#Afghanistan on brink of economic and humanitarian collapse

KABUL, Afghanistan — Ever since the Taliban took over Afghanistan’s capital 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 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.

“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.”

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.

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

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: 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.

But the off-the-grid approach is despised by global regulators. Incidentally, the Taliban themselves primarily relied on hawala to survive during their insurgency years.

Relying almost solely on such a system, as Afghans have little choice but to do now, risks plunging the country further into becoming a 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 their first two weeks of rule as the banks were shuttered. While the financial institutions have since been ordered to reopen, the scenario is precarious as the currency is continuing to lose value, and Afghans cannot afford the surging costs of goods and services.

“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 their 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.

But the worse the economic impasse gets, the more unrest the Taliban will be forced to combat — peacefully 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.

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, 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 while previous leadership would hold frequent auctions for licensed exchangers to obtain large amounts of US dollars — that way, officials could control the flow and ensure the value remained relatively stable — it’s unclear whether the Taliban, opposed to US 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.”