Author: Claudia Chia Yi En, NUS
The signing of a provisional deal between Russia and the Taliban in September 2022 marks the Taliban’s first known major international economic deal. But beyond the announcement that Russia will supply gas, oil and wheat to Afghanistan, the payment and pricing details have not been released to the public. How the two countries will navigate international sanctions and their exclusion from the global banking system remains unclear.
This deal comes against the backdrop of active trade talks between the Taliban and its regional neighbours and Russia’s discussions with several non-Western countries on long-term oil contracts. The economic value of Afghanistan–Russia trade relations might be dismal, but more bilateral engagements and partnerships are a positive diplomatic asset for Russia and the Taliban. They show the international community that neither country is isolated.
The Taliban has been striving to diversify its trading partners and enhance relations with its regional neighbours. International sanctions, followed by the freezing of assets by the United States, have affected Afghan businesses. Since August 2021, the economy has shrunk by 20 to 30 per cent.
The ongoing humanitarian crisis, along with an increase in violent attacks by other militant parties, has worsened living conditions. The incoming winter pressures the Taliban to hastily secure oil and gas imports. Negotiations with Iran, Kazakhstan and Turkmenistan are ongoing. In July 2022, the Afghan Ministry of Commerce and Industry signed a contract with a Turkmenistan oil company to supply fuel at a discount and inked an agreement with Iran to purchase oil.
The Taliban initially had high expectations for Chinese investment, but this has not materialised. Beijing remains reluctant to invest and harbours suspicions about the Taliban’s commitment to cut ties with the Turkistan Islamic Party, formerly known as the East Turkestan Islamic Movement. Khan Jan Alokozay, the vice president of Afghanistan’s Chamber of Commerce and Investment, publicly stated that ‘there has not even been a penny of investment by China’.
Russia is a natural choice for the Taliban because it is an existing trade partner with significant energy resources. The Taliban has remained neutral regarding the Ukraine–Russia conflict, officially calling for restraint on both sides.
Despite being bogged down in the Ukraine crisis and facing ongoing European disentanglement from its oil and gas, the Russian economy seems to be resilient against these shocks. In September 2022, the International Monetary Fund forecasted that Russia’s GDP will decline by 3.4 per cent, an adjustment from its earlier forecast of an 8.5 per cent fall.
Russian oil companies have been enticing non-Western buyers with discounts, insurance coverage and alternative payment schemes. Countries like Sri Lanka, India, Turkey and China have continued to purchase oil from Russia amid international sanctions. Cheaper prices are attractive for countries facing rising inflation, supply chain disruptions and economic setbacks due to the COVID-19 pandemic. The October 2022 clash between Saudi Arabia and Washington over plans by the OPEC+ to cut oil production also drew speculations within the US that Riyadh is siding with Moscow.
Despite their provisional trade deal, it does not appear that the Kremlin will officially recognise the Taliban. The clearest indication yet is the exclusion of the Taliban from the September 2022 Shanghai Cooperation Organisation (SCO)’s summit in Samarkand, Uzbekistan. Whether Afghanistan will retain its observer status at the SCO is unknown, given that the international community has not recognised the Taliban as the legitimate government of Afghanistan.
Aside from issuing statements on helping the Afghan economy, the summit discussions highlighted that the region is more concerned with how best to protect themselves against any potential spillover of violence from Afghanistan.
Russian President Vladimir Putin has repeatedly expressed his wariness of militants camouflaging as refugees from Afghanistan crossing into neighbouring states and plotting acts of terror. The so-called Islamic State (IS) has reportedly increased its anti-Russia propaganda. They have lambasted Russia as a ‘crusader government’ and ‘enemy of Islam’, actively encouraging their supporters to inflict harm on the country.
The 5 September suicide bombing of the Russian embassy in Kabul exemplified Russian concerns about the Islamic State of Khorasan Province…