The Taliban, after lasting 20 years of war, has started to dominate Afghanistan again on August 15, 2021. Following this development, the United States of America (US) decided to block Afghanistan’s reserves Also, the international community has largely stopped the donation to Afghanistan. As a result of these, the Afghan currency has experienced a great depreciation against foreign currencies in the last month. Undoubtedly, this situation negatively affects the daily life of the Afghan people so the United Nations (UN) has announced that it will send $20 million in aid every week until the end of March 2022 to prevent the collapse of the Afghan economy and the humanitarian crisis.
In this sense, Ankara Center for Crises and Policy Studies (ANKASAM) has brought to your attention to views of the Deputy Head of the Center for National Policy Studies at Kabul University, Assoc. Prof. Ajmal Kakar regarding the economic-humanitarian crises in Afghanistan.
On August 15, 2021, the second Taliban period has begun, as you know and on September 7, 2021, the government was formed. How do you evaluate the economic policy of the Taliban in this establishment process?
The ruling of the Taliban is new as yet. Therefore, it is difficult to talk about their macroeconomic policies. However, it is also possible to make some determinations based on the developments that took place over four months. First of all, it should be noted that all of the institutions of the old regime have collapsed after the 20 years of occupation. Developing a policy that meets the expectation of the Afghan people is inconvenient in this present time. When we consider the appointments by the Taliban, there is a lack of position with the effect of immigration that took place in the state. There is an absence of an educated person. The principle of merit in the appointment process has in contemplation further. The principle of merit in the appointment process should bear in mind further. For instance, a Taliban commander has been appointed as a President of the Central Bank. Such developments have caused producing prosperous economic policies to become difficult. Due to decreasing confidence in this sector, Banking has been most affected economically by the developments of the last four months. In addition, the increase in inflation has reduced the purchasing power of the people and the Afghan people have become poorer. To give an example, there are arising problems even in paying the salaries of civil servants. Nevertheless, this difficulty is not only about the Taliban’s demeanour. The international community has also been responsible for the deepening of the humanitarian crisis in Afghanistan. In particular, the blocking of Afghanistan’s reserves is not that of the Taliban; It means the punishment of the Afghan people. The inputs of the International Monetary Fund (IMF) shows that Afghanistan has experienced a regression in the national development of about 30%. This reveals that country may fall upon major economic and social shocks. Indeed, the Taliban reduced the salaries of civil servants by 50%. Also, they are promising wheat in return for labour. Thusly, Afghanistan is economically stuck. Not possible to say that the Taliban has developed concrete projects to overcome these issues.
So, what do you think are the factors engendering Afghan currency to depreciate?
In fact, the Afghan currency has not begun to depreciate with the Taliban era, it was depreciating during the old regime as well. As probably known, 1 dollar was determined as 45 Afghanis aftermath of the 2003 currency reform. However, the day before the Taliban entered Kabul; that is, on August 14, 2021, 1 dollar was exchanged as 82.01 Afghani. The sudden collapse of the old regime led to a further depreciation of the Afghan currency. Due to the effect of the psychological environment in the first days of the collapse of the regime, those who wanted to leave the country received more dollars and the disorder in the market accelerated the depreciation of the Afghan currency. However, this situation did not improve within four months.
Firstly, it should be emphasized that essentially Afghan money getting its real value. In today’s conditions, the main support of the national currency comes from the gross domestic product (GDP) and GDP is effective in determining the reputation of a state’s national currency. At the end of the currency reforms in 2003, the value of the Afghan currency is not truly defined; has been artificially determined and this situation continues for 18 years. In other words, the value of Afghan money was tried to be determined through interfering or selling dollars. In this context, since 2003, 120-150 million dollars of foreign aid has been sold every week in the Shahzade Market, known as the Afghanistan stock market. Moreover, it is not only the value of Afghan money in the last 20 years; Afghanistan’s economy was created artificially and was centred around foreign aid. Hence, Afghanistan’s GDP is not in a situation comparable to a year or four months ago because the aids not coming as before. In short, the volatility in the market pushes the Afghan currency to take its real value. Therefore, I am foreseeing that 1 dollar will be fixed between 120-300 Afghanis.
More significantly, there is also a consumption issue in Afghanistan. A decline in consumption will led to a decrease in production and GDP will also drop away. This will weaken the circulation rate of Afghan money in the market and pave the way for losing its value. Along with this, psychological warfare, actors in the market do not confidant about the future, the country’s income sources decrease, exports decrease, those who want to leave the country buy more dollars, investors withdraw their capital from the country, dollar smuggling, people who are not experts in their fields are brought to the head of economic institutions, the Taliban administration is not recognized by the international community and the blocking of Afghanistan reserves can be counted among the reasons that cause the Afghan currency to lose its value.
The UN, by expressing that the Afghanistan economy is on the verge of collapse, announced that it will send $ 20 million weekly aid to the country. How do you interpret the UN’s aid? May this step prevent the economic collapse and humanitarian crisis in Afghanistan?
Humanitarian aid of the UN is satisfactory, in plain words even a dollar is valuable. The international community should realize that; In Afghanistan, there is not only Taliban but there are also 33 million Afghans that lives. Moreover, the vast majority of these people face problems like starvation. For this reason, the announced aid can contribute to the prevention of economic collapse by decelerating the crisis. However, at this point it is also crucial to transportation of aid to those people in need. The issue of transportation of aid was also a problem during the old regime period due to the lack of a transparent mechanism developed. In fact, this aids is also an opportunity for the Taliban. The Taliban must persuade the international community for the continuation and equitably distribution of aid. It should not be forgotten that If the crisis in Afghanistan is not prevented, there will be a migration movement that will inevitably affect the regional states and thereafter the world.
The international community has some demands from the Taliban, such as establishing an inclusive government that respects women’s rights, and aid is dependent on the fulfilment of these conditions. The Taliban, on the other hand, claim to fulfil all the requests of the international community. What kind of future is Afghanistan waiting for in such an atmosphere? What steps may the Taliban take to prevent the economic and humanitarian crisis?
There was a debate about ten years ago which was about the world is similar to a small village, but now with the rapid increase of common needs has likened the world to the giant family. To continue to exist in isolation from the international community by considering just its own interest is not possible for a state. The Taliban must certainly step in this sense. For instance, considering the realities in the Islamic world, women’s rights should be respected and their right to work and education should be recognized by the Taliban. Areas of scientific research and civil society should not have been restricted and demands of the international community which is not objected the national interest and religious values should be done. Further, the isolation of Afghanistan from the international community must be prevented by establishing a government in which all ethnic groups and political views are represented. This means that The Taliban must embrace all segments of the society and act within the brotherly spirit. In fact, the Taliban has been giving messages in this direction.
Taking these steps by the Taliban may bring to the persuasion of the international community and the continuation of humanitarian aid over. However, the Taliban administration announced in a statement that it had prepared the budget for 2022 without the support of the international community. However, the Taliban administration announced in a statement that it had prepared the budget for 2022 without the assistance of the international community. These statements of the Taliban is not overlapping Afghanistan’s realities. Because with this announcement, the Taliban has given a message that says Afghanistan does not need any help and they stand on their own two feet. Yet, the Taliban must be aware of the realities of the country; should prepare programs that will receive the assistance of the international community and must ensure the development of Afghanistan.
