America’s China Policy Is Not Working
The Dangers of a Broad Decoupling
During years of talks in Qatar’s glittering hotels, U.S. diplomats warned the Taliban of grim scenarios if the insurgents failed to negotiate peace in Afghanistan. The message was stark: do not seize Kabul at gunpoint, because if you do, your regime will face the brunt of economic isolation, leaving your country penniless. This was not an empty threat. After the Taliban ignored the warnings and charged ahead to victory in August 2021, Western governments responded by halting development aid, freezing state assets, crippling the banks, and allowing sanctions to hamstring the private sector. The resulting economic crisis has pushed more than half of all Afghans toward starvation.
It is reasonable for Western officials to feel justified about exiling the Taliban regime to the economic wilderness. Still, it is a mistake. Even if such a punishment were suitable for the Taliban’s many crimes, isolating Afghanistan is self-defeating and antithetical to Western aims. A more realistic approach would be to work with the new Taliban government for the sake of delivering basic state services, a policy based on calculations of today’s geopolitical interests rather than past wrongs.
The United States and its allies should ease their restrictions and get to work helping revive the Afghan economy. Doing so would reinforce regional stability, stem the drug trade, and reduce the likelihood of another migration crisis. Saving millions of Afghans from destitution might also redeem U.S. prestige after its chaotic withdrawal. The unavoidable side effect would be some degree of assistance for the Taliban regime, but such tradeoffs are a hallmark of realpolitik. Lord Palmerston was correct that nations should have “no perpetual enemies,” even if the British statesman never imagined the policy challenges of dealing with Islamist militants who captured a whole country.
Many dreamed of peace in Afghanistan, but few expected it would be such a nightmare. Economists hoped for a “peace dividend,” predicting that the end of the deadliest conflict in the world, which was killing tens of thousands of Afghans each year, might lift the fortunes of the suffering population. Not so. Hunger and poverty following the Taliban’s takeover seem poised to kill more Afghans this winter alone than all the violence did during the past two decades. The scale of the disaster is unthinkably large: 23 million people face acute food insecurity, and one million children risk dying from malnutrition. With Afghanistan having sunk into the world’s worst humanitarian crisis, nobody was surprised when the United Nations requested $4.5 billion for urgent needs in 2022, the largest ever such appeal.
The proximate cause of the downward spiral is not the recurrent droughts, nor the Taliban’s predictable lack of skills for running a modern state, nor the inevitable shock that occurs when a war economy grinds to a halt. Those are significant factors, but the main reason for devastation is the West’s chokehold on the economy. Western politicians fear the criticism that might result from going easy on the Taliban, so they give two contradictory directions on Afghanistan: send aid to avoid calamity, but do not allow any material support for the new government. The results are bizarre. Western officials try to rebuild the banking sector while insisting that the Afghan central bank should remain blocked from the global financial system and deprived of its assets. Thousands of tons of food get delivered to starving people even as economic restrictions make people hungry. Western diplomats push the Taliban to allow girls’ education while their own governments cut off education funding.
Sanctions are having especially perverse effects. The United States and other sanctioning entities have decided to allow pre-existing sanctions on the Taliban to become de facto sanctions on the Afghan government, thereby penalizing the entire population. The United States and the UN Security Council made some small exceptions to allow the sending of humanitarian aid, but they have maintained restrictions on broad categories of economic activity. Businesses are left in the dark about what exactly is permitted, making international banks and suppliers nervous about transactions involving Afghanistan. In turn, local businesses cannot get money out of their bank accounts and make the import deals on which the country depends for food, medicine, and other essentials.
Hunger and poverty seem poised to kill more Afghans this winter than violence did during the past two decades.
This policy is not just a waste of aid dollars—it also undermines Western interests. The consequences are already visible in the growing number of migrants fleeing across borders. In October alone, an estimated 300,000 people left for Iran. Many of these refugees are waiting for spring to thaw the mountain passes into Turkey, so they can travel on to Europe. Soon, Afghanistan’s growing economic crisis will feed the illegal drug trade. Experts predict that Afghan farmers will expand illegal drug production as the economy collapses, churning out methamphetamines in addition to their usual crops of opium and hashish. The profits of this shadow economy benefit the Taliban the most. The burdens of social breakdown, by contrast, fall most heavily on Afghan women and other vulnerable members of society.
Rather than hurting the Taliban, Western donors are undermining the governmental institutions they spent billions of dollars establishing in Afghanistan. The best parts of the West’s mixed legacy in the country—gains in literacy, reductions in maternal mortality—could slip away. In that sense, Afghanistan is not just another miserable country with despotic leaders. Washington and its allies set up the fragile Afghan state that is now crumbling, and the countries that deployed troops to Afghanistan are implicated in the repercussions that will follow. If going soft on the Taliban would result in some bad press or opportunistic political criticism, these downsides would be nothing compared with a man-made famine.
The regional effects of state failure in Afghanistan are hard to predict, but it could threaten the stability of Pakistan, Iran, and Central Asian states, as Afghan civil wars have a history of spilling over borders. Some of these countries spent decades undermining Western policy. And in the case of Pakistan in particular, there will surely be Western officials who will look at the country as it suffers from the consequences of backing the Taliban and feel nothing but schadenfreude. Still, in European capitals, there is a growing nervousness about the effects of Afghanistan’s collapse rippling across the Mediterranean.
A better option would be to work with the Taliban-controlled state to preserve its basic functions: health care, education, central banking, electricity provision, and social programs. Some of the solutions are cheap, even free, and could be implemented immediately. For example, the United States and the UN could clarify that sanctions apply to listed Taliban members and not the Afghan government, a quick and costless way of unburdening the economy. Other measures would be expensive and take years of persistent effort but still represent the most frugal way to slow Afghanistan’s tailspin.
The main responsibility rests with the United States. It remains a major donor, holds the Afghan central bank’s frozen assets, maintains the most consequential sanctions regime, and influences the international financial institutions that have abandoned Afghanistan. Washington should exercise its clout at the World Bank, International Monetary Fund, and Asian Development Bank to get these institutions working again in the country. A template for such engagement already exists in parts of Yemen held by Houthi rebels. There, even though the Houthis control all the ministries, development funds flow to civil servants in the public sector, with safeguards to prevent Houthi bosses from getting their hands on the money or interfering with aid programs.
Steps in this direction have already started, with the World Bank releasing some of the $1.5 billion in unspent funds in the Afghanistan Reconstruction Trust Fund, the largest pool of donations for the previous government. The unfrozen money, however, has been allocated only to health funding and food assistance, which are less controversial because they get delivered not by the Afghan government but by UN agencies and nongovernmental organizations.
Such emergency relief is not enough. In the short term, Afghans need not just bags of flour but also a viable currency, access to U.S. dollars, and trade financing to supply food for their bazaars. The UN is working on a system for getting Afghan cash to humanitarian agencies and easing the shortages of paper currency in local banks, but this is just a partial solution to the bigger problem of paralysis in the banking sector. The U.S. government should immediately allow Afghanistan’s central bank to do business with the outside world and should signal that it hopes to return the frozen funds to the central bank once the Taliban respect existing Afghan laws that constrain the use of reserves. A phased return of frozen reserves, released in tranches on a trial basis, could easily be audited and monitored.
Emergency relief is not enough.
None of this will happen quickly. The central bank’s assets could remain tangled for years in legal and political tripwires. U.S. policy still prohibits a single penny from going to civil servants in the Taliban government, and removing this prohibition would involve tiptoeing into a political minefield: Western taxpayers might not object to stipends for Afghan teachers, but it’s unclear how they would feel about paying for infrastructure projects. In the meantime, the United States and other donors should answer the UN’s appeal for a mammoth-sized humanitarian response.
It may be easier to write big checks for humanitarians instead of addressing the economic roots of the Afghan crisis. The checks must not be blank, however. Sending billions of dollars into territory ruled by an armed group carries serious risks, and history shows that militants always try to steal aid and extort humanitarian workers. As the UN Security Council debates the upcoming mandate renewal for the UN mission, created two decades ago to support a government in Kabul that no longer exists, it should emphasize the important role the UN can still play in coordinating international civilian efforts. This should include a senior UN official empowered by donors and supported by experts on the ground, who speaks with the Taliban daily to make sure that aid gets delivered to the people who need it and not into the Taliban’s pockets.
These negotiations will require years of slogging. UN officials had initial successes in some parts of Afghanistan in recent months as they persuaded Taliban officials to reopen girls’ secondary schools, but countless similar conversations will be required as the Taliban’s hardline views collide with global goals. In some ways, this might be the best punishment for the Taliban: allowing them to endure the humble task of governing a poor country, suffering the banalities of paperwork and meetings with donors. The Taliban deserve worse, but that does not matter. After generations of suffering, the Afghan people deserve better.
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