The Taliban Could Soon Face A Cash Crunch As Countries Cut Off Funding To Afghanistan

Aug 19, 2021
Originally published on August 19, 2021 7:39 pm
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AILSA CHANG, HOST:

With the Taliban now in control of Afghanistan, the U.S. and other countries are racing to cut off the country's financial lifelines. The Biden administration halted a shipment of cash to Afghanistan last week just days before the government fell, and the International Monetary Fund has temporarily frozen hundreds of millions of dollars in aid that would have been on its way to Afghanistan next week. NPR's Scott Horsley joins us now. Hey, Scott.

SCOTT HORSLEY, BYLINE: Good to be with you, Ailsa.

CHANG: Good to have you. OK. So what's the strategy here? Is the U.S. basically, like, trying to starve the Taliban financially?

HORSLEY: Well, that's part of it. Afghanistan is obviously a poor country and heavily dependent on foreign aid, and the U.S. doesn't want to see the Taliban getting its hands on that money the way the group managed to seize the weapons and equipment from the fallen Afghan security forces. This coming Monday Afghanistan was scheduled to receive about $450 million worth of help from the International Monetary Fund as part of a big global effort to help countries deal with the pandemic. And Josh Lipsky, who's a former IMF adviser now with the Atlantic Council, says there were practical concerns about what the Taliban might do with that money. He also says it could have provided a kind of accidental legitimacy for its hostile takeover of the government.

JOSH LIPSKY: In a situation where we're trying to evacuate people on the ground, in a situation where there's serious human rights issues at play, I do think it's important to not have these funds dispersed until there's a little more semblance of order.

HORSLEY: So the IMF put out a statement saying there is currently a lack of clarity about who should be recognized as governing Afghanistan. And as a result, the Taliban won't get that aid, at least not now.

CHANG: OK. And I understand that the U.S. has taken other steps to financially squeeze the Taliban. What can you tell us about those steps?

HORSLEY: Yeah. Most of the assets of the Afghan Central Bank are actually held in the United States. And the country relied on regular deliveries of paper dollars from the U.S. In fact, there was supposed to be a delivery of dollars just this past weekend. But as the Taliban was closing in, the Biden administration informed the head of the Afghan central bank, Ajmal Ahmady, that the money was not coming. And Ahmady offers a dramatic account on his Twitter feed of desperate Afghans trying to withdraw dollars from their local banks over the weekend and, in many cases, walking away empty-handed because the dollars weren't there. Ahmady, who fled the country over the weekend, told the BBC he expects the economic situation of the country to get worse.

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AJMAL AHMADY: It's likely that the currency is going to significantly decline, which will cause a spike in inflation and lead to increased poverty levels at the same time that we have a humanitarian crisis in Afghanistan. And put those together. It's a challenging environment.

HORSLEY: Another economic lifeline that's been frozen for now - individual Afghans living outside the country had been sending nearly $800 million a year back home. And for the moment, Western Union has put a stop to those money transfers.

CHANG: As you mentioned, I mean, the former government of Afghanistan was very dependent on foreign aid. So what's going to happen to that help, assuming the Taliban remains in power?

HORSLEY: That's a big question. For the last two decades the Taliban has managed to pay its own bills largely through extortion, kidnapping and the opium trade. But it's going to need more than that if it actually wants to provide some semblance of government services. Lipsky says the challenge for the international community is, how do you lend support to the Afghan people in a way that doesn't enrich a group that the U.S. government regards as a terrorist organization?

LIPSKY: You do not want people to suffer more than they already are. You also don't want to give money into the hands of folks who could use it for illicit purposes.

HORSLEY: It's not easy, but Lipsky says there are other examples around the world where it's possible to work around a hostile government without abandoning the people who need help.

CHANG: That is NPR's Scott Horsley. Thank you, Scott.

HORSLEY: You're welcome.

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