The collapse of the Afghanistan government and the speed at which Taliban forces have taken over the country poses many questions, not least about the country’s economic future and role as a trade route.
Latest update 1 (5pm, 16 August 2021): the UK Parliament is being recalled from its summer recess on Wednesday 18 August to debate the situation in Afghanistan, ahead of the official return date of 6 September. Prime Minister Boris Johnson has chaired a third emergency Cobra meeting today (Monday) – the third such meeting held about the Afghanistan crisis since Friday.
Latest update 2: the FT reports China saying it will respect the “choices” of the Afghan people, in the first sign that Beijing was ready to give its cautious support to a Taliban-led government in Kabul.
Latest update 3: the Evening Standard reports UK Defence Secretary Ben Wallace warning that NATO forces are not going back to Afghanistan after the Taliban declared it is in control of the country following the fall of Kabul.
Trade collapse
According to Times Now, the Afghan economy has been reliant on international aid with a limited private sector. Nearly half (around 44%) of the workforce is employed around agriculture.
Observers predict that with the Taliban in control, international trade will come to a standstill, leading to a surge in smuggling. The signs were there in July, when the Afghanistan government’s customs revenue fell by 30% that month to $57.5 million.
According to World Bank, Afghanistan was 173rd among 190 countries in 2020 for doing business.
After the collapse of the Taliban government in 2001, Afghanistan opened up to international trade, reports Lloyds Bank Trade. Both imports and exports have been growing in recent years.
It traditionally exports items of low value, such as dried fruit, carpets, cotton, cereals and non-alcoholic beverages. Its main items of import include wheat, peat, textile and petroleum products.
Chinese interests
Afghanistan is at the centre of a number of trade routes linking Europe and countries of the Middle and Far East, including China’s Belt and Road Initiative (BRI).
According to analysis in The Diplomat, China prefers to work with incumbent governments regardless of regime type. It has worked with both the Taliban and the recent Afghan government and will attempt to do so to keep the BRI on track.
However, the larger threat to China’s interests in the country and regionally could be non-Uyghur jihadist groups, which are increasingly outraged by the treatment of Uyghurs in China and could pose a threat to Chinese projects regionally.
China and Russia stay
While the US, UK and other Western countries have shuttered their diplomatic missions and withdrawn from the country, China and Russia have indicated they have no plans to close their embassies and are not evacuating citizens, reports the BBC.
Taliban representatives visited Beijing last month, meeting foreign minister Wang Yi, and Reuters suggests the country could recognise the new regime.
There are some indications that the Taliban could be less hard-line than the version that oversaw the country in the Nineties.
The group has ordered its fighters to leave Afghan civilians alone, as it seeks to present a moderate face. A member of the Taliban’s negotiating team in Qatar, Suhail Shaheen, told the BBC: “We assure the people in Afghanistan, particularly in the city of Kabul, that their properties, their lives are safe - there will be no revenge on anyone.”
Drug trade
The Taliban seizing control of Afghanistan could fuel a surge in the export of heroin and other drugs as it takes control of trade routes, reports the New York Post.
According to Reuters, economic devastation during the war left many farmers reliant on the poppy crop. UN and US officials worry Afghanistan's slide into chaos is creating conditions for even higher opiate production.
Port problems: landlocked
A knock-on effect of the Taliban’s rise could be to make India’s investment in Chabahar Port in Iran, dead money, reports the Wire.
Landlocked Afghanistan is reliant on ports in other countries for imports and export. India has invested heavily in Chabahar to allow a route to Afghanistan that sidestepped Pakistan. However, the development has moved slowly and the US has backed alternative connectivity projects with Uzbekistan and Pakistan.
Pakistan is also developing its own Chinese-backed port at Gwadar, although progress has been troubled, reports Hellenic Shipping News.
