Afghanistan: Humanitarian Crisis, Economic Collapse, and U.S. Sanctions

Afghanistan: Humanitarian Crisis, Economic Collapse, and U.S. Sanctions

February 9, 2022
Afghanistan: Humanitarian Crisis, Economic Collapse, and U.S.
Sanctions
Humanitarian and economic conditions in Afghanistan,
projected to be newly displaced in 2022, and 1.8 million
long one of the world’s poorest and most aid-dependent
people in communities hosting displaced Afghans.)
countries, have deteriorated significantly since the
Taliban’s August 2021 takeover, creating the largest
On January 11, 2022, the United Nations launched a $5
humanitarian crisis in the world. The Biden Administration
billion humanitarian appeal for Afghanistan ($4.4 billion)
and many Members of Congress seek to maintain sanctions
and five neighboring countries ($623 million) hosting
on the Taliban and avoid actions that would empower the
displaced Afghans—the largest ever annual appeal for one
group or legitimize its rule. At the same time, they and
country. The humanitarian community requires lead times
many others in the international community seek to respond
of several months to increase capacity for critical
to the urgent humanitarian crisis. Afghanistan’s needs will
assistance; however, the United Nations emphasizes that
persist in the absence of sustainable economic development
these efforts cannot be a substitute for long-term recovery.
that may be difficult without greater engagement with the
While the operational context is extremely challenging in
Taliban.
Afghanistan, U.N. entities and other humanitarian
organizations continue to deliver multi-sector assistance
Afghanistan Pre-Taliban Takeover
(such as emergency food, health, water and sanitation,
Prior to the Taliban takeover, roughly half of Afghanistan’s
shelter, and winterization services) across the country.
population (18.4 million people, out of 35-40 million) faced
a severe humanitarian crisis across a wide range of metrics.
The U.S. government is the largest humanitarian donor for
Conflict, natural disasters (including severe droughts in
the Afghan population, including refugees and internally
2018 and 2020), and the Coronavirus Disease 2019
displaced persons. On January 11, 2022, the United States
(COVID-19) pandemic contributed to deteriorating
announced a contribution of more than $308 million,
humanitarian conditions and chronic vulnerability and
bringing total U.S. humanitarian assistance to nearly $782
poverty among the general population.
million since October 2021. It is not yet clear how much of
the U.S. contribution is for the recent U.N. appeal.
The weak Afghan economy exacerbated humanitarian
needs. The former U.S.-backed government relied heavily
Current Economic Situation
on international development assistance. Foreign donors
Following the Taliban takeover, economic challenges, such
financed over half of the government’s $6 billion annual
as currency depreciation, increased food and fuel costs,
budget and as much as 80% of total public expenditures.
reduced cash availability, and high unemployment have
Between 2002 and 2021, the United States provided over
constrained Afghans’ ability to meet their basic needs, and
$17 billion to the Afghan government in on-budget
made a greater number more reliant on humanitarian
assistance—funds that went directly to Afghan government
assistance. Donor governments and implementing partners
entities, or to them through multilateral trust funds.
ended international development funding to prevent the
Taliban from accessing those resources. Millions of
Current Humanitarian Overview
Afghans lost salaries and other forms of support. In October
In Afghanistan, humanitarian needs have since surpassed
2021, the International Monetary Fund projected that the
those of other major crises (such as Ethiopia, South Sudan,
Afghan economy may contract as much as 30% by the end
Syria, and Yemen) with 24.4 million people in
of 2022.
humanitarian need. The U.N. World Food Program (WFP)
has been sounding the alarm on food insecurity, with some
The currency devaluation and halt in foreign aid have
estimates predicting that at least 55% of the population will
contributed to fundamental government insolvency,
likely reach crisis or emergency levels of food insecurity by
including a severe liquidity crisis (in response to which the
March 2022, a near 35% increase over the previous winter.
Taliban imposed limits on the amount of cash Afghans
Nine million are projected to reach the more severe level of
could withdraw). Prior to August 2021, the Afghan central
emergency food insecurity. Acute malnutrition is expected
bank reportedly received quarterly shipments of $249
to impact the most vulnerable, including millions of
million in U.S. paper currency, which stopped after the
children. As of January 2022, U.N. estimates indicate
United States placed a hold on U.S.-based Afghan central
forced displacement could affect over 9 million people this
bank reserves. In December 2021, Secretary of State
year, including more than 3.4 million Afghans displaced
Antony Blinken stated “we are looking intensely at ways to
within Afghanistan and 5.7 million people in the region. (In
put more liquidity into the Afghan economy, to get more
neighboring countries this includes 2.2 million Afghans
money into other people’s pockets ... in a way that doesn’t
previously registered as refugees, 1.7 million Afghans
directly benefit the Taliban.”
https://crsreports.congress.gov

Afghanistan: Humanitarian Crisis, Economic Collapse, and U.S. Sanctions
Many experts argue it is critical to avert a collapse of the
exemptions lack specificity on commercial activity, which
banking sector and stimulate cash flow in the country to
may lead to financial institutions continuing to “de-risk”
enable Afghans to meet their basic needs and supplement
Afghanistan—refusing to engage in financial transactions
the humanitarian response. Some international initiatives
entirely rather than risk violation of U.S. and international
have injected cash into the Afghan economy, such as the
sanctions. This risk aversion may also be based on the U.S.
World Bank’s December 2021 transfer of $280 million in
government declining to define what constitutes the
Afghanistan Reconstruction Trust Fund (ARTF) monies to
government of Afghanistan. De-risking may contribute to a
UNICEF and WFP for Afghan health and education sector
chilling effect on humanitarian donors and slow the
worker salaries. Roughly $1.2 billion remains in the ARTF.
operational response. In other countries and contexts,
sanctions have presented similar challenges.
U.S. Sanctions
Efforts to address the humanitarian and economic crises in
The Biden Administration has indicated its support for
Afghanistan are complicated by sanctions on the Taliban.
addressing Afghanistan’s humanitarian and economic
The United States has designated the Taliban as a Specially
crises, but also emphasized the importance of ensuring
Designated Global Terrorist (SDGT) group since 2002, and
assistance does not fall into Taliban hands. More
the Haqqani Network, a semi-autonomous component of
permissive exemptions in general licenses might mitigate
the Taliban, as a Foreign Terrorist Organization (FTO) and
de-risking, but raise risks of assistance being diverted to the
as an SDGT since 2012. SDGT designations are
Taliban. Further, a U.S. government determination on what
implemented under Executive Order 13224 (66 Federal
constitutes the government of Afghanistan may resolve
Register 49079). Restrictions imposed on SDGT designees
ambiguities on exemptions under general licenses, but
include blocking access to their U.S.-based property and
sacrifice leverage in potential negotiations with the Taliban.
interests in property, and prohibiting U.S. persons from
engaging in transactions with designees. Foreign financial
Policy Issues and Congressional Action
institutions found to have conducted or facilitated any
The intersecting crises in Afghanistan pose difficult
significant transaction on behalf of SDGT designees may be
challenges for U.S. policymakers. Biden Administration
prohibited from using the U.S. banking system. FTOs are
officials argue that the Taliban are primarily responsible for
designated by the Secretary of State pursuant to section 219
the current situation, noting that they were warned that if
of the Immigration and Nationality Act, as amended (P.L.
they pursued a military takeover, they would be shut off
82-414, 8 U.S.C. §1189). The restrictions imposed on
from international development assistance.
designated FTOs include a prohibition on U.S. persons
knowingly providing them with “material support or
In Congress, some Members have sought to cut off all aid,
resources,” restrictions on entry to the United States of
including humanitarian assistance, which could be
representatives and members of designated FTOs, and a
construed as supporting the Taliban (H.R. 5236). Other
prohibition on access by designated FTOs to the U.S.
Members echo the Administration’s support for U.S.
financial system.
assistance, provided the Taliban do not have access to it.
These Members have welcomed Treasury’s general licenses
The legal framework authorizing sanctions on the Taliban
to exempt some transactions from sanctions and other
and Haqqani Network has remained relatively consistent
measures taken by the Administration to facilitate aid
since the groups’ designations. The implications of these
delivery. Some Members have called on the Administration
designations, however, changed substantially following the
to go further, advocating “more explicit reassurance
Taliban takeover. It was initially unclear what, if any,
regarding permitted activities.” These Members also argue
activities in Afghanistan were permissible under U.S. and
that “pragmatic U.S. engagement with the de facto
international sanctions. In September and December 2021,
authorities” is necessary to avert further humanitarian
the Department of the Treasury issued a series of general
suffering.
licenses exempting from sanctions a range of support for
humanitarian activities in Afghanistan, including
Looking ahead, Members of Congress may be compelled to
transactions related to exportation of agricultural
balance the risk of assistance being diverted to or used by
commodities and medical goods, noncommercial personal
the Taliban with the risks of further economic collapse,
remittances, and official business conducted by the U.S.
including increased humanitarian needs and heightened
government, international organizations (IOs), and
insecurity. The United Nations stresses that the 2022
nongovernmental organizations (NGOs). These general
humanitarian appeal is critical to saving Afghan lives but is
licenses also authorize interactions with the Taliban or the
a “stopgap measure.” Without a sustainable solution—
Haqqani Network that are considered “ordinarily incident”
which may entail stabilizing the Afghan economy in a way
to the provision of humanitarian assistance or the official
that further solidifies the Taliban’s position in power—the
business of the U.S. government, IOs, or NGOs in carrying
crisis may worsen, creating greater humanitarian and
out exempted activities. General licenses relating to
economic consequences.
Afghanistan do not allow financial transfers to any blocked
persons, or to any entity in which the Taliban or the
Clayton Thomas, Analyst in Middle Eastern Affairs
Haqqani Network owns a 50% or greater interest.
Rhoda Margesson, Specialist in International
Humanitarian Policy
While the humanitarian community welcomes U.S. general
Edward J. Collins-Chase, Analyst in Foreign Policy
licenses, some argue that these exemptions are insufficient
to address the broader crisis. Moreover, they argue the
IF12039
https://crsreports.congress.gov

Afghanistan: Humanitarian Crisis, Economic Collapse, and U.S. Sanctions

Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff to
congressional committees and Members of Congress. It operates solely at the behest of and under the direction of Congress.
Information in a CRS Report should not be relied upon for purposes other than public understanding of information that has
been provided by CRS to Members of Congress in connection with CRS’s institutional role. CRS Reports, as a work of the
United States Government, are not subject to copyright protection in the United States. Any CRS Report may be
reproduced and distributed in its entirety without permission from CRS. However, as a CRS Report may include
copyrighted images or material from a third party, you may need to obtain the permission of the copyright holder if you
wish to copy or otherwise use copyrighted material.

https://crsreports.congress.gov | IF12039 · VERSION 1 · NEW