The Taliban have advertised their efforts towards infrastructure development over the last two years, since taking over power in August 2021. The Taliban Deputy Minister of Economy Abdul Latif Nazari stated in August 2023 that “overall 3575 development projects of $1.9 billion have been launched in the field of infrastructure, health, energy and transportation”.1 Taliban spokesperson Zabihullah Mujahid stated that funding for these developmental projects in 2023 was more than the previous year.2
Regional connectivity projects such as the Khaf–Herat Railway Project, a connectivity link between Afghanistan and Iran, are touted to be ready for operation, as per the spokesperson of Afghanistan Railway Authority in December 2023.3 The Ministry of Mines and Petroleum in March 2023 stated that they were genuinely interested in the Turkmenistan, Afghanistan, Pakistan and India (TAPI) project as it will create direct or indirect employment and will help in energy production. Spokesperson Mujahid noted that several meetings were held with the countries involved in the project, to help take it forward.4 TAPI was on the agenda when the acting Foreign Minister Amir Khan Muttaqi along with the Minister for Mines and Petroleum met Turkmenistan Foreign Minister Rasit Meredow on 17 December 2023.5
Another regional connectivity project, the Trans-Afghanistan railway project, was signed in February 2021 between Uzbekistan, Afghanistan and Pakistan, with the project expected to cost $5 billion, prior to the Taliban taking over power. The Taliban government are now trying to secure funding for the project from Qatar or the UAE.6
As for major domestic projects, the 285-km long Qosh Tapa Canal Project aims to convert 550,000 hectares of desert into farmland by diverting 20 per cent water from the Amu Darya River. This project is being built in the Kaldar District of northern Balkh Province. On 11 October 2023, Taliban Deputy Prime Minister for Economic Affairs Abdul Ghani Baradar inaugurated the second phase of this project. Officials of the Islamic Emirate have assured that they will address concerns, if any, of regional countries such as Uzbekistan, who had expressed apprehension about the project.7 The Deputy Minister of Water and Energy, Mujib Rahman Akhundzada, stated that a plan to build a hydroelectric dam on the Kunar River was not being implemented immediately though due to its high cost. It is envisaged that the dam will irrigate one and a half lakh acres of agricultural land and produce 45 megawatts of electricity.8
Apart from these mega projects that are being constructed or being planned, the Taliban regime has announced many road construction projects.9 As per the Taliban-run public works ministry, 90 maintenance projects have already been completed in 2023 and it plans to initiate 110 developmental projects, which include 30 bridge piers, 1500 check bridge piers, Kabul–Kandahar Highway, Afghan Ring Road and the reconstruction of the Salang Highway.10 Afghanistan electricity company, Da Afghanistan Breshna Sherkat (DABS) has also developed a five-year strategic plan to develop 710 MW of renewable energy, with funding from internal sources. On 26 July 2023, DABS released annual report on major achievements in 2022 noting that electricity line from Kajaki to Kandahar, which is 170-km long, has been completed.11
Economic Realities
The Taliban’s focus on infrastructure development though is up against the hard realities of a difficult economic situation. After the Taliban took over power in August 2021, the country witnessed a major decline in its economy. The United States froze the Afghan Central Bank reserves of about $7 billion and the European Union and the World Bank stopped disbursing aid. Sanctions were also imposed. The World Bank notes that Afghanistan’s services sector, which contributes 45 per cent of the country’s GDP, shrank by 6.5 per cent in 2022, following a 30 per cent drop in 2021. The agriculture sector which contributes 36 per cent of GDP declined by 6.6 per cent while the industrial sector also saw a contraction of 5.7 per cent in 2022.12
According to the Afghanistan Economic Monitor released by the World Bank, Afghanistan government collected a total revenue of $2.3 billion for the initial ten months of 2023-2024.13 Such finances will not be sufficient, therefore, to implement the projects they have planned and are in progress. The role of funding and expertise from regional countries like China and India, therefore, assumes significance.
Chinese Investments
Chinese Foreign Minister Wang Yi’s surprise visit to Afghanistan on 24 March 2022 and invitation extended to the Taliban to attend the Third Foreign Ministers’ Meeting held on 30–31 March 2022 in Tunxi in East China’s Anhui Province was proof of China’s proactive stance in its engagement with the Taliban. China had earlier made investments in the Aynak copper mine. At the Fourth Pakistan–China Foreign Ministers’ Strategic Dialogue held in Islamabad on 6 May 2023, it announced that it wanted to extend the China–Pakistan Economic Corridor (CPEC) to Afghanistan.
The Taliban have shown interest in CPEC and the Belt and Road Initiative (BRI) with the hope that it would strengthen the Afghan economy and bring in investments. In October 2023, Taliban Commerce Minister Haji Nooruddin Azizi said: “China, which invests all over the world, should also invest in Afghanistan… we have everything they need, such as lithium, copper and iron”.14
In January 2023, China National Petroleum Corporation signed an agreement with the Taliban to invest $150 million. In the coming three years, it will invest $540 million dollars to extract oil from the Amu Darya basin and develop an oil reserve in the country’s northern Sar-e Pul Province.15
Despite China’s bid to extend CPEC to Afghanistan, the Wakhan corridor continues to raise China’s angst given concerns about possible entry of Uyghur terrorists through this route.16 In September 2023, the Taliban’s Ambassador to China, Mohammad Sadiq, mentioned that he had detailed discussions with Chinese authorities regarding the commencement of traffic through the Wakhan Corridor.17 Opening of this corridor would strengthen trade links between the two countries if the Taliban manages to address the Chinese concerns.
India’s Stakes
India is still the largest regional donor for Afghanistan and fifth largest in the world with an investment of $3.4 billion in Afghan reconstruction, development and humanitarian efforts. On 14 August 2022, the Taliban requested India to complete its pending projects and even requested to train their security personnel.18 This came close on the heels of India announcing its presence in Afghanistan under Technical Mission in June 2022.19
In December 2022, Taliban’s Minister for Urban Development, Hamdullah Nomani, interacted with members of the Indian technical team in Kabul where he talked about renewal of Indian projects, invited investment in New Kabul Town, raised visa issues and urged more scholarships for Afghan students. After this interaction, many senior diplomats met with Taliban officials in West Asian countries.
Recently, the Indian Embassy in UAE invited Afghan envoy Badruddin Haqqani for Republic day celebrations at Abu Dhabi. Indian delegations have participated in regional cooperation initiative meeting organised by Taliban in Kabul on 29 January 2024. The Ministry of External Affairs on 1 February 2024 reiterated India’s relation with the Afghan people and acknowledged that Indian diplomats have been engaging the Taliban in “various formats”.20
India’s efforts have also been acknowledged by the Taliban. Hafiz Zia Ahmed, the Deputy spokesperson of Foreign Ministry, recently shared the statement attributed to an Indian representative on social media platform X which noted that:
“India actively takes part in international and regional initiatives regarding Afghanistan, and supports every effort leading to the stability and the development of Afghanistan”21
Conclusion
The Taliban are likely to make more efforts in the coming future aimed at cultivating other countries for investments to boost the Afghan economy. India should continue to calibrate its moves towards the Taliban government to ensure that its humanitarian and possible developmental re-engagement promote an environment of trust and understanding and help the Afghan population benefit from its intervention.
Views expressed are of the author and do not necessarily reflect the views of the Manohar Parrrikar IDSA or of the Government of India.
The Taliban have advertised their efforts towards infrastructure development over the last two years, since taking over power in August 2021. The Taliban Deputy Minister of Economy Abdul Latif Nazari stated in August 2023 that “overall 3575 development projects of $1.9 billion have been launched in the field of infrastructure, health, energy and transportation”.1 Taliban spokesperson Zabihullah Mujahid stated that funding for these developmental projects in 2023 was more than the previous year.2
Regional connectivity projects such as the Khaf–Herat Railway Project, a connectivity link between Afghanistan and Iran, are touted to be ready for operation, as per the spokesperson of Afghanistan Railway Authority in December 2023.3 The Ministry of Mines and Petroleum in March 2023 stated that they were genuinely interested in the Turkmenistan, Afghanistan, Pakistan and India (TAPI) project as it will create direct or indirect employment and will help in energy production. Spokesperson Mujahid noted that several meetings were held with the countries involved in the project, to help take it forward.4 TAPI was on the agenda when the acting Foreign Minister Amir Khan Muttaqi along with the Minister for Mines and Petroleum met Turkmenistan Foreign Minister Rasit Meredow on 17 December 2023.5
Another regional connectivity project, the Trans-Afghanistan railway project, was signed in February 2021 between Uzbekistan, Afghanistan and Pakistan, with the project expected to cost $5 billion, prior to the Taliban taking over power. The Taliban government are now trying to secure funding for the project from Qatar or the UAE.6
As for major domestic projects, the 285-km long Qosh Tapa Canal Project aims to convert 550,000 hectares of desert into farmland by diverting 20 per cent water from the Amu Darya River. This project is being built in the Kaldar District of northern Balkh Province. On 11 October 2023, Taliban Deputy Prime Minister for Economic Affairs Abdul Ghani Baradar inaugurated the second phase of this project. Officials of the Islamic Emirate have assured that they will address concerns, if any, of regional countries such as Uzbekistan, who had expressed apprehension about the project.7 The Deputy Minister of Water and Energy, Mujib Rahman Akhundzada, stated that a plan to build a hydroelectric dam on the Kunar River was not being implemented immediately though due to its high cost. It is envisaged that the dam will irrigate one and a half lakh acres of agricultural land and produce 45 megawatts of electricity.8
Apart from these mega projects that are being constructed or being planned, the Taliban regime has announced many road construction projects.9 As per the Taliban-run public works ministry, 90 maintenance projects have already been completed in 2023 and it plans to initiate 110 developmental projects, which include 30 bridge piers, 1500 check bridge piers, Kabul–Kandahar Highway, Afghan Ring Road and the reconstruction of the Salang Highway.10 Afghanistan electricity company, Da Afghanistan Breshna Sherkat (DABS) has also developed a five-year strategic plan to develop 710 MW of renewable energy, with funding from internal sources. On 26 July 2023, DABS released annual report on major achievements in 2022 noting that electricity line from Kajaki to Kandahar, which is 170-km long, has been completed.11
Economic Realities
The Taliban’s focus on infrastructure development though is up against the hard realities of a difficult economic situation. After the Taliban took over power in August 2021, the country witnessed a major decline in its economy. The United States froze the Afghan Central Bank reserves of about $7 billion and the European Union and the World Bank stopped disbursing aid. Sanctions were also imposed. The World Bank notes that Afghanistan’s services sector, which contributes 45 per cent of the country’s GDP, shrank by 6.5 per cent in 2022, following a 30 per cent drop in 2021. The agriculture sector which contributes 36 per cent of GDP declined by 6.6 per cent while the industrial sector also saw a contraction of 5.7 per cent in 2022.12
According to the Afghanistan Economic Monitor released by the World Bank, Afghanistan government collected a total revenue of $2.3 billion for the initial ten months of 2023-2024.13 Such finances will not be sufficient, therefore, to implement the projects they have planned and are in progress. The role of funding and expertise from regional countries like China and India, therefore, assumes significance.
Chinese Investments
Chinese Foreign Minister Wang Yi’s surprise visit to Afghanistan on 24 March 2022 and invitation extended to the Taliban to attend the Third Foreign Ministers’ Meeting held on 30–31 March 2022 in Tunxi in East China’s Anhui Province was proof of China’s proactive stance in its engagement with the Taliban. China had earlier made investments in the Aynak copper mine. At the Fourth Pakistan–China Foreign Ministers’ Strategic Dialogue held in Islamabad on 6 May 2023, it announced that it wanted to extend the China–Pakistan Economic Corridor (CPEC) to Afghanistan.
The Taliban have shown interest in CPEC and the Belt and Road Initiative (BRI) with the hope that it would strengthen the Afghan economy and bring in investments. In October 2023, Taliban Commerce Minister Haji Nooruddin Azizi said: “China, which invests all over the world, should also invest in Afghanistan… we have everything they need, such as lithium, copper and iron”.14
In January 2023, China National Petroleum Corporation signed an agreement with the Taliban to invest $150 million. In the coming three years, it will invest $540 million dollars to extract oil from the Amu Darya basin and develop an oil reserve in the country’s northern Sar-e Pul Province.15
Despite China’s bid to extend CPEC to Afghanistan, the Wakhan corridor continues to raise China’s angst given concerns about possible entry of Uyghur terrorists through this route.16 In September 2023, the Taliban’s Ambassador to China, Mohammad Sadiq, mentioned that he had detailed discussions with Chinese authorities regarding the commencement of traffic through the Wakhan Corridor.17 Opening of this corridor would strengthen trade links between the two countries if the Taliban manages to address the Chinese concerns.
India’s Stakes
India is still the largest regional donor for Afghanistan and fifth largest in the world with an investment of $3.4 billion in Afghan reconstruction, development and humanitarian efforts. On 14 August 2022, the Taliban requested India to complete its pending projects and even requested to train their security personnel.18 This came close on the heels of India announcing its presence in Afghanistan under Technical Mission in June 2022.19
In December 2022, Taliban’s Minister for Urban Development, Hamdullah Nomani, interacted with members of the Indian technical team in Kabul where he talked about renewal of Indian projects, invited investment in New Kabul Town, raised visa issues and urged more scholarships for Afghan students. After this interaction, many senior diplomats met with Taliban officials in West Asian countries.
Recently, the Indian Embassy in UAE invited Afghan envoy Badruddin Haqqani for Republic day celebrations at Abu Dhabi. Indian delegations have participated in regional cooperation initiative meeting organised by Taliban in Kabul on 29 January 2024. The Ministry of External Affairs on 1 February 2024 reiterated India’s relation with the Afghan people and acknowledged that Indian diplomats have been engaging the Taliban in “various formats”.20
India’s efforts have also been acknowledged by the Taliban. Hafiz Zia Ahmed, the Deputy spokesperson of Foreign Ministry, recently shared the statement attributed to an Indian representative on social media platform X which noted that:
“India actively takes part in international and regional initiatives regarding Afghanistan, and supports every effort leading to the stability and the development of Afghanistan”21
Conclusion
The Taliban are likely to make more efforts in the coming future aimed at cultivating other countries for investments to boost the Afghan economy. India should continue to calibrate its moves towards the Taliban government to ensure that its humanitarian and possible developmental re-engagement promote an environment of trust and understanding and help the Afghan population benefit from its intervention.
Views expressed are of the author and do not necessarily reflect the views of the Manohar Parrrikar IDSA or of the Government of India.