As UN ‘Reviews’ Presence in Afghanistan, Afghans Face More Hunger and Poverty 

Days after the Taliban drove into Kabul on August 15, its representatives started making inquiries about the “location of assets” of the central bank of the nation, Da Afghanistan Bank (DAB), which are known to total about $9 billion. Meanwhile, the central bank in neighboring Uzbekistan, which has an almost equivalent population of approximately 34 million people compared to Afghanistan’s population of more than 39 million, has international reserves worth $35 billion. Afghanistan is a poor country, by comparison, and its resources have been devastated by war and occupation.

The DAB officials told the Taliban that the $9 billion are in the Federal Reserve in New York, which means that Afghanistan’s wealth is sitting in a bank in the United States. But before the Taliban could even try to access the money, the U.S. Treasury Department has already gone ahead and frozen the DAB assets and prevented its transfer into Taliban control.

The International Monetary Fund (IMF) had recently allocated $650 billion Special Drawing Rights (SDR) for disbursement around the world. When asked if Afghanistan would be able to access its share of the SDRs, an IMF spokesperson said in an email, “As is always the case, the IMF is guided by the views of the international community. There is currently a lack of clarity within the international community regarding recognition of a government in Afghanistan, as a consequence of which the country cannot access SDRs or other IMF resources.”

Financial bridges into Afghanistan, to tide the country over during the 20 years of war and devastation, have slowly collapsed. The IMF decided to withhold transfer of $370 million before the Taliban entered Kabul, and now commercial banks and Western Union have suspended money transfers into Afghanistan. Afghanistan’s currency, the Afghani, is in a state of free fall.

 

When Aid Vanishes

Over the last decade, Afghanistan’s formal economy struggled to stay afloat. Since the U.S.-NATO invasion of October 2001, Afghanistan’s government has relied on financial aid flows to support its economy. Due to these funds and strong agricultural growth, Afghanistan experienced an average annual growth rate of 9.4 percent between 2003 and 2012, according to the World Bank. These figures do not include two important facts: first, that large parts of Afghanistan were not in government control (including border posts where taxes are levied), and second, that the illicit drug (opium, heroin, and methamphetamine) trade is not counted in these figures. In 2019, the total income from the opium trade in Afghanistan was between $1.2 billion and $2.1 billion, according to the United Nations Office on Drugs and Crime (UNODC). “The gross income from opiates exceeded the value of the country’s officially recorded licit exports in 2019,” stated a February 2021 UNODC report.

During the past decade, aid flow into Afghanistan has collapsed “from around 100 percent of GDP in 2009 to 42.9 percent of GDP in 2020.” The official economic growth rate between 2015 and 2020 fell to 2.5 percent. The prospects for an increase in aid seemed dire in 2020. At the 2020 Afghanistan Conference, held in Geneva in November, the donors decided to provide annual disbursements rather than aid in four-year packages. This meant that the Afghan government would not be able to sufficiently plan their operations. Before the Taliban took Kabul, Afghanistan had begun to recede from the memory of those countries that had invaded it in 2001-2002.

 

A Country of Poverty

During the past 20 years, the United States government spent $2.26 trillion toward its war and occupation of Afghanistan. European countries spent nothing close to what the United States spent (Germany spent $19.3 billion by the end of 2018, of which $14.1 billion was to pay for the deployment of the German armed forces).

The money coming from all the donors into Afghanistan’s burgeoning aid economy had some impact on the social lives of the Afghans. Conversations with officials in Kabul over the years are sprinkled with data about increased access to schools and sanitation, improvements in the health of children and greater numbers of women in Afghanistan’s civil service. But it was always difficult to believe the numbers.

In 2016, Education Minister Assadullah Hanif Balkhi said that only 6 million Afghan children attended the country’s 17,000 schools, and not 11 million as reported earlier (41 percent of Afghanistan’s schools do not have buildings). As a result of the failure to provide schools, the Afghan Ministry of Education reports that the total literacy rate in the country was 43 percent in 2020, with 55 percent being the literacy rate for men and 29.8 percent being the literacy rate for women. Donors, aid agencies, and the central government officials produced a culture of inflating expectations to encourage optimism and the transfer of more funds. But little of it was true.

Meanwhile, it is shocking to note that there was barely any construction of infrastructure to advance basic needs during these 20 years. Afghanistan’s power company—Da Afghanistan Breshna Sherkat (DABS)—reports that only 35 percent of the population has access to electricity and that 70 percent of the power is imported at inflated rates.

Half of Afghanistan lives in poverty, 14 million Afghans are food insecure, and 2 million Afghan children are severely hungry. The roaring sound of hunger was combined—during these past 20 years—with the roaring sound of bombers. This is what the occupation looked like from the ground.

 

The Taliban’s Anti-Corruption Crusade

In a 2013 New York Times article, a U.S. official said, “The biggest source of corruption in Afghanistan was the United States.” Dollars flowed into the country in trunks to be doled out to politicians to buy their loyalty. Contracts to build a new Afghanistan were given freely to U.S. businessmen, many of whom charged fees that were higher than their expenditure inside Afghanistan.

Afghanistan’s President Ashraf Ghani, who fled into exile hours before the Taliban took control of Kabul, took office making a lot of noise about ending corruption. When he fled the country, press secretary of the Russian embassy in Kabul Nikita Ishchenko told RIA Novosti, his people drove four cars filled with money to the airfield. “They tried to stuff another part of the money into a helicopter, but not all of it fit. And some of the money was left lying on the tarmac,” according to a Reuters report. Corruption at the top spilled down to everyday life. Afghans reported paying bribes worth $2.25 billion in 2020—37 percent higher than in 2018.

Part of the reason for the Taliban’s rapid advance across Afghanistan over the course of the past decade lies in the failure of the U.S.-NATO-backed governments of both Hamid Karzai (2001-2014) and Ashraf Ghani (2014-2021) to improve the situation for Afghans. Surveys regularly found Afghans saying that they believed corruption levels were lower in Taliban areas; similarly, Afghans reported that the Taliban would run schools more effectively. Within Afghanistan, the Taliban portrayed themselves as more efficient and less corrupt administrators.

None of this should allow anyone to assume that the Taliban have become moderate. Their agenda regarding women is identical to what it was at its founding in 1994. In 1996, the Taliban drove into Kabul with the same argument: they would end the civil war between the mujahideen, and they would end corruption and inefficiency. The West had 20 years to advance the cause of social development in Afghanistan. Its failure opened the door for the return of the Taliban.

The United States has begun to cut off Afghanistan from its own money in U.S. banks and from financial networks. It will use these means to isolate the Taliban. Perhaps this is a means to force the Taliban into a national government with former members of the Karzai-Ghani governments. Otherwise, these tactics are plainly vindictive and will only backfire against the West.

This article was produced by Globetrotter.

Vijay Prashad is an Indian historian, editor and journalist. He is a writing fellow and chief correspondent at Globetrotter. He is the chief editor of LeftWord Books and the director of Tricontinental: Institute for Social Research. He is a senior non-resident fellow at Chongyang Institute for Financial Studies, Renmin University of China. He has written more than 20 books, including The Darker Nations and The Poorer Nations. His latest book is Washington Bullets, with an introduction by Evo Morales Ayma.

Editor’s Note: The following represents the writer’s analysis and was produced in partnership by Newsclick and Globetrotter.

The current crisis of spiraling gas prices in Europe, coupled with a cold snap in the region, highlights the fact that the transition to green energy in any part of the world is not going to be easy. The high gas prices in Europe also bring to the forefront the complexity involved in transitioning to clean energy sources: that energy is not simply about choosing the right technology, and that transitioning to green energy has economic and geopolitical dimensions that need to be taken into consideration as well.

Gas wars in Europe are very much a part of the larger geostrategic battle being waged by the United States using the North Atlantic Treaty Organization (NATO) and Ukraine. The problem the United States and the EU have is that shifting the EU’s energy dependence on Russia will have huge costs for the EU, which is being missed in the current standoff between Russia and NATO. A break with Russia at this point over Ukraine will have huge consequences for the EU’s attempt to transition to cleaner energy sources.

The European Union has made its problem of a green transition worse by choosing a completely market-based approach toward gas pricing. The blackouts witnessed by people in Texas in February 2021 as a result of freezing temperatures made it apparent that such market-driven policies fail during vagaries of weather, pushing gas prices to levels where the poor may have to simply turn off their heating. In winter, gas prices tend to skyrocket in the European Union, as they did in 2020 and again in 2021.

For India and its electricity grid, one lesson from this European experience is clear. Markets do not solve the problem of energy pricing, as they require planning, long-term investments and stability in pricing. The electricity sector will face disastrous consequences if it is handed over to private electricity companies, as is being proposed in India. This is what the move to separate wires from the electricity they carry aims to achieve through Indian Prime Minister Narendra Modi’s government’s proposed amendment to the existing Electricity Act of 2003.

In order to understand the issues related to transitioning toward green energy, it is important to take a closer look at the current gas supply-related issues being faced by the European Union. The EU has chosen gas as its choice of fuel for electricity production, as it goes off coal and nuclear while also investing heavily in wind and solar. The argument advanced in favor of this choice is that gas would provide the EU with a transitional fuel for its low carbon emission path, as gas tends to produce less emissions than coal. It is another matter that gas is at best a short-term solution, as it still emits half as much greenhouse gas as coal.

As I have written earlier, the problem with green energy is that it requires a much larger capacity addition to handle seasonal and daily fluctuations that planners have not accounted for while advocating for switching over to clean energy sources. During winter, days are shorter in higher latitudes, and the world therefore gets fewer hours of sunlight. This seasonal problem with solar energy has been compounded in Europe with low winds in 2021 reducing the electricity output of windmills.

The European Union has banked heavily on gas to meet its short- and medium-term goals of cutting down greenhouse emissions. Gas can be stored to meet short-term and seasonal needs, and gas production can even be increased easily from gas fields with requisite pumping capacity. All this, however, requires advance planning and investment in surplus capacity building to meet the requirements of daily or seasonal fluctuations.

Unfortunately, the EU is a strong believer that markets magically solve all problems. It has moved away from long-term price contracts for gas and toward spot and short-term contracts—unlike China, India and Japan, which all have long-term contracts indexed to their oil prices.

Why does the gas price affect the price of electricity in the EU? After all, natural gas accounts only for about 20 percent of the EU’s electricity generation. Unfortunately for the people in the EU region, not only the gas market but also the electricity market has been “liberalized” under the market reforms in the EU. The energy mix in the grid is determined by energy market auctions, in which private electricity producers bid their prices and the quantity they will supply to the electricity grid. These bids are accepted, in order from lowest to highest, until the next day’s predicted demand is fully met. The last bidder’s price then becomes the price for all producers. In the language of Milton Friedman’s followers—who were known as the Chicago Boys—this price offered by the last bidder is its “marginal price” discovered through the market auction of electricity and, therefore, is the “natural” price of electricity. For readers who might have followed the recently concluded elections in Chile, Augusto Pinochet—who was a military dictator in Chile from 1973 to 1990—introduced the Constitution of 1980 in Chile and had incorporated the above principle in a constitutional guarantee to the neoliberal reforms in the electricity sector in the country. Hopefully, the victory of the left in the presidential elections in Chile and the earlier referendum on rewriting the Chilean constitution will also address this issue. Interestingly, it was not the former UK Prime Minister Margaret Thatcher—as is commonly thought—who started the electricity “reforms” but Pinochet’s bloody regime in Chile.

At present in the EU, natural gas is the marginal producer, and that is why the price of gas also determines the price of electricity in Europe. This explains the almost 200 percent rise in electricity price in Europe in 2020. In 2021, according to an October 2021 report by the European Commission, “Gas prices are increasing globally, but more significantly in net importer regional markets like Asia and the EU. So far in 2021, prices tripled in [the] EU and more than doubled in Asia while only doubling in the U.S.” [emphasis added].

The coupling of the gas and the electricity markets by using the marginal price as the price of all producers means that if gas spot prices triple as has been seen recently, so will the electricity prices. No prizes for guessing who gets hit the hardest with such increases. Though there has been criticism from various quarters regarding the use of marginal price as the price of electricity for all suppliers irrespective of their respective costs, the neoliberal belief in the gods of the market has ruled supreme in Europe.

Russia has long-term contracts as well as short-term contracts to supply gas to EU countries. Putin has mocked the EU’s fascination with spot prices and gas prices and said that Russia is willing to supply more gas via long-term contracts to the region. Meanwhile, in October 2021, European Commission President Ursula von der Leyen said that Russia was not doing its part in helping Europe tide over the gas crisis, according to an article in the Economist. The article stated, however, that according to analysts, Russia’s “big continental customers have recently confirmed that it is meeting its contractual obligations,” adding that “[t]here is little hard evidence that Russia is a big factor in Europe’s current gas crisis.”

The question here is that the EU either believes in the efficiency of the markets or it doesn’t. The EU cannot argue markets are best when spot prices are low in summer, and lose that belief in winter, asking Russia to supply more in order to “control” the market price. And if markets indeed are best, why not help the market by expediting the regulatory clearances for the Nord Stream 2 pipeline, which will ship Russian gas to Germany?

This brings us to the knotty question of the EU and Russia. The current Ukraine crisis that is roiling the relationship between the EU and Russia is closely linked to gas as well. Pipelines from Russia through Ukraine and Poland, along with the undersea Nord Stream 1, currently supply the bulk of Russian gas to the EU. Russia also has additional capacity via the newly commissioned Nord Stream 2 to supply more gas to Europe if it receives the financial regulatory clearance.

There is little doubt that Nord Stream 2 is caught not simply in regulatory issues but also in the geopolitics of gas in Europe. The United States pressured Germany not to allow Nord Stream 2 to be commissioned, and also threatened to impose sanctions on companies involved with the pipeline project. Before stepping down as the chancellor of Germany in September 2021, Angela Merkel, however, resisted pressure from Washington to halt the work on the pipeline and forced the United States to concede to a “compromise deal.” The Ukraine crisis has created further pressure on Germany to postpone Nord Stream 2 even if it means worsening its twin crises of gas and electricity prices.

The net gainer in all of this is the United States, which will get the EU as a buyer for its more expensive fracking gas. Russia currently supplies about 40 percent of the EU’s gas. If this stalls, the United States, which supplies about 5 percent of the EU’s gas demand (according to 2020 figures), could be a big gainer. The United States’ interest in sanctioning Russian gas supply and not allowing the commissioning of Nord Stream 2 has as much to do with its support to Ukraine as seeing that Russia does not become too important to the EU.

Nord Stream 2 could help form a common pan-European market and a larger Eurasian consolidation. Just as it did in East and Southeast Asia, the United States has a vested interest in stopping trade following geography instead of politics. Interestingly, gas pipelines from the Soviet Union to Western Europe were built during the Cold War as geography and trade got priority over Cold War politics.

The United States wants to focus on NATO and the Indo-Pacific region, as its focus is on the oceans. In geographical terms, the oceans are not separate but a continuous body covering more than 70 percent of the world’s surface with three major islands: Eurasia, Africa and the Americas. (Although in the formulation of British geographer Halford Mackinder, the originator of the world island idea, Africa was seen as a part of Eurasia.) Eurasia alone is by far the bigger island, with 70 percent of the world’s population. That is why the United States does not want such a consolidation.

The world is passing through perhaps the greatest transition that human civilization has known in meeting the current challenges posed by climate change. To address these challenges, an energy transition is required that cannot be achieved through markets that prioritize immediate profits over long-term societal gains. If gas is indeed the transitional fuel, at least for Europe, it needs long-term policies of integrating its gas grid with gas fields, which have adequate storage. And Europe needs to stop playing games with its energy and the world’s climate future for the benefit of the United States.

For India, the lessons are clear. Markets do not work for infrastructure. Long-term planning with state leadership is what India needs to ensure supply of electricity to all Indians and ensure the country’s green transition—instead of dependence on electricity markets created artificially by a few regulators framing rules to favor the private monopoly of electricity companies.

Prabir Purkayastha is the founding editor of Newsclick.in, a digital media platform. He is an activist for science and the free software movement.

Editor’s Note: The following is the writer’s analysis.

The United States has been accusing Russia of preparing to invade Ukraine, while it continues to build a U.S. military presence in the Black Sea. Warmongering and fearmongering rhetoric began to dominate the public discourse, as media, politicians and military experts have been warning of an “imminent” Russian invasion that could have grave consequences for global peace and security. But does the Kremlin really intend to fight a war against the NATO-backed eastern European country?

According to reports, Moscow has deployed thousands of troops and military equipment to western Russia’s regions that border Ukraine. At the same time, U.S. navy ships Mount Whitney and Arleigh Burke recently entered the Black Sea, while the 9th Expeditionary Bomb Squadron’s B-1B Lancers soared over eastern Europe during a NATO fighter integration mission through the region.

Moreover, a Russian Aeroflot airliner flying from Tel Aviv to Moscow was forced to change altitude over the Black Sea because a NATO CL-600 reconnaissance plane crossed its designated flight path. These actions would be the equivalent of Russian naval ships and fighter jets entering the Gulf of Mexico. 

As usual, though, the Kremlin’s reaction was weak.

“Just because an air incident over the Black Sea’s international waters has been prevented, this does not mean the U.S. and NATO can further put lives at risk with impunity,” said Russian Ministry of Foreign Affairs spokeswoman Maria Zakharova said.

❗️ Maria #Zakharova: @usairforce actions have posed risks to civil aviation.

Just because an air incident over the Black Sea’s Int waters has been prevented, this does not mean the US and NATO can further put people’s lives at #risk with impunity.

🔗 https://t.co/mHgrPfSV9f pic.twitter.com/wKBBlPViVk

— MFA Russia 🇷🇺 (@mfa_russia) December 5, 2021

However, such a statement is unlikely to provoke fear in NATO’s headquarters. 

Crossing Russia’s Red Line

Russian President Vladimir Putin has pointed out the deployment of certain offensive missile capabilities on Ukrainian soil is Moscow’s “red line.”

Yet, the United States has demonstrated it does not take Russia’s threats and boundaries seriously.  

“I don’t accept anybody’s red lines,” U.S. President Joe Biden said on December 4. 

The two leaders then held a “virtual summit” on December 7. Shortly after their discussion, the U.S. Congress removed sanctions against Nord Stream 2, Russian sovereign debt and 35 Russians from the draft defense budget. Such actions demonstrate the two leaders have reached certain deals not only on Ukraine, but on energy issues as well. However, tensions between Moscow and Washington, which seem to be an integral part of a new Cold War era, are expected to remain high for the foreseeable future.

What’s the Possibility of War?

Ahead of the talks between Putin and Biden, the Russian leader clarified his call for new security guarantees.

Putin said Russia would seek “concrete agreements that would rule out any further eastward expansion of NATO and the deployment of weapons systems posing a threat to Russia.” Even if the United States provides such guarantees—which does not seem very probable given that such a move would be interpreted as a concession to Putin and a sign of weakness—it is not probable Washington would implement the deal.

U.S. officials already have declined to rule out dispatching U.S. forces to eastern Europe, although at this point it is highly uncertain if the U.S. troops could be deployed to Ukraine. Ukraine’s Defense Minister Oleksii Reznikov has called on the United States, Canada and the United Kingdom to dispatch their military personnel to the former Soviet republic, even though the eastern European nation is not part of NATO.

“Those troops should be stationed in places where Russia can see them,” Reznikov stressed. Meanwhile, Denis Pushilin, leader of the Russia-backed self-proclaimed Donetsk People’s Republic that declared independence from Ukraine in 2014, said he would request Russia’s assistance in case the situation in the region escalates.

Indeed, a potential deployment of NATO troops in Ukraine would prevent a Russian intervention, given Moscow would be unlikely to confront NATO troops. Russia’s policy makers are quite aware any incursion into Ukrainian territory would result in severe anti-Russia sanctions, which could potentially include actions against Russian oligarchs and energy producers, as well as disconnect Russia from the SWIFT international payment system used by banks around the world. On the other hand, given the United States has the upper hand vis-à-vis Moscow, it is entirely possible some sanctions will be imposed, even if Russia does not invade Ukraine. The West also can deploy troops to Ukraine to prevent what they would call a potential Russian invasion, and there is very little the Kremlin can do about it.

Hypothetically, Russia could recognize the self-proclaimed Donetsk People’s Republic and Lugansk People’s Republic, and build military bases on their territories, but such a move is unlikely to have an impact on Ukraine’s goal to restore sovereignty over the coal-rich region. From the legal perspective, the Donbass, as well as Crimea, is part of Ukraine, and no foreign actors would condemn Ukrainian attempts to return the regions under its jurisdiction. Still, unless its gets the green light from Washington, Kiev is unlikely to launch any large-scale military actions against Russia, or Russia-backed forces. Moscow, for its part, is expected to continue preserving the status quo. Supporters of the notion that Russia is keen on invading Ukraine fail to explain what the Kremlin’s motive for such an action would be.

Energy Deals

However, Moscow achieved its goals in 2014 when it incorporated Crimea, which has significant offshore gas and oil reserves into the Russian Federation. That year Russia tacitly supported the creation of the Donbass republics that reportedly have 34.4 billion tons of coal reserves. Since Moscow, through its proxies, already controls the Donbass coal production and export, capturing the other energy-poor regions of Ukraine would represent nothing but an additional cost for Russia.

Nonetheless, Western and Ukrainian media continue to spread rumors of an “imminent” Russian invasion. Ukrainian military officials claim Russia could start its campaign against the former Soviet republic in February—in the middle of winter when troops are up to their knees in snow. Meanwhile, Oleksiy Arestovych, the head of the Office of the Ukrainian President, recently suggested his country could “fire missiles at the Russian Federation, in case the Kremlin starts a full-scale war against Ukraine.”

Belarusian President Alexander Lukashenko, on the other hand, openly said in case of a potential conflict between Russia and Ukraine, Minsk will support its ally, Moscow. At the same time, Belarus announced joint military exercises with Russia along its border with Ukraine. Plus, Lukashenko promised to visit Crimea soon, which would be Belarus’ de facto recognition of the Kremlin’s incorporation of Crimea into the Russian Federation.

His visit, whenever it comes, undoubtedly will have a serious impact on relations between Belarus and Ukraine. Kiev fears Belarus could take part in what they perceive would be a Russian invasion of Ukraine, and the country’s authorities have taken Lukashenko’s threat very seriously. According to reports, citizens of Ukraine already started preparing to defend the Ukrainian capital against an invasion, whether it may come from Russia or Belarus.

One thing is for sure: Unless Kiev starts a massive military campaign in the Donbass, or engages in a serious provocation against Russia, the Kremlin is unlikely to start a war against Ukraine. And even if a war breaks out, Russia’s actions are expected to be very calculated, limited and carefully coordinated with its Western partners, as part of moves toward a “stable and more predictable relationship” between Moscow and Washington.

Nikola Mikovic is a Serbia-based contributor to CGTN, Global Comment, Byline Times, Informed Comment, and World Geostrategic Insights, among other publications. He is a geopolitical analyst for KJ Reports and Enquire.