The Taliban Takeover’s Economic Impact

It’s not rocket science, but that’s the point, after all, it’s not rocket science at all. 

Life expectancy has increased from 56 to 65 years, Internet use has increased from 0% to over 115%, and primary school enrolment has increased from 21% to 104%. For the past twenty years, the impoverished country’s economy has been propped up by US aid. Despite all the bad press the US received last week, it can still be argued that Afghanistan has made progress over time. The return of the Taliban to power will present Afghanistan with new problems.

That is not to say that the program has been hugely successful. Due to class repetition and late school entry, a significant number of older children are still enrolled. But it’s a sobering reminder that too many people are getting an adequate education.

That means she is now standing behind the curtain for the nation. With a cloud of uncertainty hanging over Afghanistan, the country’s economic prospects look bleak. Afghanistan remains one of the poorest countries in the world. But the country still has enormous potential. With the Taliban still at the helm, it is hard to argue that Afghanistan will find a way to succeed.

According to a report by diplomats, Afghanistan holds 60 million tonnes of copper, 2.2 billion tonnes of iron ore, 14 million tonnes of rare earth such as lanthanum, cerium, and neodymium, and veins of aluminum, gold, silver, zinc, mercury, and lithium. The value of these resources is estimated at $1 to $3 trillion.

But wait, we’re not just talking about metals. We are also talking about lithium and other rare earth metals. For the uninitiated, lithium is the key component in the manufacture of lithium-ion batteries, and these batteries power everything from you and your cell phone to the new electric scooters. 

According to an internal memo, the Pentagon thinks Afghanistan has the potential to become the Saudi Arabia of lithium. One could argue that the Pentagon’s friendly relations with China could be helpful on that front. However, if this potential translates into fruitful results, managers may be more willing to invest in the future. After all, their ambition is to monetize assets. 

They have found a way to make money from these rich minerals, and if you leak that wealth to the people of Afghanistan, you get to a point where you see the inherent difficulties of having the Taliban at the helm. There is no human capital, there is nothing to do.

Afghanistan is a young nation where two-thirds of the population is under 25. Literacy rates have increased in the recent past and the population has become more educated, with many women joining.

However, all this progress could be undone if the Taliban removed its authority once and for all. 

We have already talked about the economic impact on India. India exports tea, cotton, and pepper and imports dried fruits and nuts from Afghanistan. If India trades with Afghanistan, the total value of exports and imports will be up to $15 billion.

Given that the Taliban have been trying to wrest control from the Afghan government for some time, it is not surprising that trade is not flourishing. We don’t know how India will react. In all likelihood, you will see a small price spike for raisins and almonds in the near future. However, this should not be a cause for concern. The long-term effects of the Taliban takeover are worrying.

The Taliban takeover is not good news for the Afghan people or for India, as you know. We could work with the Taliban to keep the supply chain open. Or we could resort to back channels and trade with them until we leave interdependence behind. As far as I know, this last option is unlikely to happen, but given the speed with which geopolitical realities have changed in recent months, one could argue that anything is possible.

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