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

Sulaiman bin Shah was at a wedding earlier this month when he received a tap 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 trade and industry minister to return to his old job.

“They sent people to my house, to my private office. They sent my family members and friends to come and pressure me. I don’t think they will ever leave me alone, but I respectfully declined each time,” he said. The National in Kabul on the eve of the anniversary of the Taliban’s takeover.

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

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

The Afghan economy has shrunk by 20 to 30% since the withdrawal of American troops. The Taliban took the country back in 2007 in a time machine, costing an estimated one million jobs, and leaving 70% of the population unable to afford food and other necessities necessities, reported the World Bank.

Afghans in Kabul mainly blame their bleak economic prospects on international sanctions against the extremist group.

These take various forms, ranging from the nearly $9 billion in Afghan Central Bank reserves confiscated by the United States and European countries, to the banning of banks from trading in dollars to avoid the possibility of carry out transactions that could allow the money to end up in the hands of the Taliban. .

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

Although the US Treasury Department, which regulates dollar-linked sanctions, has said exceptions are allowed for humanitarian transactions, the details of those exceptions remain so vague that few want to take a chance.

“Technically, Afghan institutions are not under sanctions at all… Individual Taliban leaders are,” bin Shah said.

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

The decisions taken by the Taliban during their management of Afghan institutions have done little to ease the world’s discomfort.

In March, the government’s Ministry of Propagation of Virtue and Prevention of Vice patrolled government offices and sent home any male employees who refused to grow beards or wear traditional Afghan clothing. Last month, female employees of the Ministry of Finance were asked to quit their jobs and send a male relative to work in their place.

These actions have left the country without thousands of skilled workers, like Mr bin Shah, to run the departments. And that led them to hunt those they hunted in the heady days after their return.

Logistical nightmare hampers Afghan contractors

The sanctions have pushed companies to look for complicated ways to receive payments from foreign buyers, including turning to Bitcoin. Meanwhile, the logistics sector has been decimated, with airlines refusing to ship goods and international companies such as DHL leaving entirely.

Noor Ahmad, 24, and Himayatulhaq Tahiri, 22, both from Kabul, met while studying together at a university in Peshawar, Pakistan, and invested their savings of $1,000 to start a business in he export of saffron in 2021, when the ministry Mr. bin Shah worked at was to cut red tape for start-ups.

Sanctions against the Taliban have hit their businesses hard.

The way they ship saffron to their 300 foreign customers changes from week to week, depending on the trucks crossing the Afghan border. The purple spice can travel as far as Peshawar, Dushanbe or even Tehran before being re-exported in unmarked jars to their intended customers, many of whom are in the West.

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

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

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

The Tether is then used to buy UC, the in-game currency for the computer game Players Unknown Battlegrounds (PUBG), which is very popular among young Afghans.

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

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

“This is our future,” Mr. Ahmad said.

But Mr. bin Shah said there was little Bitcoin could do for Afghanistan. Rumors are swirling that the Taliban are planning to ban cryptocurrencies – they have already banned PUBG – after some viral reports in recent months of Afghans losing their life savings when the price of Bitcoin crashed.

“Cryptocurrencies lack the scale and sustainability needed by the Afghan economy, which really only needs some basic things – knowledge, expertise and resources,” bin Shah said.

The tide of corruption briefly stemmed

The Taliban promised greater stability and fewer corrupt officials, but after a good start, the practice is returning.  PA

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

“Corruption has been the big monster that has always held back our progress,” Mr bin Shah said. “It became normal for everyone in government to take a stake and it ruined a lot of good deals – potential investors were often rushed to get bribes, then packed up and left.”

One of the upsides of the strict Taliban regime, according to many Afghans, is that corruption briefly waned. Now, however, they say it’s starting to come back.

An Afghan businessman, who did not want to be identified, said that under the republic, bureaucrats would charge around 80% “fees” on the deal. Under the Taliban, this was reduced to 10%.

“The Taliban don’t know enough about all the procedures in the different ministries yet, so these guys collect fees like they used to and tell their Taliban supervisors that’s okay,” he said. “But they don’t rush you so much to go and complain to one of the mullahs.”

Mr bin Shah said the return of the Taliban was an anti-corruption opportunity – an opportunity he believes they are wasting.

“We were given a clean slate last year [when the Taliban took over] … The superpowers disappeared 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 reports from businessmen indicating that corruption was nil. But this is no longer the case, and it is difficult to say that no Taliban is collaborating. For a while, we could say that their ignorance was the problem, but until when? It has been a year. »

One evening in the first week of August, in a café in one of Kabul’s high-end hotels, The National overheard a Western humanitarian contractor suggest to his officials back home that their organization should consider paying Taliban officials to facilitate their work.

They even suggested calling an old contact who allowed similar payments back in the republic days.

A pivot to new trading partners

A young rosary and jewelry seller searches for customers in a Kabul market.  AFP

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

China’s interest in Afghanistan’s much-vaunted but little-explored natural resource sector has excited many in the country.

Earlier this year, the Taliban government shook hands with Chinese businessmen to build the first “Chinatown” – a 10-story shopping mall that houses home appliance stores and travel agencies.

Noor Rahman Ahmadi, 22, is one of 10 Afghans working there, alongside a few Chinese citizens.

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

Mr Ahmadi dreams of returning to China, but to do so he would have to pay $1,400 to quarantine himself in a hotel for 10 days, an amount more than his entire annual salary in Kabul’s Chinatown.

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

About 600,000 young Afghans enter the labor market every year, and the stagnant economy means few will find jobs.

And yet, in Kabul, cafes and shops are packed and it doesn’t seem, at first sight, to be the capital of the poorest nation in the world.

But this, warns one aid worker, is an illusion.

“People are spending their life savings or family remittances abroad, just so they can go out to eat like they used to,” he said. “Most people don’t make new dollars.”

Updated: August 12, 2022, 10:00 p.m.