More than five months after the fall of Kabul, the Afghan economy is on the brink of collapse and millions of people are at risk of extreme poverty or hunger. A key culprit: the US decision to halt aid to the country and freeze billions in Afghan government funds.
The scale of the humanitarian crisis facing Afghanistan is massive: Loud UN Secretary-General António Guterres, “virtually every man, woman and child in Afghanistan could face acute poverty” without massive investment by the international community and a concerted effort to rebuild the country’s economy.
Guterres spoke to reporters about the scale of the crisis during last week’s launch of the UN fundraising campaign for Afghanistan — the biggest fundraiser ever for a single country. The organization asks more than $5 billion in aid to help the Afghan people, both within the country and in refugee camps in neighboring countries such as Uzbekistan and Pakistan.
Before the fall of Kabul in August 2021, the Afghan economy was heavily dependent on foreign aid; after the Taliban takeover, this cash inflow stopped. Under Taliban rule, unemployment is widespread and banks only operate part-time, so people cannot withdraw more than $100 a month. On top of that, the US has frozen much of it $9.4 billion in Afghan foreign exchange reserves in the Afghan central bank in August – a move that has taken place functionally cut off the country by many foreign banks, leaving the Central Bank of Afghanistan unable to access its reserves and support the country’s cash flow.
Now much of the country faces poverty and hunger: In December The World Food Program (WFP) found that 98 percent of Afghans do not get enough to eat, and Guterres warned this month that “we are in a race against time to help the Afghan people.”
More specifically, Afghanistan economic collapse means that many people, including some members of the Taliban, cannot afford food. After the US withdrawal, many Afghans who worked as interpreters, aid workers, prosecutors, professors and journalists suddenly lost their jobs and income, and many were forced into hiding, further reducing their ability to provide for basic needs themselves disabled – blankets, food, fuel and medicine – for their families.
Freezing temperatures are also forcing families to make the critical choice between food to feed their families and fuel to keep them warm during the bitter winter months.
“Everywhere we go, we find thousands more people who need help,” Babar Baloch, a spokesman for the UN refugee agency’s Geneva office, told Reuters Washington Post earlier this month. “They have not been evicted from their homes, but they have lost their jobs, they have no savings and their living systems have collapsed. They’re not on our lists, but they come and wait outside the distribution points and say, ‘What about us?’”
“Everything is connected. The government has collapsed, people have no salaries and the economy has gone to zero,” said Shahwali Khan, a vendor in Kabul. said the post. “People can’t afford to buy now and we can’t afford to sell.”
US policy is helping fuel the humanitarian crisis in Afghanistan
Many of Afghanistan’s current problems are closely linked to the US withdrawal from the country last year and the subsequent Taliban takeover of central government. Since then, US sanctions and an abrupt end to international aid have ruined Afghanistan’s economy and plunged it into crisis.
The US and the UN have made some concessions to allow humanitarian aid to operate outside of Taliban auspices; the Treasury Department’s Office of Foreign Asset Control (OFAC). some licenses granted To help groups operate in Afghanistan without interfering with financial restrictions on specific individuals and institutions in the country.
But, as experts have said, it’s not nearly enough to get the Afghan people anywhere near the aid they need, and OFAC licenses notwithstanding, the Afghan banking system is still essentially intact held hostage by US sanctions against the Taliban.
“Sanctions are intended to have a deterrent effect because sanctions always go beyond the text,” said Adam Weinstein, a research fellow at the Quincy Institute for Responsible Statecraft the interception In December. Banks and companies did not want to risk doing business in locations or sectors with economic restrictions from the US for fear they would violate a ban and face sanctions themselves, Weinstein explained.
To this end, more than 40 members of the Congressional Progressive Caucus sent a letter last month to President Joe Biden, urging him to release the frozen foreign exchange reserves owned by the Central Bank of Afghanistan and the Afghan people.
“No increase in food and medical aid can compensate for the macroeconomic damage caused by rising prices for basic necessities, a bank collapse, a balance of payments crisis, a freeze on civil servants’ salaries and other serious consequences across Afghan society, which harms the most vulnerable,” warns the letter.
So far, however, no policy change is in sight. Earlier this month, the US agreed another $308 million in humanitarian aid for Afghanistan, but the Afghan central bank’s reserves remain frozen.
While some aid reaches Afghans through the United Nations Office for the Coordination of Humanitarian Affairs (UNOCHA) and WFP, these organizations often have strict requirements for beneficiaries. In a nation on the brink, many are in desperate need are not entitled to assistance because they do not fit into the priority area of the program or because they are not poor enough.
And while the current crisis in Afghanistan is not entirely caused by external factors – even without sanctions by the US and its allies, the Taliban’s inability to manage government bureaucracy would have created problems, as would the pandemic and a heavy dry season which began in June last year – US action plays a key role.
The deterrent effect of sanctions discourages companies and banks from actually engaging with the economy. As House Democrats pointed out in their letter last month, there are relatively simple steps – how Issuing letters to international companies reassuring them that they are not violating US sanctions – could help ease the crisis and prop up Afghanistan’s private sector, but the Treasury Department has yet to do so.
“To restore a minimally functioning public sector and halt Afghanistan’s economic free fall, restrictions on normal business must be lifted and prohibitions on supporting or by the government relaxed,” wrote Laurel Miller, director of the International Crisis Group’s Asia program an op-ed in the New York Times this month. “Without that, there is little hope that humanitarian assistance can be anything more than a palliative.”
Humanitarian aid, at least on a large, international scale, does not seem to be in sight either; the UN’s financial tracking service shows that of the $4.4 billion needed to save Afghanistan from disaster, less than $29 million has been funded to date.
In the meantime, however, the Taliban will hold talks with Western nations including Norway, Britain, the US, Italy, France and Germany over the coming week. about humanitarian aid. Norwegian Foreign Minister Anniken Huitfeldt stressed that the talks should not be seen as a way of legitimizing Taliban rule AFP on Friday, “but we need to talk to the de facto authorities in the country. We must not allow the political situation to lead to an even worse humanitarian catastrophe.”
UN Emergency Relief Coordinator Martin Griffiths echoed this sentiment in his first appeal for funds last week, saying the crisis will only get worse unless the Afghan economy can recover and start providing for people.
Without help, said Griffiths, “Next year we will ask for 10 billion dollars.”