The Daily - An Economic Catastrophe in Afghanistan

Episode Date: December 15, 2021

The economic situation in Afghanistan is perilous. Banks have run out of cash. In some areas, Afghans are selling their belongings in ad hoc flea markets. Parents wait around hospitals and clinics in the hopes of getting treatment for severely malnourished children.We hear about what the unfolding crisis looks like on the ground, why the economy has deteriorated so quickly, and what role the United States has played.Guest: Christina Goldbaum, a correspondent for The New York Times, based in Kabul.Sign up here to get The Daily in your inbox each morning. And for an exclusive look at how the biggest stories on our show come together, subscribe to our newsletter. Background reading: An estimated 22.8 million people — more than half of Afghanistan’s population — are expected to face potentially life-threatening food insecurity this winter. Many are already on the brink of catastrophe.For more information on today’s episode, visit nytimes.com/thedaily. Transcripts of each episode will be made available by the next workday. 

From The New York Times, I'm Michael Barbaro. This is The Daily. Today, the economy in Afghanistan is collapsing, prompting the United Nations to warn that the country is at risk of, quote, total breakdown. is at risk of quote, total breakdown. My colleague, Christina Golbaugh, traveled to Afghanistan to witness the crisis firsthand and understand the unique role that the United States has played in creating it. It's Wednesday, December 15th. Christina, I know that all of our colleagues in Afghanistan were evacuated when the country fell to the Taliban a few months ago.

So how exactly did you do this reporting? Yeah, so when the Taliban took over, we rushed to evacuate from the country because no one knew what was going to happen. And from late August into September, I was talking to friends and sources who are still in Afghanistan to figure out what was going on in the country now. And what a lot of aid workers were telling me was that just in the couple of weeks since the Taliban seized power, the economic situation had become pretty dire. You know, one humanitarian worker was telling me how what we were seeing in Afghanistan was the kind of collapse you might see in the course of 10 years of a civil war in a country happen in the matter of weeks. And so I was eager to get back to

Afghanistan and be able to see firsthand what exactly was going on. So I flew at the beginning of October to Uzbekistan and drove across the border into Afghanistan to be able to begin reporting on what does Afghanistan look like under Taliban control. And once you arrived, what did you see? So, I arrived in this town, Mazar-e-Sharif, which used to be the economic hub for northern Afghanistan. And around 7 a.m., I went to a bank at the center of town where dozens of guys had gathered outside, kind of clamoring to get inside this bank. Today morning to Mazar. You arrived in Mazar from Samigang. How long did it take you to get here? arrived in Mazar from Samigang. How long did it take you to get here?

Three hours. A lot of them had driven for hours from nearby villages where smaller banks had closed. And they had gotten there before dawn in the hopes of getting in. By the afternoon, that crowd had swelled to well over 100 people. And they had gotten a lot angrier and more impatient, because many had been waiting all day since the crack of dawn, trying to get inside and take out money from their accounts. You give your money to them, now you go like a beggar,

just begging for your money and standing for hours and hours. Every time a teller would come outside to call in a few people, they would try to cram through the small door. They are somehow just evading and delaying the work so we cannot get our money. They're waving their bank cards in the air, trying to get the attention of the tellers coming out, and just begging them to let them inside and take out money from their accounts. What's his name? Mohamed Rasool.

And outside the bank, we talked to this one guy, Mohamed Rasool. Mohamed, how old are you? 56. 56, okay. Who had left his home at the crack of dawn that morning to get here. He came here to get the money because he was working for an NGO who supported a project supported by the United States. He had lost his job after the Taliban took over.

And he knew that he had savings in his bank account and was desperate to get access to it since the local bank in his town had closed. I think his daughter is sick. Yeah. Oh, good. She's got pneumonia. Yeah, pneumonia, fever.

He told me that he had a daughter at home who, two weeks before, had come down with a pretty serious case of pneumonia. And he had spent the last $4 he had on a taxi to this bank to try to take out money to buy her the medicine that a doctor told him she needed. And he'd been waiting there all day. him she needed. And he'd been waiting there all day. And then by around 4 p.m., one of the bank employees stepped out and started screaming at the crowd to go home because the bank had run out of cash to give out that day. And after the teller told this group of men to go home, he just buried his head in his hands because he was at a complete loss for what to do. So he can't get his money from this or any other bank.

And as a result, he can't really do anything to help his daughter, whose life is on the line. Exactly. And I started seeing signs of desperation like that everywhere. I mean, the next day, you know, I traveled from Mazar in the north to Kabul, the capital. And there we saw the same sorts of scenes of desperation playing out on the streets. In some parts of the city,

people had begun to take their household belongings, just sprawled out on the streets in these kind of ad hoc flea markets, where they were trying to sell their belongings to passersby to get cash to buy food for their families and to buy medicine. So there were, you know, entire dining tables that were covered in pots and pans, forks and knives, surrounded by the chairs that a family would usually sit around. You had stoves that were laid out, big brown leather couches and chairs. You had these long red velvety cushions stacked up in piles that people usually use in their living rooms. And then there's one guy who had these stacks and stacks of kind of old books that he was trying to sell off. And it turned out that he had been a professor

at one of the universities in Kabul and didn't have any money. And so he was selling off all of the academic books that he had studied for decades and used to teach his students there. So these people are literally selling off the pieces of their lives, the seats they use at their dining room tables, the books they use to teach, and you're just willing to give all that up in this moment. That's right. But the problem is that very few people can afford to buy those items from them. And it was when I went to Kandahar in the South that I saw the most devastating effects for families that had completely run out of options to buy food and were going for weeks without a real meal. And what did that look like? So we started visiting some hospitals and malnutrition clinics there.

We went to one clinic around a two-hour, very rough drive from Kandahar City. And as we arrived at the clinic, there was just a group of mothers and grandmothers. They're all, you know, wearing their chadris, their burqas. How many kids does she have? And they were carrying these kids who were just incredibly frail and gaunt, who had been surviving on bread and tea for sometimes weeks at that point. And crowding into this one mud hut that was a clinic where there was one nurse trying to treat, you know, dozens and dozens of severely malnourished kids. And walking into that clinic, one of the most striking things I noticed was just the silence. Explain that. What do you mean? Well, many of the kids who they had brought in

would just become so weak from not having a proper meal for days or weeks on end that they couldn't even cry. They didn't have the energy to let out a cry. And so many grandmothers and mothers were holding these kids whose mouths were craned open, who had almost pained looks on their faces, and their skin was kind of sagging off of protruding bones. Some had become so malnourished that the skin was literally peeling off of their arms or off of their legs because there weren't enough vitamins in their systems to keep their skin alive. And many of these mothers were just absolutely desperate for some kind of help because for weeks or for months, they hadn't been able to get anything more than tea for themselves and their families. Yes, and what's her name, her grandmother?

I started talking to women in this clinic with a doctor who was working there. And how old is she? And I met this one grandmother, Sarzang. Her name is Khadija. Khadija is one years old. The grandmother brought her. Okay, okay. She was there with her one-year-old granddaughter, Khadija is one year old. The grandmother brought her. Okay, okay.

She was there with her one-year-old granddaughter, Khadija. And how long has Khadija been like this? Like, she's been very weak. For how long? She was just incredibly thin and wrapped in this thick purple blanket. You're not going to make a mistake. I'm not going to make a mistake. And so her son was telling me that she was really worried about the next couple of months. Because the weather was already getting colder.

She didn't have enough money to buy firewood to keep her family warm. So she was just, you know, anguished over how they would survive the winter because she didn't know how her family would find food anymore. And what will they do then? We are just looking forward. We are just looking forward. We're just looking forward to Allah. Do you have a sense of the scale of the number of families whose children are this malnourished?

So aid organizations are warning that in the next couple of months, around a million kids across the country are going to face such serious malnourishment that their lives are at risk. Wow. And they could die this winter. You know, when I'm hearing you describe this scene at the clinic of all of these women waiting in line, desperate for help, it feels like this tragic mirror image of the scene you saw at the bank,

where all of these men were waiting in line, desperate for help. And, you know, putting all this together, it's clear that the Afghan economy, these scenes that you are witnessing, represent an economy in total freefall. It's just not working. It's not functioning. That's exactly right. I mean, it's an economy in complete collapse. You know, I've covered severe droughts. I've covered countries on the brink of famine. But I had never seen a crisis like this that had left literally no corner of the country untouched, from banks to the streets to hospitals and clinics. You know, everything, it seems, had begun to unravel so quickly in a matter of weeks. And already, it was clear that millions of people's lives were at risk this winter

and that a lot of people really might not make it. We'll be right back. So, Christina, what exactly explains why the Afghan economy has deteriorated so thoroughly, so quickly? So first you have to understand that even before the Taliban took power, the country was already in pretty dire economic straits. straits. Afghanistan is facing one of the worst droughts in decades that is affecting most of the country's rural areas, where around 70% of the population lives. Wells and irrigation channels have run dry. Wheat harvests are not producing as much as they should. So families don't have the stores of wheat they would usually use to survive in the winter. And on top of that, in the four months before the Taliban took over, they had waged this massive military campaign across the country

that had destroyed a lot of rural areas, farms, and towns, and displaced hundreds of thousands of people from their villages to major cities. And so after the Taliban seized power, many of those people were returning to their homes that had been destroyed. They hadn't been able to plant their harvests for that season. Their businesses had been looted or were completely destroyed. So it sounds like a lot of this economic collapse can be explained by the awful realities of war. Yes, but there's also something bigger going on.

The real underlying cause of much of the economic collapse actually boils down to how the U.S. withdrew from the country and the way that the U.S. has kept a stranglehold on the country's finances ever since. Okay, explain that. So there's three main issues at play. The first is that over the past 20 years, Afghanistan's economy was built around the billions of dollars that came with U.S. intervention. In cities, a lot of the biggest

industries were military contracting, fuel supply, trucking, all the things that kept the U.S. war effort going and employed millions of people around the country. And so when the U.S. war effort going and employed millions of people around the country. And so when the U.S. withdrew, in a matter of months, millions of people who relied on that war effort lost their jobs. Those jobs just, poof, went away. Exactly. The second issue, and this is where it gets pretty complicated, has to do with how Afghanistan's banking system relied on its relationship with the U.S. Federal Reserve.

So the previous government in Afghanistan held the majority of its around $9 billion of state assets, the main funds of the Afghan Central Bank at the Fed in New York. And a lot of countries around the world do that because the Fed is a trusted financial institution and the U.S. dollar is one of the most stable currencies. But because the country's economy was so dependent on physical cash, the previous government also used to fly in millions of dollars in shrink-wrapped pallets from the Fed into Afghanistan

to help cash flowing in the economy and keep the economy functioning. So the U.S. is holding the majority of the Afghan central bank's state assets and helping it literally fly plane loads of cash into Afghanistan when the country needs it to keep the economy functioning. Right. But when the Taliban took power, that lifeline is cut. The U.S. freezes those assets

and those plane loads of cash from the U.S. stop. Why? What is the U.S. justification for freezing those assets? Because for the U.S., that money belongs to the previous Afghan government, which collapsed. And the U.S. doesn't recognize the Taliban as a legitimate government. You know, for years, the U.S. had had sanctions on a lot of Taliban leaders who were designated as terrorists. And the Taliban takeover was the first time that any group led by sanctioned terrorists had seized power over an entire country. And so suddenly, U.S. sanctions that are meant to target a few leaders of the Taliban, we're putting a stranglehold on an entire country

and an entire country's banking system. So those U.S. sanctions were originally designed to prevent individual Taliban members from having access, it sounds like $2 in the American banking system. And all of a sudden, if those individual terrorists are running the entire country, then the entire government doesn't have access to those dollars and to that banking system. Exactly. And so that's why you started seeing this massive cash shortage

happening across the country. It's why people, when they were going to the bank trying to pull their money out, suddenly couldn't because those banks didn't have enough cash. Right. There just isn't any cash. And Christina, what is the third major issue related to the U.S.? So the third issue has to do with this other giant pot of money that, because of U.S. sanctions, suddenly can't go into Afghanistan to help keep the country afloat. So under the previous government, Western donors paid for around 75% of the government's budget. They paid teacher salaries in schools. They paid for doctors and nurses in hospitals.

doctors and nurses in hospitals. And after the Taliban seized power, suddenly those billions of dollars in foreign aid from European countries, the U.S., the U.N., and others vanished almost overnight. First, the U.S. leans on the IMF and World Bank that had around $2 billion that kept the country's healthcare system and other public services functioning and told them to freeze that pot of money

and keep it from going into Afghanistan. And the other thing that was happening was that big humanitarian organizations like the UN that have their own funds, they were trying to get in life-saving aid to Afghanistan, but suddenly they couldn't find a way to. Why not? Well, the banks that they work with to transfer money into the country, they were so afraid of U.S. sanctions, afraid of getting slapped with huge fines or

getting banned from the banking system in the U.S., that they had cut a lot of their ties to Afghan banks. So the U.S. is really using its influence on donors and banks to basically stop all money from outside of Afghanistan from getting inside Afghanistan. Yeah, basically, that's what we're seeing now. Christina, what you're describing feels a bit confounding when it comes to the American decision making. When it comes to the Afghan component of this economic collapse, drought, that feels difficult to plan for or to fix. But what the United States has done here in freezing money, stopping cash deliveries, leaning on donors and saying, don't let money into Afghanistan, it feels like any smart policymaker in the U.S. would have to

understand that that would immediately destroy the Afghanistan economy. So why would the U.S. So why would the U.S. let that happen? So U.S. officials would say that in the months leading up to the Taliban taking the country in essentially a bloodless coup, the U.S. had been in talks with the Taliban to try to create some sort of peaceful transition of power or negotiated settlement with the previous government. And they had warned the Taliban that if they took over militarily, that Afghanistan would be treated like a pariah state and would be economically isolated from the world. And so many of them will say, well, listen, that's what we're seeing play out right now. We warned the Taliban. They took over the country militarily anyway. And so this is what they get for doing so. But Christina, this punishment, which is clearly directed at the Taliban in the eyes of the U.S., seems to be falling hardest on Afghan civilians.

That's right. I mean, Taliban leaders in Kabul are not the ones who are facing possible starvation this winter. Instead, what the sanctions have done is essentially strangle millions of people across the country so that they can't afford food and are facing possible catastrophe over the next couple of months. Aid organizations are warning that a million children could die this winter from starvation. And that number would dwarf, in a matter of months, the total number of Afghan civilians

who were killed as a direct result of war over the last 20 years. as a direct result of war over the last 20 years. I mean, Christina, you talk to American policymakers. How do they think about this? How do they talk to you about all this? So U.S. officials have said that they're already trying to find ways to allow aid to get into the country. The Treasury has issued two exemptions recently to help foreign banks feel comfortable transferring U.N. money in to Afghanistan.

They've also recently met with Taliban leaders in Doha and made certain demands around seeing a more inclusive government to be able to ease some of those sanctions as well. But what aid organizations are telling me is that the U.S. is not acting nearly quickly enough to prevent a massive humanitarian catastrophe. So in a sense, the U.S. is not acting quickly enough to prevent that from happening. Well, Christina, thank you very much. We appreciate your time. Thank you for having me. We'll be right back. A major study showed that its antiviral treatment for COVID-19, which is not yet approved, was highly effective in staving off severe illness. In a clinical trial of nearly 2,300 unvaccinated patients, Pfizer found that the treatment,

a pill called Paxlovid, reduced the risk of hospitalization and death by 89% when taken within three days of the onset of symptoms. Most of the volunteers in the clinical trial were infected with the Delta variant of the virus, but Pfizer said that in laboratory experiments, the drug also performed well against the Omicron variant. Pfizer is now seeking approval from U.S. regulators to quickly give the treatment to Americans, a decision that is expected in the coming weeks. And on this vote, the yeas are 222 and the nays are 208. The resolution is adopted without objection. The motion to reconsider is laid on the table.

Without objection, the motion to reconsider is laid on the table. The House of Representatives has voted to recommend holding Mark Meadows, the White House chief of staff to former President Trump, in criminal contempt of Congress for refusing to cooperate with its investigation into the January 6th attack on the U.S. Capitol. Meadows turned over documents to the committee running the investigation, but has rejected its request that he testify. Today's episode was produced by Stella Tan, Jessica Chung, and Mujzadi,

with help from Eric Krupke. It was edited by M.J. Davis-Lynn, engineered by Chris Wood, and contains original music from Marion Lozano, Alisha Ba'etube, and Dan Powell. Our theme music is by Jim Brunberg and Ben Landsberg of Wonderly. That's it for The Daily.

I'm Michael Barbaro. See you tomorrow.