Why the Taliban are in desperate need of money to rule Afghanistan
The system assumes that people want to send equivalent amounts of money between two locations. Loans and transfers are recorded in the ledgers, but the money does not have to change hands. These characteristics make it useful for evading taxes, paying bribes and laundering ill-gotten gains.
Hawala was a necessity under Taliban-ruled Afghanistan two decades ago, before the US invasion in 2001, when money from illicit sources greased the country’s financial wheels. In addition to hawala, opium from the country’s vast poppy fields and smuggling brought money to the country from the rest of the world, thus offsetting the weakness in trade. As insurgents, the Taliban have funded themselves by taxing contraband goods like televisions and fuel, in deals often funded by hawala and drug trafficking.
But the Afghanistan of 2021 is a transformed country. The economy, although its growth has been unstable over the past decade, is five times larger than in the early 2000s. Once scarce in most places, electricity is now widely available. Smartphones and internet access are common.
Foreign money helped. Over the past two decades, the United States has spent more than $ 145 billion on reconstruction activities in Afghanistan, according to the United States government. Much of it was used to build the Afghan security forces, but the funds were also spent on large-scale infrastructure projects and an economic support fund. More than three-quarters of the Afghan government’s $ 11 billion in annual public spending has been funded by donors.
The Taliban will find it difficult to close this deficit.
Since taking control of Afghanistan, the Taliban have announced that they will stop the production of opium. But for the hawala system to work, Afghanistan must ultimately find sources of hard currency to lubricate the lines of credit that would flow back into the country. With exports of around $ 870 million in 2019 – mostly carpets, as well as figs, licorice and other agricultural products – Afghanistan has little to offer on a large scale as lucrative as opium.
The Taliban might see support from governments like Pakistan, Iran and China who might have their own reasons for maintaining warm relations with Afghanistan. Trade has already resumed with Iran, said David Mansfield, an independent consultant and expert on rural Afghanistan, citing satellite images of tankers and transit trucks crossing the border. He estimated that during their insurgency, the Taliban managed to raise more than $ 100 million a year by informally taxing goods from Iran and southern Afghanistan.
Even if the Taliban raised several multiples more than that, it would mean a return to the minimalist state like in the 1990s.