The Financial Express

Afghanistan under the Taliban: daunting economic challenges ahead

| Updated: September 12, 2021 21:35:23

Afghanistan under the Taliban: daunting economic challenges ahead

US president Joe Biden delivered a speech on last Tuesday afternoon declaring an end to the 20 year US war in Afghanistan. The declaration came a day after the last C-17 military transport plane flew the last US troops out of Kabul. He defended the US' hasty withdrawal from Afghanistan stressing the "outstanding result" of the mission despite the chaos and bloodshed of the US military's final days in the country. In fact, the US occupation ended like it began.

The February 2020 peace agreement between the Trump administration and the Taliban, an agreement that the Biden administration apparently followed through leading to complete withdrawal from Afghanistan reveals that the Taliban made almost no concessions in return for the US withdrawal.

Biden in his speech further added, "This decision about Afghanistan is not about Afghanistan. It's about ending an era of major military operation to remake other countries". Since the  WWII, the US has engaged in innumerable wars both hot and cold throughout the world leading to geographical reconfiguration to destabilisation of the future of many nation states.

A century ago, the British and the French carved up the Middle East into countries with recognisable borders but that is under siege today due to military interventions and aggressions by the US in the region. Now the monumental Afghan disaster  signals the end an era and the shattering of an strategy of global dominance by the US using its military force. Niall Ferguson, an eminent British historian  told the Economist "as it (the US) leaves Afghanistan in chaos, American decline mirrors Britain's a century ago".

The US invaded Afghanistan in 2001 on the pretense of fighting "terrorists" but in effect the US with the support of its foreign legion NATO occupied the country and remained in Afghanistan for 20 years. The departure of US troops on last Tuesday marked the end of 20 years of occupation of the country.

People were in a celebratory mood on the streets of Kabul  to mark the end of occupation. The US army rarely leaves a country once it occupies that country. Countries such as  Japan, Germany, South Korea and Iraq still have very large US military presence since these countries were occupied despite the claim that all these countries have regained their independence from the US occupation.

In  Afghanistan it was a clean departure, no US army was left behind. The defeat suffered by the US at the hands of the Taliban was complete and decisive. It also exposed the failure of policies pursued by the US  in Afghanistan. This US retreat from Afghanistan also signals the failure of an entire strategy that has guided the US policy actions to maintain  global dominance for decades.

More importantly, the rapid collapse of the US client regime in Kabul like in Saigon in 1975 demonstrated once again that any US or Western power backed or installed regimes rarely succeed in achieving legitimacy  or the ability to stand alone. In fact, the endless violence of the US occupation and the corruption of the US client regime in Kabul boosted popular support for the Taliban, especially in rural areas where three quarters of Afghans live.

The US occupation of Afghanistan also demonstrates how the neo-liberal economic policies can be applied to conduct a war of occupation. The war in Afghanistan was almost privatised. Not only soldiers of fortune were given a free hand to pursue their business objectives  but also  US military and CIA contractors with no bid contracts were  pocketing a massive amount  of the war money. Also, lobbyist for the US war industry, many of whom are retired generals also benefitted from  this privatised war.

By 2016 one in four US personnel in Afghanistan was a private contractor. This in effect means the war in Afghanistan was already outsourced. These contractors operate in the shadows without any effective public oversight and allow policy makers to have their cake and eat it too.

Also, the use of businessmen as intelligence gatherer is a quite common practice used by the CIA and NSA. The budget for US national intelligence agencies in 2020 was estimated at about US$86 billion. However, although the US is now out of Afghanistan, the 2001 Authorisation for Use of Military Force (AUMF) still remains in place and can still be used. It authorises to take military measures along with rendition, torture and drone assassinations in distance places  and that  will keep thousands of Pentagon and CIA contractors busy running their businesses.

The Taliban now claim they have achieved independence but face massive challenges as they proceed to establish a stable government. Afghanistan is now facing an imminent economic collapse and a looming famine  as the Taliban are trying to get the country back to normalcy.

Before the Taliban took control of the Afghan capital Kabul on August 15, the country's GDP largely depended on foreign aid dished out by the US and its NATO allies and others. Aid flows over time decreased from around 100 percent of GDP in 2009 to 43 percent in of GDP in 2020. 75 percent of all public expenditures were covered by grants from international donors including the US.

Afghanistan's levels of poverty and unemployment remained very high despite the flows of international aid because a large proportion of these money were stolen by the Afghan ruling elite based in Kabul. As the Taliban forces approached Kabul on August 15, the former Afghan president Ashraf Ghani left the country with US$169 million stolen money to settle in Dubai.  His daughter pursues a hipster lifestyle and lives in Brooklyn, New York. This is a typical example of a member of the Afghan ruling elite. The Afghan ruling elite provides a perfect example of a pure reinter class. Rachel Maddow of MSNBC described the Afghan ruling elite as " a fantastically corrupt elite".

In 2020, when Ashraf Ghani was still president of Afghanistan said that 90 per cent of the people in the country were living below the government set poverty line of US$2 a day. With wealth distribution remaining highly uneven, much of the country's rural population remain impoverished as well as much property has been destroyed due to the ongoing war.

Afghanistan has had some of the most corrupt state institutions in the world which include judiciary among others under the US occupation. Such widespread corruption has made it  very difficult to conduct business activity as reflected in Afghanistan' s ranking at 173rd out of 190 countries in 2020 for the  ease of doing business.

Afghanistan now has a population of 39.7 million with a GDP of US$19.01 billion. In the global ranking, the country ranked 113th in terms of GDP with a per capita income of US$509, less than one per cent that of the US  in 2020.

The underground economy accounts for a significant share of production, export and employment and includes opium production, smuggling and illegal mining. Many of the people employed in Afghanistan's private sector are associated with the underground economy. Afghanistan now has one of the smallest formal economies in the world.

There are 2.5 million registered Afghan refugees in Pakistan, Iran and other countries. Three million more Afghans are internally displaced.  According to the UN refugee agency, UNHCR, last week  some internally displaced Afghans had begun to return to their places of origin. But the agency also warned that up-to half a million Afghans could flee the country by the end of this year.

According to the New York Times (NYT)  the war cost the US more than $2 trillion. The war in Afghanistan, we are again told by the NYT, after achieving the primary objective of denying sanctuary to Al Qaeda evolved into a two decade long nation building project.

It is not only the US and its allies but even the US' regional strategic partner India, a US$1,901 (2020) per capita income (just about 3 per cent  that of the US) economy also joined in nation building project in Afghanistan and dished out more than US$3 billion for the project that included building the Afghan  Parliament house at a cost of US$120 million.

In fact, India ranked the 6th largest donor to Afghanistan after the US, Japan, Germany, the UK and Canada. However, it will be very interesting to see what happens when Afghan refugees in India those who are Muslims start applying for Indian citizenship under the new Citizenship Amendment Act (CAA).

Yet, despite the trillions of dollars that have been flowing into the country, Afghanistan still remains a  very desperately poor country. Having won the war, the Taliban now face daunting economic challenges among many other challenges. The new Afghan government is in desperate need of  huge amount of funds in the coming months to feed and provide basic services to its people.

The US quite often reflexively responds to a country it considers not friendly or an enemy by  choosing to wage  an economic war with sanctions and debt weapons as devastating as  the US "humanitarian bombing" with cluster bombs, helicopter gunships and drones.

On August 24, UK Prime Minister Boris Johnson after chairing the G7 meeting very clearly stated that withholding aid and recognition gave them "very considerable leverage-- economic, diplomatic and political" over the Taliban. Under the current prevailing dire economic condition in Afghanistan, the exercise of such  a "leverage" will lead to the loss of hundreds and thousands of Afghan lives.

Already the US has frozen US$9.4 billion of the Afghan Central Bank's foreign reserve. The International Monetary Fund (IMF) has suspended US$46 million emergency reserves to Afghanistan and also decided to cut off US$370 million Covid-19 aid. The World Bank also has decided to freeze US$1.4 billion in aid. The European Union (EU) also has  frozen US$1.4 billion in aid.

The after-effects of such measures will certainly inflict much more miseries and deaths than the hot war  of the last 20 years. Zamir Kabulov, Russia's Presidential envoy to Afghanistan,  rightly pointed out that "if our Western colleagues really care about the fate of the Afghan people, then there is no need  to create additional problems for them in the form of freezing the gold and foreign exchange reserves of the Afghan state".

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