Almost four-and-a-half years after the Taliban returned to power, Afghanistan is still struggling to recover from the seizure of $9.5 billion of Central Bank assets by the United States and the European Union. Alongside reductions in foreign aid and international limitations on the banking system, the asset freeze has led to a strangling of Afghanistan’s economy that has exacerbated one of the world’s worst humanitarian crises.
It hasn’t been for a lack of warnings. Senior humanitarians were quick to raise the alarm. On 16 August 2021, the day after the Taliban took control of Kabul, UN Secretary-General António Guterres urged member states not to “abandon” the Afghan population. A month later, UN special envoy Deborah Lyons warned that the asset freeze would lead to "a severe economic downturn and could push millions more Afghans into poverty and hunger".
However, the international community reacted swiftly and punitively. On the day the Taliban returned to power, the World Bank-managed Afghanistan Reconstructive Trust Fund (ARTF) – established to provide development assistance, including salaries to teachers and health workers – had its payments cancelled. Other key donors followed suit and suspended aid flows. The asset freeze also initially prevented the UN and other civil society actors from accessing funds due to the revocation of the Central Bank’s credentials to the international banking system. This was until December 2021, when a private bank was put in charge of handling cash shipments for international humanitarian funding.
Teachers and health workers were among those immediately affected, according to the UN: Health facilities across the country were unable to procure much-needed supplies and pay their overworked staff. Banks ran out of cash, while money transfers and remittances slowed.
These immediate job losses and aid cuts led to what the UN called “a new class of hungry in Afghanistan” – educated urbanites, the very people who had previously benefitted from the aid-dependent economy during the US-led occupation.
The US issued the first of several General Licenses in September 2021. These were intended to allow for the provision of humanitarian aid, personal remittances, and to permit limited financial and administrative transactions to keep essential services functioning. A broader UN Security Council-approved exemption came in December 2021.
However, these exemptions proved unreliable and insufficient, especially as they didn’t resolve the banking restrictions, which hampered the overall humanitarian response and led to an economic crisis.
As a result of the asset freeze and aid cuts, an estimated half a million people lost their jobs as NGOs shuttered, local businesses had to downsize. and foreign investment and assistance came to a near-halt.
By October 2021, just two months after the Taliban’s return to power, the World Food Programme reported that only 5% of Afghan households had sufficient food, marking a 15% increase in hunger. By the spring of 2022, nearly 200 media outlets had also shut down, largely due to funding cuts.
Aid cuts as sanctions
The overall Afghan economy has seen some modest improvements since 2021 yet fiscal challenges persist, reflected in an increase in the unemployment rate from 11.7% to 13.3%. But, simply put, Afghan families don’t have the domestic resources to make up for the loss in international aid, which constituted 1.3% of Afghanistan’s Gross National Income (GNI).
The initial wave of Afghan aid cuts, which came before most international NGOs started to tighten their purse strings in 2023, were all the more devastating because 75% of the former Western-backed government’s expenditure relied on international grants.
The International Rescue Committee now says their reach in Afghanistan has plummeted by nearly two thirds since US funding cuts took effect last year.
The next round of cuts, as US President Donald Trump’s administration shut down USAID in early 2025, only added to the financial strain faced by international NGOs. They also came as hundreds of thousands of Afghans were being expelled from Iran and Pakistan, adding to the humanitarian strain. Aid workers speaking to the media at the time said Trump’s cuts made a notable difference in their ability to respond to Islamabad’s mass expulsions.
In May 2025, Tom Fletcher, the UN’s top humanitarian, said the Trump administration’s decision to cut the $1.8 billion in assistance, predicated in part by the Islamic Emirate’s intransigence on human rights issues, would “directly result in deaths”.
The International Rescue Committee now says their reach in Afghanistan has plummeted by nearly two thirds since US funding cuts took effect last year.
In a 14 January statement, IRC’s director in Afghanistan, Lisa Owen, described the cuts to aid in Afghanistan as “a potential death knell for millions who are at risk of being left without critical food assistance”.
“World leaders must not look away,” Owen warned. “Humanitarian funding must be scaled up urgently to pull Afghans back from the brink of starvation.”
Collective punishment and a reckless withdrawal
The package of economic statecraft deployed to apply pressure on the Taliban’s Islamic Emirate government amounts to collective punishment on all Afghans. And while the humanitarian crisis persists, US courts have ruled that billions of dollars of the assets cannot be used to compensate 9/11 victims, which was one of the reasons given by former president Joe Biden’s administration when it announced the freeze in the first place.
The last four years in Afghanistan represent a clear example of how sanctions – even those that include humanitarian exemptions – can cause significant civilian harm, particularly in countries dependent on aid.
Today, an estimated 23 million Afghans, more than half the population, are in need of urgent humanitarian aid.
The persistent neglect of humanitarian needs compounds vulnerabilities and perpetrates more extreme impoverishment, while sanctions continue to restrict financial transactions, access to aid, and the process of payments due to the asset freeze and exclusion from the global financial market, placing a further burden on the Afghan population.
For many observers, the international community’s actions are even more cynical: Western actors cultivated an economic architecture of dependency for decades and then abruptly withdrew from that role in a way that was reckless and devastating for ordinary Afghans.
Despite the sobering statistics, sanctions and restrictions on the Taliban remain largely unchanged, including the reductions in aid. And they seem to have had little to no effect: The Islamic Emirate appears unfazed in carrying out its policy choices on women’s rights and other restrictions, while forging new relationships with China, India, Iran, and Russia.
Since 2022, humanitarian appeals have been funded at 50%, meaning that millions are left without any assistance. Looking ahead, due to the aid cuts, the UN is only appealing in 2026 for $1.72 billion to provide urgent humanitarian support for 17.5 million people out of the 21.9 million in people in need.
The Trump administration has excluded Afghanistan and Yemen from receiving further aid, reiterating concerns that ‘’funding was benefitting terrorist groups’’ – a decision that further underscores how the withdrawal of humanitarian assistance is being deployed as a political punishment. The cessation or reduction of aid is rarely acknowledged as a form of sanction, but in Afghanistan this has been a key component of the sanctions package.
The persistent neglect of humanitarian needs compounds vulnerabilities and perpetrates more extreme impoverishment, while sanctions continue to restrict financial transactions, access to aid, and the process of payments due to the asset freeze and exclusion from the global financial market, placing a further burden on the Afghan population.
The international community must reach a collective agreement on how to address this dilemma and alleviate Afghanistan’s humanitarian crisis.
This can be achieved by adjusting current sanctions, unfreezing Central Bank resources, and easing restrictions so that financial transactions can resume as they did before 2021, or by committing adequate levels of funding to ensure humanitarian aid reaches those in greatest need; or, ideally, by doing a bit of both.
The Taliban’s dismal record on human rights, particularly women and girls, must be challenged, but this can be done through diplomacy rather than isolation and coercion. Given the alternative we are already witnessing, it is, at the very least, worth a try.
