ATMs that dont work, rising prices and people selling their stuff on the streets. The Talibans takeover is rapidly drying up international aid, which Afghanistan relies heavily on. Nieuwsuur discusses with Bert Koenders, World Bank Special Envoy, whether those cash flows are ever going back under a Taliban government.
Afghanistans government spending was 75 percent for foreign donors, such as the International Monetary Fund (IMF) and the World Bank until recently. The IMF has stopped providing money because it is not clear to the international community which government should be recognised as the official Afghan government.
The World Bank has also stopped support. Bert Koenders (former Foreign Minister) is special envoy for the World Bank for vulnerable areas, including Afghanistan, and tells in Nieuwsuur why they stopped with the support.
“Its a pause button because we didnt actually have a partner anymore,” says Koenders. “The old government had fled, and the new government has not yet been formed. And as far as it is formed, it was done by military means. All Member States are actually stopping the help because you dont know where its going.”
The World Bank did not provide direct financial support to the Afghan government, but donated the money to specific projects in the country. In total, more than EUR 4 billion has been put into such projects since 2002.
“For example, those are projects in 30,000 districts, set up by the locals,” says Koenders. “They are about healthcare, education and economic development. It is also about stimulating developments in electricity and digital resources.”
According to Koenders, much has been achieved in Afghanistan over the past twenty years, but it is changing rapidly. “We now see that were back to a massive poverty fall, a social implosion,” he says.
For many Kabul residents, chaos and panic are complete. “We want the banks to open.”
Afghanistan currently has only a GDP of around 17 billion euros on a population of 38 million people. For comparison, the province of Friesland, with 650,000 inhabitants, also has that GDP.
Afghanistan is potentially a rich country, with huge stocks of gold, silver, copper, and above all the rare lithium, a raw material indispensable in the production of increasingly important sustainable technologies, such as rechargeable batteries. Afghanistan presumably has the largest lithium supply in the world. However, the extraction of raw materials is not going well due to a combination of factors.
The Taliban is making their own money especially with illegal drug trafficking. In Afghanistan, poppy is grown on a large scale. As a result, Afghanistan is responsible for the lions share of opium and heroin trade globally, even 80 percent according to the UN. A June UN report estimates that the Taliban, including extortions, kidnappings and donations, will receive an amount of between 300 million and $1.6 billion annually.
“Talk to and test the Taliban”
The big question now is: will international lenders go to the table with the Taliban as soon as they have been able to form a recognised government?
“That decision depends on World Bank Member States,” says Koenders. There is also no chance that the Taliban will form a government that is internationally recognised. “That means looking at alternatives. It is also perfectly understandable that no money is put into a government that discriminates against women and minorities. Maybe the money ends up wrong. So were not going to do that, I hope international aid has learned that by now.”
One of the arguments not to stop aid to a country like Afghanistan is the risk of other countries jumping into the hole. For example, China and Russia would be willing to negotiate with the Taliban, without putting too high demands on human rights and democratic values.
“First of all, China and Russia are also in the World Bank,” Koenders says about that. “Were also trying to find agreement with those countries if it doesnt exist.”
Moreover, according to Koenders, it is better for China if there is stability in Afghanistan. “China may try to stabilize that country. Theyre afraid of any terrorist attacks. That means I dont expect huge investments to come there right away.”
Nevertheless, Koenders believes that countries in the West should not leave Afghanistan. “We shouldnt wait with humanitarian aid. Talk to the Taliban but test them too, and make recognition dependent on whether a good central bank president is coming.”