In the wake of the Taliban’s seizure of power in Afghanistan in August 2021, the international community remained steadfast in its refusal to accept the legitimacy of the new leaders. Western governments have sought to keep them on the defensive by suspending economic aid until the Taliban accept the basics of human rights.

On first glance, one might expect this to have worked. In the last months of the war, Afghanistan’s Western-allied government depended almost entirely on international aid to fund its budget, which amounted to over 40 percent of GDP. And the global community hoped/assumed the hardships brought on by the loss of most of this aid would persuade the Taliban to cease its suppression of women’s rights and, more generally, to adopt a benevolent approach to the welfare of the population. No such luck.

Return to the Middle Ages

Donor countries and agencies found they had little economic leverage over the Taliban, who have gone to great lengths to prioritize the return of Afghanistan to the group’s version of medieval Islamic theocracy. With aid cuts, the economy contracted by 21 percent in 2021 and 6 percent more in 2022, before settling into a wretched equilibrium that left most Afghanis in poverty. Moreover, the Taliban has undertaken a series of actions that have undermined any prospects for economic recovery.

Take the case of women. At the time of the Taliban takeover, around one-fifth of the workforce was female. The Taliban immediately pushed women out of public sector jobs — some of them from positions of considerable responsibility.

The sector hit hardest has been education. The Taliban prohibits girls from attending both secondary schools and universities. And in the country’s newly gender-segregated education system, female teachers have no place to go. While for the most part, women have been allowed to continue working as doctors and nurses, the Taliban are not permitting women to study medicine.

Women in the private sector are also encountering a growing number of barriers, including harassment during their commutes. At work, representatives from the Ministry for Propagation of Virtue and Prevention of Vice intimidate them with unannounced visits and probing questions. Even home-based informal economic activities have declined because of uncertainty and fear of reprisals. 

NGOs, which did much of the heavy lifting in social welfare roles, have also been affected. In December 2022, the authorities banned all female staff. Then in April 2023, the ban was extended to include women working for United Nations relief efforts. Many NGOs have left the country, while others have opted to scale back their activities. The United Nations Development Program predicts that the government’s policies toward women will lead to an economic loss of up to $1 billion annually, about 5 percent of the country’s GDP. Hardest hit: the country’s healthcare system.

Another Taliban policy that is sapping the economy involves the country’s vast opium poppy sector. In April 2022, the government announced a countrywide ban on poppy cultivation. This may please folks in the global antidrug establishment but created an existential crisis for Afghan farmers, who are not competitive in most traded agricultural products and lost a staggering $1 billion in annual revenue. The government appears confident that it can withstand popular resistance to the opium crackdown, which has triggered armed clashes on multiple occasions. 

Climate change also poses a threat, but the Taliban have undertaken little or no adaptation initiatives. Wheels within wheels: An ongoing drought may lead to a serious confrontation with Iran. That country is accusing Taliban leaders of breaking a sharing agreement over water from the Helmand River, which flows into Iran from Afghanistan. And clashes near the river in late May 2023 resulted in the deaths of several Iranian border guards and a Taliban fighter.

The incident will jeopardize any assistance Iran might have been inclined to give a fellow Islamic state under siege from the West. And it has already destabilized the Afghani diaspora in Iran — mostly economic refugees — some 350,000 of whom were deported last fall.

In a parallel act with equally dire potential, the Taliban has continued to support the Pakistani Taliban Movement, a militant fundamentalist opponent of the Pakistani state which has long relied on bases in Afghanistan. In retaliation, Pakistan announced last October that it would expel all unregistered migrants, primarily two million Afghans. Some 400,000 Afghans had been forced out by this past November. The Taliban have established camps to accommodate the refugees, but lack the resources to sustain them over a prolonged period.

If there is a bright spot here — from the Taliban’s perspective, anyway — the government has managed to increase its revenues from domestic sources by cracking down on corruption and eliminating road checkpoints that generate bribes. In 2022, it collected taxes equal to that in the final full year of the U.S.-backed regime — an impressive amount given the economic contraction. 

Jumpstarting Growth

However, rekindling economic growth is another matter entirely. The government’s immediate hopes for investment mainly focus on infrastructure projects linked to the country’s strategic location. Two of Afghanistan’s neighbors to the north, Uzbekistan and Turkmenistan, are interested in resuming projects of mutual interest — railway lines, highways, a gas pipeline and a power transmission corridor. However, Afghanistan is in no position to contribute financially to these projects, and has a tough time summoning trust in potential partners.

Apart from its value as a crossroads of Central Aisa, Afghanistan’s attraction to foreign investors lies in the country’s extractive industries. The Taliban, for its part, is eager to expand oil production in theAmu Darya basin. In December 2023, a Chinese company, CAPEIC, drilled multiple wells, leading to a fourfold increase in production to approximately 5,000 barrels per day — a trivial amount compared to production elsewhere, but a start. The goal now is to quadruple output once again, but that may be wildly optimistic.

Mining companies’ familiarity with working in unstable jurisdictions gives the Taliban hope that hard-rock mineral exploitation can begin in earnest. Indeed, the government claims to have signed $6.5 billion in mining deals, but uncertainty over international sanctions have restricted the number of companies and countries willing to work with it. Although many small legacy mines are in operation, their equipment and workforce are primitive. They will only contribute a tiny amount to the state’s funds in the short-to-medium run.

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The Afghanistan economy has stabilized, but at a level that consigns all but a favored elite to misery. The World Food Program estimates that 92 percent of the country’s households are at the edge of subsistence, with millions on the verge of famine. And, alas, Taliban-led Afghanistan is one of those rare cases where a government in power does not feel their citizens’ material wellbeing is a priority.

The Taliban is seeking Chinese investment, but instability — not to mention China’s own domestic economic woes — will probably inhibit significant inflows for the foreseeable future. And because of its refusal to accept international standards of civil behavior, the government will not have access to its international reserves (now frozen in the U.S.) anytime soon.

The country is in a unique situation. Its economic circumstances are dire. But the ideological commitment of the Taliban limits its will — and perceived need — to do much about it. It would be nice to end this piece with a ray of hope. But hope is one of many things in short supply in contemporary Afghanistan.