The Afghanistan Bulletin
Afghanistan Faces a Dire Humanitarian Crisis; Economy Teeters on Collapse; Taliban Struggle to Provide Basic Services
Afghanistan faces an existential crisis as the Taliban’s forceful takeover of the country put an end to direct financial assistance, and cut off access to foreign reserves. The healthcare system, which was reliant on direct payments from international donors, is in desperate need of an infusion of cash to pay salaries and supplies to stock clinics and hospitals. Millions of Internally Displaced Persons (IDP’s) are unable to return to their homes. More than half of the population faces food insecurity. Without outside assistance, many Afghans will suffer and die as the cold winter months approach.
The prices for essential goods have skyrocketed, while banks have limited cash withdrawals. Food shortages are dwindling, companies are shutting down and workers have gone unpaid for months. Severe inflation is taking hold and food prices are rising dramatically due to the combination of a falling Afghani currency and a lack of foreign currency available for importers to spend on products from abroad. The price of rice, cooking oil, and flour have all risen by as much as 30% since the Taliban took power, Bloomberg Businessweek reports. As much as 75 percent of Afghanistan's economy was reliant on foreign aid in some way. US dollars were widely circulated and served as the default currency for buying imported goods and services as well as high-value transactions such as purchasing a house or paying for a wedding.
When the Taliban seized power in mid-August, the US government froze Afghanistan’s $9 billion foreign reserve assets held at US banks, citing the Taliban’s status as a sanctioned terrorist organization. European allies and multi-laterals such as the IMF and World Bank, following suit, suspended all direct financial aid to Afghanistan. Faced with insolvency, the Taliban have imposed strict capital controls. They imposed a withdrawal limit of $200 per week for any individual with an Afghan bank account. They have also frozen all transfers of funds outside of the country, according to a report by the NY Post. As a result, since the banks were reopened, tens of thousands of Afghans spend their days in long lines waiting hours and sometimes days to withdraw money from their accounts.
The United Nations Development Program published a report last month stating that Afghanistan’s Gross Domestic Product (GDP) could decline up to 13.2% by the summer of 2022. If this were to happen, nearly 40 million people, the entire Afghan population, would be in poverty. Almost one million children are at risk of death from severe malnutrition in Afghanistan as winter approaches, tens of millions of people face food insecurity, and millions of more children will suffer from starvation by the end of the year, according to NBC News. In a sign of just how desperate life for some in Afghanistan has gotten, people have taken to selling their belongings and even children at flea markets in Kabul and other big cities to raise cash for food or to fund their travel out of Afghanistan to one of the neighboring countries.
“What else can we do to survive?” a Kabul resident told Bloomberg Businessweek. The man, who lost his job before the fall of the Afghan government said, “If the hunger doesn’t kill us, the fear, anxiety and depression because of the Taliban regime definitely will.”
In Case You Missed It:
DPPC Advisory member Naheed Farid participated in a virtual event hosted by the Center for a New American Security(CNAS) regarding the future of US-Afghanistan policy, evacuation of vulnerable Afghans, and resettlement of Afghan refugees in the United States. Ms. Farid reiterated that:
“The Taliban cannot be trusted because of their hardline beliefs and partnership with dangerous terrorist groups. The Taliban regime poses an imminent threat to the region and the world. The U.S. and its allies should not recognize or normalize relations with the regime.”