Aid groups fear UN exit could sink Afghanistan’s economy

The United Nations is gearing up for a high-stakes meeting on the future of Afghanistan as it mulls whether to leave the country over the Taliban-led government’s relentless chokehold on women’s rights.

UN secretary general Antonio Guterres penned a meeting with country envoys in Qatar for 1 and 2 May after the UN threatened to leave if the Taliban continued to ban Afghan women from working for its agencies.

But a UN exit from the country risks tipping Afghanistan over into “abysmal” levels of poverty, as it would likely isolate it further from international funds –  which an overwhelming majority of Afghans depend on.

A report by the UN’s development agency, UNDP, whose abridged version was presented last week, said that last year, UN humanitarian funds were the only thing that shielded the Afghan economy from “total collapse”.

But the Taliban authorities’ draconian restrictions on women’s and girls’ rights to work and study risk seeing that aid cut off further, the UNDP’s envoy in Afghanistan, Abdallah Al Dardari, told reporters in Geneva last week, warning that losing those funds would bring “grave consequences for all Afghans”.

Patricia Gossman, associate Asia director for Human Rights Watch, said in a phone interview that decades of foreign interventions meant that, by the time the Taliban took over in 2021, foreign aid already made up as much as 75 per cent of government spending.

“That’s not sustainable for any country,” she said. While the exodus in donor funds plunged the country into crisis, she said that the Taliban’s restrictive policies had made an already bad situation worse.

Out of a population of around 40 million, the UNDP report estimated that the number of Afghans living in poverty ballooned to a staggering 34 million last year, up from 19 million in 2020.

Citizens have tried to cope by slashing their consumption of food and other basic goods, selling their properties, or going into debt, the agency said in the report, noting that some have resorted to begging or taking drastic measures in order to survive. “Some sell their homes, land, or income-generating assets; others end up commodifying their own family members, turning children into laborers and young daughters into brides.”

Experts also warn that illicit economic activities, such as the illegal drug trade, are booming as a growing number of Afghans turn to them for economic survival.

Al Dardari said that despite efforts and continuous talks, the Taliban-led government showed no sign of budging on women’s rights. “We speak to them every day, and we present [these] numbers to them, showing how detrimental the absence of women in public life, education, and work is to the future of the Afghan economy,” he told journalists during a briefing on the report. “But, at the moment, we don't see any positive response.”

Read more: NGOs deem Taliban female staff ban ‘unacceptable’: aid group head

Vital lifeline at risk

With aid already lagging behind a growing population, Afghanistan cannot afford to lose out on more funding, according to Al Dardari. “If foreign aid is reduced this year, Afghanistan may fall from the cliff edge into the abyss,” he said.

Yet, in the same briefing, UN spokesperson Alessandra Vellucci said that the UN’s humanitarian program for Afghanistan, the largest in the world, was so far only five per cent funded.

Billions of Afghanistan’s central bank assets are frozen in a Swiss-based fund set up to prevent the Taliban from accessing them. As the Taliban seeks out recognition as a legitimate government, these funds are a major leverage for Western economies calling on them to undo their most drastic policies, such as the crackdown on women’s rights.

But UN spokespeople have rushed to clarify that the thorny issue of recognition is not on the agenda for Qatar, after a top UN official sparked backlash for hinting at it.

With international engagement dwindling, a UN walkout risks wiping out crucial avenues for humanitarian support into Afghanistan. Gossman said that while this put humanitarian organisations working there in a “terrible dilemma”, ordinary Afghans would be the ones to bear the brunt of a walkout.

Zuhra Dadgar-Shafiq, co-founder and director of Action For Development (ActForDev), an organisation based in Geneva and running school programs in Kabul and in the neighbouring Parwan province since 2012, told Geneva Solutions that decades of progress were now evaporating into thin air. “After several decades, we have again female judges, we have female pilots, female engineers, but this, again, got lost,” she said, adding that this would send Afghanistan back in time “by a century”.

As donors pulled the plug on funding, Dadgar-Shafiq said their education programs – which targeted children who worked to support their impoverished and displaced families  – shrank, with children losing access not only to education but also to daily meals and sports activities.

Girls over 13 were just sent home. “They are basically imprisoned within their own home, and a lot of girls have gone into depression,” she said, noting that some former students had been married off and that there had been reports of teens as young as 13 committing suicide.

Read our exploration: Dispatches from women in Afghanistan

A UN exit from the country would also impact humanitarian budgets drastically, she said, as operational costs would surge, with potentially only “drops” reaching the people. “If the UN leaves the country, there will be even further [chaos],” she said, adding: “400 female UN employees are banned [but] what about 20 million girls and women? This will not help the situation of poverty in the country.”

Shadow economy

The UNDP said that the few positive signs of economic recovery last year, such as a shy uptick in exports, growing labour demand, higher tax revenues, and a slowdown on inflation, were mostly due to a sustained influx of foreign aid.

But experts say that, for a growing number of Afghans, illegal economic activities are becoming a major provider of livelihoods.

“Without the illicit economy, there would be a much more severe humanitarian crisis, that's just clear – so many people rely on it for their incomes,” a senior analyst at the Global Initiative Against Transnational Organized Crime in Geneva, who requested anonymity out of concern for the safety of their Afghan collaborators, said in a phone interview.

Cultivation of opium poppy, for decades an infamous cash crop for Afghan farmers gobbled up by the world heroin market, was banned last year as the Taliban authorities imposed strict anti-narcotics laws.

But a UN report found that the 2022 harvest was the “most profitable in years, with cultivation up by nearly a third amid soaring prices”, netting poppy farmers $1.4 billion ( roughly CHF1.246bn) in opium sales, tripling their 2021 earnings.

The UN’s trade development agency, Unctad, declined to comment on the state of Afghanistan’s illegal markets, and UNDP could not provide a comment before publication.

The post-2021 collapse in international aid, the analyst said, had definitely made illicit activities, such as poppy farming, much more relevant – making strict enforcement of the ban challenging since it would gut livelihoods and risk alienating populations from the Taliban rulers.

As the economic crisis deepens, Afghanistan is also entering the crystal meth market at breakneck speed, with makeshift labs popping up throughout the country following the discovery that ephedra, a wild local herb, could be ground to produce ephedrine, the main ingredient for the highly addictive drug.

Ephedra-derived meth from Afghanistan is mostly funnelled through southern trade routes and has been found as far out as southern Africa and Australia.

Beyond drug trafficking, Afghanistan’s vast deposits of lithium, copper and other precious resources are leading to a boom in illegal mining, logging and other illegal extractive activities.

But they are also a key asset for a Taliban-led government seeking to control these sectors to cement formal trade relationships with countries like China, the United Arab Emirates, and others in the region, which are less likely to condition trade to humanitarian concerns.

“There is certainly a real alignment taking place” between those countries, the analyst said. “There was an economy built on international aid and Western support, and now it's having to reconfigure. Unfortunately, that will probably tend towards illicit economies in a lot of places where people rely on them more rather than less.”