The past is the best guide to the future, so there’s no surprise that there is already a rebellion breaking out against the Taliban. Finding its core in the natural fastness of the Panjshir Valley, which foiled repeated Soviet attacks during the 1980s, the Northern Alliance is reconstituting itself under Ahmad Massoud (the son of the famous mujahideen) and Acting President Amrullah Saleh.
Will they succeed? No idea. People who know more than me are making all sorts of predictions. That said, I allow that rebels will not even be the Taliban’s biggest challenge in the coming months. And it’s something that almost nobody is talking about.
I’m talking about afghanis. Money.
The following figures are from a World Bank report on Afghan finances up to the year of 1397. (No, they don’t touch on financing the campaigns of Timur the Lame. Afghanistan, which I am told is an American puppet state, apparently doesn’t even use the Gregorian calendar in their World Bank reports). What they show is that Afghanistan might well be the single most “subsidized” state in the world.
With a population of ~38M and a GDP of $20B, its total expenditures as of 2018 totaled $11B versus revenues of just $2.5B.
The results in an amazingly large amount of largesse by Third World standards. As a share of GDP, Afghan budget expenditures approximate those of the most expansive First World welfare states, as opposed to its Third World peers. This expenditure is dominated by wages and salaries (“70 percent of recurrent expenditure and around 70 percent of all expenditure growth since 1389“). However, despite the huge budget deficits, debt is very low. That is because “grants” accounted for 75% of its budget. Thanks to foreign infusions*, the Afghans have gotten used to very high wages relative to their extremely low productivity levels, which they get to spend in what is possibly the cheapest country in the world.
Guess what the US and the IMF have just cut off in the past few days.
Loss of subsidies aside, Afghanistan’s official $9.5B in foreign currency reserves have also been frozen.
In Syria, the central government continued paying state salaries and pensions in insurgent-controlled areas (with the help of Iranian subsidies). This helped the Assad regime preserve its legitimacy in territories occupied by jihadists and Islamic State. But where exactly is the Taliban supposed to get the money for financing the Afghan state apparatus?
There is an economic crisis brewing on the horizon. Tax revenues are slated to go through the floor. It has just lost the means to finance its massive trade deficit of $5B / year (25% of GDP). Imports will grind to a halt. (Incidentally, trade with India has already been shut down by the Taliban).
As per above, the Islamic Republic of Afghanistan had very small amounts of debt (8% of GDP in 2020). So the Taliban will find no relief through default, as the Bolsheviks did in Russia.
The Taliban will no longer have to finance the ANA. However, they will still have to pay their own soldiers. They are stretched thin. To hold down the territory they conquered in their recent blitz, it will have to expand them in size. Only way to do that cheaply is through conscription, but if approval of the Taliban is anything to go by, it will be mostly through press gangs. Given the underdevelopment of the Afghan economy, which is now on the brink of a hard contraction anyway, there is zero chance of them maintaining the windfall of modern US military equipment that has just fallen into their hands. Their single A-29 Super Tucano will remain grounded.
No private enterprise is going to be investing into a country in the throes of a new civil war ruled by an organization that are recognized as terrorists by multiple countries.
Meanwhile, many of the “smart fractions” who actually have some experience in running the country are trying to hitch a ride out for entirely legitimate reasons of self-preservation. The past is a good guide to the future:
When the Taliban first sacked Kabul 25 years ago, the group declared that it was not out for revenge, instead offering amnesty to anyone who had worked for the former government. “Taliban will not take revenge,” a Taliban commander said then. “We have no personal rancor.” At the time of that promise, the ousted president, Mohammad Najibullah, was unavailable for comment. The Taliban had castrated him and, according to some reports, stuffed his severed genitals in his mouth, and soon after, he was strung up from a lamppost.
It is a bold and perhaps stupid man who would trust the Taliban past the date when the world’s photo cameras are out of Kabul.
And in seems that they will have to navigate all of these challenges – a massive fiscal crimp, urban unrest from the majority of Afghans who don’t want them in charge, economic immiseration, probable lack of international recognition – while battling an insurgency or three.
This is a set of challenges that would test the most ingenious economists and policy-makers.
But while the Taliban themselves might know something about religious scripture and low-tech insurgent warfare, history again suggests that they fall short on the governance front.
I am not necessarily saying they’ll fail. But the challenges before them do seem at least as great as those they faced in subjugating Afghanistan in the first place, and they’re of a nature much less suited to their innate strengths as theocratic militants.
I would even go so far as to say that the one scenario in which their victory (that is, sustainable control over most or all of Afghanistan) becomes close to assured is if China – there’s no other plausible candidate – funnels in billions of dollars to prop them up.
Meanwhile, the world should probably get ready for another great wave of Afghan refugees.
- To be sure, a significant part of it is surely siphoned off by corruption. However, what actual attempts to quantify corruption in Afghanistan have been carried out don’t suggest it’s massively higher than amongst its peers. According to the Global Corruption Barometer, 29% of Afghans said they paid a bribe in 2013, which is not cardinally different from Pakistan (23%) and India (34%). According to the World Bank’s Enterprise Surveys, 47% of Afghan companies reported they experienced at least one bribe request, which is higher than Pakistan’s 31%; however, the value of “gifts” expected to secure government contracts was twice less as a percentage of contract value than in Pakistan (4% to 8%). Corrupt yes, but not cardinally dissimilar from its corrupt neighbors.