Afghanistan’s Missing Money- The Economic Drivers Behind The Humanitarian Crisis

In a statement released on the 15th of August, 32 NGOs called for the international community to increase aid and address the economic issues driving Afghanistan’s humanitarian crisis. In the past year, the country’s economy has been crippled by sanctions and isolated from the international banking market in an attempt to invalidate the ruling Taliban and condemn their heinous actions against Afghan civilians. However, these organisations draw attention to the spiraling rates of hunger and poverty, which is disproportionally affecting women.

The story of Afghanistan’s economic turmoil begins with the departure of US forces from the country in August of 2021 and the subsequent takeover of the Taliban. Led by the US, foreign donor governments instructed the World Bank to cut approximately 2 billion dollars’ worth of funding to the Afghanistan Reconstructive Trust Fund. Prior to this, three quarters of the country’s economy was made up of foreign aid. The ARTF was used to pay the salaries of the essential frontline workers that kept Afghanistan running through four decades of war. Projects ran by the International Development Agency immediately grounded to a halt. Banks closed and ATMs ran out of paper currency.

As this was happening, the US, along with other governments and the World Bank Group prevented the Afghan Central Bank from interacting with international financing institutions such as the World Bank and the IMF, as well as foreign domestic banking systems. By revoking the credentials of the Central Bank, Afghanistan became financially isolated. The Bank was blocked from accessing its reserves of foreign currency on deposit in overseas banks, which held approximately $9 billion of the country’s foreign currency reserves. The bulk of this- $7 billion- is held in the New York Federal Reserve by order of President Biden. Half of this sum is in a separate account in the name of the Central Bank but can only be withdrawn by a US-approved representative that has not yet been chosen. The other half is currently the subject of an ongoing court case involving the families of those killed in the 9-11 terror attacks and remains in a frozen account. Additionally, there remains sanctions on individual Taliban leaders that further hinder the economy and leave foreign banks reluctant to engage with Afghanistan for fear of breaking them.

The main justifications for the above actions relate to the ruling Taliban and their treatment of Afghan citizens, particularly women. In the span of a single year, women and girls have suffered immensely under an extremist interpretation of Islamic law that prevents them from partaking in society. The Taliban rolled back promises of ensuring girls’ right to education, and in May the leader of the Taliban, Haibatullah Akhunzada, mandated that women must fully cover themselves in public. These devastating setbacks have only been exacerbated by the humanitarian crisis that the IRC is warning could kill more people than the past two decades of conflict.

20 million people are suffering at level-3 or level-4 “emergency” starvation under the World Food Programmes assessment, with one province, Ghor, at a level-5 that strongly indicates an approaching famine. A Save the Children report reflects the impossible choices that families are forced to make in order to survive, with one in four children asked to work and 5.5% of girls being asked to marry. The same report shows the ways in which women are disproportionally suffering, even as children- of the one in ten children surveyed that go to bed hungry every night, nearly two thirds were girls.

In a letter signed addressed to Joe Biden by over 70 economists and experts, they condemn the economic decisions that led to the current crisis, stating that, “The people of Afghanistan have been made to suffer doubly for a government they did not choose”. The withholding of Afghanistan’s funds is being done largely based on a fear of what the Taliban may do with any large sum of money acquired, yet the sharp decline of aid from the international community punishes the Taliban’s victims further. There is no question that the grievous offences of the Taliban must be widely condemned by the international community, but economically isolating the country, seizing their sovereign wealth, and cutting off aid is the opposite of solidarity with the people of Afghanistan.