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
-
Red Lines and Supply Chains: Trump’s Approach to Trade and Security
Video
The Trump administration is increasingly linking trade policy to national security. Join Emily Kilcrease, senior fellow and director of the Energy, Economics, and Security Pro...
By Emily Kilcrease
-
Ziemba: Struck By Energy Deal Between India & Saudi Arabia
Video
Saudi Arabia and India have agreed to deepen energy ties and cooperate more closely on tourism and technology as the countries seek to strengthen relations at a time of turbul...
By Rachel Ziemba
-
What is President Trump’s Economic Plan?
Podcast
Global financial markets plunged as investors braced themselves for a shock to the flow of international trade. Faced with prolonged market turmoil, within days the US Preside...
By Emily Kilcrease
-
Bloomberg Businessweek: Age of Economic Warfare
Podcast
Columbia University Senior Research Scholar and adjunct senior fellow at the Center for a New American Security, Edward Fishman on US credibility and how that is affecting its...
By Edward Fishman
