“API Geoeconomic Briefing” is a weekly analysis of significant geopolitical and geoeconomic developments that precede the post-pandemic world. The briefing is written by experts at Asia Pacific Initiative (API) and includes an assessment of burgeoning trends in international politics and economics and the possible impact on Japan’s national interests and strategic response. (Editor-in-chief: Dr. HOSOYA Yuichi, Research Director, API; Professor, Faculty of Law, Keio University; Visiting Fellow, Downing College, University of Cambridge)
This article was posted to the Japan Times on October 12, 2021:
API Geoeconomic Briefing
October 12, 2021
How Japan and the U.S. should approach Taliban-ruled Afghanistan
Senior Research Fellow, Asia Pacific Initaitive (API);
Professor, Graduate School of Public Policy, The University of Tokyo
Twenty years have passed since the United States began its war on terror following the terrorist attacks on U.S. soil on Sept. 11, 2001.
While U.S. forces managed to kill Osama bin Laden, the mastermind behind the attacks, they ended the two-decade conflict by pulling out of Afghanistan without having been able to build a democratic state in the country and eliminate the Taliban.
To onlookers, the pullout from Afghanistan gave the impression that the U.S. was defeated and that it had abandoned Afghanistan.
But was that the only option the U.S. could have taken? The pullout raised that question along with a number of others. How will the U.S. engage with a country controlled by the Taliban, the enemy of its war on terrorism? And what geoeconomic tools do the U.S. and Japan have to use in respect of the Taliban administration following the withdrawal of American troops?
Perhaps the greatest advantage Washington has against Taliban-controlled Kabul is its ability to freeze assets held by the Afghan government.
Ajmal Ahmady, former governor of the country’s central bank, Da Afghanistan Bank, who fled the country shortly after the government’s collapse, tweeted in August that the central bank had reserves of approximately $9 billion, the majority of which are in the U.S. In fact, the bank had been getting physical shipments of cash every few weeks.
Following the collapse of the Afghan government in August, however, the U.S. froze assets belonging to the Afghan central bank and stopped shipments of cash to the nation.
The International Monetary Fund (IMF) also halted shipments of more than $370 million to Afghanistan and decided to block the country’s access to the IMF’s reserves in Special Drawing Rights (SDR) assets. The World Bank also suspended funding for projects in the nation.
The Taliban are believed to have been receiving financial aid from some countries that support them in an inconspicuous way, as well as gaining funds from the drugs trade. But it would be difficult for them to run the entire country only with these sources of revenue.
Considering the corruption-infested Afghan government has been governing the nation by utilizing money sent from the U.S. to tame the military cliques that control each region, it would be particularly challenging for the Taliban to maintain stable governance without the funds at hand.
As banks become dysfunctional and citizens’ lives continue to be impacted, there will be growing discontent among people over Taliban rule.
Unless the Taliban strengthen control by force or obtain foreign aid in some form, the situation will be further destabilized, raising the risk of another civil war breaking out across the country.
Although the Taliban is banning protests and demonstrations, Afghan women have already taken to the streets to rally against the regime’s curbs on their rights. There are reports that Taliban soldiers fired warning shots to disperse the crowd at one protest march.
So far, the group is trying to gain international recognition by observing agreements with the U.S. and vowing to respect women’s rights within the norms of Islamic law.
Today’s Taliban differs significantly from that of 20 years ago, having many experienced negotiators in leadership positions and long-standing links with supporters in countries like Pakistan and Qatar.
They are likely well aware of the fact that unless they are accepted by the global community, they won’t be able to govern the country with stability.
However, we should also keep in mind that financial sanctions will inevitably make the Afghan people, who are already struggling under the Taliban rule, suffer even more severe economic hardships.
The U.S. will have to make the difficult judgment of whether to continue pressuring the Taliban with sanctions or to urge them through negotiations to ensure the livelihood of the Afghan people.
Rich in minerals
Another issue to focus on from a geoeconomic perspective is Afghanistan’s deposits of mineral resources.
Even before the start of the war in 2001, it was widely known that the country had abundant reserves of minerals estimated at $1 trillion, including rare metals such as lithium, which is used in rechargeable batteries.
However, during the two-decade war, no records of major extraction or exports of minerals have been found in the country.
This is likely because Afghanistan is a landlocked country and lacks the infrastructure to transport and export minerals even if it gains the ability to extract them.
This lack of transportation infrastructure had been an issue also for the U.S. in fighting the war in Afghanistan.
It was difficult for the U.S. to enter Afghanistan from the south via Iran, and although the U.S. had formed an unstable alliance with Pakistan, there were risks in using that country as a transportation route.
As a result, the U.S. sought the cooperation of countries in Central Asia, such as Uzbekistan, to get supplies to Afghanistan.
Afghanistan also crucially lacks infrastructure and human resources for mine development.
Rare-earth element mineral deposits are scattered all over Afghanistan, but can’t be discovered through random extractions.
Massive investment is needed to build infrastructure and secure a stable environment to develop mines, but that is practically impossible in a politically unstable country with a constant risk of internal conflict.
Therefore, mineral resources in the country have been left untapped, with no motives or incentives to develop mines, although their potential has been discussed repeatedly.
If the Taliban manages to rule the country with stability, however, there is a possibility for some countries to show interest in developing Afghanistan’s mining sector.
China and Russia are among those countries since they are located close to the country, which lowers the hurdles concerning transportation. We should not rule out the chances of China and Russia taking an interest in Afghanistan for geoeconomic intentions.
It has been said that China has already made proposals to the Taliban to develop infrastructure in the country. China also held talks last month with Russia, Iran and Pakistan on the issue of Afghanistan.
Until now, Japanese aid in Afghanistan has been concentrated on assisting the democratization of the country through infrastructure development and assisting rural villages, as well as supporting disarmament, demobilization and reintegration.
Japan has so far provided civilian assistance of some $5.8 billion, which has been accepted favorably as support different from the military assistance of the U.S. and NATO members.
Japan’s assistance accomplished great achievements thanks to the efforts of nonprofit organizations, such as the irrigation projects led by Tetsu Nakamura of the Peshawar-kai, which brought significant benefits to the people of Afghanistan.
But with the withdrawal of the U.S., efforts aimed at making Afghanistan an independent state free from the control of the Taliban will cease halfway through. Still, the mission of building a democratic Afghanistan should continue.
But in what way should Japan be involved in the process from now on?
One way is to support the asset-freezing measures of the U.S. and IMF and offer assistance to the Taliban-led administration only under certain conditions, such as the Taliban recognizing women’s rights and education for women.
Meanwhile, Afghanistan is facing a serious food crisis due to the global rise in commodity prices and the deteriorating economy following the Taliban’s takeover.
Japan can offer food supplies in cooperation with Central Asian countries, Iran and Pakistan while seeking the right distance with the Taliban administration from a humanitarian standpoint.
The pullout of American troops has caused a shift in the power balance in the middle of the Eurasian landmass. And the Taliban is clearly trying to eliminate foreign influence over the country by getting rid of U.S. and NATO troops.
This will be an opportunity for Japan, which has been involved in Afghanistan as a civilian power without military intervention, to continue engaging with the country through assistance.
Disclaimer: The views expressed in this API Geoeconomic Briefing do not necessarily reflect those of the API, the API Institute of Geoeconomic Studies or any other organizations to which the author belongs.