When the Taliban took over Afghanistan in August 2021, the country was cut off from the outside world overnight. The banking and financial systems were paralyzed and foreign aid, the main source of subsistence for the government and the economy ceased to flow. The implications were noticeable right away. Poverty, unemployment, and food shortage rose to unprecedented highs.
After makeshift policy interventions, the UN began shipping money to the cash-strapped economy that would bypass restrictions around international financial transactions. While the humanitarian and economic crisis has only deepened, the UN has sent nearly $3 billion cash to Afghanistan, according to a new report by the US Special Inspector General for Afghanistan Reconstruction (SIGAR).
Last year in March, Michael McCaul, the Republican Chairman of the U.S. House Foreign Affairs Committee, wrote a letter to SIGAR, asking for an examination and report on specific areas concerning ongoing US activities in Afghanistan. It included the delivery, use, and oversight of U.S. funds allocated in response to Afghanistan’s humanitarian crisis.
The new SIGAR report, which was developed in response to that request, shows that the U.S. remains the largest contributor to the humanitarian fund, supplying $2.6 billion out of the total $2.9 billion in funding for the UN and other non-governmental organizations (NGOs) operating in Afghanistan.
“More than $1.7 billion of that funding came from [the Department of] State and the U.S. Agency for International Development (USAID) to support humanitarian activities implemented by PIOs and NGOs, including the UN, the World Bank, and the Colombo Plan.”
The UN is the only organization involved in buying and transporting cash for humanitarian assistance in Afghanistan, an initiative that commenced in December 2021. Since then, the UN has conducted at least 80 purchases of cash for transportation to Afghanistan.
In September 2021, the U.S. Treasury’s Office of Foreign Assets Control (OFAC) issued a series of licenses authorizing the delivery of assistance to Afghanistan. Following that, the U.S. State Department and USAID resumed several programs to address the essential needs of the people of Afghanistan, encompassing key sectors such as health, education, agriculture, and food security. In addition to humanitarian initiatives, these programs funded civil society, with a particular focus on women, girls, and human rights protections.
Previously, SIGAR reported that these programs are executed through non-governmental organizations (NGOs), international organizations, and other third-party entities to mitigate interference from the Taliban.
According to the SIGAR report, when the cash shipment arrives in Kabul, it is deposited in a private bank, the Afghanistan International Bank (AIB) that the UN and its partners use.
“While many of the UN-partnered PIOs and NGOs receiving money from UN cash shipments hold accounts at the same bank as the UN, cash is also transferred to other Afghan banks where PIOs and NGOs maintain accounts.”
In its recent report, the United Nations Office for the Coordination of Humanitarian Affairs (OCHA) documented 999 instances of Taliban interference in humanitarian activities throughout 2023, with 147 incidents recorded in October alone. The report details the Taliban’s methods of disruption, which include arresting aid workers, restricting the movement of personnel and goods, imposing limitations on female staff, and obstructing administrative procedures.
According to the report, as a direct consequence of the Taliban’s interventions, humanitarian organizations were forced to suspend 659 programs last year.
The recent SIGAR report also confirms that the Taliban benefits from cash shipments. When there is a need to convert funds into the local currency, private banks frequently obtain the local currency from the Taliban-controlled Central Bank of Afghanistan, resulting in a significant accumulation of US dollars by the Taliban.
However, Concerns over the Taliban’s role in distributing humanitarian aid and benefiting from it have been raised before, including by SIGAR. In April 2023, the head of SIGAR, John Sopko, told the US House Foreign Affairs Committee: “I cannot assure this committee or the American taxpayer we are not currently funding the Taliban.” Sopko further noted during the House Oversight Committee hearing, “Nor can I assure you the Taliban are not diverting the money we are sending from the intended recipients.”
