Fall of Kabul and implications for Pakistan economy

Taliban which had been making rapid advances across Afghanistan in the wake of US evacuation, were finally able to take control of the capital, Kabul, in what was a rather swift, seamless and somewhat peaceful transition. The development finally puts an end to the uncertainty over the political future of Afghanistan.

In contrast to what had been feared, Taliban seek to present a moderate face by offering general amnesty to masses, preserving the infrastructure deployed in the past 20 years while remaining mostly in compliance with agreements forged with the international community, opening up possibility of international recognition of the new political setup. Further, China, Pakistan and Iran are on the same page on maintaining stability in the Afghanistan region.

Rise of new power in Afghanistan

Major regional powers, China, Iran and Pakistan have all showed a willingness to work with the new setup in Afghanistan and help maintain peace in the region. The geographical and political dynamics have changed significantly since the last time Taliban government was in power in Afghanistan with China establishing its strong presence in the region through economic corridors in Pakistan and also in Iran.

The economic corridors in Pakistan and Iran connect landlocked Afghanistan and the central Asian Republics to the sea ports, thus giving them access to global markets. The integrated economic interests of major powers in the region will help bring these players closer and work together and potentially bring peace and economic prosperity in the region.

Implications for Pakistan

From Pakistan’s vantage the peaceful transition has so far has ended concerns for a civil war that could have resulted in unrest on Pakistan’s western border, increasing law and order risks and potentially putting projects under CPEC into jeopardy. Moreover, the threat of an influx of refugees that could further put pressure on already strained fiscal side has been allayed, somewhat.

Further, with Pakistan likely being the preferred partner for the west amongst the Russia-China-Pakistan-Iran quartet to keep its influence, strengthening of relationship could unlock some concessions in med-to-long run while improving prospects of Pakistan’s status with global agencies (IMF, FATF etc.).

Pakistan’s net trade for FY21 with Afghanistan is reported around US$804 million mostly consisting of food related items while cements, pharma, and aluminum cans (PABC) occupy a minimal share. Analysts do not expect any material impact on cements given the strong robust domestic demand and coal alternatively imported through sea while PABC could witness neutral to negative impact given Afghanistan occupying a significant share in sales mix. The company has ventured into other markets to neutralize the impact. Lastly, with the tight border controls in the near term, Pakistan could witness inflow of smuggled products subsiding, opening up prospects for local players (such as in auto parts tyres, and consumer items).

Investment perspective

The fall of Kabul in the hands of Taliban may not turn out to be as negative as feared earlier, especially if the major powers in the region show willingness to work together. Though, still early at this point, a stable and peaceful Afghanistan will have positive spillover effects for Pakistan and the region at large. The potential positive idiosyncrasies related to lasting peace in the region may help expand market multiples in the medium and long term.

What next in Afghanistan?

The Taliban’s swift takeover of Afghanistan has set off a chain reaction of chaos just two weeks before the US was set to officially withdraw the last of its troops in the country.

The fall of Kabul on Sunday came after a week of lightning-fast territorial gains and crumbling government forces that could not hold off the Islamist group that ruled Afghanistan before the arrival of American forces in 2001. Americans, as well as Afghan civilians who worked with the US government, are now scrambling to get out of the country.

While President Biden is standing by his decision to withdraw US troops, he acknowledged Monday that the situation “did unfold more quickly than we’d anticipated.”

Here are the five takeaways from the collapse of the Afghan government and Taliban takeover:

Evacuation has turned desperate 

The scene at Kabul’s international airport descended into chaos Monday as military and civilian flights stalled on the tarmac when thousands of Afghan civilians flooded the runway in desperate search of a way out.

Photos and videos show people surrounding planes, with dozens of them clinging to a US C-17 transport aircraft or running beside it as it tried to take off. In another video, several Afghans were seen falling off the plane as it left the runway.

The surge of panicked civilians grew so quickly that the US military, in the midst of evacuating American personnel, had to halt flights for several hours.

The scene also prompted the Pentagon to send thousands more US troops to the country to help secure the airport, bumping the US military presence from 1,000 to 6,000 in a matter of days to support the evacuation.

At the U.S. Embassy in Kabul, all American personnel were evacuated, leaving unguarded a building that cost the United States nearly US$800 million to construct, according to the State Department. 

Elsewhere in the capital, Taliban fighters went door to door looking for any men who served in the Afghan Special Forces or helped the US military, Fox News reported.

The Taliban has said it would not interfere with US evacuation efforts, but that’s just one of many hurdles to getting tens of thousands of Afghan civilians out of the country. 

The US has pledged to assist more than 80,000 people who qualify for special immigrant visas meant to help Afghans, and their family members, who worked with the US government.

 “The idea that visa processing can provide protection as the country is crumbling and is now in the hands of the Taliban ignores the grim reality on the ground,” said Krish O'Mara Vignarajah, president of Lutheran Immigration and Refugee Service, which will help resettle Afghan evacuees.

Afghan women, girls once more at risk 

The United States had long touted gains made in women's rights in Afghanistan as one of the main accomplishments in the country over the past two decades.

But the Taliban takeover means women and girls are once again at risk of losing their freedoms.

From 1996 to 2001, when the Taliban controlled the country and ruled with an extreme interpretation of Islamic law, women and girls were prohibited from attending school, working or leaving their homes unless accompanied by a man. Women were also prohibited from driving and required to cover most of their body, including their face.

Those who broke the rules were sometimes subjected to humiliation and public beatings.

On Monday, CNN’s Clarissa Ward reported that of the women she saw outside their homes in Kabul, many were dressed more conservatively than they were just a week ago.

Taliban leaders, during failed peace talks over the last several years, have assured Western officials that women would be given equal rights as granted by Islam, though many, including numerous US lawmakers, have expressed serious doubts.

“There must be an immediate expansion of the refugee program for Afghan women seeking asylum, whose lives are in jeopardy as the Taliban resumes control and turns back the clock on 20 years of progress for women’s rights. A failure to act now will seal their fate, and the generation of girls who grew up with freedoms, education and dreams of building their country’s future will die with them,” Sen. Jeanne Shaheen (D-N.H.), said in a statement Monday.

In the Pentagon’s press briefing room on Monday afternoon, a female Afghan journalist became emotional over the Taliban takeover of her country and the fate of women and girls there. 

“I'm very upset today because Afghan women didn't expect that overnight all the Taliban [would come],” she said. “They took off my flag. ... Everybody is upset, especially women.”

China, Russia are prepared to move in

While the United States continues to pull out of Afghanistan, China and Russia appear ready to move in, signaling openness to working with the Taliban.

Zamir Kabulov, Moscow’s representative in Kabul, said Russia would not evacuate its embassy in Kabul and would “stay in contact” with Taliban officials in Doha “to work out a permanent mechanism of ensuring safety of our embassy.” 

China, meanwhile, which met with Taliban leaders last month in Beijing, called for a “smooth transition” in Afghanistan. The country also said it is willing to seek “good-neighborliness and friendly cooperation” with the Taliban, signaling it may recognize them as a legitimate government. 

It remains unclear how China's and Russia's approaches to Afghanistan could either hamper or bolster U.S. efforts in the region.

Biden on Monday said Beijing and Moscow “would love nothing more than for the United States to continue to funnel billions of dollars in resources and attention into stabilizing Afghanistan indefinitely.”

Terrorist groups have room to reemerge

The Pentagon is already warning that terrorist groups based in Afghanistan could regain footholds more quickly than expected with the Taliban back in control.

Defense Secretary Lloyd Austin wants to look at whether groups such as al Qaeda and the Islamic State will be able to strengthen after 20 years of being on the run, Pentagon press secretary John Kirby said Monday.

“The secretary certainly believes that in light of recent events that a reassessment of the possibilities for reconstitution of terrorist networks inside Afghanistan is warranted,” Kirby said.

But he added that “we’re in no position at this point just one day after the events in Kabul to make a firm judgment either way or what that's going to look like” and that it's “way too early to make assessments and judgments about what the counterterrorism threat” is going to be. 

Members of al Qaeda who participated in the 9/11 attacks had trained in Afghanistan, making the country a primary target after the terrorist attacks were carried out. 

Last week, thousands of Taliban, al Qaeda and ISIS prisoners were reportedly released from Bagram air base after the Taliban took over the hub of the US war effort.

Lawmakers have been dubious of the Biden administration’s ability to keep terrorists at bay without U.S. troops in the country. Senate Minority Leader Mitch McConnell (R-Ky.) said recently it “would be very very difficult” for Washington to do exactly that.

“I think Afghanistan is lost. Every terrorist around the world is cheering in Syria, in Yemen, in Africa. They've watched the Taliban ... defeat America in effect,” McConnell said during a press conference in Kentucky.

The region is on shakier ground 

The Taliban’s takeover means Afghan citizens are streaming across the border to neighboring countries, and beyond, to get out of the country through any means.

The humanitarian disaster, in which refugees have fled to countries such as Tajikistan, Turkey, Pakistan and Uzbekistan, has already led to strained U.S. relations with regional partners.

Turkish President Recep Tayyip Erdoğan on Sunday pledged to increase diplomatic and security efforts to prevent a rush of Afghan refugees into his country, warning that the Taliban’s takeover would mean a refugee crisis.

“Turkey is facing a growing migration wave of Afghans transiting through Iran,” Erdoğan said alongside Pakistan's president, Arif Alvi, who is also working to staunch the flow. “We will continue to make efforts to bring stability to the region, starting with Afghanistan.”

Additionally, the quick and chaotic US withdrawal from Afghanistan is likely to dent America's position on the world stage and undermine efforts to bolster democracy in the region.

Taliban Enter Afghan Capital Kabul

Taliban entered Afghanistan's capital Kabul on Sunday and said they expected to take power within days, promising to moderate their earlier hard-line Islamist rule even as foreign diplomats and many locals tried to leave. 

Taliban fighters were reaching the capital "from all sides", a senior Afghan interior ministry official told Reuters. However, there were no reports of fighting.

The group was in talks with the Western-backed government for a peaceful surrender, Taliban spokesman Zabihullah Mujahid said. "Taliban fighters are to be on standby on all entrances of Kabul until a peaceful and satisfactory transfer of power is agreed," he said in a statement.

Ali Ahmad Jalali, a US-based academic and former Afghan Interior Minister, could be named head of an interim administration in Kabul, three diplomatic sources said, though it was unclear whether the Taliban had agreed.

Known during their past rule for keeping girls out of school and their hard-line practice of Islamic law, including punishments of amputation, stoning and hanging, the Taliban appear to be trying to project a more modern face.

Another spokesman Suhail Shaheen said the group would protect the rights of women, as well as freedoms for media workers and diplomats.

"We assure the people, particularly in the city of Kabul, that their properties, their lives are safe," Shaheen told the BBC, saying a transfer of power was expected in days.

The ease of the Taliban's advance, despite billions of dollars spent by the United States and others to build up local Afghan government forces, has stunned the world.

Just last week, a US intelligence estimate said Kabul could hold out for at least three months.

There was no immediate word on the situation from President Ashraf Ghani. A palace official said he was in emergency talks with US peace envoy Zalmay Khalilzad and officials from the NATO transatlantic alliance.

Power would be handed over to a transitional administration, the government's acting interior minister, Abdul Sattar Mirzakawal, tweeted on the Tolo news channel. "There won't be an attack on the city, it is agreed that there will be a peaceful handover," he said without elaborating.

A tweet from the Afghan presidential palace account said firing had been heard at a number of points around Kabul but that security forces, in coordination with international partners, had control of the city.

Many of Kabul's streets were choked by cars and people either trying to rush home or reach the airport, residents said.

"Some people have left their keys in the car and have started walking to the airport," one resident told Reuters by phone. Another said: "People are all going home in fear of fighting."

Afghans had fled the provinces to enter Kabul in recent days, fearing a return to hard-line Islamist rule.

Early on Sunday, refugees from Taliban-controlled provinces were seen unloading belongings from taxis and families stood outside embassy gates, while the city's downtown was packed with people stocking up on supplies.

US officials said diplomats were being ferried by helicopters to the airport from its embassy in the fortified Wazir Akbar Khan district. More American troops were being sent to help in the evacuations after the Taliban's surge brought the Islamist group to Kabul in a matter of days.

"Core" US team members were working from the airport, a US official said, while a NATO official said several European Union staff had moved to a safer location in the capital.

Earlier on Sunday, Taliban captured the eastern city of Jalalabad without a fight, giving them control of one of the main highways into landlocked Afghanistan. They also took over the nearby Torkham border post with Pakistan, leaving Kabul airport the only way out of Afghanistan still in government hands.

"The governor has surrendered to Taliban," a Jalalabad-based Afghan official told Reuters. "Allowing passage to Taliban was the only way to save civilian lives."

After US-led forces withdrew the bulk of their remaining troops in the last month, Taliban campaign accelerated as the Afghan military's defences appeared to collapse.

President Joe Biden on Saturday authorized the deployment of 5,000 US troops to help evacuate citizens and ensure an "orderly and safe" drawdown of military personnel. A US official said that included 1,000 newly approved troops from the 82nd Airborne Division.

Taliban said its rapid gains showed it was popularly accepted by the Afghan people.

Ashraf Ghani must immediately leave Afghanistan to save his life

Afghan President Ashraf Ghani is calling on the international community to aid in the country’s fight against Taliban, getting too close to Kabul and fears are growing that the capital could soon be overrun by them.

The US-backed leader said in a televised address on Saturday, his first public appearance in days as Taliban have made significant territorial gains. 

Ghani said he wished to “stop the civil war imposed on Afghans and prevent more innocent deaths and the loss of 20 years of achievements” since US troops first arrived in Afghanistan to topple the Taliban in 2001. 

“We have started consultations, inside the government with elders and political leaders, representatives of different levels of the community as well as our international allies,” he said, as reported by The Associated Press. 

“The consultations are happening at great speed and the results will soon be shared with you dear countrymen,” added the president, who is facing growing pressure to step down amid the crisis. 

The address came as Taliban captured Afghanistan’s Logar province Saturday, with Afghan lawmaker Hoda Ahmadi saying that the group has now reached the Char Asyab district, located just seven miles south of Kabul, according to the AP. 

Ghani is facing diminishing support at home, with thousands of his soldiers surrendering en masse, a move former Finance Minister Omar Zakhilwal said indicates the Afghan troops believe the president is not “worth fighting for.” 

The president’s plea to the international community comes as the US and others such as Canada and the United Kingdom are removing large numbers of their diplomats from Afghanistan amid the worsening security situation.

Senate Minority Leader Mitch McConnell on Friday urged the Biden administration to conduct airstrikes against Taliban to support local security forces and prevent the insurgent group from taking control of Kabul, warning that failing to act would allow the security threat to the US to "assuredly grow" and lead to a "catastrophic" humanitarian cost within Afghanistan.

The State Department confirmed to The Hill on Friday that the US Embassy in Kabul had ordered staff to start destroying sensitive material, including “embassy or agency logos, American flags, or items which could be misused in propaganda efforts.”

The US has significantly reduced its military presence there amid President Biden’s goal to remove all troops from the country by the 20th anniversary of the 11th September 2001, terrorist attacks, though the Defense Department this week said it would temporarily be sending an additional 3,000 US troops to assist in the large departure of US diplomats.

US defeat in Afghanistan

As the last men of the dwindling American garrison in Afghanistan pack their bags, there is an echo of the Soviet Union's own withdrawal from the country, more than 30 years ago. But, in truth, Washington's defeat is far greater.

In December 1979, Soviet forces invaded Afghanistan to support the unpopular government of the ruling People’s Democratic Party of Afghanistan (PDPA). They soon found themselves bogged down in a war against Mujahedeen.

Nine years later, the Soviets decided that there had been enough bloodshed and, in May 1988, they began their exit. The final contingent of Soviet troops drove back across the bridge to the USSR in February the following year.

Twelve years later, US troops arrived to fight Taliban. Soldiers of other NATO states then followed. Together, they stayed even longer than the Soviets, but are now on the way out. US President Joe Biden has promised that American soldiers will leave Afghanistan by the end of August.

As the US completes its retreat from its longest war, its enemy is on the march. Lately, Taliban have captured 12 of Afghanistan’s 34 provincial capitals, including the second and third largest cities in the country, Kandahar and Herat, both of which fell on Thursday.

The pace of Taliban advance has been remarkable. In some places, government forces simply ran away without a fight. The Governor of Ghazni province was said to have surrendered his city in exchange for free passage out of the area. US-trained government troops have fled or deserted en masse and, in some cases, gone over to Taliban. It’s fair to say that it’s been a rout, and the Americans haven’t even fully left yet. The government may be able to hold onto the country’s capital Kabul, but even that is no longer certain.

In short, the 20 years of America’s and NATO’s war in Afghanistan has ended in ignominious failure – total and absolute. So, of course, did the Soviets’ war, but not quite so abruptly.

After the last Soviet troops crossed over the Friendship Bridge linking Afghanistan and Soviet Uzbekistan, Mujahideen launched a major offensive, confident that they would be able to defeat the government forces in short order. Their offensive collapsed completely. The Afghan army stood its ground and not a single major population center fell into the hands of their opponents. It was not until two years later, when the post-Soviet Russian government of Boris Yeltsin cut off funding to the Afghans that the PDPA regime finally fell.

The contrast with what has happened this past week could not be clearer. Even after the Soviets had left, the troops they had trained and equipped fought hard and successfully. Today, the troops that America and its allies trained and equipped at a cost of hundreds of billions of dollars have scattered to the four winds with only the slightest effort at resistance.

But, to be fair, the problem lies not in army exercises or crates of machine guns. The current batch of Afghans has had plenty of both. They outnumber Taliban and are better supplied. The problem is one of morale: not many of them are willing to die for their government.

The PDPA had a well-deserved reputation for corruption, incompetence, factional in-fighting, and dogmatic, counterproductive policies that alienated the Afghan people, such as its Marxist assaults on religion and private enterprise. Mujahideen, the Taliban’s precursor, enjoyed substantial support from the United States, including signing for the delivery of sophisticated Stinger missiles.

The fact that the Soviet-backed government put up a better fight than its contemporary counterpart can, therefore, only have one explanation, Afghans respect their current rulers even less than they respected the socialist PDPA. And that is really saying something.

All of which begs the questions of why America and NATO spent so long supporting the regime in Kabul, and why the latter got to be so disliked.

The answer to the first question is largely one of prestige. Having installed the current government, Western states felt that their reputation was tied to its survival and thus refused to abandon it even when it became clear that it wasn’t worth supporting.

The answer to the second question is that the awfulness of the current government owes a lot to the policies pursued by Western states.

After Najibullah was overthrown in 1992, Afghanistan suffered a vicious civil war in which drug-running warlords competed for power and inflicted all sorts of atrocities on the Afghan people. When Taliban came along offering fierce but incorruptible justice, many Afghans breathed a sigh of relief and gave them their support.

Canadian General Rick Hiller famously said that Taliban were “detestable murderers and scumbags.” What he failed to note was that Taliban enemies were, on occasion, even worse. When America and its allies moved into Afghanistan, these enemies returned to their homes, this time with the backing of Western powers, and resumed their criminal ways. Unsurprisingly, the locals weren’t too impressed.

Beyond that, Western powers flooded the country with money. Pour cash into an impoverished country without adequate controls, and the consequence will be mass corruption. So it was in Afghanistan.

Not only did this delegitimize the government, but much of the aid flowed down into the hands of Taliban. As John Sopko, the US official responsible for auditing American expenditures in Afghanistan put it, “the end of the US supply chain in Afghanistan is Taliban.” If you want to know who armed and paid for Taliban, the answer is that America did.

While innocent civilians and Afghan soldiers are dying, Biden has no regret

It is height of disgrace to humanity to read a statement of Joe Biden, saying he does not regret his decision to pull US forces out of Afghanistan amid reports of rising civilian casualties as the Taliban makes gains in the country.

On the contrary he said, "We spent over US$ one trillion over 20 years. We trained and equipped with modern equipment over 300,000 Afghan forces," Biden said at a news conference.

"And Afghan leaders have to come together. We lost to death and injury, thousands of American personnel. They’ve got to fight for themselves. Fight for their nation."

Biden vowed the US would keep its commitments to provide air support, resupply Afghan forces with food and equipment and pay their salaries. "But they’ve got to want to fight," Biden added.

Over the weekend, the Taliban seized a string of provincial capitals including the strategically and economically important city of Kunduz. The battlefield gains come as the US withdrawal from Afghanistan is largely done, with an official end date set by Biden of 31st August 2021.

Using so-called over-the-horizon forces, the US military in recent days has conducted some airstrikes in support of Afghan forces, Pentagon press secretary John Kirby confirmed, but declined to provide any specifics.

Moral of the story

Over the last two decades, US troops helped achieve their ‘undeclared’ objectives. Among these weeding out terrorists and ushering development in Afghanistan were on the lowest priority.  Now the same will be done by ‘operators’ who can work the best under the chaotic condition. The US president is not talking about security of Afghans, but the operators living under the disguise of Afghan soldiers.

Defense officials have not confirmed whether such airstrikes will continue after US troops are fully withdrawn as per the deadline.

Lawmakers and critics of Biden's decision to withdraw from Afghanistan have raised concerns over the possibility of a full Taliban takeover of the country and the chaos that will be created without American forces.

Administration officials also briefed senators on the situation behind closed doors and faced what Senate Minority Leader Mitch McConnell described as “tough” questions.

US envoy Zalmay Khalilzad warned the Taliban government that assumes power through use of force in Afghanistan will not be acknowledged by the international community.

Lately, Khalilzad traveled to Doha, Qatar, where Taliban has a political office, to help formulate a joint international response to the rapidly deteriorating situation in Afghanistan.

He will urge the Taliban to stop their military offensive and arrange a political settlement, which the State Department said “is the only path to stability and development in Afghanistan.”

Khalizad, who negotiated the peace deal brokered with the Taliban under the Trump administration, and other officials reportedly hope that the stern warning will encourage Taliban leaders to engage in peace talks with the Afghan government.

CIA head to meet Israeli Military Intelligence Chief

The head of the CIA, Bill Burns will meet with the head of the IDF’s Military Intelligence Maj.-Gen. Tamir Hayman during his visit to Israel on Tuesday. He will also meet with Prime Minister Naftali Bennett and with the new Mossad Director David Barnea.

Burns is in Israel amid reports that the US is considering alternative ways to get Iran to stop advancing its nuclear program as negotiations to return to the 2015 Iran deal stall.

Israel considers Iran’s nuclear program as the number one concern. Though, Tehran has always denied seeking nuclear weapons, it is believed that they are continuing to develop the capabilities to produce a nuclear weapons arsenal as well as produce ballistic missiles capable of carrying nuclear warheads.

Last week Defense Minister Benny Gantz said that Israel was ready to strike Iran, saying that the Islamic Republic was a threat to the country, Middle East and the entire world.

“Iran is an international and regional problem. The world witnessed one example on Friday,” Gantz told Ynet, referring to the deadly attack against the Mercer Street tanker that was struck by a suicide drone. “This could happen to anyone,” he said.

With new Iranian President Ebrahim Raisi taking over from moderate Hassan Rouhani on Thursday, Gantz said that he could lead Iran to even more extreme regional and security policies.

Between the long lull in negotiations and Raisi entering office, plus recent attacks on ships in the Persian Gulf, including on the Mercer Street, in which a Romanian and a British national were killed, many in the State Department think a return to the JCPOA is unlikely, though there is still a faction that remains hopeful, according to an Israeli official involved in talks with the US on Iran.

Israel and the US have been working on preparing for that scenario, including when Bennett’s diplomatic adviser Shimrit Meir and National Security Adviser Eyal Hulata visited Washington last week.

Burns will also reportedly meet with Palestinian Authority intelligence chief Majed Faraj in Ramallah, as well as PA President Mahmoud Abbas.