GPI Global Policy Institute

The context

Last August, the Taliban took over an impoverished and poorly governed Afghanistan, a country with no viable economy. The world reacted by cutting the large economic assistance programs that allowed the survival of the nation under the previous regime. Basic humanitarian aid still flowing in is just not enough to stabilize a country of almost 40 million people with no significant productive assets. As winter comes and living conditions deteriorate, it is possible that many Afghans will do whatever they can to flee. This may create a refugee crisis that neighboring countries (mostly Iran and Pakistan) will be unable to absorb. Poverty, hunger and despair may soon create an unmanageable environment in Afghanistan with negative impact on the entire region.

The United Nations Development Program (UNDP) recently published a report titled “Economic Instability and Uncertainty in Afghanistan after August 15“. The report warned  that Afghanistan is facing extreme poverty by the middle of next year. Sebnem Sahin, one of the writers, presented key findings of this report.

Event Summary

Sahin presented key finding of the UNDP report she co-wrote on Afghanistan’s current and projected economic and financial predicament. Based on the data gathered, the situation is likely to go very soon from bad to catastrophic. With the abrupt cutting of most foreign assistance following the Taliban take over last August 15, Afghanistan is on the verge of collapse, because foreign aid provided most of the resources the previous government relied upon to fund most of its programs. The freezing of Afghan assets held abroad made matters worse. The banking system cannot function because of lack of funds. The Taliban government is unable to pay civil servants and its bills, including the electricity bills for the electricity purchased from neighboring countries. As Afghanistan has been cut off from the international banking system, it is also difficult for banks to send and receive remittances from Afghans abroad. The only aid channels currently open are limited to basic humanitarian assistance. They are critically important in order to avoid mass starvation; but they are totally insufficient to stabilize a country of 40 million people. This tragic situation is made worse by one of the worst droughts in modern Afghan history that is devastating the agriculture sector.

Tzannatos pointed out that the rapidly deteriorating economic, financial and fiscal environment may soon trigger a mass exodus from the country. Facing no viable economic future and the likelihood of famine or starvation, many desperate Afghans will try to flee the country. This development will create daunting challenges for the international community. Countries are ill prepared to welcome a massive inflow of Afghan refugees. To make things worse, Tzannatos noted, those seeking refugee status face significant hurdles. In most cases they travel with no passports or other forms of identification. Likewise they will be unable to document the hardships they suffered. Without these prerequisites immigration officials in host countries will not grant refugee status. Therefore, the ultimate fate of those who will choose to leave Afghanistan is highly uncertain. Besides, Europe in particular is no longer a hospitable destination. In many European countries in recent years openly xenophobic political parties gained significant support. The previous German government which opened its doors a few years ago to a large number of refugees suffered politically because most Germans were opposed to the open door policy.

In the final analysis, both speakers concluded, the best policy would be to stabilize Afghanistan, so that its citizens would not have the incentive to flee. But this will depend on the Taliban finding acceptance in the broader international community. And this is highly unlikely, given its extreme policies inspired by their interpretations of Islamic principles and precepts.

Speakers Bios

Sebnem Sahin

Sahin is a development economist based in Washington DC. She is the lead author of the UNDP Rapid Appraisal of the Current Crisis in Afghanistan. She analyzed the impact of the COVID-19 Pandemic on SDGs and socio-economic conditions in Afghanistan. She has more than 15-year experience on economy-wide analysis as it applies to sustainability, climate change, natural disasters, and trade analyses. Following her PhD in economics from Sorbonne University, prior to joining the UNDP, she worked at the World Bank, and OECD. She also provided consultancy services to the IMF, and IFPRI. Degrees: PhD in Economics (with honors), Université Sorbonne, Paris, France

Zafiris Tzannatos

Dr Zafiris Tzannatos is a Senior Consultant for Strategy and Policy as well as Fellow of the Lebanese Center for Policy Studies in Lebanon where he was previously Professor and Chair of the Economics Department at the American University of Beirut. Between 1992 and 2008 he served as Advisor to the Managing Director of the World Bank where he was also Manager for Social Protection in the Middle East and North Africa as well as Leader of the Global Child Labor Program that he initiated. At the Bank he set up the labor program and organized and led the first capacity building workshops starting in 1993. More recently, he was Senior Advisor for the 22 Arab States at the ILO office in Beirut, and before that, for governments in the Middle East and the GCC – including Lebanon (Ministry of Social Affairs), Qatar (Planning Council), and the UAE (Abu Dhabi, General Secretariat of the Executive Council) as well as development consulting firms. Since 1979 he has held academic, research and honorary positions in several universities in the UK. He visited more than 80 countries and worked with regional and international organizations as well as governments of industrialized, transition, emerging and developing economies across all continents. Degrees: Law School at the University of Athens; Doctorate in Economics at the University of London. Executive Education at Harvard University and the J.F. Kennedy School of Government.