Millions in Taliban Taxes Show Who’s in Charge as U.S. Departs

(Bloomberg) -- Running a business in Afghanistan has one unspoken rule: Pay the Taliban.

Abdul Ahad Wahidi learned that the hard way when insurgents blew up a gas pipeline last year that fuels the country’s only fertilizer plant after its operator refused to pay up. Now he and other workers at the factory fork over 14% of their wages to the Taliban -- nearly five times more than they pay the government in taxes.

“The government can’t protect the pipeline, which forced us to compromise with the government’s enemy,” said Wahidi, who heads the labor union at the plant in northern Afghanistan. “Paying a part of our revenues to the Taliban is much better than the closure of the factory.”

That’s just one example of the vast array of hostile arrangements forced on Afghan businesses by the Taliban, which controls or contests more than half the country. The group collects as much as $1.5 billion a year from similar mafia-like deals, control over the drug trade and donations from abroad, a United Nations Security Council report said last year. That’s equal to roughly 25% of the government’s annual budget.

The Taliban’s strong-arm tax collection tactics in areas under its control are just one reason Afghan President Ashraf Ghani and many of the country’s 38 million citizens are opposed to any potential power-sharing arrangement with the militant group. Still, Afghanistan’s elected leaders may have no choice but to work with the Taliban as President Joe Biden prepares to withdraw the remaining 2,500 American troops by a Sept. 11 deadline.

“If they do want to rule Afghanistan, either by sharing power or taking it by force, they will either have a great deal of adaptation to undergo or their regime will face just as much poverty -- and as many difficulties -- as it did in the 1990s,” said Andrew Watkins, a senior analyst with International Crisis Group. “Whether they would adapt once they reach that point, and do away with the more predatory elements of taxation, is hard to foresee.”

Talks on a peace plan have stalled since Biden’s announcement, with the Taliban refusing to participate in a U.S.-sponsored summit in Istanbul that had been scheduled to start on April 24 is now delayed until more than three weeks after Ramadan. Ghani is unhappy at being forced into a U.S.-led peace deal with the Taliban, which refuses to recognize his authority in Afghanistan even as it regularly met with representatives from his government in Doha, Qatar.

The Taliban taxation deals show a political settlement in Afghanistan remains far away even as Biden plans to pull out troops, according to Omar Samad, a senior analyst at Atlantic Council and former Afghan ambassador to Canada and France.

“The Afghan war needs to end as part of a political process that brings all main factions around a peace table to discuss and agree on a future political settlement,” he said. “Once that is done, only then can we assure a unified and reformed taxation system that addresses corruption and double taxation challenges that exist in the country.”

The UN Security Council has described the Taliban’s operations as an extensive “criminal enterprise that involves levying taxes on almost all infrastructure, utilities, agriculture and social industry in areas under their control or influence.” In northern provinces the Taliban also taxes teacher salaries and extorts money from motorists on highways, according to Saifura Niazi, an Afghan member of parliament from Balkh province, home to the fertilizer plant that was targeted.

“The Taliban taxes have been a serious issue,” she said in an interview, adding that the group’s gains on the battlefield has boosted confidence it has the upper hand in talks with the U.S. “That means the government’s influence is declining and the Taliban’s control over local populations seems to be expanding.”

Afghanistan’s only fertilizer factory, known locally as Kod-e-Barq for the town near the provincial capital of Mazar-e-Sharif, was built nearly half a century ago by the Soviet Union. After its operator refused to pay the Taliban last year, insurgents blew up a part of a 57-kilometer (35-mile) pipeline transferring gas from neighboring Sheberghan city to the factory.

The fertilizer plant needs gas from the pipeline for the 14-megawatt power plant that runs its outdated machines. The factory closed down for several months until Ghani’s administration fought the Taliban to repair it, which resulted in the death of several government troops. But its owners are still paying the Taliban now.

A Taliban commander on the outskirts of the northern city of Jowzjan province, which borders Turkmenistan, confirmed the group receives funds from the plant. “The pipeline passes through our territory and they have to pay for it,” said Gul Hamdard, who negotiated terms with Wahidi, the union leader. Local government officials in Balkh province were not immediately available for comment.

“The sad truth is that we are really working for the Taliban, not for the government,” said a worker at the plant, who didn’t want to be named due to the sensitivity of the issue. “We are unfortunately funding their deadly insurgency.”

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