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Taliban Face Financial Crisis Without Access To Foreign Reserves

The new Taliban rulers of Afghanistan will be facing a financial crisis very soon, with its finances being in shambles and Western donors cutting off or threatening to cut payments thereby reducing foreign reserve.

The conservative Islamist group has been independent of outside financial supporters for some time now, but in order to govern themselves, they will need more than $1.6bn (£1.2).

Afghanistan’s central bank governor revealed that the country has $9bn in reserves abroad, but not inside its borders after President Biden ordered the freezing of Afghan government money held by US banks on Sunday leading to financial crisis.

On Wednesday, Ajmal Ahmady tweeted that the majority of $7 billion is being held in US Federal Reserve bonds. He also said “assets and gold” making up a substantial amount of it as well–though he did not say how much.

The country’s dollar holdings have been close to zero since its cash shipment was delayed during the Taliban offensive last week.”

He wrote – “The next shipment never arrived,”. “It’s like they knew what was going to happen all along.”

The drop in US dollars has caused many Afghans, including Ahmady himself, to worry about whether prices for commodities like wheat flour would rise prohibitively high due to lack of access.

Indeed, the Taliban have had to develop into a governing power after winning militarily. “It is not easy”, he said of this transition period for Afghanistan’s new leaders.

The Taliban have been under heavy sanctions for many years, but they’ve found an ingenious way to profit off of the opium trade. Instead of harvesting poppy twice a year, as was previously preferred by cultivators in Afghanistan’s war-torn region.

New strains can be harvested three times annually. This has allowed them to increase their supply dramatically and brought millions upon millions of dollars into their coffers every year.

The report by Nato paints a troubling picture of the Taliban’s financial situation. The terror*The organization is now self-sufficient and doesn’t need any help from other countries or governments to finance its operation, which means that it could be harder for US troops in Afghanistan to maintain their military position against them if they don’t receive more funding than what Trump has offered so far.

A key factor in predicting the Taliban’s recent successes has been their ability to fund a military campaign with little money. To succeed, however, they will need more than just funds and are beginning to realize that an emollient face could be necessary for external support in order to meet financial crisis of afghanistan.

John Sopko spoke about how the Taliban has come to understand Afghanistan’s need for foreign assistance. “Even they know that there is a military stalemate and only one country can break it,” he said at an event this year, as reported by Vocativ.

In a recent press conference in Kabul, the Taliban promised to halt the export of narc*tics from Afghanistan and they claimed that this would lead them to do away with opium production.

UN data seems to indicate otherwise as it estimates 84% of global opium production happened inside Afghan territory controlled by either the government or rebel forces.

The numbers are alarming because most poppy farming takes place under Taliban control where there is an estimated 10% tax on drug trafficking profits for those who farm crops such as poppies legally but illegally produce heroin without paying taxes at risk of being executed if caught.

For four years, Afghanistan has had some of the highest levels of opium production in the world. Last year alone was no exception as cultivation soared to 37%.

In addition to taxing residents, the Taliban is also able to generate funds by mining Afghanistan’s natural resources. In accordance with reports prepared for UN and US Defense Intelligence Agency officials, another main component of Taliban funding has been its taxation on mineral exports which brings in almost a third of their income.

To date, the Taliban has been a major beneficiary of donations from wealthy individuals in the Gulf. In addition to this donation stream, they have also received support from Iran.

The Taliban has long contested the Afghan government’s attempts to provide security and stability for their people, but now they find themselves in an increasingly precarious position.

Germany had been due to fund a huge aid package this year; however, that support is being called into question as Berlin halts development funding altogether and other donors threaten similar action.

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