Xing Wu
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It is no coincidence that Afghanistan’s huge trade deficit first emerged after 2001, when the country was taken over by Western powers, or that the deficit peaked during the rise in military power of US President Barack Obama in 2012 and 2013. Imports are a direct consequence of foreign aid.
Like much of the military spending in Afghanistan, aid dollars poured in and then flowed out in payments to entrepreneurs and in the flight of capital from the corrupt elite. Giant flows of foreign money have created a whole parallel economy, partly civilian, partly military.
If this funding crumbles as many who have benefited from it flee to the airport, it is tempting to shrug. That’s life. The West is coming out and Afghanistan is going back to its previous state of self-sufficiency. If the Taliban want the money to start flowing again, they have to accept Western terms.
Modernized Afghanistan
Such a policy would be cynical, superficial and dangerous. Viewing the funding as a favor – to be granted or denied depending on whether the Taliban conforms to Western expectations – denies the existence of Afghanistan which has emerged as a result of the last 20 years of intervention.
It may not have been a viable state or an army worthy of battle, but it was a new society that critically depended on outside funding. If the West is to help ensure at least minimal continuity of life in Afghanistan, a continuous flow of funds is essential.
As partial as the modernization of Afghanistan has been since 2001, it was real and critically dependent on imported money and goods. Education at all levels has grown, attracting significant funding from abroad.
Over the past 20 years, life expectancy has increased dramatically. Infant and maternal mortality have fallen, all thanks in large part to an externally funded medical system.
The use of mobile phones and the Internet is widespread. Electronics come from abroad. Afghanistan’s electricity consumption has more than increased tenfold. Seventy percent of this electricity is imported, to the tune of about US $ 280 million annually.
The number of registered motor vehicles has more than doubled since the early 2000s; not only the vehicles themselves but also the gasoline and diesel with which they run must be imported. In 2002, Afghanistan was coping with 280 barrels of imported oil per day. In 2018, it needed 13,300 barrels.
Most critical of all is the food. Since 2001, the Afghan population has doubled. The food balance is precarious. Among Afghan imports, at $ 760 million in 2018, is flour.
Opium exports
Most countries import cereals and manufacture them themselves. Flour is relatively expensive to buy abroad and fragile to transport. Afghanistan imports flour because it does not have the grinding capacity to grind its own.
If Afghanistan were to reduce its imports to the level that could be financed by its exports – assuming it can continue to export – they would fall by 75%. It would be a big blow.
Of course, official Afghan export figures do not take into account its most profitable source of export income: opium. As the world’s largest supplier, one would imagine that Afghanistan would be fabulously rich. But the Afghans do not control marketing like the Colombian cartels. The United Nations estimated the income of Afghan opium producers in 2019 at $ 1.2 billion to $ 2.1 billion.
The benefits are very unevenly distributed in Afghan society, and they are already fully justified. Through one channel or another, the money is already entering the Afghan economy and paying for domestic and imported purchases, many of which can be smuggled.
Global drug markets are rebounding from their pandemic lows, but it would be really wrong for Western powers to rely on soaring heroin prices to bail out starving Afghanistan.
A besieged country can also turn to its foreign exchange reserves to pay for its imports. Afghanistan has accumulated $ 9.4 billion, enough to cover almost 18 months of imports. Ajmal Ahmady, former Afghan President Ashraf Ghani’s man at the Afghan central bank, tweeted as he left the country that the Taliban had come to seek the reserves.
To their dismay, they discovered that the funds were not held in Kabul but at the US Federal Reserve in New York. They are now blocked by Treasury sanctions. Similarly, the International Monetary Fund (IMF) has decided not to distribute to Afghanistan the 440 million dollars of special drawing rights to which it is entitled under the global allocation of 650 billion dollars.
How then will the Afghan economy continue to function? Westerners who have tried to train the Taliban in economics notice that they seem to assume that the funding will come from Pakistan or China. Pakistan, itself under an IMF program, does not have the resources to cover Afghanistan’s deficit. While China may be accommodating, it has so far made no commitments.
Already before the current crisis, the World Food Program estimated that half of the Afghan population faced food shortages. It was then that aid was still pouring in. More than 3 million Afghan children suffer from severe malnutrition. Drought is sweeping the land, destroying 40 percent of the crop this year.
The most vulnerable of all are the 3.4 million internally displaced people. The cold will arrive in a few months. Food prices in Kabul and other major cities are already skyrocketing.
While this may be the only leverage left to the West, to play politics with the external funding upon which life in Afghanistan has been built over the past 20 years would amount to worsening the inhumane withdrawal in a way. really inhuman.
What Afghanistan needs is a well-funded, multilateral humanitarian effort to ensure that life can go on as long as possible and that millions of people are protected from disasters. Not for nothing, the slogan adopted by Isabelle Moussard Carlsen, head of the United Nations Humanitarian Office in Afghanistan, is #StayAndDeliver. It’s correct.
Adam Tooze is a columnist at Foreign police and professor of history and director of the European Institute at Columbia University.
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