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Economic Challenge


The swift collapse of the then Afghan Government after the US announcement on withdrawal has mystified many observers. They have come up with various reasons but it is clear now that the primary cause was the failure to build an economy outside of US funding. It was obvious to those leading the government then that they would not be able to pay the bills – no matter how much money they had personally hoarded. Rather than make matters worse, they chose to surrender and flee.

And it is exactly this challenge that the ‘interim’ government of the Taliban will face. It has two options now – to take Afghanistan back to a ‘subsistence’ economy in which people live off a very basic agrarian economy. There simply will not be enough money circulating in the system to maintain a middle class way of life with all its attendant amenities. There is a question whether there are enough skilled persons left to keep the system running even in a Cuban kind of self-reliant mode.

The alternative that everybody expects is a handover to other countries like Turkey and China. Pakistan can offer openings for trade but that is bound to dry up if the supply chain gets disrupted. Should sanctions be imposed, even the traditional dry fruits, asafoetida, etc., may be in short supply, with producers forced to sell at unsustainable rates. The Turks could take charge of the technical challenges, such as running the airports, power stations, water supply systems, etc., because they are least likely to be attacked by the locals. The Chinese could provide funding to recharge the economy. The lack of an indigenous model, however, would mean the funds would be used in a manner similar to the US period. The Taliban will survive because of their drugs business and the patronage of Qatar type backers, but the people will be driven to poverty. The less said the better about the nation building institutions like the health services, schools and universities. The contempt expressed for degrees by the new ‘Education Minister’ has already become known to all. If these collapse, it will take ages to recover.

This is bound to result in people seeking refuge in other countries. Hopeless young men will line up for jihadi recruitment, which will largely be directed against India. The stage is being set for a larger tragedy. The world must prepare before it is too late.