WASHINGTON: Funding by the United States and other nations and the Taliban regime’s relations with Pakistan will shape Afghanistan’s future, say two recent reports by a US federal institution.

In these reports, the Washington-based US Institute of Peace (USIP) reminds the United States and its allies that humanitarian aid alone cannot prevent an economic collapse in Afghanistan.

USIP released the two reports this week as part of a larger report summarising the studies it conducted during 2021 on Afghanistan and other issues.

Positive relationship with Islamabad could help foster stability, development

Elizabeth Threlkeld, the author, believes that the aid given by the United States and partner nations to the Afghan government from now onwards would shape the country’s future.

According to her, the extent of support the Taliban receive from external sources, mainly Pakistan, would also be a deciding factor in determining Afghanistan’s future.

Based on interviews with Afghan and Pakistani experts, one of the reports identifies key drivers of conflict and connection between the two countries while explaining how the bilateral relationship could affect future outcomes in Afghanistan.

The report points out that under current circumstances, “a positive relationship with Pakistan could go a long way in fostering stability and development”. The report, however, warns that the “opposite is a much likelier outcome, given the deeply held grievances on both sides”.

By addressing one another’s security and sovereignty concerns through dialogue, “Afghanistan and Pakistan stand the best chance of building on their cross-border ties for the benefit of regional stability and the well-being of their citizens”, the author argues.

One of the key issues is the dispute over the Durand Line, which led to clashes between Pakistan and Taliban border guards this week. Pakistan wants Afghanistan to recognise the line as the international border while the Taliban, like previous Afghan governments, are not willing to do so.

The report claims that the relationship between the two countries will continue to be shaped by tensions that have characterised it for more than a century. Five recurring drivers of these tensions, according to the report, are: sovereignty concerns, security interests, geopolitical dynamics, cross-border ties, and connectivity and trade.

“Together, these dynamics will shape future prospects for stability in Afghanistan and the broader region,” the report adds.

In the other report — “How to Mitigate Afghanistan’s Economic and Humanitarian Crises — author Dr William Byrd writes that the primary economic shock to Afghanistan was the abrupt cut-off of aid — about $8 billion a year — and the freezing of Afghanistan’s $9bn of foreign exchange reserves. He also notes that recently both the United Nations and the United States took several measures to ease their sanctions on the Taliban.

But Dr Byrd warns that providing humanitarian aid alone cannot salvage the Afghan economy and suggests “expanding sanctions relief to encompass private business and commercial transactions”.

He argues that the risk this relief “will materially support the Taliban in a substantial way is acceptably low compared to the costs of a continued economic implosion”.

Dr Byrd also suggests paying the salaries of health workers, teachers and other essential-service providers, using a combination of Afghan revenues and aid funding.

He also suggests releasing $900 million of Afghanistan’s foreign exchange reserves to the country’s banks, arguing that “this would shore up the banking system and forestall its imminent collapse”.

Dr Byrd also suggests gradual release of additional foreign exchange reserves over time to cushion the economic shock and support the balance of payments, facilitating the Afghan economy’s adjustment.

He argues that reserves could also be used for specific purposes not directly involving the Taliban, such as paying bills for electricity imports from Uzbekistan and Tajikistan and servicing sovereign debts owed to international financial institutions incurred by the previous government.

Dr Byrd also urges Kabul’s new rulers to restore a degree of independence in the Ministry of Finance and the state bank and appoint competent, experienced technocrats to key positions.

It’s also important to make “a credible, publicly available national budget for this year, which can be assessed by the World Bank and other outside agencies”, he argues.

Published in Dawn, January 10th, 2022