The Taliban government is working on converting foreign military bases into SEZs.
BACKDROP
The Taliban’s takeover of Afghanistan in August 2021 has led to significant uncertainty about the country’s economy. Afghanistan is one of the poorest countries in the world, heavily dependent on foreign aid and vulnerable to fluctuations in the global economy. The Taliban previously ruled Afghanistan from 1996 to 2001, during which time the economy suffered greatly due to international sanctions and the group’s strict interpretation of Islamic law.
The Taliban’s return to power has raised concerns about the country’s access to foreign aid and international markets. The United States and other Western countries have frozen billions of dollars in Afghan assets and have suspended aid to the country, while the International Monetary Fund (IMF) has halted its program with Afghanistan. This has caused a severe cash crunch in the country.
TALIBAN’S PLANS
The Taliban regime in Afghanistan will move forward with its plans to turn former foreign military bases into Special Economic Zones (SEZ), the acting deputy prime minister for economic affairs announced on Sunday.
In December last year, the acting commerce minister had informed Reuters that his ministry was working on a plan for the former American military bases and would present its findings and plans as a report to the cabinet and the economic committee being directed by acting deputy PM Mullah Abdul Ghani Baradar.
Mullah Baradar stated that following an extensive discussion, the committee arrived at the conclusion that the Ministry of Industry should progressively take control of the remaining military bases of foreign nations with the intention of converting them into special economic zones. He added that a pilot plan would be implemented in the capital Kabul and in the northern Balkh province.
ECONOMY UNDER TALIBAN
Afghanistan’s economy was already on a downward path before the Taliban takeover of the county. The country was reeling from a severe drought, the Covid-19 pandemic, and a fall in support for the previous government. Afghanistan’s economy is heavily dependent on foreign aid, the insurgent takeover prompted the Western Countries to cut aid which was around 40% of the GDP.
The country still feels the aftershocks of the abrupt withdrawal of the US military forces and allies in 2021. The political crisis that began in 2021 led to a noteworthy economic contraction in Afghanistan which worsened food insecurity. According to the World Bank the economy of Afghanistan contracted by 20.7 per cent in 2021, and is projected to grow 2 to 2.4 per cent over the next 2 years with no improvement in per capita incomes. According to the United Nations Office for the Coordination of Humanitarian Affairs (UNOCHA) 20 million Afghans are faced with acute hunger including 6 million people at emergency levels.
Taliban’s strict interpretation of Islamic law is also causing economic despair, the decision to ban women from almost all forms of work and education is costing the economy. According to World Bank, “barriers to completing 12 years of education cost countries between $15 trillion and $30 trillion in lost lifetime productivity and earnings. If the Taliban wants to achieve sustainable growth, they have to allow women back into the workforce. According to UNICEF estimates, the Taliban ban on girls’ secondary education cost the Afghan economy $500 million in just 1 year.
CONCLUSION
Overall, the current state of the Afghan economy is in a precarious position. After a freefall for months the economy is stabilising but at a much lower equilibrium. Many of the country’s citizens are unable to access essential services, and the Taliban has been unable to restore the economy to its pre-2021 levels. Afghanistan’s currency exchange rate has bounced back and is not lower than what it was a year ago. The economy is projected to move to a low growth path for the next two years, and the financial sector remains in crisis. The overall rule of law remains uncertain, and the country’s severely underdeveloped financial system is limiting the government’s ability to carry out monetary policy.