The economic consequences of the Taliban dominating Afghanistan: more poverty, refugees and illegal activities

By RockedBuzz 5 Min Read

In recent weeks, the Taliban have carried out a rapid offensive throughout Afghanistan to regain the country that they already dominated at the beginning of the century. The peace commitments signed in 2019 and 2020 have remained a dead letter once the US announced the definitive withdrawal of his troops. The terrorist group is one step away from taking Kabul, which will decisively affect the failed state’s economy.

The IMF warned just over a month ago: “While a sustained peace It would raise development prospects, failure of talks could exacerbate violence, leading to loss of life, destruction and potentially a refugee crisis, hamper the ability of authorities to undertake the reforms that underpin the forecasts, and feed the outflow of capital. ”

On the one hand, according to World Bank data from 2019, approximately half of the country’s budget it is financed with foreign aid even though it has declined slightly in recent years. And although in November an agreement was signed for the country to receive 12. 2021 million dollars in the period between 2021 – 2025, the majority of these funds were conditional on the peace process between the Afghan government and the terrorist group.

In this way, it does not seem realistic to think that the West will maintain funding that will go to the coffers of the Taliban instead of the development of the country’s institutions or the well-being of the citizens.

On the other hand, a World Bank study of 2019 showed that Legal economic activity in the country declined each time the conflict escalated, while illicit activities grew, especially opium production. Although this did not weigh heavily on the country’s overall economic growth, the researchers stressed that illicit activities have “negative externalities, from greater insecurity to greater corruption,” while the formal economy provides better jobs and contributes to the collection of taxes.

“With the change in the structure of the economy, a small drop in aggregate economic activity could be associated with a greater decrease in the welfare of the population,” they point out.

Of course, foreign investment will decline even more than it has been doing. Uncertainty and insecurity scare money away, especially if it comes from the very West that Taliban fundamentalism considers the enemy.

In addition, the end of state institutions will not contribute to the necessary modernization of the economy. The 40% of employment in the country is still linked to agriculture, which represents more than 20% of GDP, which equates the industrial sector in terms of wealth generation.

A progress that could be reversed Before the US intervention in 2002, Afghanistan’s economy was a centralized system. Since then, in just two decades, its GDP has increased fivefold from 4. 000 to 20. 000 million (in stable dollars ), with an average annual growth of 6.2% between 2003 and 2020.

GDP per capita has increased by 166% to 509 dollars and its population has almost doubled, from 22 million to 39, according to World Bank data.

To all the aforementioned, possible international sanctions against the country should be added once the Taliban take control of the nation, either for the war crimes that the US has already pointed out, for the treatment of women and minorities or for skipping the UN resolutions, among other reasons.

In addition, the seizure of power by force may lead to the non-recognition of the Taliban government as a legitimate power, which would prevent any type of economic agreement – including humanitarian aid – with those countries that do not do so. recognize.


1-Business – Wikipedia

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