On the streets of Kabul after the Taliban takeover, Afghans were running from one empty ATM to the next. Prices soared, the U.S. froze $9.5 billion in assets, and the hard-line group appointed an obscure official to run the central bank to address “the problems of people.”
Very little is known about Haji Mohammad Idris, the new head of Da Afghanistan Bank (DAB).
Idris’ appointment reflects the shadowy yet sophisticated financial system that the extremist Islamist group has been operating for over two decades.
Even in one of the world’s poorest countries—where nearly half of the population lives below the poverty line—the Taliban are infamously wealthy. Their resources were a key factor that helped them gain control of Afghanistan at lightning speed, according to experts.
“There’s a notion that the Taliban are simple-minded jihadis who live in caves and operate from there,” Gretchen Peters from the Center on Illicit Networks and Transnational Organized Crime (CINTOC), told VICE World News. “That’s complete nonsense.”
One of the clearest pictures of the group’s financial assets was laid out in a confidential NATO-commissioned report that leaked last year, and was obtained and reviewed by VICE World News. Based on interviews with sources in the Taliban and the previous government, the report estimated Taliban earnings of $1.6 billion last year. The ultimate goal of the group, according to the report’s authors, is to become “an independent political and military entity” that can survive without the help of its supporters—governments or individuals—outside of Afghanistan.
“There’s a notion that the Taliban are simple-minded jihadis who live in caves and operate from there. That’s complete nonsense,” said Gretchen Peters from the Center on Illicit Networks and Transnational Organized Crime.
Because the Taliban don’t publish anything like quarterly financial reports, the sources of all this wealth are difficult to clearly pin down, but multiple news reports suggest a significant chunk comes from black and grey markets involving illegal mining, the drugs trade, and real estate.
Surprisingly, a significant portion of their income—15 percent, which is more than $240 million—comes from generous “donations.”
Some of these donations come from wealthy sponsors in Pakistan and the Middle East and a “network of individuals, companies, mosques and madrasas known to provide finances and money-laundering on behalf of the Taliban,” according to a 2019 United Nations Security Council (UN) report. Many of these charities are listed on the U.S. Treasury Department’s list of groups that fund terrorism, including the Taliban.
“The Gulf region also remains important to the Taliban as a location where drug revenue can be laundered through legal structures belonging to local Afghan expatriates,” the UN said, adding that these networks brought the Taliban into a “systematic engagement and partnership with Afghan organised criminals.”
Private individuals have been reported to be the largest contributors. One of the wives of Taliban leader Sirajuddin Haqqani living in Saudi Arabia sends an annual donation of $60 million, according to the UN. Haqqani, the deputy leader of the Haqqani Network—one of the most lethal insurgent factions within the Taliban known for conducting high-profile attacks on western allies in Afghanistan— was placed in charge of Kabul’s security last week.
Some of Taliban’s donations come from wealthy sponsors in Pakistan and the Middle East, and a “network of individuals, companies, mosques and madrasas known to provide finances and money-laundering on behalf of the Taliban,” according to a 2019 UN Security Council report.
The Taliban’s first regime—characterised by banned entertainment, harsh punishments and restricted access to the internet—was once labelled “the dark ages”. But U.S. intelligence reports showed that the group was actually doing pretty well for itself.
“For years, Taliban’s commanders were living in expensive compounds in Pakistan, driving around in Land Rovers, and sending their kids to private schools,” said Peters, adding that the flawed perception of their supposedly austere lifestyles meant “nobody bothered to follow the money.”
UN Security Council reports have highlighted a shadowy network of the Taliban’s dealings, especially its funding from “wealth” international donors. Photo: Muhammed Semih Ugurlu/Anadolu Agency via Getty Images
The NATO report showed that in 2020, even before the Taliban officially took over Afghanistan, illegal mining raked in 29 percent of the Taliban’s income—or $464 million—while the narcotics trade brought in $416 million, and exports, zakat (wealth taxes) and real estate brought in $480 million.
Vanda Felbab-Brown, an expert on the Taliban’s finances with the Brookings Institution, told VICE World News that the money, particularly from the Middle East, has been difficult to follow.
“The funding has been significant for the Taliban insurgents,” she said. “It determines the future of particular factions within the Taliban, and helps with internal bargaining. The U.S., on the other hand, has tried to counter it through financial intelligence efforts. They succeeded in some cases, but couldn’t stop them entirely.”
Peters from CINTOC said that she’s found evidence that the Taliban laundered money as far away as the U.S. and the UK.
Previous UN reports found the age-old “hawala” tradition—a system of transferring money in the Arab countries and South Asia through a middleman—is widely used by the Taliban. These systems are weakly monitored by the Afghanistan government. The UN has recommended that more information is required on Taliban bank accounts, hawalas and financial facilitators.
“In a war effort that was defined more by its strategic failures than successes, one of its greatest failures was to understand how the Taliban is making the money, how they’re hiding it, and comprehensively using it,” said Peters.
There’s been some progress. The Afghan Threat Finance Cell, which falls under the U.S. Treasury and the Department of Defense, was set up in 2008 to monitor Taliban financing. It unearthed several cases of high-level corruption, including links between the Taliban and the previous Afghan government.
Despite the efforts, Peters said that the monitoring was insufficient.
“In a war effort that has been defined more by its strategic failures than successes, one of its greatest failures has been to understand how the Taliban is making the money, how they’re hiding it, and comprehensively using it,” she said. “It’s been a complete and abject failure by the U.S. intelligence and their allies.”
Haroun Mir, the director of Afghanistan’s Center of Research and Policy Studies, told NPR that he once asked Bahrain’s foreign minister what can be done to stop money flow from the Gulf countries to the Taliban. The minister reportedly said that there was “no mechanism in the region to monitor the transfer of charity funding.”
The bad news for the Taliban is that their finances work well for an insurgent group, but not for a governing body. Analysts say their “sophisticated” methods of money management that fuelled them so far might not be enough now. Felbab-Brown said that individual donations work fine to run an insurgency, but will not be enough to run a state.
The Taliban is known to run an intricate system in which they collect zakat or wealth tax from everything, including shipments and trucks of foreign aid into the country. Right now, at the Kabul airport, some news outlets are reporting that the Taliban officials are extracting money from people trying to get on flights.
“The Taliban has limited experience with the international financial systems,” said Felbab-Brown. “They have some experience with hiding money in bank accounts, and some evasion of the international financial system. But a lot of their dealings are in hard cash. They don’t have experience with Afghanistan’s macroeconomic policies, or the experience to run the central bank.”
On Wednesday, the former head of the Central Bank who escaped from Kabul last week as the Taliban closed in, wrote in a column that no amount of internal funding can beat international aid that has kept Afghanistan running for decades.
“The Taliban has some experience with evading international financial system. But they don’t have experience with Afghanistan’s macroeconomic policies, or how to run the central bank,” said Vanda Felbab-Brown from Brooking’s Institution.
“Even if such investments were to occur, they cannot replace the combined financial firepower of the main bilateral and multilateral donor agencies,” he wrote. “The Taliban must negotiate with such partners if they expect to be able to access international reserves or receive donor funding. That will require adherence to global standards of governance and education for women, among other issues.”
Analysts fear that as the Afghan economy deteriorates, the people of Afghanistan will suffer the most. The G7 nations are currently mulling a decision to recognise the Taliban, or sanction them. Legitimacy, said U.S. President Joe Biden on Sunday, would mean “additional help in terms of economic assistance, trade, and a whole range of things.”
Felbab-Brown said as Afghanistan’s economy falters, a blanket sanction might not hurt the Taliban as much as the people of Afghanistan. But tying aid to the preservation of human rights was a “fantasy. It’s not going to happen.” She recommended that instead, the aid needs to be used conditionally instead to prevent the worst restrictions on human rights.
“Instead of removing all sanctions at once, only a part of the IMF or some of the World Bank money is released for a specific desired policy from the Taliban,” she explained.
“The Taliban may survive the pressures and isolation. But in a country already ravaged by poverty and malnourishment, the sanctions will hurt the people.”
Follow Pallavi Pundir on Twitter.