The Islamic Republic of Afghanistan used to raise $2.8 billion in domestic revenues per year and spent $11.4 billion per year. Of the $11.4 billion in public spending, $5.6 billion (49 percent) was spent on ‘security’, $2 billion (18 percent) on ‘development’, $1.8 billion (16 percent) on ‘health’ and $800 million (7 percent) on health.
How did the Islamic Republic manage to spend $11.4 billion a year against revenues of $2.8 billion a year? Of the 170 countries that receive US foreign aid, the Islamic Republic was at the very top – an average of $6 billion a year, every year in direct foreign aid. The World Bank had committed $5.3 billion. Then there was the Afghanistan Reconstruction Trust Fund (ARTF), the single largest source of on-budget financing, that had raised $12.9 billion. Germany had promised $500 million and the European Union had set aside $1.17 billion.
The Islamic Republic of Afghanistan used to export goods worth $2.24 billion while imports stood at $7 billion. The largest of all imports: wheat flour worth $436 million. Largest exports are gold ($968 million) and grapes ($214 million). How did the Islamic Republic manage a trade deficit of nearly $5 billion a year, every year?
US President Biden has now frozen $9 billion worth of reserves held by Da Afghanistan Bank (DAB), Afghanistan’s central bank, at the Federal Reserve. The IMF has blocked $460 million. The World Bank has halted all financing. Germany has suspended $500 million. The European Union has also frozen all development funding.
Imagine, foreign aid amounted to 75 percent of Afghanistan’s GDP. Imagine, Afghanistan’s domestic revenues can only serve 25 percent of Afghanistan’s population. Banks have now opened up but there’s little cash in their vaults and ATMs ran out of cash a long time ago. Afghan diaspora in the UAE, Germany, the US, Turkey, Canada, the UK and Sweden are unable to send money to their families in Afghanistan because Western Union and MoneyGram have also suspended their operations.
How will the ‘Islamic Emirate of Afghanistan’ feed 40 million, 50 percent of whom survive at $1.90 a day or less? The price of wheat flour is going through the roof. Yes, Russia, China, Iran, India and Pakistan all have their own security interests in the ‘Islamic Emirate’. Yes, America may not be able to keep diplomatic recognition away from the ‘Islamic Emirate’. But, only America and its allies have the financial wherewithal to cough out the billions that the ‘Islamic Emirate’ needs.
At least 14 million Afghans are “acutely and severely food insecure”. A hungry citizen is an angry citizen. For Pakistan, a neighbour full of hungry citizens is a volatile neighbour. And volatility is as contagious as the Indian-origin Delta variant. The American-led war has ended but is this the beginning of chaos? Afghanistan is host to the Tehreek-e-Taliban Pakistan, Al-Qaeda, Islamic State-Khorasan, East Turkestan Islamic Movement, Islamic Movement of Uzbekistan and the newly-formed Panjshir Resistance. To be certain, each and every one of them will be violently vying for space, resources and attention. Violence within Afghanistan means more ‘ungoverned spaces’ in Afghanistan and more ‘ungoverned spaces’ means more violence – and that’s a vicious cycle. Are the gamblers involved in the new ‘great game’ prepared to break this vicious cycle?