Taliban’s road ahead

Published August 19, 2021
The writer is a business and economy journalist.
The writer is a business and economy journalist.

WE are being told that the Taliban of today are not the same as the Taliban of 1996. Fair enough but the Afghanistan of today is not the same as the Afghanistan of 1996 either. The Taliban were able to capture the country with more ease than anyone imagined, and certainly more ease than in 1996. But now that the war has ended, as their spokesman Zabihullah Mujahid announced in his maiden press conference on Tuesday, the real job of running the country begins. And this is not as simple as it may sound.

In 1996, Afghanistan was a country destroyed almost completely by years of civil war. Its infrastructure was wrecked, the dams were idle, roads chewed up, cities bombed largely into rubble, its central bank defunct for years and its national currency — the Afghani — left without any monetary authority to back it up. At least four separate currencies circulated in parallel as media of exchange in Afghanistan back in 1996, depending on the region. Its economy was largely run by smugglers and racketeers and no fixed investment worth mentioning was operated anywhere in the country. Less than a million students were enrolled in schools, mostly males, and hardly any higher education system was running.

By contrast, the Afghanistan they have captured so easily today had $9 billion in foreign exchange reserves (all held outside the country), public-sector enterprises, a functioning central bank and financial system to curate the money supply and exchange rate and process cross-border payments, 2,000 kilometres of roads connecting all major provincial cities, four long-distance transmission lines that carry the vast majority of the country’s electricity from neighbouring countries (Afghanistan purchases electricity from Tajikistan, Uzbekistan, Turkmenistan and Iran via transmission lines laid down during the period of US occupation), 10m students in schools and universities and so on.

Read: Will Taliban-II be different from the past?

The US-installed government was notorious for its corruption and inability to build institutions, but despite these failings, what the Taliban have captured today is far more functional and developed compared to what they captured back in 1996. They have made it clear that they do not wish to dismantle whatever rudimentary skeleton of a state the Americans built. In his press conference on Tuesday, Mujahid also said “we want a modern economy” and urged those Afghans seeking to flee the country to stay. “We need your talents,” he said.

The upside today is that nobody wants to see the Taliban fail and Afghanistan to descend once again into protracted conflict.

He’s not wrong. In order to run the country they will need engineers, doctors, teachers, administrators and bureaucrats. Consider for example that since rolling into Kabul, they are said to have gone to the offices of the country’s central bank, whose head had flown out on Sunday night, asking to be taken to where the $9bn foreign exchange reserves are kept. It had to be explained to them that reserves are not held in cash in a vault in the basement of the central bank’s headquarters. They are held mostly in various instruments with the Federal Reserve Bank in New York, and have been frozen by the Biden administration. The central bank governor, who had left, had to clarify this in a series of tweets on Wednesday.

In time they will learn that more than half of the resources required to operate the new state that is now theirs to run are met by donor countries that are announcing a suspension of these aid flows one by one. Without these resources they cannot pay government salaries, especially those of the Afghan National Defence and Security Forces (ANDSF). They will learn that without a functional financial system, without a central bank, and without foreign exchange reserves, they cannot make the payments on the electricity they import from their neighbours. Then they will discover the massive debt-servicing obligations of the state they have just captured, and the freezing of the $7bn in programmed donor support for 2021.

This is why the Taliban are so keen to acquire international legitimacy. Despite the fact that they control all the provincial capitals, they have not yet declared their emirate to be the government in Afghanistan and are continuing to negotiate a transfer of power from the former state authorities, notably the High Peace Council in Doha. Without international legitimacy they cannot unlock the reserves or reactivate donor funding lines. And without these they can only fall back on their earlier model of taxing smugglers to generate revenues. But that model cannot give them the resources that the state they have captured requires.

Along the way they will have to decide the fate of the ANDSF. Do they demobilise this force or keep it? If the latter, how do they integrate it with their own forces, and crucially, how do they continue meeting its bills, primarily salaries? On paper the ANDSF consists of 300,000 men. Even if we assume a one in six ratio, meaning for every six fighters they claim on paper they have only one in reality, that gives us a force of 50,000 men under arms, only slightly less than the Taliban’s own force size. What to do with this force is not a minor question.

There are parallels here to the American capture of Iraq, though the fighting was heavier in that case. Then too the Americans were forced to seek international legitimacy after the fall of Baghdad, because they realised they could not go it alone there. The Americans were unable to manage the aftermath and the consequences were disastrous. The upside today is that nobody wants to see the Taliban fail and Afghanistan to descend once again into protracted conflict. This will be of help to them as they work to legitimise their takeover and ask the international community for the assistance without which they cannot run the state.

Pakistan’s destiny is now joined more than ever before with that of Afghanistan, since Pakistan has argued all along that the Taliban are better suited to run Afghanistan than anybody else. ‘You got what you wanted,’ the world will say, ‘Now deliver’.

The writer is a business and economy journalist.

khurram.husain@gmail.com

Twitter: @khurramhusain

Published in Dawn, August 19th, 2021

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