Where Is the Taliban Regime Three Years In?

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Lawfare, 16 August 2024

Probably the most concise, differentiated and realistic short assessment of Afghanistan’s situation after three years under the Taleban’s second rule by former world banker Bill Byrd, now at USIP, particularly on the economic side. He attests the Taleban “better-than-expected Taliban economic management”:

The Taliban’s performance in this regard is dramatically different from the Taliban’s non-management of the economy during the group’s previous 1996-2001 rule. That regime had no control over the afghani currency and there was hyperinflation…

But he still finds the country’s economy in a “fragile below-subsistence equilibrium.” Afghanistan suffered

… a sharp drop in GDP of 21 percent in 2021 and an additional 6 percent in 2022, with no significant revival in 2023 and negligible growth projected for 2024 and 2025.

Often, there are contradictory trends:

Corruption in the Taliban government appears less severe than it was under the previous Afghan government, particularly in customs. (….) However, there are indications that petty bribery as well as corruption in the most vulnerable sectors—such as mining—have continued.

In his view,

… [t]he Taliban government has also made some serious mistakes that have damaged the Afghan economy and potentially the regime’s own interests. One is the regime’s ban on opium poppy cultivation, which it has strictly enforced for a second year in a row. The ban has precipitated a loss of income on the order of $1 billion per year for poorer rural households. (…)

A second major mistake has been the ban on female secondary and higher education and the increasing restrictions against women working in the public sphere. Excluding half of the Afghan population from access to education and much of the workforce will be disastrous for longer term economic and social development. (…) these restrictions have also been harmful for the Taliban’s foreign relations.

Also, “effective, aggressive Taliban revenue mobilization risks overtaxing the economy and the private sector.”

He summarises that

… the economic “peace dividend” that would normally be expected at the end of a civil war—especially an outright victory by one side as occurred with the Taliban takeover—was overwhelmed by other shocks. Most damaging was the abrupt cutoff of aid (which had amounted to more than $8 billion per year, equivalent to approximately 40 percent of gross domestic product [GDP]) and international military spending in Afghanistan. The economic decline was exacerbated by the freezing of Afghanistan’s over $9 billion of foreign exchange reserves ($7 billion of which were held in the U.S.), the incipient collapse of the banking system, and the stoppage of normal financial transactions with the rest of the world.

Finally, he points out a number of risks for regime stability.