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The tumult of rapid regime change in Afghanistan has meant that a great deal of economic uncertainty looms large; and not just in the country itself, but also among its immediate neighbors. For example, both Pakistan’s and Uzbekistan’s dollar-denominated bond yields fell 1.6% the day after the Fall of Kabul, as foreign bond investors feared that a refugee fallout would put significant fiscal pressure on these countries going forward. Yet as the new Taliban regime shifts from a fighting-mode towards national reconciliation and nation-building, it faces immediate economic challenges and constraints. Economics is, of course, not their domain of expertise. As battle-hardened guerillas, they have never been in the business of stable statecraft. Ironically, the US-led efforts in Afghanistan (and even Iraq) seem to suggest that Americans have also lost their ability to engage in effective nation-building, with perhaps $2 trillion dollars having been spent over 20 years and hardly anything to show for it but a vivid remake of the Fall of Saigon.

Yet the problem for the Afghan economy, beyond the absence of managerial or technocratic expertise, is that their incipient efforts to jumpstart economic activity are being stifled from outside. There are two institutions in particular that are involved in this economic infanticide, strangling the new government from the get-go: the US Treasury and the IMF. There are nearly $10 billion dollars in assets that belong to Afghanistan which are held within the US banking system, but Treasury Secretary Janet Yellen has blocked the transfer of any of this amount to Afghanistan. Meanwhile, the IMF is blocking the new Afghan government’s access to its capital reserves, including new Special Drawing Rights (SDRs) worth at least $440 million that the IMF is about to issue. In the case of the IMF as well, it has been the lobbying from Republican lawmakers that has led Treasury Secretary Yellen to pressure the IMF into blocking Afghanistan’s access.

According to an IMF spokesperson, “there is currently a lack of clarity within the international community regarding recognition of a government in Afghanistan, as a consequence of which the country cannot access SDRs or other IMF resources.” While the question of legitimacy of the new Afghan government is certainly one that requires international debate, and doubts loom about the Taliban’s pledge to behave like a civilized government, there are broader questions about the use of economics as a tool for hybrid warfare that should also be posed. American defeat in Afghanistan and an embarrassing withdrawal from Kabul does not mean that the US has withdrawn its stakes from the Afghan scene entirely. Economics remains an important tool with which the US can coerce the new government, it believes, into more
compliant behavior. At the same time, the US may never be satisfied with the new government, opting for a “do more” strategy that never gives the Taliban credit for compliance, which would then put the new regime in a very difficult spot.

Without internal stability and external access, the landlocked country may soon spiral into chaos once more, as imported items and cross-border trade will not occur; while the lack of access to foreign capital will mean that the currency might collapse. In such circumstances, the conditions within Afghanistan’s major cities may turn bitterly hostile and openly violent once more. For all the calm that has generally prevailed during the capitulation of major Afghan cities to the Taliban, an economically desperate public may now face the Taliban head-on with nothing to lose, especially since international air and land routes will remain largely or wholly inaccessible, and there will be nowhere else to go. This would fit within a “controlled chaos” strategy of forcing new waves of violence within the country and pushing refugees into neighboring countries to destabilize their economies as well.

To ease this burden, foreign capital and access is necessary for any new Afghan government, not just that of the Taliban. Where the US and other Western countries are leaving a terrible legacy of bitterness, especially in the betrayal and abandonment of their Afghan collaborators, a “Troika” of Beijing, Moscow, and Islamabad may be compelled to intervene economically to ease the pressure faced by any new regime in Kabul. If these three capitals manage to reduce the level of instability in Afghanistan, they may have much to gain in geoeconomic and geostrategic terms. Geoeconomics, both in terms of economic warfare (the negative) and in terms of investment-for-stability (the positive), may thus become the largest determinant in this new phase of Afghanistan’s otherwise often tumultuous history.

Regarding the $10 billion dollars that the US Treasury is withholding, as well as the $440 million in new SDRs for Afghanistan that the IMF is not extending, one may surmise that both are relatively small amounts when seen in the scope of major regional projects such as the One Belt One Road that China is developing. With their former puppet-leader flying off with perhaps more than $100 million in cash, and with hundreds of billions of dollars squandered over an army that wouldn’t fight, many Afghans are faced with a demoralizing prospect of not seeing anyone help them build a stable economy at this critical juncture. Any externally-engineered “controlled chaos” strategy in Afghanistan risks turning what has been a relatively peaceful regime-change process into full-blown anarchy, which poses very serious risks for Afghanistan’s neighbors.

However, it also gives Afghanistan’s neighbors an opportunity to rescue the country from a secondary imperialist war that is being waged in the domain of economics. This does not imply that neighboring countries need to endorse the Taliban per se. Rather, it requires them to bring stability to Afghanistan irrespective of the regime in place. Several solutions may be posited, but the most promising might be in extending credit denominated in various instruments (US dollar and regional currencies) to recapitalize the Afghan central bank and help it to fund at least the country’s immediate needs. For example, a trade credit facility extended to the central bank that is denominated in Pak Rupee (PKR) could help to facilitate payment for the essential import items from Pakistan, and could be paid for in-kind rather than in the volatile Afghani currency. Other creative recapitalizing mechanisms could also be considered in this vein
that strengthen a moribund banking system.

All three major capitals: Moscow, Beijing, and Islamabad, are aptly familiar with American economic warfare, but they are permanent neighbors to Afghanistan; and so they cannot flee from their economic security imperatives. They should therefore mull how their economic energies can stem the tide of possible hybrid warfare in economics directed against any fledgling Afghan government, and thus neutralize a looming threat and assure regional economic stability as a stepping stone to further regional connectivity.

Dr. Usman W. Chohan is Advisor (Economic Affairs and National Development) at the Centre for Aerospace & Security Studies (CASS), Islamabad. He can be reached at

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