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
-
Bloomberg Scoop: Trump’s Team Said to Be Exploring Stake in Intel
Video
Geoffrey Gertz of the Center for a New American Security joins to discuss his takeaways as the administration demonstrates willingness to intervene in the economy much more di...
By Geoffrey Gertz
-
Commentary
Energy, Economics & Security / Technology & National Security
Scrapping AI Export Controls Is Self-DefeatingBeijing surely has two goals in mind: Signal to domestic companies that they ought to shun American technology as soon as possible, and manipulate Nvidia to reveal how it desi...
By Liza Tobin & Matt Pottinger
-
Game Over?
Reports
The trade wargame suggests that sustained high tariffs could create leverage and urgency to spur action toward a productive restructuring of the international trade system....
By Emily Kilcrease & Geoffrey Gertz
-
Video
Indo-Pacific Security / Energy, Economics & Security
Trump Hits India with 25% TariffThere have been signs of trouble in the U.S.-India talks, according to a Lisa Curtis from the Center for a New American Security, joining Bloomberg TV, including the U.S. want...
By Lisa Curtis
