they argued that the frozen funds were meant for the government of Afghanistan, that the Taliban is now running that government, and so the money belongs to the Taliban. Thus, the argument goes, the funds can be targeted and accessed for the 9/11 families.
The White House has pointed to the case as one reason the frozen money can’t simply be handed to the new Afghan authorities. “The Taliban remains sanctioned by the United States as a ‘specially designated global terrorist group.’” White House press secretary Jen Psaki has said. “But this is, of course, complicated by the ongoing litigation over those funds.”
Many Afghans — including fierce opponents of the Taliban — argue that under no circumstances should any of the funds be diverted from Afghanistan itself. “It’s money meant for the Afghan people, whoever their leaders are,” Saad Mohseni, CEO of the MOBY Group, which owns Afghanistan’s largest independent news organization, told Grid. “And right now the Afghan people are starving.”
Race against time
While these debates roil international capitals, Afghan banks are running low on cash, hospitals are failing, and children and their parents are worrying about their next meals. All this is unfolding in the depths of a harsh winter season.
Before the Taliban takeover, winter tended to bring a reduction in violence, as snow and icy temperatures put the insurgency on the back foot. This year, winter is magnifying the already urgent humanitarian crisis. As the ICG report put it, “hunger and destitution following the Taliban’s takeover of the country seem poised to kill more Afghans than all the bombs and bullets of the past two decades.”
The sheer scope of the crisis brings the conversation back to those billions in Afghan reserves and to the American sanctions. And this, inevitably, returns the spotlight to Washington.
The U.S. may have ended its “forever war” in Afghanistan, but it remains the most important player in determining the nation’s immediate future. Washington, that ICG report said, is still “the principal arbiter of Kabul’s economic relationship with the world.” And when it comes to the Taliban, the ICG’s Graeme Smith says the U.S. should put aside its legitimate concerns to help resolve the crisis. “The Taliban deserve worse,” Smith wrote in Foreign Affairs, “but that does not matter. After generations of suffering, the Afghan people deserve better.”