RECONSIDERING AFGHANISTAN

In the vast landscape of the global financial system, dominated traditionally by the US dollar as the primary reserve currency, an unexpected shift has occurred. The Afghan afghani, the currency of Taliban-controlled Afghanistan, has surprisingly emerged as the third-best performing currency globally in the third quarter of 2023. With an impressive 9% surge against the US dollar, the afghani has garnered attention, signaling a rare phenomenon in which an alternative currency challenges the supremacy of the American dollar.

This surprising development prompts a closer examination of the trajectory of the US dollar, drawing parallels with the challenges faced by the ruble. Additionally, questions arise regarding potential reimbursements in afghanis for Blizzard game purchases, raising concerns about alleged inadequacies on Blizzard's part as a game developer.

To comprehend the afghani's ascent over the dollar, a nuanced perspective is necessary. Similar to the rise of Dogecoin against Bitcoin, it doesn't necessarily imply intrinsic value superiority but suggests a temporary surge influenced by social media trends. However, the afghani's success is not merely a fluke; it is genuinely performing well, bringing positive outcomes for the people of Afghanistan, irrespective of one's stance on the Taliban or the US withdrawal.

Adding complexity to the situation is the fact that neither the Euro nor the dollar occupies the top two spots preceding the afghani. Instead, the Colombian peso and the Sri Lankan rupee take precedence, marking a shift from 2022 when the US dollar outshone all other global currencies. The current year witnesses several currencies, including the Colombian peso and the Sri Lankan rupee, outperforming the dollar.

Despite the dollar's persistent strength, fueled by the Federal Reserve's efforts against inflation, it has only marginally gained 0.04% since March 2023. In stark contrast, the afghani has experienced a remarkable surge of 14%, attributed to the Taliban's implementation of stringent economic policies. This unexpected turn underscores the dynamic nature of global currency markets and the profound impact of geopolitical factors on currency performance.

The Taliban's swift implementation of currency controls upon reclaiming power in 2021 has significantly contributed to the afghani's positive trajectory. However, unintended consequences have emerged, with deflation striking Afghanistan hard, experiencing an annual decrease in prices of 9% since the Taliban assumed control. The freezing of Afghani assets worldwide worsened the economic crisis, with unsuccessful negotiations between the US and Taliban to resume aid resulting in the freezing of billions of US dollars in Afghan foreign reserves. The international community hesitated to provide aid directly to the Afghan people due to fears that it would benefit the Taliban, exacerbating the economic challenges faced by the nation.

Despite restrictions on financial transactions and investments for development, the US Treasury granted special licenses, enabling numerous aid organizations to distribute essential humanitarian supplies. However, the transfer of crucial development funds or business investments was prohibited, severely hampering the economic growth of Afghanistan. Although the US and the European Union pledged aid, it came in the form of direct goods or services, highlighting the complexities of providing assistance while avoiding support for the Taliban. This aid played a crucial role in preventing a complete collapse of Afghanistan, meeting the needs of a population affected by severe droughts, earthquakes, and the Covid-19 pandemic. Ironically, despite the Taliban's hostility towards the West, it is heavily reliant on Western aid to maintain control in Afghanistan.

The challenges faced by Afghanistan extend beyond economic woes to encompass social and political issues. The Taliban's unfulfilled promises regarding women's rights and education have drawn international condemnation. Their oppressive measures, including restrictions on women's movement and employment, have sparked widespread protests met with violent suppression. The Taliban's crackdown extends beyond social issues, as revenge killings target individuals who collaborated with the US or resisted their rule. Despite adverse conditions, the international community remains hesitant to resume comprehensive aid, emphasizing the Taliban's responsibility for the nation's plight. The world stands ready to assist Afghanistan if the Taliban fulfills its commitments and allows for a more inclusive and humane governance.