As Afghan economy struggles, Taliban increasingly looks to go it alone
The Taliban-run government’s ambitions, at least in part, are driven by necessity. The Taliban’s crackdown on women’s rights has worsened its pariah status, stalling efforts to gain control over Afghan central bank reserves held abroad and to secure Western funding. While foreign aid funded three-fourths of the public expenditures before the takeover, the Taliban says it is largely relying on domestic revenue and customs to finance its projects.
Abdul Latif Nazari, a deputy minister of economy, acknowledged in an interview that these financial constraints limit the scope of government projects. “But we’re on the right path,” he said, “the path that will lead us to self-sufficiency.”
For the Afghan population, however, economic conditions continue to deteriorate. The number of Afghans with humanitarian needs has surged by about 60 percent since 2021 and now represents over two-thirds of the population, according to the United Nations.
And challenges are mounting. Afghanistan’s top trading partner, Pakistan, is increasingly frustrated with the government in Kabul and has been willing to disrupt economic ties for political purposes. Meanwhile, cash-strapped Afghan business owners and other taxpayers say they’re running out of savings to pay for the Taliban-run government’s plans.
“Self-sufficiency itself does not mean anything,” said Omar Joya, an Afghan economist, unless the Taliban can achieve “economic growth, employment, lower poverty levels and an adequate life so that people can at least meet their basic needs.”
Taliban officials say a priority is an expansion of oil extraction, drawing on reserves that could eventually cover domestic demand, according to assessments conducted before the Taliban takeover. With new wells, one of Afghanistan’s biggest oil fields, located in the Amu Darya basin in the north of the country, could increase its output more than threefold in the coming months, officials projected.
They are also rushing to exploit the country’s vast wealth of lithium ore and other minerals, which might be worth almost $1 trillion, according to a U.S. Defense Department estimate in 2010. Afghan authorities say they struck seven mining contracts earlier this year, worth $6.5 billion in investment.
It could take years before mining can start on a large scale. Once it does, the Taliban says infrastructure projects now underway will be essential for exporting coal, minerals, as well as vegetables.
In the west of the landlocked country, a railway link with Iran that is being repaired has raised the prospect of Afghan freight trains heading to Iranian sea ports. Meanwhile, repairs at the Salang tunnel in northern Afghanistan were just completed, Taliban officials say, which could ease travel between central and northern Afghanistan and facilitate trade with Uzbekistan and Tajikistan.
During years of war, long-haul trucking in Afghanistan was obstructed by Taliban attacks and military checkpoints where extortion was common, but a more reliable road network could now help to revive this commerce.
“Afghanistan is standing on its own feet,” said Shir Baz Kaminzada, a mining and industry representative and the chief executive of one of the country’s largest printing companies, which until not long ago produced NATO leaflets.
But Kaminzada acknowledged that reminders of the country’s international isolation remain ever present. Western manufacturers that used to supply his plants with equipment and banks that facilitated his payments now shun his company, he complained.
He blamed Pakistan for much of the disruption. Afghanistan’s industry is rising from the ashes, he said. “They’re scared.”
The more Afghan officials seek autonomy, the more apparent it has become how dependent the country remains on neighboring countries. When trucks carrying agricultural produce headed toward Pakistan this fall, they were repeatedly halted at the border. As politicians traded accusations, pomegranates and onions rotted in the sun.
Pakistan’s leadership blames the Afghan Taliban for harboring militants who have staged a mounting number of deadly attacks in Pakistan in recent months. Angered, Islamabad has expelled hundreds of thousands of Afghan refugees, seized Afghan imports and imposed restrictions on cross-border trade.
The impact of the political tensions was palpable at the customs department in Kabul on a recent afternoon, where imports from and exports to Pakistan are processed.
As trucks carrying goods arrived at the gate, many of the warehouses were only half-full. Ahmad Khalid Rahimi, a 45-year-old customs official, was quick to explain that the empty shelves were in no way a reflection of the economy, but rather of the department’s efficiency. “Everything is being processed very quickly,” assured Rahimi.
“Why are you lying?” whispered a frustrated worker who stood nearby. “We don’t have enough supplies these days.”
An hour away, at the Milat steel factory on the outskirts of Kabul, the gap between the government’s ambitions and reality is evident every day at 4 p.m. when the electricity goes out for about six hours, and the cranes and observation towers lose power.
Hundreds of employees were hired when the factory, central to the Taliban’s infrastructure plans, reopened last year. And yet, the factory has in recent months struggled with shortages of electricity.
The Taliban is hoping to use solar energy to make the country’s power grid self-sufficient. But for years to come, the Milat steel factory will likely have to compete with the power demands of more than 5 million Kabul residents and the constraints of a grid that has for decades relied on imported electricity.
Despite high demand for the factory’s output, Milat Steel recently had to lay off 150 of its 500 workers, said Nasir Ahmad Haqmal, 35, who supervises production.
Taliban officials primarily blame the West for many of the challenges. In an interview, Taliban spokesman Zabihullah Mujahid singled out the United States for freezing $7 billion in Afghan central bank assets after the Taliban takeover. “First, they occupied our country. And now they occupy our reserves,” said Mujahid.
But Afghanistan’s new partners could prove challenging, too. While some Chinese companies are positioning themselves to reap a windfall from lithium and other natural resources, the Chinese government’s ties to the Taliban remain limited. Afghanistan is focusing much of its outreach on Iran, but long-standing border tensions over scarce water supplies make political relations between the two countries unpredictable.
Meanwhile, taxes, fees and licenses have become such a burden for some Afghans that they say they’re thinking about giving up their businesses.
Ismail Hotak, 25, founded a commercial real estate agency on the outskirts of Kabul last year. Even though business has been dismal, he keeps getting hit with taxes and unexpected fees that he said he didn’t know existed.
“If the authorities ask me for any more money, I’ll just close,” he said.
Many of these fees existed before the Taliban takeover but were less stringently enforced. Corrupt officials “reduced the cost if we paid them directly. Most of it went into their own pockets,” recalled Sahib Khan Ansari, 48, a steel vendor in Kabul.
Ansari said he appreciates the decline in corruption and the increased investments in infrastructure under the Taliban.
But the one thing that would make the economy flourish by clearing the way for foreign aid and investment, he said, would be the reopening of schools for girls.
Mirwais Mohammadi and Lutfullah Qasimyar contributed.
