London Daily

Focus on the big picture.
Thursday, Aug 20, 2026

Now for the Hard Part: The Taliban Face Financial Headwinds

Now for the Hard Part: The Taliban Face Financial Headwinds

Finance will need to be at the centre of decision-making not only in Western capitals, but also in Taliban-controlled Kabul.
Not even the most pessimistic predictions anticipated the speed with which the Taliban would overrun the incumbent regime in Afghanistan, but it was always certain that the US military withdrawal would leave the government and its military exposed. So, one would imagine that a range of contingencies across different dimensions would have been planned for. Quite rightly, much focus has been placed on the security of those that have supported Western forces during the past two decades and on the future of those, particularly women and girls, that have benefited from the education and career opportunities unavailable under the Taliban’s previous reign.

But another issue warrants close consideration, and that is how the international community will adapt its finance-focused activities to the Taliban takeover. This might seem to be a narrow, specialist concern, but countering the financing of terrorist groups and other state and non-state actors via sanctions and other more covert means is a core pillar of international security efforts.

Indeed, it is worth recalling that before the 9/11 attacks, finance was already a frontline security issue: it was covered by UN Security Council Resolution 1267, passed in October 1999, as well as a specific UN Convention. The Security Council resolution, triggered by the Taliban’s sheltering of Al-Qa’ida – together with a stream of subsequent resolutions directed against terrorist groups such as al-Qa’ida and Islamic State – required member states to apply travel bans, arms embargoes and, importantly, asset freezes against the Taliban.

Following 9/11, the international community mounted a concerted global policy and operational effort to identify and disrupt terrorist financing, including the finances of the Taliban. Countries also introduced unilateral regimes to restrict terrorist financing, most notably US Executive Order 13224, in which President George W Bush announced a strike on ‘the financial foundation of the global terror network’ intended to ‘starve the terrorists of funding’.

Fast forward two decades and the annual reports produced by the UN’s Afghanistan monitoring team paint a picture of continued – and thriving – Taliban financial health. Whatever restrictions the group may have notionally faced have not deterred it or diminished its ability to buy support to capitalise on the US military’s departure.

In our work at RUSI, we identify different financial models employed by terrorist actors. The Taliban fall squarely in the ‘territory-controlling’ category. While the group allegedly has external benefactors, it has perfected the art of living off the financial landscape it controls, allowing it to operate with significant financial independence – a reported objective of the group in recent times.

For example, as the most recent UN report notes, prior to their territorial expansion, the Taliban already controlled territory containing 280 of the country’s 709 mining zones. Precisely how much revenue the Taliban derived from this control is unclear, but with their takeover of the country that financial opportunity has now significantly increased. Territorial control has also allowed the group to benefit from the considerable profits to be made from Afghanistan’s opium poppy production and drugs trafficking. Expanded control offers significant opportunities for rent-seeking from businesses, transport operators and the population at large.

But financial health should not be viewed merely through one eye. Reflecting on revenue is only half the story and overlooks the financial obligations this revenue needs to cover.

With this in mind, just as the Taliban’s expanded territorial control has brought increased revenue-raising opportunities, it also brings greater financial obligations. As the governing power, the Taliban must now fund not just their own activities, but also those of state institutions that provide services and government to the people of Afghanistan.

Students of the rapid expansion of the Islamic State will recall the promises that group made in its English-language Dabiq magazine to ‘pump millions of dollars into services that are important to Muslims’ and ensure ‘the availability of food and products and commodities in the market, particularly bread’, all of which was intended to create a ‘flourishing relationship between the Islamic State and its citizens’. As financial pressure was applied to Islamic State, these welfare commitments were quickly forgotten and disappeared from the group’s propaganda. While military pressure on the Taliban remains unlikely, the application of financial pressure has already begun. Indeed, as noted earlier, it has been in place for over 20 years and is something the Taliban sought to have reviewed and removed as part of the Doha Agreement with the Trump administration.

So, what might this financial pressure entail? The early shape is already clear. A significant percentage of the Afghan Central Bank’s reserves are held offshore and have been frozen, as have international donor funds, reported to contribute up to 75% of the Afghan economy. Foreign currency cash shipments to Kabul have been suspended, and remittance companies – vectors for delivering humanitarian and diaspora funding – have suspended services. Further pressure will be self-generated as the lack of foreign currency drives up domestic price inflation and reduces the value of the local currency.

As a result, the Taliban will face a funding deficit that they will need to fill, even if they do not seek to provide the same degree of government service as the regime they have replaced. Raising revenue will therefore be a critical – perhaps existential – mission for the Taliban. A number of options are available.

First, we can expect the Taliban to strive to efficiently harvest the greater domestic revenue base at their disposal through taxation of businesses and people, and to take advantage of their expanded control over mining and other resources. Second, we can anticipate that the Taliban regime will seek to strike trade agreements on issues such as the country’s $1 trillion of mineral wealth with neighbouring countries – notably China and Iran – that might welcome closer relationships with Afghanistan in return for security guarantees. Third, we can expect the Taliban to run a ‘cheaper’ form of government than the previous regime and to bear down on the rampant corruption that beset it.

And finally, the Taliban have already shown signs of proposing a form of international blackmail – as they have done before – suggesting that ‘Afghanistan will not be a country of cultivation of opium anymore’, but that it needs international financial help in return. The inevitable humanitarian crisis that will develop in the country or the offer of security guarantees to the US and its allies may be used to seek the reopening and unfreezing of the financial channels that have slammed shut in the last two weeks.

The past fortnight has seen the US and its allies caught flat-footed. As the next phase of this crisis unfolds, finance will need to be at the centre of decision-making not only in Western capitals, but also in Taliban-controlled Kabul.
Newsletter

Related Articles

0:00
0:00
Close
Children's Doctors Warn That Vaping Can Lead Young People to Smoking
Prince Harry and Meghan to Move Back to Britain With Their Children
Hundreds of Thousands of Students Receive GCSE and Vocational Results Across England, Wales and Northern Ireland
Here Is What Can Never Happen in Your Country: Taiwan Is Giving Money to All Its People Because It Collected Too Much Tax
UK Inflation Rises to 2.9% as Energy Bills Jump
UK Issues New Conduct Guide for Asylum Seekers on Consent and Respect
Suspected People Smuggler Arrested After Investigation Identified Him
England and Wales Have Fewer Than 1,800 Prison Places Left for Men
UK Retail Sentiment Improves as Summer Spending Boosts Consumer Confidence
UK Aid Cuts Draw Warnings From Charities Over Humanitarian Consequences
UK Financial Conduct Authority Issues Guidance for Motor Finance Redress Scheme
UK Met Office Launches Aviation Programme to Reduce Climate Impact of Persistent Contrails
Former UK Civil Service Chief Received Record 500,000 Pound Severance Payment
West Midlands to Bring Bus Network Under Public Franchising Model
UK Government Drops Plan to Relax Affordable Housing Requirements After Backlash
UK Reaffirms Military Support for Ukraine Despite Russian Hybrid Warfare Threats
UK Technology Sector Expands Nearly 8 Percent as Digital Industry Outpaces Wider Economy
UK Drought Threatens Harvests Across England and Wales as Food Inflation Risks Persist
UK Government Pledges 442 Million Pounds to End Rough Sleeping by Christmas
UK Government Signals Willingness to Reconsider Digital Services Tax Amid US Tariff Threats
UK Inflation Rises to 2.9 Percent as Energy Costs Threaten Economic Recovery
NHS Hospitals Cancel Surgeries as Extreme Heat Pushes Ward Temperatures Above 40 Degrees Celsius
UK Heatwave Forces Emergency Measures as Wildfire Risk, Hospital Disruption and Drought Intensify
A Sleepless Night on Wall Street: Nasdaq to Begin Nearly Round-the-Clock Trading
"The First in the World": 69-Year-Old Protested Artificial Intelligence—and Went to Jail
Ukraine's Ousted Defence Minister Calls for Wartime Presidential Election
UK Marks Ten Years of Night Tube as London Weekend Usage Exceeds Eighty-One Thousand Journeys a Night
Met Office Issues Thunderstorm Warnings Across Northern Ireland Over Flash-Flood Risk
Frasers Group Raises Stake in Hugo Boss to Nearly Forty-Eight Percent
Scottish Clyde Marine Pilots Prepare for Strike That Could Disrupt Glasgow and Greenock Shipping
Twenty Passengers Injured After Southern Train Derails Near Lewes in East Sussex
Government Rules Out High-Speed Rail Revival Between West Midlands and Northern England
West Midlands Bus Network Returns to Public Ownership in Twenty-Four Million Pound Deal
UK Competition Watchdog Targets Trainline, Virgin Atlantic and RED Driving School Over Drip Pricing
Northern Ireland Health Minister Mike Nesbitt Resigns After Dispute Over Causeway Hospital Surgery Closure
UK Long-Term Government Bond Yields Rise to Five Point Eight Five Percent as Borrowing Costs Surge
UK Government Overhauls Planning Rules to Push Housing Development Near Major Transport Hubs
UK Health and Economic Pressures Highlight Wider Strain on Households and Public Finances
UK Prime Minister Andy Burnham Reaffirms Full Support for Ukraine Amid Russian Warnings
Sainsbury’s Suspends Live Facial Recognition at London Store After Customer Misidentified
Artists Urge UK Prime Minister Andy Burnham to Reject New North Sea Oil and Gas Licensing
UK Government Awards Four Hundred and Fifty-Six Million Pound Civil Service Training Contract to EY and KPMG
Global Government Bond Yields Rise as Middle East Conflict Fuels Inflation Concerns
British Housing Market Records Weakest August Since Two Thousand and Eighteen as Asking Prices Fall
UK Announces New Sanctions on Russian Shadow Fleet and Financial Institutions
UK Approves Virgin Rail Group Services Through Channel Tunnel, Challenging Eurostar
UK Government Backs Three Hundred Million Pound AI Investment Zone in North Lanarkshire
UK Declares National Salmonella Outbreak Linked to Imported Eggs
China’s Lifelike AI Humans Move From Livestreams Into Real-World Service Roles
UK Government Rolls Out £5.8 Billion Regional Investment Programme to Revive High Streets
×