November 16, 2021
Establishing a Humanitarian Financial Corridor for Afghanistan
The humanitarian and economic situation in Afghanistan continues to spiral downward as the harsh winter arrives. A humanitarian financial corridor must be established to bring assistance to the Afghan people and stabilize an Afghan economy that is currently in freefall. After the Taliban’s takeover in August, donors suspended billions of dollars in assistance that had propped up 75 percent of the Afghan government’s budget and accounted for 40 percent of annual gross domestic product. The current financial system suffers from acute strains caused by the Taliban’s takeover, such as currency depreciation, rampant inflation, and a shortage of both local currency, the Afghani, and U.S. dollar (USD) banknotes upon which the dollarized economy relies.
The international community, led by the United States, must take further action to help the Afghan people without rewarding the Taliban.
Additionally, despite well-meaning public calls to release $9 billion in frozen foreign exchange reserves, the Taliban does not deserve to receive these funds at present. Unfreezing these assets (or allowing access to International Monetary Fund resources), in the absence of other institutional choices, would not solve the problem. Recent pleas by the international humanitarian and development community to address the crisis have identified the need for a financial corridor as a means to getting assistance to the Afghan people without engaging the Taliban. However, no detailed plan exists to explain what the corridor might look like. Such a plan should remain sanctions compliant and work within the new policy framework under the Treasury Department’s October 2021 sanctions review. Although it might be an extraordinary measure, one step in bringing this corridor to Afghanistan would include privatizing a key function of the Afghan central bank, albeit with appropriate controls to avoid Taliban interference or enrichment.
Read the full article from Lawfare.
More from CNAS
-
CNAS Insights | Why the United States Needs Economic Coercion Doctrine
Commentary
Economic tools now sit at the center of U.S. global competition. Sanctions, export controls, investment restrictions, and financial measures are employed with a frequency and ...
By LtCol Mary Hossier
-
Commentary
Transatlantic Security / Energy, Economics & Security
Want to Stop Trump Bullying Your Country? RetaliateThis article was originally published in The Guardian. In February of last year, Donald Trump convened the first full cabinet meeting of his second term in the White House. He...
By Edward Fishman
-
Unpacking the Trump Administration’s Plans for Venezuela’s Oil Revenue
Commentary
This article was originally published in Lawfare. Since removing Venezuelan dictator Nicolás Maduro from power, President Trump has made clear that he intends to “get the oil...
By Alex Zerden
-
Sanctions by the Numbers: 2025 Year in Review
Reports
This installment of Sanctions by the Numbers examines the United States’ use of financial sanctions and entity-based export controls...
By Eleanor Hume & Kyle Rutter
