How the Taliban’s economic engine fueled it to power

The Taliban’s romp across Afghanistan, resulting in the decisive capture of the country’s provincial provinces and finally the capital Kabul on Sunday, might have stunned some observers – but was a campaign fueled by extensive fundraising that bankrolled the insurgent group all the way back to power.

While hard to pinpoint an exact figure, the group reportedly generated $1.6 billion at the end of March 2020 according to a leaked NATO report, enough to provide a self-sustaining funding stream to carry out its activities.

In comparison, the Afghan government brought in $5.5 billion during the same period.

The revenue breakdowns are as follows:

Mining – $464 million

Mining iron ore, gold, zinc, marble, copper, and other rare-earth minerals have become a lucrative industry for the Taliban. It is paid by small and large mining companies to allow business to keep running; those who don’t, face death threats.

Drugs – $416 million

Afghanistan accounts for 84 percent of global opium production, and the drug makes up a massive chunk of the Taliban’s funding.

Cesar Gudens, head of the Kabul office of the UN Office of Drugs and Crime, said: “The Taliban have counted on the Afghan opium trade as one of their main sources of income. More production brings drugs with a cheaper and more attractive price, and therefore a wider accessibility.”

In addition to poppy cultivation, methamphetamines are emerging as a growing industry in recent years, with some believing it could eventually rival the opium trade.

Foreign donations – $240 million

The Taliban are known to receive covert financial contributions from both private and institutional donors around the world. A lot of it stems from charities and private trusts in the Gulf.

Over the years however, the group had been weaning itself off foreign donation dependency. In 2017-2018, it had reportedly received around $500 million – around half of its total funding – from foreign sources. By 2020, it had reduced to 15 percent.

Exports – $240 million

The organisation’s net income from exports is driven by poppy, looted minerals and everyday consumer goods, in part to assist with laundering illicit money. As a result, there is some financial overlap between drug and mining revenue.

Taxes – $160 million

Like any government, the Taliban tax people and businesses in the swath of the country that falls under its control, including industries like mining operations, telecom, and development projects. Drivers are charged for using highways.

It also imposes an Islamic form of taxation known as ‘ushr’ – a 10 percent tax on a farmer’s harvest – as well as the 2.5 percent ‘zakat’ tax.

Since poppy growers are taxed, there is some overlap between tax and drug revenue as well.

Real estate – $80 million

Many of the Taliban own properties in Afghanistan, Pakistan and other countries.

Meanwhile, financial support from the governments of Russia, Iran, Saudi Arabia, and Pakistan – which has long been assumed to have bankrolled the Taliban and provided it safe haven – are more opaque.

However, Pakistani intelligence agency the ISI’s hold over the Taliban is likely overstated. According to Abdul Basit, research fellow at the S Rajaratnam School of International Studies, material support to the Taliban in Afghanistan has dried for a number of reasons.

“Their territorial control inside of Afghanistan has increased. Since 2018, Taliban have become financially self-sufficient and do not need help from Pakistan,” Basit told TRT World.

“As their territory increased, their revenue did likewise and as did their ability to tax people.”

Basit also highlighted the patron-proxy relationship between the two is outdated.

“Once a proxy starts gaining materially, grows in size, it becomes more autonomous.” It would be more appropriate to think of the Taliban playing the role of ally, not proxy, he adds.

Having to be less reliant on Pakistan is also a product of the Taliban diversifying its international relationships over the years with countries like China, Russia, and Iran.

While the Taliban’s economic engine has got it this far, whether it will be enough for them to govern remains to be seen.

As much as the Taliban makes, it is a lot less than the Afghan government’s budget of $11 billion – 75 percent of which came from international aid.

It then begs the question: will the group be subject to any international leverage?

“It appears that even the Taliban understand Afghanistan’s dire need for foreign assistance,” said John Sopko, US Special Inspector General for Afghanistan Reconstruction.

Earlier this month Zalmay Khalilzad, US Special Representative for Afghanistan Reconciliation, argued that the US still retained leverage over the Taliban due to the importance of foreign aid.

“They say they don’t want to be a pariah state,” Khalilzad said. “They want to receive assistance.”

Matthew Levitt, director of the counterterrorism program at the Washington Institute for Near East Policy, is more skeptical.

“I think the Taliban is not going to feel the kind of financial pinch that some in the West expect it will because it doesn’t need or feel the obligation to provide the level of services that the Afghan government did when it was supported by the West,” he said.