Minerals, Drugs & China: How Taliban Might Finance Their New Afghan Government
Afghanistan is currently enduring severe drought that threatens over 12 million people – a third of the population.
Now that the Taliban of Afghanistan and begun , a looming challenge awaits: How will they keep their country and economy afloat financially?
For the past 20 years, the US government and other countries of the Afghan government’s non-military budget – and that .
Now, with American aid likely out of the question and billions in central bank foreign reserves frozen, the Taliban will have to find other means to pay for salaries and support citizens and infrastructure.
of the Taliban and American-backed government for many years as an economic policy analyst at the Center for Afghanistan Studies.
Understanding how the Taliban will pay for their government begins with the last time they were in power over 20 years ago.
Afghanistan Has Changed a Lot
In the 1990s, Afghanistan was a very different country.
The and relied on international aid groups for the few services they could provide. In 1997, for example, the , which was barely enough for the salaries of government officials, let alone the entire country’s administrative and development needs.
Today, Afghanistan has changed markedly. The population has grown significantly, and its citizens increasingly came to expect services such as health care, education and basic utilities. In 2020, for example, Afghanistan .
As a result, Kabul has been transformed from a war-ravaged city into a modern capital, with a growing number of high rises, internet cafes, restaurants and universities.
Most of the developmental and infrastructure spending that has taken place since 2001 has come from other countries. The US and other international donors covered about 75 percent of the government’s non-military spending during those years. In addition, the US spent $5.8 billion since 2001 on economic and infrastructure development.
Still, was beginning of domestic spending in recent years. Sources included customs duties, taxes, income from fees on services like passports, telecommunications and roads, as well as revenue from its .
Revenue would have been a lot higher were it not for the government’s endemic corruption, which as a . A report from May 2021 suggested that out of the country every day, which would add up to about $3 billion a year.
Where the Taliban Gets its Money
Meanwhile, the Taliban had their own significant revenue streams to finance their insurgency as it gained control of the country.
In the 2019-2020 fiscal year alone, the Taliban from a wide variety of sources. Most notably, the Taliban earned $416 million that year from selling opium, over $400 million from , marble and gold, and $240 million from donations from private donors and groups.
US intelligence agencies and others believe that various countries, including , , have helped finance the Taliban.
With those resources, the Taliban were able to buy plenty of weapons and grow their military ranks as they took advantage of the U.S. withdrawal and conquered Afghanistan .
But winning the war may be easier than running the county, which faces many problems.
Afghanistan is currently enduring severe drought that – a third of the population – with “crisis” or “emergency” levels of food insecurity. and other essentials have soared, while most .
And like many countries, – and some fear a . Many public health facilities .
The Taliban also face . Roughly $9.4 billion in Afghanistan international reserves were frozen immediately after the Taliban took over Kabul. The International Monetary Fund in emergency reserves, and the European Union $1.4 billion in aid to Afghanistan through 2025.
5 Potential Funding Sources for New Government
Still, as they finish making their government and plotting a future course, the Taliban have a few sources they might be able to tap to generate enough money to run their reclaimed country:
1. Customs and taxation. Now that the Taliban are in full control of Afghanistan’s border crossings and government offices, they can begin collecting all import and other taxes.
2. Drugs. The Taliban have said poppies as they seek international recognition for their rule. But they may change their mind if that recognition doesn’t come, in which case they may be able to continue to generate a significant source of revenue from drug smuggling. Afghanistan is said to be and heroin supplies.
3. Mining. Afghanistan is estimated to have $1 trillion worth of minerals in its mountains and other parts of the country. China in particular , which include ones that are critical to the modern supply chain, such as lithium, iron, copper and cobalt. This may not be possible in the short run, though.
4. Non-Western countries. Several governments have been reportedly helping the Taliban financially, including and , and these countries may continue to do so. After the previous Afghan government collapsed in August, I was told by ex-central bank officials that a country in the region, likely Qatar, injected millions of dollars to support the Afghan economy. China in particular stands out for its potential ties to the new government, as the Taliban the country their “principal partner.” On Sept. 8, 2021, . Besides mining minerals, China its – a global infrastructure development project – into Afghanistan.
5. Western aid. Even with these other sources of income, I believe the Taliban will still be keen to restore aid from the U.S. and other Western countries and get rid of . The Taliban have said than in the 1990s, including by respecting the rights of women and not permitting terrorists to operate from Afghanistan. And the EU, U.S. and other governments may want to use aid and frozen reserves as leverage to hold the Taliban to these promises.
(Hanif Sufizada is a Education and Outreach Program Coordinator at the University of Nebraska, Omaha. This is an opinion piece and the views expressed are the author’s own. The Quint neither endorses nor is responsible for them.)
(This article was first published in The Conversation and republished here with permission.)
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