Where Is the Taliban Regime Three Years In?

Three years after their rapid takeover of Afghanistan in 2021, the Taliban have consolidated control over the country’s territory and key levers of power—military, administrative, financial, and political. There is no organized armed opposition that would threaten the regime internally, and neighboring countries as well as great powers appear to have decided that living with the regime is preferable to trying to topple it in yet another civil war. And the Taliban have remained cohesive and united—unlike most past Afghan regimes—despite some friction and internal differences. But the Taliban regime is presiding over a failing economy with a deeply suffering population, and no improvement is in sight. The current confluence of internal and external factors points to a continuation of the status quo, which would be unfortunate for the Afghan people—though at least the country would not fall back into widespread civil war. Threats to the Taliban regime seem remote, but relations with Pakistan and the continuing opium ban, if not well managed, are probably the most important risks.

What the Taliban Brought and Inherited

The Taliban movement that came into power in 2021 was different in important respects from the previous iteration of the Taliban that took Kabul in 1996, even though the movement’s core ideology was largely the same. And the country the Taliban took over was very different from Afghanistan in the 1990s.

Whereas in 1996 the Taliban movement was nascent, by 2021 it had survived, learned, and evolved as an insurgency while facing sustained military pressure from the U.S., its allies, and Afghan government forces. In addition to its increasing tactical effectiveness and territorial expansion over time, the Taliban built organizational structures beyond the military sphere, including for revenue collection and local administration. In parts of the country under the group’s control, and along major transport routes, the Taliban insurgency issued tax receipts, mining permissions, and other edicts and orders. The movement’s capacity should not be overstated, however, and it was focused on winning the war (by outlasting the enemy).

Unlike in 1996 when the Taliban took over a Kabul largely destroyed after years of destructive civil war, the Taliban in 2021 inherited a functioning Afghan government, staffed with large numbers of educated and professionally qualified people, reflecting the build-up of human capital during the previous two decades. Even after the flight of senior government officials and many others—especially women—that came with the Taliban takeover, large pools of mid-level officials, managers, and technical personnel remained. Information technology and other systems and processes were in place and were restored after short interruptions.

Consolidation of Control and Concentration of Power Around the Emir

The Taliban regime took over the existing state apparatus it inherited and installed senior members of the movement in top leadership positions in nearly all government ministries. (The recent replacement of the minister of public health removed the most prominent remaining non-Taliban technocratic official from government leadership.) Many of the new appointees had been part of the 1990s Taliban leadership structure, but unlike in the 1990s, there were also some “Taliban technocrats” who were inducted into government positions.

Certain government agencies (the Ministry of Finance, the Ministry of Mines and Petroleum, and the Ministry of Agriculture, among others) mobilized revenue for the new regime, especially customs duties and mining royalties and taxes, and have done so arguably more effectively than the previous Islamic Republic had—despite the weak economy. In these ministries, mid-level technocrats from the previous regime continued to play a role in day-to-day management, but without decision-making authority. The security agencies (the Ministry of Defense and the Ministry of Interior) were kept intact but with changes in staffing. The existing Taliban intelligence apparatus from the insurgency largely took over the previous government’s intelligence organization. The Taliban brought legal institutions and the justice sector into line with the group’s core principles, which also included wholesale staffing changes. And the Taliban abolished some agencies altogether since they had no place in the Taliban’s governing agenda (such as the Ministry of Women’s Affairs), replaced by newly created institutions—most notably the Ministry of Promotion of Virtue and Prevention of Vice.

It appears that the regime has “Pashtunized” provincial administrations, by widely appointing officials from the Pashtun ethnic group, which dominates the Taliban, including in non-Pashtun majority provinces such as Samangan. These appointments mark a shift beyond the previous appointment of senior Taliban members as provincial governors and to other top positions (police chief, intelligence chief, etc.). In Badakhshan province, these changes occurred later than elsewhere, reflecting the strong ethnic Tajik element in the Taliban insurgency there. But even in Badakhshan, the regime has now been making many of these appointments.

The Taliban leadership has frequently swapped senior government appointees. This “churn” does not seem necessarily or solely related to problematic performance or outright failures, since those removed from senior positions almost invariably get appointed elsewhere. Instead it may reflect the desire of the emir and his allies to avoid entrenchment of administrative leaders and the emergence of separate power bases that could resist the Taliban leadership’s orders. In some cases, leadership changes may reflect concerns about corruption, which may have been a factor in the recent demotion and replacement of the minister of mines and petroleum.

During the early months of the regime, Taliban leader Mullah Haibatullah was relatively quiescent, continuing the behind-the-scenes consensus-building roles he had played in the insurgency. During this period the senior Taliban military and other leaders appointed to top government positions were more highly visible, and several of them were seen as “pragmatists” at least within the context of the Taliban movement, in particular with regard to foreign relations. This may also have reflected the unexpectedly quick Taliban victory that abruptly put them in the driver’s seat without an intervening period or conflict after the U.S. troop withdrawal or further negotiations, let alone some kind of interim government.

However, since then Haibatullah has increasingly asserted his authority, inserting himself directly into key government decisions—especially on core ideological issues like the ban on female secondary and higher education, restrictions against women working in the public sphere, and the opium ban (given the Taliban’s religious strictures against narcotic drug use). His increasingly hands-on role is reflected not least in Haibatullah’s several visits to Kabul and his frequently calling ministers and other leaders to come to Kandahar to meet with him. Haibatullah’s increasing visibility and assertiveness is somewhat remarkable given his purely clerical background and his lack of operational or military experience during the insurgency. As was the case with President Hamid Karzai during the early post-2001 years, authority over government appointments seems to have been an important vehicle by which Haibatullah strengthened his position. But still, his authority centers on consensus and maintaining the unity of the Taliban.

Some observers have argued over whether the Taliban regime—and Haibatullah himself—is strong or weak in some kind of absolute sense. But those commentators miss the point. In relative terms, the regime after three years in power is entrenched as one of the most powerful ones in recent Afghan history, even though like any Afghan government it is presiding over a decentralized and ethnically and otherwise diverse population. The kinds of factional divisions that toppled or gravely weakened several previous Afghan regimes have been contained by the Taliban so far.

Moreover, the Taliban regime currently is not facing a strong organized armed opposition that poses a threat to the regime—let alone one that is militarily supported by outside powers. (The Islamic State Khorasan Province (ISK) carries out occasional terrorist attacks in Afghanistan but is not a serious threat to Taliban rule.) Other than perhaps a brief period after the 2001 U.S.-led intervention that toppled the previous Taliban regime and before that movement resuscitated in Pakistan with Pakistani support, the current internal and external constellation of forces is unprecedentedly favorable for the regime currently in power.

Economic Collapse Followed by Precarious Low-Level Stability

Though Afghanistan suffered considerable human, physical, economic, and social damage from two decades of insurgency prior to the Taliban takeover, enormous inflows of aid and security assistance, along with the very large international military expenditures in-country, artificially boosted the Afghan service sector specifically and the economy broadly. The country experienced major improvements in human development indicators such as basic health and education. However, economic growth stalled as aid declined in the 2010s, and progress on human development indicators such as health and education turned out to be unsustainable when development aid stopped completely in 2021.

The end of large-scale organized violent conflict after August 2021 had positive effects on security, economic activity, and even some social indicators—for example, an increase in girls’ primary school enrollment in rural areas. However, the economic “peace dividend” that would normally be expected at the end of a civil war—especially an outright victory by one side as occurred with the Taliban takeover—was overwhelmed by other shocks. Most damaging was the abrupt cutoff of aid (which had amounted to more than $8 billion per year, equivalent to approximately 40 percent of gross domestic product [GDP]) and international military spending in Afghanistan. The economic decline was exacerbated by the freezing of Afghanistan’s over $9 billion of foreign exchange reserves ($7 billion of which were held in the U.S.), the incipient collapse of the banking system, and the stoppage of normal financial transactions with the rest of the world.

No country could have managed such an enormous shock without major economic decline, and Afghanistan is no exception—suffering a sharp drop in GDP of 21 percent in 2021 and an additional 6 percent in 2022, with no significant revival in 2023 and negligible growth projected for 2024 and 2025. The result is widespread unemployment, loss of livelihoods, and poverty, with much of the population dependent on humanitarian assistance. During 2022 and 2023, the Afghan economy stabilized at a lower level, supported by a large influx of humanitarian aid paid for by regular shipments of cash U.S. dollars into the country, as well as better-than-expected Taliban economic management (discussed below). But this is a fragile below-subsistence equilibrium, with much of the population in need of humanitarian help, and subject to downside risks with little upside potential.

Taliban Successes and Mistakes

Taliban governance has been broadly consistent with the group’s core interest in strengthening the regime and increasing its longevity. Some of the Taliban’s actions that have been widely criticized in the West—ranging from the lack of any effort to broaden the base of political power or to make the government more inclusive to the failure to publish its budget—may make good sense for an authoritarian regime.

Taliban macroeconomic management has been better than expected, reflected in Afghanistan’s stable exchange rate, limited inflation, functional revenue collection, and more broadly its maintenance of relative economic stability in the face of major economic shocks. The Taliban’s performance in this regard is dramatically different from the Taliban’s non-management of the economy during the group’s previous 1996-2001 rule. That regime had no control over the afghani currency and there was hyperinflation; government revenue was negligible; the Afghan economy was largely moribund, especially after the severe drought of the late 1990s and the Taliban’s first opium ban in the year 2000; average incomes were less than $200 per capita; and social indicators such as maternal and child mortality were terrible.

Corruption in the Taliban government appears less severe than it was under the previous Afghan government, particularly in customs. And the Taliban regime has abolished the separate trade levies previously imposed by the Taliban insurgency. More generally, the cutting off of most external aid after August 2021 removed from the Afghan economy significant amounts of money that was vulnerable to corruption. However, there are indications that petty bribery as well as corruption in the most vulnerable sectors—such as mining—have continued.

And the Taliban regime has clamped down on the rampant capital flight that occurred under the Islamic Republic (on the order of $5 billion per year or more), through the strict enforcement of rules against the export of cash and more stringent regulation of the hawala informal money market. These actions along with the government’s regular foreign currency auctions have stabilized the afghani currency even in the face of a sizable and widening trade deficit.

The Taliban government has also made some serious mistakes that have damaged the Afghan economy and potentially the regime’s own interests. One is the regime’s ban on opium poppy cultivation, which it has strictly enforced for a second year in a row. The ban has precipitated a loss of income on the order of $1 billion per year for poorer rural households (most of them Pashtuns) that had depended on opium for their livelihoods and face a bleak future given the limited number of other job opportunities. It is most unlikely to be sustainable since other economic activities are not taking up the slack, and it has not stemmed the flow of opiates to neighboring countries and beyond. Though wealthier landholding households have benefited from large capital gains on their opium inventories due to price increases resulting from the ban, popular sentiment against the ban is likely to intensify as these inventories get depleted.

A second major mistake has been the ban on female secondary and higher education and the increasing restrictions against women working in the public sphere. Excluding half of the Afghan population from access to education and much of the workforce will be disastrous for longer term economic and social development. But these restrictions have also been harmful for the Taliban’s foreign relations and are the most salient reason why much of the international community has refused to recognize and maintain substantial economic relations with the regime. Moreover, the ban on female secondary education has not been popular inside Afghanistan or even within the Taliban movement.

Other missteps have been less serious but nevertheless damaging. On the economic front:

• The macroeconomic policy focus on maintaining a strong afghani exchange rate discourages domestic production and exports while stimulating imports, which is especially inappropriate in the current recessionary economic situation when the opposite macro stance is required.
• Price deflation (falling prices) this year is a symptom of economic weakness but is also the outcome of too tight monetary and exchange rate policies—most significantly the limited printing and circulation of afghani banknotes, and the foreign exchange auctions, which put more U.S. dollars into circulation.
• And though effective, aggressive Taliban revenue mobilization risks overtaxing the economy and the private sector, further dampening business incentives, activity, and potentially investment in the face of the current weak economy.

Prospects and Risk Factors for the Taliban

Regime changes in Afghanistan invariably have involved one or more of (a) factional fissures or contestation among individuals within the ruling group descending into open conflict, (b) serious armed opposition supported by outside powers, and/or (c) direct military intervention by other countries. None of these phenomena has materialized so far or seems likely to arise in the short term. By most indications the Taliban regime is well entrenched.

But what could begin to undermine the Taliban’s grip on power, and possibly generate threats to the regime over time?

Tensions around the poppy ban are likely to increase, as the suffering of poor Afghan households is compounded with each successive annual iteration of the ban. More Afghan farmers and landowners will be increasingly desperate to return to poppy cultivation. The episodes of violence that have already occurred in Badakhshan could worsen and, perhaps, spread elsewhere in the country.

Relations with Pakistan could break down to the point where that country’s government and military threaten the Taliban regime. The deterioration in relations—already fraught—may continue and eventually reach a boiling point that changes Pakistan’s calculus, moving it beyond current economic pressures on trade and deportations of Afghans in Pakistan to include serious violent border incidents, support to armed opposition, or even direct military intervention. The Tehrik-e Taliban Pakistan (Pakistani Taliban—TTP), which has had close ties with the Afghan Taliban and has launched attacks on Pakistan from Afghan territory, is by far the biggest source of friction between the two countries. A major act of terrorism emanating from Afghan soil or a sustained series of smaller terrorist incidents could precipitate a major response by Pakistan. Border incidents along the disputed “Durand line” geographic demarcation between the two countries could spiral out of control, or the Taliban’s relations with India, which have improved since their takeover, to the chagrin of Pakistan, could perhaps bring in an Indo-Pakistan conflict dimension.

Frictions with other countries, and over other issues, seem unlikely to threaten the Taliban regime. With rivers originating in Afghanistan flowing into Pakistan, Iran, and several Central Asian countries, there are ongoing disputes over water, but it seems unlikely that these water issues would compel neighboring countries to take action against the Taliban. For example, the Qosh Tepa canal in northern Afghanistan diverts some of the Amu Darya river’s water, which previously flowed into Uzbekistan and Turkmenistan, but it has not resulted in a breakdown in relations with those countries. Large movements of Afghans to and through Pakistan and Iran are continuing, along with deportations back into Afghanistan, but are not leading to a breaking point in relations. Flows of illegal opiates out of Afghanistan, which continue despite the Taliban’s poppy cultivation ban (reflecting large existing inventories of opium), represent a serious concern for neighboring countries but are far from sufficient to precipitate a regime-threatening response, not having played this kind of role during the some 30 years that Afghanistan has been the world’s largest producer of illicit opiates.

If there is a further snowballing economic decline, aid will not come in to save the day. Unlike in late 2021 and early 2022 when humanitarian aid ramped up, a second downward economic spiral could more fully test the extent to which the Taliban regime’s strength and longevity do not depend on the economic well-being of the Afghan population—because aid would not flow into the country in a potential future economic collapse. So far, however, the widespread poverty in the country has not weakened the Taliban’s grip on power.

Worsening corruption—only to be expected as the regime further settles in and consolidates power—could, if it increases and is poorly managed, become a risk factor for the Taliban’s control. But such a dénouement is far from inevitable and does not appear on the horizon now. Many governments around the world survive for long periods of time with widespread corruption, which sometimes can even enhance regime stability at least for a period of time. Probably the biggest risk is if worsening corruption gets mixed up with or aggravated by other risk factors and particularly if it becomes factionalized, as happened with great damage during the previous Islamic Republic regime. Much mining tends to be highly vulnerable to corruption in any developing country, and the sector was a major seat of corruption during the previous Islamic Republic regime. The recent replacement of the minister of mines and petroleum may be a sign of Taliban concerns about corruption in this sector.

A crisis of leadership succession, often the Achilles heel of authoritarian regimes around the world, could undermine and threaten Taliban rule. As the current leader, Mullah Haibatullah Akhunzada, ages, succession issues may come more to the fore. However, the Taliban successfully navigated two earlier challenging successions, the death of founder-leader Mullah Omar and then the killing of Akhtar Mansour by a U.S. drone strike in 2016 and subsequent appointment of Haibatullah as leader, without permanent harm to the movement.

Erosion of day-to-day government functioning could result from an ongoing “brain drain” after the large loss of human capacity in the aftermath of August 2021, potential deterioration of information technology and other government systems over time, possible inattention on the part of top Taliban leadership to the maintenance of government machinery, and staffing mid- and lower levels of the government with unqualified appointees from the insurgency, among other issues. Whether this risk materializes depends in part on how much professional education and training Afghan government officials are receiving to replenish the human capital lost by out-migration, especially for members of the Taliban movement who are inducted as government staff.

Taliban harsh restrictions against women and girls are unlikely to weaken the group’s power in the short term. These restrictions range from bans on female secondary and higher education, to preventing numerous women from working in the public sector, to restrictions against women’s movements outside the household without a male relative accompanying them, to differential legal treatment. However, they represent a major obstacle to normal levels of aid and international financial relations. Moreover, they will further weaken the Afghan economy and worsen poverty and social indicators (such as health and education) over the longer term.

Finally, unexpected events could derail the Taliban, as sometimes precipitated regime change at key points in the past, such as 9/11, which led to the fall of the first Taliban regime, or the Marxist-Leninist “accidental coup” of 1978, which inaugurated four decades of bloody conflict.

What Will the Taliban Do?

The Taliban government has options to mitigate possible risks to the regime and promote its resilience and longevity. Preventing major terrorist attacks launched from Afghan soil—whether by the TTP, ISK, or another group—would appear to be the top priority, not least since that is what led to the toppling of the previous Taliban regime in 2001. More generally, carefully managing bilateral relations with neighboring countries, even while actively defending national and regime interests, would mitigate risks of a breakdown in relations that could undermine the Taliban. Recent movement toward normalization of relations by neighboring countries as well as China and Russia will enhance the regime’s stature and potential longevity, absent a major disruption.

A reversal of the ban on female secondary and postsecondary education would reap immediate dividends for the Taliban in the form of likely restoration of normal financial relations with the rest of the world, recognition by many countries, and probably more aid as well as potentially more foreign investment. Moreover, Afghanistan and its government would benefit in myriad ways in the long term by better educating the entire population. A relaxation of the poppy cultivation ban would mitigate discontent among poorer rural households that were previously dependent on the crop. This economic suffering is only likely to get worse and to spread the longer the ban is strictly enforced, with potential for wider outbreaks of violence.

But neither of these major policy reversals is likely to be taken up. The female education ban (as well as restrictions against women working) appears to be a core policy priority of the Taliban. A relaxation of the poppy ban (at least an implicit one) is more likely, particularly given that the government does not appear to be very effectively enforcing the prohibition against trade, processing, and exports of opiates, which continue in substantial amounts from existing inventories. However, the top leadership of the Taliban has made banning drugs a highly visible priority, so anything more than a mild de facto easing of the ban is unlikely, but even that might bring modest benefits to the rural population and help reduce associated tensions.

Other economic policy choices for the Taliban would be more palatable for the leadership and worth pursuing, but the benefits also would be more limited. First, the Taliban administration should reverse recent price deflation and ensure that the afghani exchange rate is not too strong, instead allowing it to depreciate gradually. Reducing the amount of U.S. dollars sold by the Central Bank at foreign currency auctions (which would have the added benefits of building up foreign exchange reserves in-country), and moderately increasing the printing and circulation of afghani banknotes, is a prudent macro policy stance. These policy changes would not by themselves result in robust economic growth, but they would at least stop exacerbating the current recession by encouraging domestic production and exports.

Second, the Taliban should avoid overtaxing the private sector. Actively collecting all the taxes on the books, which the previous government did not do because of a lack of effort and widespread corruption, would impose too heavy a burden on the private sector and further dampen economic activity. The Taliban should review all existing taxes, abolish duplicate and excessive taxes, and not impose new levies. Less onerous taxation practices would ease the burden on the private sector and on the economy more generally. However, collecting less in taxes would also require containing government expenditures particularly in the security sector (the largest component of spending)—though a modest fiscal deficit would be appropriate in the current recessionary economic situation.