Strategy to Improve Afghan Economy Explored at Quincy Institute
By Elaine Pasquini

Washington: One year after US-led coalition troops left Afghanistan, the United States remains the leading donor of humanitarian aid to the Afghan people, having provided more than $774 million over the last 12 months.

On August 29, the Quincy Institute for Responsible Statecraft hosted an online discussion moderated by QI research fellow Adam Weinstein to analyze ways to make Afghanistan more self-sufficient – and less dependent on US aid – in light of the country’s dire humanitarian and economic crisis.

Adam Weinstein	Graeme Smith
Haroun Rahimi	Jordan Kane

Weinstein pointed out there are multiple causes which created the humanitarian and economic problems in Afghanistan. US-imposed sanctions on the Taliban government have a major effect on the economy, despite the general licenses that offer some exemptions to them. “We have an unprecedented sanctions situation in which a group that was designated as a terrorist group is now the de facto government,” Weinstein said.

According to Graeme Smith, senior consultant for the International Crisis Group, the Taliban are interested in economic recovery, but only “on their own terms.” There are ways in which the Taliban are trying to sort of “duct tape things back together even though the country does remain under a lot of pressure,” he said. “About one-third of the GDP has disappeared since this time last year.” And the foreign exchange reserves are frozen.

But amid this “grim new normal” that is emerging economically, Smith noted, are “glimmers of hope.” According to the latest World Bank update “the government revenues for the current year have now surpassed government revenues for the same period last year…in part because the Taliban have cleaned up corruption massively,” he asserted.

In addition, the CASA-1000 electrical power project currently under construction connecting energy-rich Central Asia with energy-poor South Asia is going to result in “tens of millions of dollars pouring into the Taliban treasury,” he explained. “And these fees are legitimate due to General License 20 which allows certain fees relating to commercial transactions, such as customs duties, taxes and licensing.” This license aims to ensure that US sanctions do not prevent or inhibit transactions and activities needed to support the basic humanitarian needs of the Afghan people.

While there are reports that the Taliban government is less corrupt than the previous Afghan government, Tara Moayed, who worked in Afghanistan from 2015 to 2019 as a social development consultant and advisor to the Ministry of Finance, expressed the need for the Taliban government to be more transparent on its spending.

“The key question is where is the money being spent,” she said. “The Taliban has not been willing to be transparent about its finances and where the money is going, which is a problem.”

Parts of the previous system did work and are worth preserving, she continued. Successes in Afghanistan over the past 20 years include the health program, the community development program and education service delivery. “It would be a huge loss for Afghanistan to lose the capacity to deliver those services going forward as well,” Moayed warned.

With respect to the Taliban’s ban on girls’ secondary school education, there is secondary education for girls in certain provinces due to “community demands…which is a testament to grassroots community-led development,” she noted. “Sometimes…we forget that Afghans themselves, the community members and the rural people living in the villages, are actors in their own fate.”

Moayed stressed the need to “involve communities directly in the development process – give them a voice, give them decision-making power and transparency.”

For the economy to improve, Haroun Rahimi, assistant professor of law at the American University of Afghanistan, said the country must find a way to be part of the international community.

Both the Taliban and the West, he argued, “are walking a tightrope in terms of what is acceptable to the other.”

The international community is walking a tightrope of whether they can contribute to a progressive Afghanistan but not contribute in a way that would make Afghanistan “a successful emirate” for the Taliban. “You cannot do both things at the same time,” he insisted. “There is just one government.”

The Taliban is walking a tightrope, too, between not breaking ties with Al-Qaeda while trying to become a member of the international community in order to have sanctions removed and the central bank connect with general banking systems, he said. “They cannot have it both ways.”

The economy is the number one issue for Afghans, followed closely by girls’ education.

“Whether they see it as leverage or whether it is for ideological reasons, the Taliban have chosen to isolate themselves and by extension Afghanistan by not moving forward on girls’ education,” Rahimi said. “They are also harming their own country by not developing half their population.”

Jordan Kane, a senior analyst for the Special Inspector General for Afghanistan Reconstruction (SIGAR), works in its Lessons Learned program to identify and preserve knowledge from the US reconstruction experience in Afghanistan. The group then makes recommendations to Congress and executive agencies on ways to improve efforts in current or possible future operations.

Currently, the group’s forward-looking projects include examining the legal barriers to providing humanitarian assistance and the technical limits of how money can move. “Not just humanitarian or development assistance,” she explained, “but also commercial transactions because the lack of willingness to engage with Afghanistan has really put a pall on the commercial sector as well.”

It’s difficult to overstate the magnitude of the current economic and humanitarian crisis in the country, Kane said. In January, the UN announced two appeals for Afghan aid that totaled more than $8 billion, one of which was the largest appeal for a single country in UN history. The World Food Program forecasts that almost 19 million Afghans will face “acute food insecurity” between now and November, she added.

(Elaine Pasquini is a freelance journalist. Her reports appear in the Washington Report on Middle East Affairs and Nuze.Ink.)