The Taliban doesn’t rely on drug money or Iranian bounty rewards for serious funding. It takes protection money from infrastructure and transport projects, and donations where it can get them
Last year Hajji Mohammad Shah began to build a new road outside the city of Kunduz in northern Afghanistan, to allow farmers in the Chahar Dara district to take their products to market in the provincial capital. The 25km road was funded by the Asian Development Bank at a cost of $82,000. But on the first day of construction, a member of the Taliban approached the district council of elders, who had commissioned the work, and demanded protection money. The elders paid $18,000 to make sure the road was not destroyed before it had even been completed. Then another Taliban turned up: they paid him too. When a third one arrived, the elders explained that they had no more money. So, one day in March 2010, Shah came back to the site from his lunch break to find that his workers had been taken hostage by armed men and most of his equipment had been destroyed, at a loss of $227,000.
The governor of Kunduz, Mohammad Omar, is not sure what went wrong: did the elders not pay enough, or just not to the right people? “The Taliban do what they like around here,” he told me. “They torture and kill, and run countless rackets.” Omar’s Taliban counterpart, the “shadow governor” of Kunduz, takes a percentage of almost all construction work in the area, including roads, bridges, schools and clinics. The more Afghanistan is reconstructed, the richer the Taliban become.
It is generally believed that the Taliban get most of their money from opium, but drug money is only 10-15% of their revenue, according to a 2009 report by the UN Office of Drugs and Crime (1). “Most money is raised at the local level,” said Kirk Meyer, director of the Afghan Threat Finance Cell at the US embassy in Kabul. “We don’t know to what extent profit from opium in Helmand province (2) is redistributed to the poorer provinces. Elsewhere the Taliban live on money donated by fake non-governmental organisations, and by kidnapping, and smuggling cedar wood and chromite ore to Pakistan.”
Abdul Kader Mojaddedi, 32, is an engineer, and nephew of Sibghatullah Mojaddedi, the leader of the Afghan Senate and the first president of Afghanistan after the fall of the communist regime in 1992. Mojaddedi is currently building 7km of road beneath the mountains in Laghman province. He employs guards to look after his equipment; half are dressed in uniform, while the other half wear traditional tunics and beards. That is because they were provided by the local Taliban for the duration of the works, for a fee of $67,000. “It’s nothing,” Mojaddedi told me. “If I had to pay 100 guards it would cost me $20,000 a month. With the Taliban, it costs me $10,000, and the construction site is safe.” There had been four or five attacks on the site, but for the last six months everything has been calm. The provincial governor is delighted, and the Americans, who are funding the project through their Provincial Reconstruction Teams, a military programme designed to “win hearts and minds”, turn a blind eye.
This small project is not an isolated case. The former deputy minister for public works, Wali Mohammad Rasuli, who retired four months ago, defends the system: “I have talked to President Hamid Karzai about this on two occasions, for more than two hours. If we get the roads finished, vehicle traffic and business will automatically increase security. We already pay the Taliban, so we should end this hypocrisy.” But the current minister and international donors repeat the official line: we do not pay insurgents.
The main target of extortion is the US military, and more specifically, its local contractors. Every month, 6,000-8,000 convoys deliver supplies to around 200 military bases: everything from ammunition and petrol to toilet paper and television sets (3). Security for the convoys is provided by private companies, through the “Host Nation Trucking” contract of March 2009, worth $2.16bn (16.6% of Afghanistan’s 2009 GDP). A US official of the International Security Assistance Force (ISAF) told me: “We don’t know anything about the contractors’ networks. We don’t know if they pay the Taliban for safe passage. We put in billions, and it’s possible that millions end up in the hands of the insurgents.”
’Of course we pay the Taliban’
Zarghuna Walizada is the only woman running a freight transport company in Afghanistan. She understands the pressure the Americans are under, and knows they do not reimburse her for lorries attacked on the road: “I don’t care whether we pay the police, the insurgents, or the Taliban. What matters is that the lorries get through.” Sometimes they do not even use an escort: “Why would we need one? The Taliban guarantee our security.”
“Of course we pay the Taliban,” said Ghulam Abas Ayen, head of the main freight transport union. “It’s a racket, pure and simple. Some security companies demand $2,000 per container, for just a few hundred kilometres of road. About half of that money could end up in the hands of the Taliban.”
Safe passage is not negotiated directly, of course. “My boss wouldn’t appreciate it if I went to negotiate face to face with the tribal leaders of Helmand,” said Juan Diego Gonzales, a former US soldier and head of the private security company White Eagle. “We have intermediaries who recruit our security guards locally. Sometimes it’s the tribal chief himself, or his son, who takes charge of the convoy. You just hope they’re not linked too closely with the Taliban.” The balance of power on some of the roads he uses is volatile: one warlord alone cannot guarantee security, which gives Gonzales some scope to choose his partners. On other roads, “If you go alone, you are going to have big problems. If you don’t have authorisation from the local warlord, you’re dead,” said an Afghan official with the Australian private security company Tacforce. He said Tacforce followed the recommendations of the Afghan interior ministry, to identify the “right” warlords to deal with.
The most powerful of those at the moment is Rahullah, a commander aged around 40 who has never been in contact with a US army official. He wears a Rolex watch and shalwar kamiz, speaks with an unusually high-pitched voice, and controls an important part of Highway 1, which links Kabul with Kandahar in the south. Rahullah works with the Popal brothers, owners of the Watan Group and cousins of President Karzai. A typical convoy will have 300 lorries and 400-500 private guards. Safe passage for one container from Kabul to Kandahar can cost up to $1,500. According to a recent report by the US House of Representatives (4), a tribal chief who controls a route, and his English-speaking associates, can make tens of millions of dollars a year escorting US convoys. Rahullah and the Popal brothers deny paying the Taliban to pass through the sections of the road the insurgents control. They say they lost 450 men last year. Transport and security companies have complained many times to the US army about the money they have to pay warlords, but the army does not know how to resolve the problem.
Discreet and efficient bankers
The Taliban do not get all their money through threats and force, however. Discreet and efficient bankers transfer sizeable donations from the Gulf, Dubai and Pakistan. The key venue is the Sarai Shahzada money market in Kabul. Three floors of galleries look onto a central courtyard where wooden stalls are set up on the ground, piled with wads of dollars, rupees, and yuan. A study by the Afghan Threat Finance Cell suggests that 96% of Afghans prefer using the market to the bank. There are hundreds of brokers’ offices – narrow shops, where, at the end of the day, employees sit slumped on hot leather sofas counting the day’s takings. The system, called hawala, dates back to the 8th century. In a few hours hundreds of thousands of dollars can be transferred from the other side of the planet, with minimal commission. According to Hajji Najibullah Akhtary, head of the money changers’ union in Kabul, $5m passes through the market every day. The system relies on trust: each agent knows his clients and their guarantors.
The authorities have been trying since 2004 to register these agents and record their monthly transactions. Akhtary says dozens of security agents hang around the market every day, taking a look at the accounts. But no government inspectors dare go near the busy money market in Kandahar, even though a significant proportion of Taliban funds pass through it (5).
The central bank’s financial intelligence unit has recorded the transfer of $1.3bn worth of Saudi banknotes into Afghanistan since January 2007. According to the unit’s director general, Mustafa Massoudi, the money comes from the Pakistan tribal areas: “Now can you tell me who needs Saudi riyals there? They are sent by hawala from Peshawar [in northwest Pakistan] to Kabul, where they are changed into dollars. The dollars then disappear into the mountains, while the riyals go back to Dubai, perfectly legally, by air.”
General Mohammad Asif Jabbar Kheel, head of security at Kabul airport, is furious about the law that allows any individual to fly with several million dollars in cash, as long as he declares it. Since the financial crisis hit Dubai in 2009, the authorities there are even less concerned about the sources of funds. According to a US official, more than $2bn was transferred to the United Arab Emirates last year from Kabul airport. What is even more surprising is that the majority of these transfers, according to Massoudi, are made by only a few people, mostly hawala agents. General Jabbar gave me a list, with the names angrily underlined. The figures are impressive: one person took $464m in 2009, another $89m.
Not all of this money is linked to the Taliban. Some is legal, some represents international aid misappropriated by officials, and some is linked to drug trafficking, which is not only controlled by insurgents. The pallets of notes wrapped in plastic that fill the hold of Ariana Afghan Airlines planes are a symptom of the government’s inability to control its finances. It collected only $819m in customs revenue last year, half the potential sum. The deputy minister for customs and revenue, Said Mubin Shah, cannot go to some border posts because he has no protection against the police: many border policemen run customs for their own benefit. In the border town of Spin Boldak, in Kandahar province, Mubin Shah would rather be escorted by a warlord suspected of collusion with the Taliban than by the Afghan police.
Louis Imbert is a journalist
(1) “Addiction, crime and insurgency: the transnational threat of Afghan opium”, UNODC, Vienna, October 2010.
(2) Province in southern Afghanistan where the majority of the opium is grown.
(4) “Warlord Inc. – Extortion and Corruption along the US supply chain in Afghanistan”, US House of Representatives, Washington, 22 June 2010.
(5) See Stephen Grey, “Hearts, minds and the same old warlords”, Le Monde diplomatique, English edition, July 2010.