The Afghani—Afghanistan’s currency—is one of the best performing currencies in the world today. Currently, one US dollar fetches about 75 Afghanis. The Pakistani rupee, in comparison, is faring much worse despite the drumbeat about improvement in the dollar-rupee exchange rate. Today, for one US dollar, one can get 275 rupees.
True, this has come down from 320 rupees to a dollar in recent weeks but it is still very high. Lost in this euphoria is the fact that the rupee is being propped-up artificially. This is borne out by the fact that US dollars are not available in the market. So, the rupee’s rise is quite artificial.
Back to the Afghani. There was a time when a Pakistani rupee was worth 8 or more Afghanis. No more, as we can see from the exchange rate. What have the Taliban rulers done to achieve this feat?
It is certainly not because of any smart financial whiz kids from the World Bank or the International Monetary Fund (IMF) advising the Taliban. Their “expert” advice is often a recipe for disaster. Here is what the Taliban have done.
In early September they gave a two-month notice that within that period, all transactions and trade in the country will be done exclusively in the local currency: the Afghani. Prior to that, US dollars as well as the Pakistani rupee were freely used for trade and could also be converted in the open market. The Taliban put an end to this practice. Foreign currency cannot be bought or purchased from local money changers, as was previously the case. Further, the Taliban have enforced a strict policy of prohibiting visitors from possessing more US$100. Those leaving the country cannot take out more than $5,000.
This has led to a phenomenal rise in the value of the Afghani. Since the Americans have frozen nearly $10 billion in Afghanistan’s foreign exchange reserves and the Afghan central bank is cut off from normal transactions with international banks, any foreign currency coming into the country has to be in cash. Thus, every month the UN as part of its humanitarian program brings in $40-$50 million in cash. That is promptly stored by the Taliban and they print the equivalent amount in Afghanis. This has resulted in the local currency not only being stabilized but has led to its rise vis-à-vis other currencies.
There are other developments in Afghanistan that portend well for the country’s future. While a number of countries are operating their missions in the country, China has become the first country to send its ambassador to Kabul. Can others be far behind?
China has also entered into mining exploration agreements. The Chinese are also building a road through the narrow Wakhan Corridor as part of its Road and Belt Initiative (BRI) linking the two countries. Beijing embarked on this project after the Pakistani generals sabotaged the China-Pakistan Economic Corridor (CPEC) in which China had already invested nearly $28 billion. The men in khaki cannot imagine life without subservience to Uncle Sam.
The Taliban rulers have also scored other diplomatic victories. While no country has extended formal recognition, that has not prevented them from dealing with the Taliban.
For the first time, a Taliban delegation was invited to the Moscow Format talks on September 29 and 30. Held in Kazan, the capital of Tatarstan in Russia’s Muslim-majority region, the gathering brought together all 10 members of the Moscow Format. The envoys of three Arab countries—Qatar, Saudi Arabia, and the United Arab Emirates (UAE)—as well as Turkey attended as guests.
Afghanistan’s acting Foreign Minister, Amir Khan Muttaqi who led the Taliban government delegation, was given an opportunity to address participants at the Moscow Format. He urged them to follow China’s example and send their ambassadors to Kabul.
Not surprisingly, this has reinforced speculation that the Taliban-led government may be recognized by at least some, if not all countries of the world, especially members of the Moscow Format.
There are other developments that portend well for Afghanistan’s future. One is complete safety and security for the people. Gone are the days when warlords used to terrorize people and extort money from them. Second, they have virtually wiped-out poppy cultivation in the country. During America’s 20-year occupation, Afghanistan was the biggest producer of heroin in the world supplying some 90% of global demand. The CIA was deeply involved in this illicit trade.
Interestingly, the Americans have sent word to the Taliban to allow some poppy cultivation because heroin prices have skyrocketed due to a lack of supply. Now isn’t that an interesting development? For many decades, the Americans and other western officials accused the Taliban of making money from the drugs trade. We now know who the real drug warlords are!
At the end of the Moscow Format, the Kazan Declaration was issued. It warned against US re-entry into Afghanistan and “advocated for Afghanistan as an independent, united and peaceful state.” It is not difficult to surmise who would facilitate America’s re-entry into Afghanistan: Pakistani generals. They do not seem to have learnt any lessons from their past follies.
Participants at the Moscow Format “… underscored the unacceptability of deployment of military infrastructure facilities of third countries in Afghanistan and its neighboring states under any pretext.” This point was further emphasized by Russian Foreign Minister Sergei Lavrov who mentioned the “increasing involvement of extra-regional actors in Afghanistan,” in a clear reference to American designs in Afghanistan.
The top Russian diplomat stressed US and its NATO allies must “fully recognise their responsibility for the lamentable results of their 20-year military presence in Afghanistan, which has culminated in a complete fiasco.” Lavrov demanded that the US and NATO take full responsibility for rebuilding Afghanistan that they had destroyed over a 20-year period.