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
-
The Long Tail of the Hormuz Energy Crisis with Rachel Ziemba
Podcast
Emily is joined by Rachel Ziemba, CNAS adjunct senior fellow and energy markets expert, to unpack the ongoing energy crisis resulting from the U.S.-Iran military conflict and ...
By Emily Kilcrease & Rachel Ziemba
-
India First Debate: Daniel Silverberg and Sandeep Unnithan on U.S. Rescue Op and Iran Air Defence
Video
In this episode of India Today, anchor Gaurav Sawant discusses a high-stakes US special forces mission deep inside Iran. Joined by Daniel Silverberg, Managing Director of Caps...
By Daniel Silverberg
-
Hit It with Your Best Shot
Reports
Executive Summary America needs an economic pressure doctrine. The country is using economic pressure in more novel ways and at greater scale than any other time in the postwa...
By Emily Kilcrease
-
CNAS Insights | A Year After Liberation Day, Can Trump’s Trade Wars Be Salvaged?
Commentary
As the trade wars have played out over the last year, the Trump administration has fumbled its opportunity....
By Emily Kilcrease & Geoffrey Gertz
