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
-
Tariffs and Tech: An Uncertain Recipe
Commentary
Higher tariffs could prompt American cloud companies to shift more of their capital investments abroad....
By Pablo Chavez
-
How Do You Tariff a Movie and Liza Tobin on the Trade War with China
Podcast
China expert Liza Tobin, managing director at Garnaut Global and new CNAS adjunct senior fellow, joins Emily Kilcrease and Geoffrey Gertz to discuss the ins and outs of the US...
By Emily Kilcrease, Geoffrey Gertz & Liza Tobin
-
Friendshore First, Trade War Second
Podcast
Edward Fishman is the author of Chokepoints: American Power in the Age of Economic Warfare. Fishman is an adjunct senior fellow at the Center for a New American Security (CNAS...
By Edward Fishman
-
Trump's First 100 Days in Trade Policy
Podcast
Emily and Geoff look back on the first 100 days of Trump’s trade policy, with a focus on how different parts of the U.S. political and economic system are reacting. They get i...
By Emily Kilcrease & Geoffrey Gertz
