Afghanistan has long been a rentier state dependent on international aid. Aid has had a mixed impact on the long-run performance of the Afghan economy. From 2001 to 2021, the flow of aid undoubtedly shaped the contextures of a modern economy and bureaucracy, boosted a nascent but thriving civil society and private sector, and integrated Afghanistan’s economy into the world economy. Meanwhile, international assistance created a culture of dependency, increased systemic corruption, and hampered state legitimacy. Upon the collapse of the Afghan republic, international grants covered about 75 percent of the government’s public expenditures. With a gradual decline in international assistance starting in 2014, economic growth slowed, while poverty and unemployment kept rising. The pandemic and the intensified conflict in the later years of the republic had already led the economy to the brink of a collapse.

When the Taliban took over on August 15, 2021, Afghanistan became a pariah state. The country was isolated from the international financial markets, and its economy began a free fall. An absolute majority of the population lost its purchasing power due to loss of employment, distorted civil service salary payments, reduced household incomes (particularly for the female-headed households who are denied the right to work), and the suspension of development aid. Total domestic expenditure declined by 60 percent. More than 82 percent of households lost their wages, 18 percent of families resorted to the negative coping mechanisms of child marriage or child labor, and 7.5 percent of families started begging for survival. Of those still employed, at least 70 percent lost a significant portion of their incomes.

The challenges of a failing economy and an extreme humanitarian catastrophe are rooted in three interrelated existential crises triggered by the triumph of the Taliban in Afghanistan: a legitimacy crisis, an accountability crisis, and a crisis of governance.

First, the two primary correlates of state legitimacy are the people’s perception of how rightfully the rulers hold and exercise power, and how satisfied the citizens are with the state in terms of the latter’s ability to maintain order and deliver public goods. The rise of the Taliban by means of force and the people’s dissatisfaction with them are at odds with these principles. Afghanistan is now in a state of anarchy. There is no constitution—not a single law that would define the civil rights of the citizens—and people have no influence over decisions that impact them in their everyday life. State-society relations are reduced to an oppressor-oppressed relationship.

The Taliban’s conceptualization of government is a theocracy guided by a group of clerics responsible for enforcing a dogmatic and intolerant version of Islam—preached to them in Pakistani Madrasas—combined with a set of primitive tribal norms of behavior. This combination was manifested in the form of a terrorist group in the past, and the current de facto regime has only produced full-scale religious violence, radicalization, and violations of basic rights. This dogmatic perception held the Taliban back over the past year, despite persistent national and international calls for the Taliban to embrace opportunities to negotiate with their fellow Afghans to form a political consensus and a coherent national discourse to bring the fractured Afghan polity together. Consequently, anarchism and the absence of a responsible and legitimate government in Afghanistan have triggered and fed the humanitarian catastrophe and economic turmoil, which cannot be patched up unless the root causes are addressed.

Second, the de facto rulers in Afghanistan have failed to generate accountability, both to the international community for their commitments under Doha Agreement and to the people of Afghanistan for their socio-economic management, budget expenditures, and delivery of public goods. The Taliban have censored the media and silenced dissenting voices and civil society; they have left no accountability mechanism in place.

The Taliban are mobilizing revenue from multiple sources simultaneously. These sources include formal and informal taxation. In addition, the exploitation of Afghanistan’s natural resources and the Taliban’s monopoly over opium cultivation, production, and trafficking are the cash cows of the de facto regime. Although the Taliban have reportedly reduced corporate taxes slightly to stimulate the crippled private sector, they have drastically increased informal collections, business license taxes, services fees, and other pity taxes, which is also an important driver of the skyrocketing retail prices in Afghanistan. Service fees for national ID cards, passports, birth certificates, marriage certificates, and collections from street vendors, for instance, have increased by up to 300 percent.

Upon entering Kabul, the Taliban started overexploiting Afghanistan’s natural resources.  Over the past year, the Taliban-controlled Ministry of Mines and Petroleum has awarded contracts for the exploitation of close to 200 small-scale and large-scale mines across Afghanistan. This August, the ministry collected $7.9 million in revenue in just one week. On average, the Taliban’s revenue from mining amounted to $23.8 million last month, according to the data on the ministry’s web portal. The Taliban are trucking up to 500,000 tons of coal to Pakistan each month via the Kharlacha, Gholam Khan, Chaman, and Torkham crossings. The Taliban’s Ministry of Finance taxes coal exports at $60 per ton, including a recent ten percent increase. The gross revenue to Afghanistan from the sale of coal (priced at $200 per ton) totals up to $130 million a month, most of which accrues to the Taliban for their prerogative to award and manage contracts.

The Taliban have budgeted $2.6 billion in expenditures and targeted $2.1 billion in revenue for the current fiscal year. With the Taliban’s over-taxation and relative efficiency in revenue mobilization, the actual revenue will be much higher than anticipated. But parlous revenue extraction from a rapidly contracting economy with austerity on the spending end puts the economy under further pressure. Despite a meager allocation of $0.31 billion (11 percent) of the total budget for development, the Taliban regime has not yet initiated any significant development project. Besides, humanitarian assistance and the salaries of thousands of teachers and health workers across Afghanistan are being paid by UN agencies, which saves the Taliban’s treasury a significant amount each month.

The question of what happens to the millions of dollars of revenue flowing into the hands of the Taliban, which pays for nothing except salaries to its civil servants (based on a reduced salary scale), remains unanswered. The Ministry of Finance has not made a breakdown of its revenue and expenditure public, nor is there any other transparent mechanism to ensure monitoring and transparency.

Third, a competent bureaucracy—currently missing in Afghanistan—is a crucial element of a responsible government. The Taliban administration is filled with incompetent clerics who have incapacitated the institutions of service delivery. The international community’s provision of much-needed humanitarian aid and vital services has been a major relief for the Taliban regime.

Afghanistan’s acute humanitarian and economic challenges are more of an institutional and accountability failure than the result of a lack of resources. The incompetent leadership, a disrupted bureaucracy, the absence of women in public services, the flight of human capacity, and interventions with humanitarian aid delivery have decreased the value of money and exposed more than 90 percent of Afghans to food insecurity. A UN report estimates that the immediate cost of the Taliban’s ban on women’s work to the Afghanistan economy is $1 billion, the equivalent of 5 percent of GDP.

The Taliban’s refusal to appoint a competent and independent central banker cost Afghanistan the collapse of its financial sector. The immediate repercussion of a failing banking system is the growth of informal financial markets, which could trigger potential money laundering concerns in Afghanistan and beyond.

The Taliban are ruling Afghanistan by force, opaquely, and without the consent of the people. They have failed to deliver on their promises to negotiate a political settlement, maintain security, end relationships with international jihadi networks, respect human rights, and providing public goods to the people of Afghanistan.

The international community has a moral obligation to assist the people of Afghanistan in rescuing their country from its current path toward radicalization and humanitarian catastrophe. Without proactive initiatives by the international community, the status quo will only lead to further misery for Afghans and the spread of jihadism beyond Afghanistan.

The narrative of inclusive government emphasized by the international community and some domestic elements is a failed narrative and cannot guarantee a sustainable solution to Afghanistan’s protracted conflict. Over the past twenty years, ensuring inclusivity has always been a challenging issue, and the liberal-minded elites could not agree on forming an inclusive government. Now, with the totalitarian Taliban on the scene, the idea of forming an inclusive government is absurd. Inclusivity in the form of putting some people of specific backgrounds into a Taliban government will be the repetition of the failed and destabilizing experiences of the past. A long-term solution to Afghanistan’s instability lies in all sides’ submission to the will of the people through a legitimate process. The international community should hold the Taliban accountable for their behavior and pressure them to jointly negotiate with other Afghans to decide the future course in Afghanistan.

Mirwais Parsa is a Research Fellow at the Center for Governance and Market, University of Pittsburgh.

Image: Reuters.