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The Economic Disaster Behind Afghanistan’s Mounting Human Crisis
The Economic Disaster Behind Afghanistan’s Mounting Human Crisis
Toward a New Mandate for the UN Mission in Afghanistan
Toward a New Mandate for the UN Mission in Afghanistan
An Afghan woman and her children carry bags on their heads as they walk along a path on the outskirts of Mazar-i-Sharif, 5 November 2015. AFP/Farshad Usyan
Statement / Asia

The Economic Disaster Behind Afghanistan’s Mounting Human Crisis

Donors and Afghan state agencies must urgently tackle an economic crisis building up since 2014, when foreign troops started leaving and political instability worsened. The starting point must be a socio-economic assessment of just how big the problems are.

­As Afghanistan’s international donors meet in Brussels in a summit co-hosted by the European Union and the Kabul government on 4-5 October, Afghanistan’s rapidly deteriorating economy must be their central concern. Before this and an escalating humanitarian crisis merge to reach a dangerous critical mass, all must agree on several priorities – alongside renewed efforts to bring peace and political stability: realistic planning based on a thorough new socio-economic assessment, currently absent; adequate aid and support for state policy implementation, especially to help an alarming rise in numbers of displaced and shelterless people; halting repatriation of Afghan refugees, especially from Europe and Pakistan; and boosting investment and above all job creation in the country.

Afghanistan’s impressive average annual growth of nine per cent from 2002-2013 has declined rapidly since 2014. According to the World Bank’s World Development Indicators, annual GDP growth fell from 14.4 per cent in 2012 to 2 percent in 2013, and 1.3 and 1.5 per cent in 2014 and 2015 respectively. This drastic economic decline is mainly the result of the post-2014 international military drawdown and the year of intensified political instability that followed the 2014 election. Foreign troops once brought hundreds of millions of dollars into the Afghan economy, and their departure from 800 bases, large and small, deprives the country of what was after 2002 its largest single source of revenue. By one estimate, more than 200,000 Afghans have now lost jobs in logistics, security, and other sectors of a war-driven economy.

Heightened security concerns, political uncertainty and the erosion of the rule of law since 2014 have added to a devastating loss of confidence by consumers, producers and investors. Pervasive fears of a political meltdown have led to a surge in capital flight, with both wealthy and middle-class Afghans moving assets to the Gulf States, Pakistan, Iran, Turkey and Central Asia. Afghanistan’s human capital shrank too, especially among the urban middle class that had emerged after 2001 to play a stabilising role in Afghan politics. Hundreds of thousands of Afghans, mostly young and educated, left the country in 2014 and 2015, often to seek refugee status in Europe.

This sudden economic reversal has considerable political, security and social implications. Rising unemployment and widespread poverty is already widening the legitimacy gap between the National Unity Government (NUG) and the Afghan public, and expanding the reservoir of grievances that insurgents as well as hardline ethnic and regional players could further exploit. Unfortunately, it is not the NUG’s only pressing problem.

An Underestimated Humanitarian Crisis

The economic crisis may have been predictable, but its impact remains poorly understood and insufficiently reflected in strategic thinking and policies about the country’s future. The most revealing indication of such gross underestimation of the situation is the absence of any current, reliable socio-economic data. Three years after the economic reversal began, neither the NUG nor the international community have conducted any substantial assessment of the impact of the collapse of the war economy on the Afghan people and state.

The available figures show that the most vulnerable segments of the population are bearing the brunt of the burden. According to the Afghanistan Living Conditions Survey, the unemployment rate rose from 9.3 per cent in 2011-12 to 24 per cent in 2014. During the same period, the number of people who were not engaged in gainful employment increased from 26.5 per cent to 39.3 per cent of the labour force; among women, the rate increased from 42.4 per cent to 49.8 per cent. Those who manage to find work have to provide for a large number of dependents, with 47 per cent of the population under the age of fifteen. Although no such figures are available for 2015 and 2016, anecdotal evidence makes it abundantly clear that these negative trends are worsening. With Afghanistan’s estimated 32.5 million people growing by perhaps three per cent annually, adding half a million people to the work force every year, the decline in employment opportunities can only worsen.

Even without reliable Afghan government statistics for 2015 and 2016, the trends indicated by anecdotal evidence and UN figures point to a silently evolving, increasingly alarming humanitarian crisis. According to UNHCR, the total numbers of “people of concern”, including Internally Displaced Persons (IDPs), refugees and returnees, nearly doubled between 2013 and 2015, rising from 985,197 to 1.77 million people. UNOCHA estimates that 265,141 more were displaced from their homes in 31 of 34 provinces between 1 January and 15 September 2016.

On top of this has come an unprecedented rise in recent months in the return of registered and unregistered refugees from Pakistan, averaging 5,000 people daily in early September. Combined with the new internally displaced, an alarming one million (57 per cent of whom are children) could be on the move just as winter sets in between September and December 2016. All will require urgent food assistance, health, shelter and other essential services. This spike in the numbers of IDPs and returnees will increase the percentage of the population facing seasonal or permanent food insecurity beyond the current estimate of 40 per cent, and will further strain already meagre economic and employment opportunities and public services.

As Budgets Shrink

The decline in economic opportunities has long-term consequences for overall political stability. Over the past three years, state institutions have become by far the largest source of employment and providers of essential public services, but available economic resources are shrinking fast. Reductions in donor assistance and international contracts are increasing the fragility of the post-2001 political order, which is largely based on networks of patron-client relations in which powerful political players have become dependent on the continuous flow of international largesse. As international military spending and contracts shrink, these networks will rely even more on the proceeds of the informal economy including corruption, criminality, the opium trade and the illegal exploitation of resources such as mines.

The decline in economic opportunities has long-term consequences for overall political stability.

The NUG’s inability or unwillingness to respond to these challenges has profound implications for both its legitimacy and the future of the post-Taliban political order. In the Asia Foundation’s 2015 Survey of the Afghan People, citizens who believed the country was going in the right direction declined to 37 per cent from 55 percent in 2014. After insecurity, worsening economic conditions were cited as the main reason for such pessimism. While the NUG inherited problems that were already mounting before it was formed in September 2014, the Afghan public increasingly links the worsening economy with the government’s policies and/or inability to perform. While the NUG has prioritised the economy in its policy reform agenda, popular expectations created by such rhetoric have yet to be matched by a track record in forging or implementing reforms, let alone actual economic benefits. Aside from some major infrastructure projects such as energy transit routes, which depend on good security and may take years to make a tangible impact on the economy, the NUG has done little to respond to immediate asks such as job creation or the protection of the private sector against rising criminality and insecurity. 

The potential gains of some of the government’s most important infrastructure projects, including CASA 1000, which aims to carry power from Central Asia to South Asia, are threatened not just by insurgent violence but also by increased social and political discord over the distribution of national resources. For instance, in mid-2016 a persistent, predominantly Hazara Enlightenment protest movement emerged to oppose the government’s decision to change the route of another power transmission line bringing electricity from Turkmenistan to Afghanistan, from a route passing through the Hazara-majority Bamiyan province to one running through the Salang Pass. Absent transparency and accountability, such policy decisions could further escalate ethnic tensions.

The government’s ability to implement economic reforms is hampered by internal political gridlock, bureaucratic hurdles and pervasive corruption. Capacity constraints in most government ministries continue to adversely affect the execution of development projects. Payments are delayed to private sector contractors, suppliers and even the state’s own personnel. As of September 2016, nine months into the current Afghan fiscal year, the NUG has spent only 30 per cent of a $2.5 billion development budget. This slow pace in spending and execution is depriving a cash-starved economy of much-needed funds.

The government’s ability to implement economic reforms is hampered by internal political gridlock, bureaucratic hurdles and pervasive corruption.

Despite its many weaknesses and shortcomings, the NUG has succeeded in maintaining a degree of macro-economic stability and addressing the budgetary shortfalls it encountered in 2014. It has also raised domestic revenues above targets set by the International Monetary Fund. However, the new Afghanistan National Peace and Development Framework, 2017 to 2021 is based on an unproven assumption that the three-year economic decline has been stemmed and that over the next five years the economy will grow by an average of five per cent. Domestic revenue mobilisation is in fact a poor indicator of the economy’s overall health, and the current effort to raise more money runs the risk of further shrinking an already fragile and struggling formal tax base.

While taxation rates remain low in comparison to other countries in the region, there is a widening mismatch between what the government demands in terms of revenue and the services it offers. Meanwhile the costs of doing business are increasing, and rising violence and weakening government control is exposing an already shrinking private sector to extortion and other acts of criminality, including kidnapping for ransom. Those responsible may be the Taliban, urban criminal networks or a range of other actors, some with links to the state. 

Despite a rise in revenue collection in 2015, the U.S. Special Inspector General for Afghanistan Reconstruction (SIGAR) estimated that over half of the country’s customs revenues were lost to graft that year. Public sector appointments, including critical security sector positions, are often casualties of infighting and nepotism. All this indicates the complicity of powerful political networks at the highest levels of government, costs the state and Afghan people hundreds of millions of dollars in revenues, and curtails the delivery of even basic services. Astonishingly, corruption within the security sector extends to the sale of military hardware and ammunition to insurgents.

Recommendations

As international donors and the Afghan government devise their responses to address the deteriorating situation in Afghanistan, they should prioritise – alongside coordinated efforts to bring peace and political stability – a comprehensive and robust approach to an escalating humanitarian crisis, and adopt a more realistic vision of economic recovery and growth. They should:

  • Conduct a thorough national assessment of post-2014 socio-economic conditions and challenges to serve as the basis of more realistic strategic planning;
     
  • Urgently respond to the fast-growing humanitarian crisis, pledge adequate resources for the immediate needs of IDPs and refugee returnees for shelter, food, health and sanitation, and support the NUG in devising and implementing a coordinated policy to meet their longer-term needs for access to gainful employment;
     
  • Halt the deportation of Afghan refugees and asylum seekers from Europe; encourage the Pakistan government to end coercive, involuntary returns of all Afghan refugees, registered or unregistered; and provide financial and other incentives to sustain the millions that remain; 
     
  • Create new momentum in the fight against fraud by (i) tackling politically connected corruption networks within government; (ii) integrating robust anti-corruption policies with current revenue collection efforts; and (iii) ensuring robust oversight over payments in government contracts to private contractors and suppliers, while also streamlining these payments;
     
  • Ensure that funds reach the provinces, to promote more equitable distribution regionally and improve the writ of the government, while also prioritising the most under-developed and isolated regions;
     
  • Consider boosting private sector investment through guarantees and other protections and incentives; in particular encourage job-generating and long-term investments by the private sector through tax incentives; and provide, as far as possible, access to public services, including electricity, to firms that create jobs;
     
  • Take immediate, coordinated measures to ensure the security of private investors and business persons, including by targeting criminal networks, some containing elements within or linked to government institutions.  

CORRECTION: An earlier version of this article wrongly stated that the Enlightenment protest movement emerged to oppose the government's decision to change the route of the CASA 1000. This has now been updated to correctly cite that the opposition was towards the government's decision to change the route of another power transmission line bringing electricity from Turkmenistan to Afghanistan.

An Afghan woman walks on the street during a snowfall in Kabul, Afghanistan, 3 January 2022. REUTERS / Ali Khara
Q&A / Asia

Toward a New Mandate for the UN Mission in Afghanistan

The UN mission in Afghanistan will soon be up for renewal. In this Q&A, Crisis Group experts Ashish Pradhan and Graeme Smith discuss how the UN Security Council could update its list of responsibilities with the Taliban back in charge.

The UN Security Council faces hard choices about the future of the UN Assistance Mission in Afghanistan (UNAMA). The UN’s role in Afghanistan has grown more important following the Taliban victory in August 2021 and the shuttering of many embassies and international organisations. UNAMA, originally launched in 2002 after the U.S. toppled the first Taliban government, has stayed in place, acting as a point of contact for engagement with the new Taliban authorities. The mission also has the potential to serve as the “eyes and ears” on the ground for outside powers and aid donors, monitoring the human rights situation and coordinating the work of UN agencies in responding to the country’s economic and humanitarian crisis.

UNAMA’s mandate is up on 17 March, and Security Council members broadly agree that the mission should continue in some form. The Taliban also seem to want the mission to remain in place. The exact terms on which it does so, however, remain uncertain. There are significant splits in the Council over how much emphasis the mission should place on human rights issues, and whether it should engage in political – as opposed to primarily humanitarian – dialogue with the new government. UN Secretary-General António Guterres is set to deliver a report on Afghanistan and UNAMA to the Council by 31 January, and Russia will convene a ministerial-level Council meeting on Afghanistan in February, during which the future of UNAMA is likely to be a major topic.

What is the current mandate?

UNAMA’s current mandate is based on the political situation prior to the Taliban victory in August. It is sometimes called a "Christmas tree" mandate, festooned with multiple goals. The secretary-general’s special representative for Afghanistan – since April 2020, Deborah Lyons of Canada – is authorised to lead and coordinate international civilian efforts. In practical terms, the person who holds this post (along with other staff) is meant to provide advice to the Afghan government, promote democracy and human rights, build rule-of-law capacity, encourage regional cooperation, and get humanitarian and development actors working together, among other things.

How has UNAMA adapted to the Taliban takeover?

UNAMA adapted on the fly, halting activities that no longer made sense or that might have been controversial in the period of nervous calm as the war ended. Teams of UN election experts dropped preparations for anticipated future rounds of voting for the Afghan presidency and parliamentary seats. Legal experts abandoned work with the attorney general to report on anti-corruption measures (or lack thereof). Most visibly, UNAMA’s respected teams of human rights monitors stopped publishing their much-anticipated reports on the protection of civilians, which had been an important source of public information.

While some offices went quiet, others got exceptionally busy. The special representative and her team were among the first to call for a new “modus vivendi” between the Taliban-controlled government and the outside world, trying to encourage cooperation – most immediately, to address the humanitarian and economic crisis. The staff at UNAMA helped with drawing up a new Transitional Engagement Framework, possibly the most expensive plan for humanitarian and economic assistance in UN history, setting out how donors could spend $8 billion in the coming year to avoid a state collapse.

After the evacuation of many embassies, the continued presence of UNAMA on the ground became essential for day-to-day troubleshooting with what the UN calls the “de facto authorities”, the new Taliban government. Staff helped get aid shipments through border crossings and airports and ensure the safety of humanitarian workers, among other urgent tasks. The mission has suffered from staff attrition, however. Large numbers of Afghan staff in politically sensitive jobs stayed home or fled the country after the Taliban walked into Kabul. Many employees have since returned to work, and security concerns have reportedly decreased in the following months as the Taliban consolidated power and violence subsided. Still, relying on the Taliban to provide security raises uncomfortable questions about the mission’s independence for both the UN and for member states funding the organisation’s activities in Afghanistan.

How do the Taliban view UNAMA?

During decades of war, the UN became an indispensable part of basic service delivery and the Taliban worked with the UN on ensuring humanitarian access to remote parts of the countryside, including when the Taliban last had power in the 1990s. UNAMA has a long history of meeting with the Taliban, both at high levels and in conversations among mid-level staff. Such engagement was not limited to humanitarian issues but also included years of on-and-off (and ultimately unsuccessful) UN efforts to foster a peace process, alongside UN human rights advocacy focused on limiting civilian casualties and otherwise reducing harm in the conflict. Those relationships between the UN and the Taliban have carried over into the new Taliban government, as many of the same Taliban officials who handled liaison with international organisations and foreign governments in previous years have now been appointed to senior positions in Kabul.

The Taliban resent the continued imposition of UN sanctions on the group and many of its individual leaders.

At the same time, the Taliban resent the continued imposition of UN sanctions on the group and many of its individual leaders, as well as the UN’s refusal to seat their designated permanent representative in New York. Some Security Council members are concerned that UNAMA exaggerates the degree to which UN staff can work constructively with the Taliban. Crisis Group’s interlocutors among the Taliban say the two sides are working well together so far, but that serious gaps remain between the UN mission’s “Western idealism” and the Taliban’s agenda of establishing its version of Islamic governance. It remains to be seen whether those divergences will seriously impede pragmatic engagement.

Can UNAMA publish reports on human rights under the Taliban?

An important part of UNAMA’s mandate has always been promoting human rights, including through reporting on the situation of women and girls. UN officials and Security Council diplomats say these tasks are even more necessary now in the wake of the Taliban takeover. The Taliban expect the UN to talk about human rights, and there is no surprise among Taliban leaders when UNAMA raises difficult questions. The Taliban have recently told UN officials that they want the UN to continue reporting publicly. Despite the Taliban’s mistrust of international observers, they may prefer the factual narratives from the UN and other impartial watchdogs to public commentary from their domestic enemies. They appear to recognise that, over time, getting reasonable grades from the UN on rights issues could be a pathway toward increased international acceptance of their regime.

Still, it remains to be seen whether the Taliban will comment on the renewal of the UNAMA mandate and particularly the mission’s efforts to continue reporting. In other countries, armed groups have blocked UN human rights teams or denied them visas, but the Taliban appear to know that such actions would undermine their quest for international legitimacy. It is possible that the Taliban will not be the biggest impediment to human rights reporting, at least in the near term, as disagreements among Security Council members – described further below – could be a more limiting factor. Of course, if the Taliban continue to be implicated in crimes such as the disappearance of female activists, and UNAMA keeps pushing back with reporting and advocacy, the Taliban’s view of human rights work could become less benign.

What is the leading proposal for reconfiguring the UN presence?

The forthcoming secretary-general’s report on the future of UNAMA involves relatively limited changes to the mission, according to Crisis Group interlocutors. The UN would adjust the mission to suit the new circumstances, while keeping the old structure, the UNAMA name, and the existing roster of 300 to 400 international staff. UNAMA would continue to lead coordination and facilitation of humanitarian aid delivery, but it would focus more on these tasks as the humanitarian response balloons in size. The mission would also restart human rights reporting, especially on the plight of Afghan women and minorities.

This updating approach would see UNAMA shifting resources in the coming months away from defunct operations (ie, elections, peace talks) and reassigning them to new priorities, such as understanding the Afghan political economy and strengthening coordination among international donors. The current mandate to support the Afghan “government” would get rewritten to reflect the UN’s new approach of political engagement with the “de facto authorities”. The special representative would remain in the hot seat, responsible for political engagement with the Taliban, including pushing them to bring their policies and practices into line with international norms.

One unresolved question is how specific to make the new mandate. Some UN officials and Security Council members argue against detailing the tasks for the renewed mission because it could constrain the day-to-day flexibility required by UN staffers on the ground in an uncertain and evolving situation. They argue that the new mandate should instead focus on outlining the UN’s new priority areas, leaving room to interpret them.

Can the mission do more to protect the integrity of aid delivery?

A staggering amount of money is required to stave off famine in Afghanistan: the UN’s humanitarian appeal by itself, excluding other types of aid, is a record-breaking $4.4 billion for 2022. As donors contemplate that scale of spending, they need to think hard about how to mitigate the risks. Any time that international organisations and donor governments dramatically enlarge operations in a conflict or post-conflict zone, there are major risks that aid will get stolen, diverted, misused or have other unintended consequences. UNAMA had set up a small Risk Management Unit in previous years, which was later shut down, but under the new proposal this unit would be revived with additional resources. This is a vital requirement, and the stakes are high: it’s always scandalous if aid money falls into the wrong hands, but the political fallout could be incendiary should a future scandal involve the Taliban and aid money from the countries whose soldiers once battled the group.

So far, UN and non-governmental organisation staffers say the Taliban are proving themselves much less corrupt than previous Afghan governments, and aid workers are reaching parts of the country that were previously inaccessible. The Taliban say they will continue allowing access for humanitarian and development workers, including female staff. The new authorities also claim to be collecting customs and other revenues more efficiently than their predecessors, intending to wean the state off foreign assistance. All of these claims need to be checked, and checked again, in the coming years.

Donors should insist on rigorous independent monitoring of their own, of course, and some veteran officials have expressed scepticism about the UN’s ability to examine operations for risks. Still, extra layers of protection are warranted. In addition to their own accountability systems, donors should empower the on-the-ground UN teams who can endeavour to hold the Taliban accountable on a daily basis. This task would require a dedicated focal point – likely a bigger Risk Management Unit than currently anticipated – to inform the UN leadership as they talk with the de facto authorities. At times, donors might need to make tough decisions about steering money away from areas susceptible to misuse and even withholding non-essential aid when necessary. As the response in Afghanistan turns into the world’s biggest aid effort, donors should plan for an unprecedented level of scrutiny to avoid boondoggles.

How do the main Security Council members view these proposed changes?

Strong disagreements persist among members of the Security Council about international engagement on Afghanistan, apart from the specifics of the UNAMA mandate. Some European members favour a large-scale humanitarian response as well as potentially some measures that buttress the fragile Afghan state, fearing another migration crisis. That view is not unanimous, however: France opposes any aid or engagement that might be construed as legitimisation of the Taliban. The United States is wary of lifting restrictions on Afghan economic activity, even as U.S. officials admit that sanctions undercut humanitarian efforts, because Washington sees such restrictions as one of its few forms of leverage and because of the political unpalatability of a softened stance toward the Taliban. So far, the compromise at the Security Council has been to declare that international efforts should “minimise” benefits to the Taliban. UNAMA will have the task of putting that vague instruction into practice, trying to avoid state collapse without providing so much help to Kabul’s new masters that it raises hackles in New York.

A key priority should be to ensure that a significant UN presence remains on the ground ... to mitigate risks of diversion of resources and misuse of funds.

Once negotiations in the Security Council on the mandate renewal begin in February, differences are likely to emerge on the broader question of how the UN can balance these competing views regarding relations with the Taliban. In this regard, the question of retaining UNAMA’s political mandate could be an important sticking point. A key priority should be to ensure that a significant UN presence remains on the ground to carry out the type of day-to-day engagement required to mitigate risks of diversion of resources and misuse of funds. The delicate political context, though, is underscored by some Security Council members’ views that the UN’s presence and engagement should not confer any legitimacy on the Taliban authorities.

Disputes are also likely to surface on issues such as the nature of the UN’s human rights role and the degree to which it should be tasked with holding the Taliban’s feet to the fire. China and Russia both have long objected to UN missions in other conflict zones monitoring human rights. The Council’s other members – including its European contingent, the U.S. and India – envision a mission that keeps a close eye on Taliban behaviour.

These sensitivities mean that Council members – especially Norway, which as the “penholder” on the Afghanistan issue leads on the drafting of Council resolutions regarding UNAMA – will have to forge delicate compromises as UNAMA’s new mandate frames the UN’s overall relationship with the Taliban.

Council members should nonetheless see that they have a common interest in shoring up UNAMA as a channel for engagement with the Taliban. The special representative needs strong support in New York, with a mandate and political clout to rally the disparate concerned external actors and engage effectively with the Taliban. It would be dangerous for global players to try to engage with the Taliban entirely unilaterally – with Western donors, regional powers, humanitarian agencies and international financial institutions implementing their own, separate Afghanistan policies – as the ensuing disarray would only hasten a continued slide toward mass starvation and enable the de facto authorities to exploit divergences. The new UNAMA should serve not only as the eyes and ears of the world, but also as an authoritative voice calling for actions on the part of the Taliban. The special representative should feel confident in playing a leading role in international efforts, bringing a degree of orderliness to the aftermath of the West’s disorderly exit.

Contributors

Senior Analyst, UN Advocacy and Research
ashishspradhan
Senior Consultant, Afghanistan
smithkabul