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
-
Edward Fishman on the Age of Economic Warfare
Podcast
In the latest episode of the Sanctions Space Podcast, Justine is joined by Edward Fishman, author of Chokepoints: American Power in the Age of Economic Warfare and an adjunct ...
By Edward Fishman
-
What Have U.S. Sanctions on Russia Achieved Since the War in Ukraine Began?
Podcast
Three years after Russia's full-scale invasion of Ukraine began, what have U.S. sanctions achieved? NPR talks to Edward Fishman, author of "Chokepoints: American Power in the ...
By Edward Fishman
-
Ziemba: Sanctions Enforcement on Russia To Ease Up
Video
Rachel Ziemba, an Adjunct Senior Fellow at the Center for a New American Security (CNAS), speaks with Bloomberg TV’s Joumanna Bercetche on the Horizons Middle East and Africa ...
By Rachel Ziemba
-
Bruce Andrews on the Geopolitics of Semiconductors
Podcast
Emily and Geoff quickly debrief on the week’s tariff news, including new 25% levies on steel and aluminum imports, before chatting all things semiconductors with Bruce Andrews...
By Emily Kilcrease & Geoffrey Gertz
