Afghans fight economic destruction with Bitcoin, video games and a new Chinatown

Sulaiman bin Shah was at a wedding earlier this month when he was slapped on the shoulder.

It was the sixth time that someone, sent by the Taliban, the militant group that now rules Afghanistan, had asked the former Deputy Minister of Trade and Industry to return to his old job.

“They’ve sent people to my house, my private office. They have sent relatives and friends to pressure me. I don’t think they’ll ever leave me alone, but I respectfully declined every time,” he told the national in Kabul on the eve of the anniversary of the Taliban takeover.

Bin Shah was only 30 when he was appointed deputy minister by then-president Ashraf Ghani, with whom he regularly clashed.

When the Taliban took control of Afghanistan last August, he was sidelined. Within a few weeks, he stopped showing up for work. Now the Taliban want him back.

Afghanistan’s economy has contracted 20 to 30 percent since US troops withdrew. The Taliban have brought the country back to 2007 in an economic time machine, costing about a million jobs, and 70 percent of the population unable to afford food and other necessities, the World Bank reported.

Afghans in Kabul blame their poor economic outlook mainly on international sanctions against the extremist group.

These take various forms, from the nearly $9 billion in reserves of the Afghan central bank confiscated by the US and European countries, to a ban on banks that deal in dollars to prevent transactions that put money in the hands of the Taliban could come. .

The first prevents Afghan government departments from importing most food or medicine. The latter prevents most foreign governments, charities and corporations from dealing with Afghanistan at all.

Sara, a 14-year-old Afghan girl, sits on a grave and reads a book while selling water in a cemetery in Kabul, Afghanistan. AP

Although the US Treasury Department, which regulates dollar-related sanctions, has said that exemptions are allowed for humanitarian transactions, the details of these exceptions remain so vague that few are willing to take the risk.

“Afghan institutions are technically not sanctioned at all… Individual Taliban leaders are,” said Mr. Bin Shah.

“Unfortunately, the Taliban government has decided to put those individuals in charge of various institutions, which prevents foreign groups from interacting with them. This is something we have to blame the Taliban for.”

Decisions made by the Taliban while managing Afghan institutions have done little to alleviate the world’s discomfort.

In March, the government ministry for the spread of virtue and the prevention of vice patrolled government buildings and sent home all male workers who refused to grow beards or wear traditional Afghan clothing. Last month, female Treasury officials were asked to quit their jobs and have a male relative work in their place.

These actions have left the country without thousands of skilled workers like Mr Bin Shah to run departments. And it has led them to pursue those they drove out in the tumultuous days after their return.

Logistics nightmare hinders Afghan entrepreneurs

Due to the sanctions, companies are looking for complicated ways to receive payments from foreign buyers, including Bitcoin. Meanwhile, the logistics industry has been decimated: airlines are refusing to ship goods and international companies like DHL are leaving altogether.

Noor Ahmad, 24, and Himayatulhaq Tahiri, 22, both from Kabul, got to know each other while studying together at a university in Peshawar, Pakistan, and invested their $1,000 savings to start a saffron export business in 2021, when Prime Minister bin Shah worked at was reducing red tape for start-ups.

Sanctions against the Taliban have hit their business hard.

How they ship saffron to their 300 overseas customers changes week after week, depending on which trucks cross the Afghan border. The crimson spice can travel to Peshawar, Dushanbe or even Tehran before being re-exported in unmarked jars to their intended customers, many of whom are located in the West.

The second hurdle is getting paid: with no bank transfers available, they switched to Bitcoin.

But the cryptocurrency is extremely volatile, so payments received must be paid out quickly to avoid major losses.

The men use an online exchange to exchange the Bitcoin for Tether, a so-called “stablecoin” pegged to the US dollar.

The Tether is then used to purchase UC, the in-game currency for the Players Unknown Battlegrounds (PUBG) computer game, which is extremely popular among Afghan youth.

The pair then visit one of the few alternative exchange houses in Kabul that trade UC and buy the in-game tokens for hard cash.

In this new financial world of sanctions and complicated exchanges, Mr. Ahmad and Mr. Tahiri, like many other young Afghans, have become big believers in Bitcoin.

“It is our future,” said Mr Ahmad.

But Mr bin Shah said there is only so much Bitcoin can do for Afghanistan. The Taliban are rumored to be exploring a ban on cryptocurrencies — it has already banned PUBG — following a few viral reports in recent months that Afghans lost their savings when Bitcoin’s price plummeted.

“Cryptocurrencies do not have the scale and sustainability needed for the Afghan economy, which really only needs certain fundamental things – knowledge, expertise and resources,” said Mr Bin Shah.

The flow of corruption came to a halt for a while

The Taliban promised more stability and less corrupt officials, but after a strong start, the practice is creeping back in. AP

While sanctions remain a major barrier to investment, so does the specter of corruption.

“Corruption is the great monster that has always held back our progress,” said Mr Bin Shah. “It became normal for everyone in government to cut spending and it ruined a lot of good deals – would often push potential investors for bribes, then just pack up and leave.”

One of the benefits of the strict regime of the Taliban, many Afghans say, was a brief reduction in corruption. However, now they say it is starting to return.

An Afghan businessman, who declined to be identified, said bureaucrats under the republic would expect about 80 percent in “fees” on the deal. Under the Taliban, that has been reduced to 10 percent.

“The Taliban don’t know enough about all the procedures in different ministries yet, so these guys are collecting fees like they used to and telling their Taliban supervisors it’s normal,” he said. “But they don’t squeeze you so much that you could complain to one of the mullahs.”

Bin Shah said the return of the Taliban was an opportunity when it came to fighting corruption — an opportunity he thinks they are wasting away.

“Last year we got a clean slate [when the Taliban took over] … The superpowers were gone and for the first time in a long time the country had to run its own affairs,” he said.

“During the first three months of the new government, I regularly received messages from business people that there was no corruption. But that is no longer the case, and it is hard to say that no one from the Taliban is cooperating. For a while you could say their ignorance was the problem, but until when? It’s been a year.”

One evening in the first week of August, in a cafe in one of Kabul’s luxury hotels, the national heard a western aid contractor suggest to his managers at home that their organization should consider paying off Taliban officials to make their jobs easier.

They even suggested calling an old contact who facilitated similar payments in the days of the republic.

A hub for new trading partners

A young man selling prayer beads and jewelry looks for customers at a market in Kabul. AFP

While the US and others in the West are reluctant to do business with the Taliban, there are others who are less concerned.

China’s interest in Afghanistan’s much-vaunted but under-researched sector of natural resources has excited many in the country.

Earlier this year, the Taliban government shook hands with Chinese businessmen to build the first “Chinatown” – a 10-storey shopping center housing home appliances and travel agencies.

Noor Rahman Ahmadi, 22, is one of 10 Afghans working there, along with some Chinese citizens.

He is fluent in Mandarin after spending four years at a Chinese university and often works as an interpreter for Chinese businessmen.

Ahmadi dreams of going back to China, but to do so, he would have to pay $1,400 to quarantine at a hotel for 10 days — an amount higher than his full-year salary in Kabul’s Chinatown.

And this, critics of this new investment say, illustrates the problem experienced so far: many businessmen have come to Kabul, shops are being built and the mining sector is being assessed, but few are willing to invest in developing Afghan talent.

About 600,000 young Afghans enter the labor market every year, and few will find a job due to the sluggish economy.

And yet, in Kabul, cafes and shops are crowded and, at first glance, it doesn’t seem like the capital of the world’s most impoverished nation.

But this, a counselor warns, is an illusion.

“People spend money from their savings or remittances from relatives abroad just so they can eat out like they used to,” he said. “Most people don’t make new dollars.”

Updated: August 12, 2022, 10:00 PM