Afghanistan’s Economic Meltdown

The Dispatch    August 16, 2022
Women and their babies at a Doctors Without Borders nutrition center in Herat, Afghanistan. (Photo by Hector Retamal / AFP via Getty Images.)

In the year since the United States withdrew its military from Afghanistan, the country’s economy has gone into free fall.

It’s easy to find reports of individuals suffering—a man selling most of his possessions to feed his family; a former German teacher waiting in a food line; people selling organs or their children to survive. It’s also easy to find staggering statistics—the United Nations estimates 1 million children face severe malnourishment and 25 million Afghans are in poverty, while more than half the population relies on humanitarian aid for survival.

There are myriad reasons for the collapse. Many of the country’s most educated citizens fled during the withdrawal, while the industry that had sprung up around the American war effort—security, support staff—folded. The war in Ukraine has driven up food and fuel prices, exacerbating already grueling inflation—in June, the World Bank reported, Afghanistan saw 50 percent year-over-year inflation for basic household goods, up 10 percentage points from May. And the International Rescue Committee aid group estimates the Taliban’s decision to restrict women’s access to work reduced Afghanistan’s gross domestic product by about 5 percent.

But perhaps the biggest reason for Afghanistan’s economic disintegration is that the world slammed the door on the country’s economy when the U.S. left. Prior to the U.S. withdrawal, as much as 80 percent of the Afghan government’s spending came from foreign assistance. But no nation recognizes the Taliban as Afghanistan’s government (though several have established diplomatic relations), and U.S. sanctions drove out public and private investment.