Six months on from the fall of Kabul, Afghanistan is in the throes of a massive humanitarian crisis. Western governments are turning to the United Nations and other aid agencies to stave off the worst. However, this strategy is flawed. These agencies can help save lives, but they cannot make the Taliban govern more justly and competently. More importantly, humanitarian aid cannot salvage Afghanistan’s collapsing economy. That collapse is largely a function of Western policy. Fixing it will require swift interventions by the United States and its allies. The Biden administration has taken steps to address the challenge. But recent decisions – including Friday’s executive order seizing certain U.S.-based Afghan sovereign funds for humanitarian assistance — may hurt more than help, and much more remains to be done.
Origins of the Crisis
The origins of the crisis in Afghanistan are well known. Some causes – like drought – predate the withdrawal of Western forces and the collapse of the state. Others, like the health and socioeconomic impacts of COVID-19, are not unique to Afghanistan. The Taliban also shoulder much of the blame. Taliban leadership knew the economic and diplomatic consequences of eschewing negotiations and using force to oust the Afghan government. They lack the internal technical and bureaucratic capacity to carry out core state functions and are now presiding over a crisis they are incapable of managing.
The Taliban’s brand of repressive governance has worsened matters. Overall levels of violence may have diminished across the country. But the Taliban’s continued attacks on political opponents, journalists, and civil society activists, and restrictions on the rights of women and girls, are creating new humanitarian challenges, and indicate that any hope for more moderate governance than their previous turn in power was misplaced. The Taliban’s lack of transparency on tax revenues and spending on social services also remain deeply problematic.
However, the magnitude of the humanitarian crisis is driven by the collapse of the Afghan economy, which resulted from decisions taken by donor governments after the fall of Kabul in August 2021. For nearly 20 years prior, the United States and other donors footed the bill for 80 percent of the Afghan public sector. After the Taliban seized power last year, donors froze this funding, along with almost $10 billion of Afghanistan’s foreign currency reserves. That decision was rooted in legitimate concerns about Taliban access to such massive sums of money, as well as in complicated legal questions relating to who represents the Afghan state and has the legitimacy to claim sovereign funds.
Yet while these concerns are valid, the suspension of these funds has frozen the country’s trade and commerce. The delivery of essential health and education services has suffered greatly. The banking system has largely ceased to function, and the economy is in freefall. Afghanistan’s economy will contract by up to 30 percent this year, the International Monetary Fund predicts.
Together, these decisions have helped to create a humanitarian crisis of epic proportions. As winter unfolds, nearly 23 million Afghans, more than half of the population, are going hungry. The U.N. warned early on that 1 million Afghan children could die. While there are early indications that relief agencies may be keeping famine at bay, spring is still a way off and Afghans are quickly depleting what remains of their personal resources. Indeed, humanitarian and economic conditions inside of Afghanistan have deteriorated to the point that the White House just declared the situation to be an “extraordinary threat to the national security and foreign policy of the United States.”
Using Humanitarian Aid to Ward off Economic Collapse
The United States and other Western donors have turned to humanitarian relief agencies to plug the gaping hole left by the breakdown of the Afghan economy. U.N. agencies, the International Committee of the Red Cross (ICRC), and NGO partners are emerging as a bulwark in this effort. On Jan. 12, the U.N. unveiled the world’s largest humanitarian appeal, calling for $4.4 billion in relief aid for Afghanistan in 2022. The U.N. will reportedly seek another $3.6 billion as part of the a Transitional Engagement Framework plan to provide essential services such as health, education, water, and sanitation. As Wall Street Journal Report Saeed Shah put it, under this plan, the UN would “move beyond a purely humanitarian mission” and “take on many of the functions of government.”
All told, the U.N. estimates that Afghanistan will need more than $8 billion in foreign aid this year to manage the crisis. That’s 40 percent more than the country’s entire budget for 2020 and 25 percent more than the U.N. is spending on its 12 peacekeeping missions across the globe. In short, the U.N. is being called upon to lead an aid operation possibly larger than anything it has attempted, and in the most challenging of environments.
To put the task in perspective, the U.N. country team received $1.4 billion in funding in 2020 and delivered about $1 billion in assistance. Now, these same agencies will be called to scale operations eight-fold under the Taliban at a time when the pandemic continues to rage across the country. To further complicate matters, a resurgent Islamic State is ramping up attacks countrywide. It would be naive to think that aid agencies are not in the terrorists’ sights.
To succeed, the U.N. will need to scale up, and at warp speed, to respond to the short-term challenge. To aid relief efforts, the U.N. Security Council passed a resolution last December to create aid carveout for sanctions imposed on the Taliban. At the same time, the U.S. Treasury issued three new general licenses to expand sanctions exceptions for relief aid and essential service delivery for Afghanistan and to “help implement…UNSC resolution 2615.” These are important steps, to be sure. But if the worst outcomes are to be avoided, much more needs to be done.
Donors must realize that U.N.-led humanitarian action cannot be the long-term solution. They must also be careful not to build a new system of parallel structures to substitute for Afghan institutions because the Taliban are currently in charge. Instead, Washington and other Western governments should set out a plan for helping Afghanistan’s civilian population to weather the storm. To this end, the Biden administration should lay out its vision and policy for the humanitarian response, today and into the future. A clear expression of the U.S. commitment and roadmap will be an important signal to the Afghan people that America remains committed to finding solutions to the challenges they face and has not simply passed off the file to the U.N. and other aid agencies.
A Way Forward
As a first step in this roadmap, the Biden administration should reconsider its executive order transferring up to $7 billion of Afghanistan’s foreign currency reserves to the U.S. Federal Reserve. The order would make $3.5 billion of the Afghan reserves available for relief efforts or to otherwise “benefit of the Afghan people.” The order also firewalls the remaining $3.5 billion of the reserves for 9/11 families suing the Taliban for compensation. While this may seem like an expedient avenue both to fund the humanitarian relief effort and to respond to domestic political pressures, it is unlikely to solve the problem inside Afghanistan. Indeed, senior officials from the Biden administration have indicated that it could take months for the money to show up in the form of aid inside Afghanistan. This is time the people of Afghanistan do not have.
The executive order also sends the wrong message to the Afghan people that they collectively bear responsibility for Taliban actions prior to 9/11 and have forfeited a say over how their national assets are to be spent. Finally, the order could worsen the outlook for Afghanistan’s economy. By appropriating Afghanistan’s foreign reserves, the United States draws into question the future viability of Afghanistan’s currency and central bank. It is possible that the administration intends to use the $3.5 billion to both fund humanitarian relief and support some form of central bank functions inside Afghanistan. But the lack of clarity leaves a question mark over any plan to revitalize Afghanistan’s economy and risks further entrenching the country’s cycle of aid dependence.
Second, rather than using Afghanistan’s reserves, the United States and other donors must open their wallets. The Biden administration has pledged $308 million in aid for Afghanistan. That figure pales in comparison to the astronomical sums that the United States spent on development, security, and humanitarian aid in Afghanistan over last 20 years. To close the gap, the U.S. Secretary of State and the U.N. Secretary General should organize an emergency donor conference and mobilize pledges. The World Bank should urgently transfer the $1.25 billion left in the Afghan trust fund to U.N. agencies working in the country. And China and Gulf countries that have shown a willingness to work with the Taliban need to match their political messages and actions with financial support.
Third, much more needs to be done to lift or lessen the humanitarian and economic impact of U.S. and U.N. sanctions on the Taliban. The new U.N. Security Council resolution and U.S. Treasury licenses were important steps in the right direction, but Afghanistan remains in the grips of a debilitating liquidity crisis. Most commercial activity is still sanctioned if it provides financial support to the Taliban regime, even inadvertently. The United States should clarify the scope of the designations, including the distinction between the Taliban leadership and government ministries and civil service workers. The Biden administration should also engage more closely with humanitarian organizations, their vendors, and financial service providers to provide the necessary clarity for humanitarian operations to continue. Washington should also continue to work to expedite the establishment of the U.N. “humanitarian exchange facility” that can enable access to desperately needed currency, and revitalize private sector activity.
Afghanistan’s banking system is also in shambles, and international banks continue to steer clear of the country. The appropriation of Afghanistan’s reserves is unlikely to help matters. There is no shortage of creative ideas about how to tackle the liquidity and banking challenges. These include additional U.S. Treasury Department general licenses to broaden sanctions relief and the deputization of a private bank to play the role of Afghanistan’s central banker. What appears to be missing is the political will to move quickly and the boldness to take difficult decisions. That political will must come from the top.
Fourth, the Biden administration should set realistic expectations about how much aid the Taliban might siphon off. The hard truth is some aid diversion will happen, and this should surprise no one. Indeed, the Special Inspector General for Afghanistan Reconstruction estimates that nearly $19 billion of U.S. money was lost in one decade in Afghanistan to fraud, waste and abuse.” The United States and other donors can work closely with humanitarian organizations and financial service providers to improve the systems for moving money, helping to prevent diversion and cooption. However, the top priority must remain saving ordinary Afghans from falling off a man-made cliff. Nothing else matters as much.
Fifth, the United States should also engage at the U.N. Security Council to redefine the U.N. political mission in Afghanistan, known as UNAMA, in line with today’s set of challenges. An occasion to do so comes in March, when UNAMA’s mandate must be renewed. A new U.N. mandate in Afghanistan should forgo the mission’s past state-building functions and instead double down on efforts to prioritize relief aid and the delivery of essential services, including health and education. UNAMA must continue to shine a light on violations of human rights by the Taliban, especially those of women and minority groups. The mission should also stand ready to support political dialogue inside Afghanistan.
Importantly, the U.N. mission and aid agencies should provide political and technical oversight of the delivery of the $8 billion assistance plan to help ensure aid coherence and humanitarian access to the civilian population and minimize aid diversion through careful monitoring. More broadly, the U.N. must do everything in its power to involve and empower Afghan civil servants and civil society in the delivery of aid and avoid creating new parallel structures at the expense of Afghan capacity and agency.
Finally, the Biden administration should also help prepare the region for a surge of Afghan refugees. Since August, more than 1 million Afghans reportedly have fled Afghanistan for neighboring countries. Time is not on the side of the aid effort, nor of the Afghan people. As winter takes its toll, more Afghans will flee to survive. The U.N. has asked for more than $623 million to help the millions of Afghans already living in region. But that won’t be enough to persuade Pakistan and other neighbors to open their borders. This will require high-level U.S diplomatic engagement. And donors will need to make long term commitments to support the next wave of refugees and the host communities receiving them.
The crisis in Afghanistan today is complex, with many owners. The Talban clearly shoulder much of the blame. But an immediate danger now is that Washington and other Western governments will turn over the unfolding catastrophe to the U.N. and aid groups to manage as they pivot to other priorities, including a looming Russian invasion of Ukraine. The Biden administration has declared Afghanistan’s humanitarian crisis to be a threat to U.S. national security. It is time to treat it with the requisite urgency. A failure to act could spell disaster for the people of Afghanistan and set the stage for a new Afghan refugee crisis in the region.