Taliban, Cut Off From Accessing Afghanistan's Funds, Can't Pay Import Taxes for Food

Only a month after the Taliban seized Kabul, Afghanistan's impoverished people are hanging by a thread as the world tries to figure out how to deliver aid without indirectly supporting the militant group, the Associated Press reported.

The interim government, cut off from its own and foreign funds as banks and Western governments freeze assets and pull out of financing deals, can't pay the import taxes necessary to access food from a port in Pakistan, the country's Chamber of Commerce and Industry vice chairman said.

What's more, without government access to the international banking system, aid groups from inside Afghanistan and elsewhere are unable to bring emergency relief, basic services and funding to people at risk of starvation, unemployment and COVID-19.

For more reporting from the Associated Press, see below.

Taliban AIrport
Taliban fighters collect military clothes near damaged Afghan military aircraft after the Taliban's takeover inside Hamid Karzai International Airport in Kabul, Afghanistan, on September 5, 2021. Mohammad Asif Khan/AP Photo

Among the groups struggling to function is a public health nonprofit that paid salaries and purchased food and fuel for hospitals with contributions from the World Bank, the European Union and the U.S. Agency for International Development. The $600 million in funds, which were funneled through the Afghan Health Ministry, dried up overnight after the Taliban took over the capital.

Now, clinics in Afghanistan's eastern Khost Province no longer can afford to clean even as they are beset with COVID-19 patients, and the region's hospitals have asked patients to purchase their own syringes, according to Organization for Health Promotion and Management's local chapter head Abdul Wali.

Donor countries pledged during a United Nations appeal this week to open their purse strings to the tune of $1.2 billion in humanitarian aid. But attempts by Western governments and international financial institutions to deprive the Taliban-controlled government of other funding sources until its intentions are clearer also has Afghan's most vulnerable citizens hurting.

The World Bank, the International Monetary Fund and the European Union suspended financing for projects in Afghanistan, and the United States froze $7 billion in Afghan foreign reserves held in New York. Foreign aid to Afghanistan previously ran some $8.5 billion a year—nearly half of the country's gross domestic product.

The West's strategy is to strangle the Taliban's finances to induce Afghanistan's new leaders to respect the rights of women and religious minorities. The all-male, hardline Cabinet appointed last week includes several ministers subject to U.N. sanctions and one with a $5 million FBI bounty on his head.

While it's unclear how long Afghan central bank reserves will remain out of reach, American officials insist that humanitarian groups can sidestep Taliban authorities to deliver directly to the needy Afghans fearing for their lives and futures in the wake of the chaotic U.S. pullout.

"It's definitely still possible to meet the basic needs of Afghans without rewarding the government with broader economic assistance and diplomatic recognition," said Lisa Curtis, former South and Central Asia director of the U.S. National Security Council.

But the situation on the ground shows the limits of that approach. Fighting over the years has displaced over 3.5 million people—including over half a million since the start of the year. The price of basic goods has soared. Bank lines snake down streets as people wait hours, even days, to withdraw money so they can feed their families.

While individuals are allowed to withdraw a maximum of $200 per week from Afghanistan's banks, organizations are unable to get any funds. The paralysis has hampered the work of local authorities who used World Bank development funds to pay for health services and clean water, as well as international charitable groups trying to run vast aid operations.

"The cash remains the main issue," said Stefan Recker, Afghanistan director for Catholic relief organization Caritas. "We cannot pay our own staff, run our aid projects or implement badly needed new programs."

Cut off from their bank accounts, groups dependent on international donors are using stop-gap methods to stay afloat. They are getting their hands on operating cash through a mixture of mobile payment service M-PESA, Western Union transfers and hawala—the informal money transfer system that helped power the economy when Taliban ruled Afghanistan in the 1990s.

The ancient system, which existed in the country before banks, relies on the principle that if there are two people who want to send equal amounts of money between two locations, cash doesn't need to change hands. International anti-poverty organization CARE is among the relief providers that rely on hawala dealers to transfer funds and record loans across provinces.

Meanwhile, some countries, including the United Arab Emirates, Qatar and Uzbekistan, have avoided the messy debate over financial aid by dispatching planeloads of food and medicine to Kabul, betting that bags of rice will get distributed to the needy and not line the pockets of Taliban ministers who are on terrorism watch lists.

But many insist that informal money transfers and rice shipments are hardly the way to prevent Afghanistan's financial and social collapse at a time when the stakes are so high: along with drought and the threat of famine, potential Taliban brutality and a collapsing health care system, Afghans face more desperate times as winter approaches.

Although the $1.2 billion raised at the U.N. this week exceeded expectations, uncertainty surrounds the outpouring of international sympathy. Aid workers want to know where exactly the money is going and when, as well as how the needs of cash-strapped local nongovernmental organizations will be addressed while Afghanistan's banking system remains crippled.

Those salaries now run through financial plumbing controlled by former insurgents with a brutal reputation. In maintaining its grip on the Afghan state's foreign reserves, the U.S. hopes to pressure the Taliban to honor their promises to create a moderate and inclusive government.

Although Afghanistan's new rulers vowed as recently as Tuesday to ensure the U.N. aid is distributed fairly, reports have emerged in recent days of Taliban fighters cracking down on journalists and peaceful protests.

As the international community ponders the answer, doctors at a government-run pediatric hospital in Kabul say they have run out of antibiotics and gauze and are bracing for a harsh winter without heating as they treat a growing number of malnourished children.