The Collapse of the Kabul Foreign Aid Bazaar

“The stated North Atlantic Treaty Organization (NATO) objective in Afghanistan was nation-building, but what was created instead, over 20 years, and fell in days, was a heavily garrisoned foreign aid bazaar.”

Over the course of this year, the Taliban has been further imposing its ideology on the people of the Islamic Emirate of Afghanistan, disadvantaging in particular female education and development. Poor governance in 2022 was responsible for extreme hunger and a severe banking contraction. Following the collapse of the Western-backed Kabul government in 2021, the United States froze $9.5 billion in Afghan central bank assets. Following talks between the Taliban and the international community in Oslo, Norway on January 24, 2022, there was an attempt to make foreign aid to the Taliban government contingent on human rights markers, as well as requiring the Afghan government to be more representative of religious minorities and women. The United Nations (UN) declared that it needed $623 million for aid to Afghan refugees residing in neighboring states, along with $4.4 billion in aid for Afghanistan proper. The United States pledged $308 million for humanitarian aid to Afghanistan and $474 million to Afghan refugees.

This desperate demand for foreign aid is all very familiar. This is, in part, a consequence of the foreign aid community’s fixation on Afghanistan, a country that objectively is better off than certain war-torn countries that are actually more deserving of international assistance. Scarce foreign aid funds should be disbursed where they are most needed and are most effective—and should not flow disproportionately to groups fixated on providing resources to a particular nation. In Afghanistan, in particular, the allocation of scarce foreign aid funds should be measured against past successes. While 20 years of foreign aid has not significantly increased literacy in Afghanistan, it has reduced child mortality by more than half.

Western taxpayers were largely deceived about the effectiveness and sustainability of foreign assistance in Afghanistan during the 20 years following 2001. The stated North Atlantic Treaty Organization (NATO) objective in Afghanistan was nation-building, but what was created instead, over 20 years, and fell in days, was a heavily garrisoned foreign aid bazaar. The current debate about what to do about Afghanistan is largely fueled from the same professional aid-management community, though their policies never served the NATO members’ public interest. The decisive indicator of unsustainability, improved at first, and then stagnant for 20 years, was that only half of Afghanistan’s budget revenue came in from tax arrangements. The remainder was the result of overseas grants and loans.