Michael Hughes
August 13, 2022

Afghanistan’s Gross Domestic Product (GDP) plummeted by 40 percent overnight in the wake of the Taliban seizure of Kabul on August 15, 2021 because the international community cut off the foreign aid that had propped up the country’s economy for years. Such an earth-shattering loss of revenue no nation could survive, let alone one on the brink of utter collapse after decades of war.

Meanwhile, as of mid-August of 2022, a record 22 million Afghans are food insecure with 97% living under the poverty line of $1.90 per day. Inflation continues to skyrocket, with prices for basic household items rising by 50 percent since last July, according to the World Bank’s Afghanistan Economic Monitor.

Although it is worth pointing out that 90 percent of Afghans were living under the poverty line during the corruption-plagued Ghani administration – long before the fall of Kabul. It is of course a duty to highlight that the U.S. and its allies have frozen some $10 billion in Afghan central bank assets (or about 50% of last year’s GDP).

The objective of freezing Afghanistan’s own funds is to isolate the Taliban for illegitimately seizing power, although the takeover came as the result of a deal the U.S. negotiated.

This raises the question as to how Washington, and its minions, did not see all of this coming. Not only did the Biden administration’s top minds – unlike most of the rest of us – fail to foresee the collapse of the U.S. puppet government, they also failed to anticipate what has become the world’s worst humanitarian crisis. And the situation has only gotten worse over the past year while the U.S. has trickled less than $800 million in aid Afghanistan’s way after giving Ghani billions per year.

Well, now, nearly a year into this economic catastrophe, some advocacy groups are really pressing Washington to step up. Human Rights Watch (HRW) called on the United States and its partners to ease restrictions on Afghanistan’s banking sector to facilitate legitimate economic activity and aid delivery. At the end of the day, the economic and financial crisis is what underlies the humanitarian crisis.

“Afghanistan’s intensifying hunger and health crisis is urgent and at its root a banking crisis,” HRW Asia Advocacy Director John Sifton said in a press release on August 4. “Regardless of the Taliban’s status or credibility with outside governments, international economic restrictions are still driving the country’s catastrophe and hurting the Afghan people.”

The inability of Afghanistan’s central bank to access its foreign currency reserves or process or receive most international transactions has led to a major liquidity crisis and lack of banknotes, the HRW report added. Meanwhile, businesses, humanitarian groups, and private banks continue to report extensive restrictions on their operational capacities, according to HRW.

An Afghan humanitarian official told HRW last month that acute malnutrition is entrenched despite the fact food is available in markets across the nation. The official also said a functioning banking system is an immediate and crucial need to address the humanitarian crisis.

This is not to suggest that the Taliban regime is without blame. Although this economic and humanitarian crisis was certainly not of the Taliban’s making alone, the hardcore Islamist radical movement did little to reverse the decline. The Islamists spent way too much energy on curtailing women’s rights and took as their chief aim the implementation of antediluvian religious strictures rather than, say, broadly shared wealth creation.

Unemployment under the Taliban has soared from 13% to around 40 percent, according to the UN, and much of this has to do with the restrictions on women. More than 40 percent of women-owned businesses shut down amid the economic collapse compared to 26% of concerns run by men, according to a report by the World Bank. A quarter of these female-owned enterprises cited restrictions on women’s commercial and economic activities as among their top three fears.

William Byrd, an economist who worked at the World Bank, warned that Taliban restrictions on girls’ education and women in the workplace will have disastrous longer-term economic consequences by “limiting the participation of over half of the population in the economy.”

And, while applauding the Taliban’s friendlier approach to the private sector and crackdown on corruption, Byrd fears ideology is getting in the way of sound economic management.

“Their recently announced ban on opium, if implemented, would further shock the Afghan economy and take away the livelihoods of hundreds of thousands of rural people – an additional economic hit the country is simply unable to take,” Byrd said in a commentary published by the U.S. Institute of Peace earlier this month.

As HRW pointed out, it is on the Taliban leadership to recognize that their poor human rights record is undermining any chances to reach agreements to resolve the banking crisis.

“The Taliban seem more interested in restricting the human rights of Afghan women and girls than in preventing starvation,” Sifton said. “If their leadership is seeking legitimacy, they need to rethink their priorities.”