There has been a fundamental shift in the way the revenues on cross-border trade are collected and distributed following the August 2021 Taliban takeover of Afghanistan. Under the former Islamic Republic of Afghanistan, corruption was not just endemic, it was a critical part of the political settlement, with powerbrokers at the centre and in the provinces collecting substantial rents on trade at both official Border Crossing Points (BCPs) and roadside checkpoints in the interior. In capturing BCPs as well as key roadside checkpoints in their advance towards the capital, the Taliban denied these rents to the Republic’s allies in the provinces, undermined Kabul’s ability to provide largesse, and undercut the bargains that held the previous government together. It is therefore understandable that, once in government, the Taliban moved quickly to regulate and centralise revenue collection, channel trade through formal crossings, and enforce effective management of official BCPs. However, this arrangement now denies groups within the Taliban the revenue they earned as insurgents. How these groups gain rent and favour under this new system remains unclear, as does its future stability.

This paper by Alcis and David Mansfield presents the key findings of six months of in-depth research that combined focused fieldwork with high resolution satellite imagery and geospatial analysis. The research reveals just how fundamentally the rules that govern cross-border trade have changed in Afghanistan since the Taliban takeover, the implications for the present Taliban government’s revenues, and how these changes impact on the political topography within Afghanistan and on its borders.

The key findings of this report are:

1. Once in government, the Taliban moved quickly to regulate and centralise revenue collection on cross-border trade through the Ministry of Finance, replacing senior officials at Border Crossing Points (BCPs) while adopting and rigourously enforcing government regulatory frameworks and border management systems.
   
2. The Taliban also dismantled the network of roadside checkpoints that had collected rents for powerbrokers in the provinces, as well as checkpoints operated by the Taliban as insurgents, earning them an estimated US $245 million in annual revenues under the former Republic.
   
3. In wider efforts to channel trade to official BCPs, where taxes are collected by central Ministries, the Taliban also closed smuggling routes that had previously generated revenues for both Taliban factions and local powerbrokers.
   
4. These Taliban efforts have drastically reduced corruption and effectively disassembled a political settlement that rested on a system of patronage where powerbrokers siphoned off as much as US $767 million in bribes each year on undeclared goods at official BCPs and levied a further US $650 million at checkpoints on arterial roads.
   
5. Changes in flows and border management, as well as Taliban policies, have also redistributed benefits among Afghanistan’s neighbours, with a significant drop in the volume of trade with the Central Asian Republics and Iran attributable partly to an 80 percent drop in fuel imports.
   
6. In contrast, the Taliban and Pakistani governments are adapting policies and infrastructure to improve the flow of trade. Tighter Taliban border management and the Pakistan border fence deny funding to armed groups opposed to the government in Islamabad, while a doubling of coal exports from Afghanistan to Pakistan benefit both parties.
   
7. Centralisation of revenues deny factions within the Taliban the revenue they earned as insurgents. Opportunities for patronage are now more limited, but may include government appointments, mineral industry contracts, aid delivery, and the drug industry. Potential dissatisfaction with their distribution among groups within the Taliban could threaten the stability of the Taliban government over time.