Last week I published an article in the Globe and Mail proposing a solution for a uniquely Canadian problem: our inability to provide aid to Afghanistan because it’s being governed by a listed terrorist entity, and any provision of funds to the country could be considered terrorist financing. Have a read, and let me know what you think!

The Taliban’s takeover of Afghanistan precipitated an economic crisis in the country, largely because the group is widely recognized as a terrorist organization by the international community. Because of this status, well-earned through two decades of insurgent and terrorist activity, many states have laws prohibiting the provision of financial services and funding to the Taliban. When the group made itself the de facto government in Afghanistan last year, these provisions still applied.

Insight Intelligence

The Challenges of Understanding Taliban Finance

This article was originally published by Lawfare on 23 August 2021, and explores what we think we know about Taliban finance - and where our assumptions sometimes lead us astray. Last week, the Taliban effectively took control of most of Afghanistan. This has naturally led to questions about how the group managed to do it—and about how they were funded…

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a year ago · Jessica Davis

The logic of this prohibition is sound: The Taliban tax and extort the population where they hold territory, meaning that any aid delivered to these areas will benefit the group.

Fears of the Taliban taxing or misappropriating foreign aid are not unfounded; there are reports of Afghans accusing the Taliban of doing so. The Taliban have also recently resumed their auction of U.S. dollars, a form of currency auction through which the central bank, in this case Da Afghanistan Bank, sells foreign currency in a bidding process designed to stabilize local currency and meet demand for foreign currency. The funds used by the Taliban to conduct these auctions were likely acquired through taxation and extortion activities targeting aid organizations, including the United Nations.

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Taliban Financing

The Taliban has a number of sources of funds at its disposal. As the group regains territory in Afghanistan, these sources of funds (and related expenditures) will shift. The group also has a wide variety of expenditures that will also increase as they control more territory. This article will serve as a repository for updated assessments on their finan…

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a year ago · Jessica Davis

Ideally, countries would work to ensure that any money earmarked for foreign aid in Afghanistan would not be able to make its way to the Taliban. However, the international community has quickly realized that, in reality, blocking all foreign aid in an effort to stop any money from flowing to the group is an unsustainable position – it would mean a catastrophic humanitarian and economic crisis for Afghans. In response, the United States quickly implemented a waiver system for aid delivery to Afghanistan, as did the United Nations. Canada did not, despite aid organizations asking for clarity on the issue so they could resume operations.

Under Canadian law, it is prohibited to provide property (financial or otherwise) knowing that it will be used in whole or in part to benefit a terrorist group. Unfortunately, in a case like Afghanistan, it’s almost certain that any goods or money provided to the country’s people will also benefit the Taliban.

Aid organizations argue that relaxing some aspects of this law would help Canada achieve its goal of accepting 40,000 Afghans. However, the Canadian government has been dithering on amending the Criminal Code to create a system for aid to Afghanistan, instead choosing to hide behind our sweeping counterterrorism financing laws. The fix is relatively simple: create a waiver system (an amendment to the Criminal Code), similar to those of the U.S. and the UN, providing the Minister of Public Safety with the ability to issue permits to qualified organizations seeking to deliver aid to Afghanistan.

The amendment would be straightforward, but this system would also require other elements to minimize the extent to which the Taliban (or other terrorist entities) can extort or tax aid delivery. Such a system would need to involve the financial sector, as many money-transfer agents would be rightly hesitant to transfer funds to Afghanistan. Some countries provide comfort letters to facilitate transactions, something Canada could consider.

A waiver system should also include training for aid organizations on how to minimize the ability of the Taliban (and other terrorist groups) to extract “taxes” from them; a system for reporting how much money is being lost to terrorist entities; and the ability to rescind the waiver or permit. Any such system should also include a public reporting mechanism so Canadians know how the government is weighing the need for humanitarian assistance with limiting the ability of terrorist groups to profit from this aid. It’s not an exact science, but rather a balancing act.

Insight Intelligence

Counter-Terrorism Implications of the Taliban takeover of Afghanistan

Listen now (4 min) | In this podcast, I talk about what we can expect from the Taliban in terms of support for terrorist groups, and the implications for counter-terrorism policy in practice in Canada and globally. This content originally appeared as an op-ed for the last week…

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a year ago · Jessica Davis

A Canadian waiver system will not entirely solve the problem of the Taliban benefiting from aid money, but it would balance the reality of the situation with the needs of the Afghan people. We cannot stop all aid to Afghanistan just because the Taliban will profit from it. Doing so would mean condemning millions of Afghans to starve to death. Instead, we have to accept the realpolitik of the situation: To stop a humanitarian catastrophe and to help refugees, we have to accept some benefit to the Taliban. The amount of aid from Canadian organizations is unlikely to make or break the Taliban, but a continued refusal to allow this aid to be delivered will most certainly mean that Afghans, including prospective Canadian refugees, are suffering unnecessarily.

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