By Annie Pforzheimer & Jeffrey Grieco
In view of the dangerous and worsening humanitarian conditions now assailing Afghans, and as the United States contemplates its FY 2023 budget, finding a “sweet spot” for principled U.S. assistance to Afghanistan is an urgent requirement. What can donors do now, and where should donors aim to be six months from now? Ideally, the international community cannot meet next winter’s crisis simply using the same toolkit. Instead, the United States should leverage its international financial and diplomatic coalition to help meet the humanitarian requirements of the near future. This means heading off regional instability and stabilizing the Afghan economy, all while still pressuring the de facto Taliban authorities to protect and adhere to their human rights obligations—especially for women and girls.
The United States bears a moral responsibility to the Afghan people and to U.S. soldiers who fought and died in Afghanistan since 9/11. The U.S. government left the Afghan population to a religious fundamentalist regime, whose members face multiple sanctions under the UN Security Council and U.S. law. The United States has a strategic interest in preventing Afghanistan from becoming another haven for terrorist organizations to carry out threats and activities inside and outside Afghanistan. Since the 2021 withdrawal of the North Atlantic Treaty Organization, more than a dozen foreign terrorist organizations are assessed to be active inside Afghanistan, and the Taliban’s hold on power is being challenged. Civil war and refugee flows are predictable outcomes.
Given this precarious national security situation, the United States should set a short- to mid-term goal (i.e., within two years) of establishing a more viable market-based economy and a robust social services sector with independence from direct Taliban control while preventing a UN parallel economy taking over the nation during this humanitarian crisis. To achieve this, the United States, fellow donors, and regional nations should focus on two principal areas of international assistance for the Afghan people: a) providing expansive humanitarian relief activities channeled through Afghan nongovernmental and market-based supply chain mechanisms, and b) relieving all restrictions on the transfer of banking capital (i.e., liquidity) into Afghanistan in order to free the private sector to create jobs, increasing economic resiliency through trade and dramatically improving livelihoods within key employment sectors of agriculture, export-import trade, banking, mining, energy and more. The metrics of longer-term success of that policy would stave off large-scale suffering, deaths, and migration as well as normalize some financial flows and trade finance mechanisms. To the extent possible, such a policy could leverage donors to improve Taliban performance on human rights.
There are now and will continue to be political, reputational, commercial, and security risks inherent to any such course of action for donors. This is why it is vital to highlight clear-eyed risk analysis within our international assistance considerations so that policy, program, and appropriations strategies appropriately align going forward.
A zero-risk approach is unrealistic, having already led to suspended development projects for women and girls, orphaned children, higher education, and market-based business endeavors. Banks are wary of transferring money even for legally permitted activities, and the one international intermediary bank for Afghanistan, Citibank, withdrew in January this year largely because of the perceived country risks caused by sanctions. Afghans have taken the hit, losing jobs and livelihoods as well as access to their own bank accounts, leading to credible reports of people selling their organs and their children in the face of starvation.
A fundamental policy imperative now is to find ways for the Afghan people to emerge from this crisis without the interim Taliban authorities being granted while restoring U.S. credibility as a trusted ally. In theory, the international community is united on this: the UN Security Council Resolution 2615 set expectations that “the Taliban will adhere to the commitments made, including with regards to humanitarian access, safe passage, counter-terrorism, security, human rights, and counter-narcotics.” However, in reality, it will take immediate effort and significant diplomatic capital—currently in short supply at the UN Security Council—since traditional allies in Europe, together with Pakistan, Iran, Russia, and China, may have divergent views from our own on Afghanistan.
Step One: Harnessing “Humanitarian Plus” as a Strategy
UN Special Representative Deborah Lyons told the UN Security Council on March 2, 2022, “It is now most urgent to address Afghanistan’s economy...we are nearing a tipping point that will see more businesses close, more people unemployed and falling into poverty. It is approaching a point of irreversibility.” The first order of business is already underway—relief that combines traditional humanitarian assistance with a wider range of market-based programmatic activities associated with traditional development, the so-called “humanitarian plus” approach.
The United States has a long tradition of allowing lifesaving humanitarian aid to flow even to regimes with whom we are in a state of enmity—including North Korea, Iran, and Yemen— albeit with strict controls in place to safeguard against the aid being hijacked by the ruling authorities or delivered exclusively to their political or military factions. Most assistance going into Afghanistan as of today uses this playbook, moving through specialized UN agencies. In addition, international donors such as the World Bank and bilateral donors such as the U.S. Agency for International Development (USAID) carefully prescribe their delivery mechanisms to conform to sanctions requirements. UN sanctions are normally applied without exception, but the UN Security Council Resolution 2615 from December 2021, allows delivery of “humanitarian assistance and other activities that support basic human needs” despite the existence of sanctions on Taliban leaders and some organizations like the Haqqani Network. This basic exemption took weeks to pass, in part due to many UN Security Council members’ unease with the relaxation of normal sanctions implementation. The Taliban still benefit indirectly, but political risk is lower.
The December 22, 2021, U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) general and special licenses afforded several legal carve outs to permit funding for activities outside of Taliban interim administration structures in areas such as rule of law, accountability, citizen participation, human rights, education, development projects directly benefitting Afghans basic human needs (loosely defined as health, food security, sanitation, water, etc.), environmental and natural resource protection. It also allowed remittances through two special licenses and provided further licenses thus far in 2022 as well.
The ensuing discussion with risk experts and others closely following the politics of the issue has reflected some uneasiness at how broadly this could be interpreted. As humanitarian agencies and advocates have pushed for the widest possible application of help, some in the United States and international assistance space have instead flagged their concern that de facto recognition of the Taliban regime—which arguably had already started with their high-level political negotiations with the United States and others—could solidify from the normalization of aid. But as with the case of humanitarian aid, there are historical examples of highly conditioned development assistance, such as in apartheid South Africa or in Cuba, delivered without going through or overly empowering the government.
To this end, the development portion of “humanitarian plus” activities—such as governmental salaries beyond those of teachers and health workers, increased agricultural livelihoods and re-established trade finance mechanisms, and activities that increase community and citizen participation—should be advanced, as long as it is subject to conditionalities. The U.S. government has finite leverage going forward and should use it for maximum impact on Taliban administrators—including the larger goals of women’s rights and economic empowerment, peace, and security promotion, human rights protections, and atrocity prevention. This is made difficult because the Taliban are collecting government revenues and could in theory pay these costs without acceding to conditions.
Step Two: Unleashing the Market-Based Private Sector as a Crucial Implementer
Secondly, businesses and other elements of the private sector including nonprofit organizations need greater international support as a means of helping the Afghan economy survive the crushing blow of diminished international aid and illiquidity. This is the sector that can dilute Taliban power by engaging in job creation that is not within government purview and would help urban populations devastated by the asset freeze.
However, humanitarian delivery restrictions have been particularly hard on local and international nongovernmental organizations (NGOs) and private Afghan businesses trying to respond to the humanitarian crisis. So, while humanitarian aid is lowering one kind of risk, a different one emerges: local Afghan implementing organizations will be driven out of business by aggressive, well-funded UN agencies on the ground.
The Afghan private sector, dedicated to market-led policies and programs, should be the lead in this humanitarian supply chain response for the Afghan people. The private sector needs the U.S. government to enable or facilitate greater use of creative partnerships, including with NGOs, to strengthen their capacities and build more sustainable impacts and performance.
Carving out sanctions to make room for market-based, private sector assistance is perhaps a harder sell than humanitarianism, but there are many reasons to push market-based assistance solutions now. The collapse of many economic supply chains because of the donor cutoff and the implementation of sanctions brought hyper-inflation, destroyed Afghan currency valuations, drove food costs up, and stopped most imports and exports. This crisis is of unparalleled scale and speed, and no UN operational response plan can sustainably help over 22 million acutely malnourished and suffering people.
While U.S. and international donor businesses involved in Afghanistan’s private sector want to avoid the risks associated with Afghan trade and investment under Taliban rule, they should be encouraged to return. Their logistics, transportation, health, and market-support programs can create sustainable partnerships with larger Afghan firms and deliver life-saving market-based solutions for feeding, housing, clothing, and providing sanitation and access to water on the ground in some of the most remote areas of Afghanistan. The recently announced OFAC General License 20, which seeks to normalize most commercial and financial transactions in Afghanistan, will be rendered meaningless if bold action is not taken now to find a competent corresponding bank. The United Nations, fellow donors, and U.S. government leadership need to help solve this single issue quickly. Afghan trade cannot start moving without it.
Finally, there is no justification for releasing Afghanistan's sovereign reserves in bulk because they are committed to the International Monetary Fund for Afghanistan’s balance of payments system and exchange rate management, as well as for monetary policy implementation via the Afghan banking system. Afghanistan’s frozen assets should be obligated to an elected, representative national government. It is doubly inconceivable that they would be put up for legal contestation in the name of a regime that took power through violence, intimidation, and the murder of innocent civilians.
A Way Forward
The international assistance community should focus on a response strategy for the Afghan humanitarian crisis. Donors need to help prevent the collapse of the Afghan economy and all the banking, agriculture, energy and mining, and other infrastructure assets that were built through donor investments and Afghan partnerships over the last 20 years. The cost of inaction or moving too slowly toward establishing capital flows and greater liquidity-based solutions for their market economy will be evident in the long term. It is clearly time for out-of-the-box solutions, to support and sustain a more viable market-led economy that operates largely independent of Taliban control.
Going forward for “humanitarian plus” aid delivery, donors should focus on:
Preventing a parallel UN economy that further devastates the Afghan private sector economy. In this regard, the proposed World Bank and UN “Humanitarian Exchange Facility” will help improve cash transfers for humanitarian response (if Da Afghanistan Bank approves), but donors should be careful not to let this facility be permanent and replace the capable Afghan private banking sector.
- Transparent accounting of who is benefitting from targeted assistance and pinning down what donors should be paying for given the Taliban’s own resources.
- Creating a coordinated international approach of requirements for eventual recognition or incremental normalization of relations.
- Diversifying delivery of assistance to include local Afghan businesses and civil society organizations. World Bank funds for basic developmental needs should be channeled through Community Development Councils that the United Nations helped create in the 1990s, operating nationwide even in conflict-affected regions over the past 20 years. Best practices also would help state institutions the United States so heavily invested in to survive, but this needs to be calibrated against other considerations.
Regarding the private sector, options for a way forward include:
- Unfreezing the portion of Afghanistan’s foreign exchange reserves that correspond to Afghan commercial bank assets and the beneficiary accounts of individual Afghan depositors, as well as NGOs and private businesses.
- Allowing Afghan commercial bank investments outside of Afghanistan to be released for incremental transfers to Afghanistan to improve their balance sheets and stabilize the Afghan currency.
- Empowering and sustaining an Afghan commercial banking sector that provides access to financing for Afghan businesses and civil society organizations, as well as offers export-import trade finance—especially for the agricultural sector and improved food security.
- Identify, indemnify, and implement a new U.S. corresponding bank (e., intermediary bank) for Afghanistan immediately, or facilitating Citibank’s re-entry into this role out of humanitarian necessity.
- Using new mechanisms to help Afghanistan’s central bank pay international electricity bills and other required infrastructure support programs (g., airport and air transportation system requirements).
Overall, in the pursuit of a sustainable solution, the donor community should establish clear, incremental human rights conditionality for any actions which touch the Taliban movement or any sanctioned individuals or organizations. The Taliban were adept during their political negotiations at setting red lines and staying within them—for example, consistently excluding Afghan authorities from substantive talks. The international community should clarify and then stick to its own criteria. For this to stick, sanctions on Taliban leaders should remain in place until the conditions that created them have changed, i.e., an irreversible end to terrorist acts and the presence of international terrorist groups. In fact, the travel bans against the Taliban imposed by UN Security Council Resolution 1988, lifted while they were nominally engaged in peace talks, should be reimposed while they continue to espouse and practice violence.
Both the Biden administration and the United Nations should formulate a higher-level approach for policy responsibility. The secretary general has had to bring the topic of Afghanistan to the world’s attention repeatedly through the stove-piped mechanism of humanitarian appeals, while the UN Assistance Mission in Afghanistan (UNAMA)—up for renewal in March—needs more leadership support and an improved human rights mandate. The UN Security Council should keep this on the agenda on an emergency basis, while endorsing the secretary general’s establishment of a highly empowered special envoy for economic recovery and a more empowered UNAMA. Having a U.S.-UN ambassador and a USAID administrator who are both more outspoken and active on Afghanistan’s humanitarian and economic plight would be appropriate to get the results we need.
The U.S. government may be preoccupied with serious geostrategic threats elsewhere but should be able to manage more than one crisis at a time—especially one for which we bear such enormous responsibility.
The article was first published in the Center for Strategic and International Studies (CSIS) on March 16, 2022.
Annie Pforzheimer is a senior non-resident associate with the Center for Strategic and International Studies in Washington, D.C. Jeffrey Grieco is the president and CEO of the Afghan American Chamber of Commerce and a former USAID assistant administrator.
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