Archive for August, 2021

Economic Consequences Of America’s Strategic Defeat In Afghanistan

August 14th, 2021 Comments off

Sheldon Filger-blogger for





As the world watches  the total and unmitigated defeat of the United States in Afghanistan, pundits will no doubt offer their multitude of post mortems. Historical reflection is a long process, and decades into the future historians and political scientists will still be offering their explanations. However, in this piece  I want to focus on the economic consequences of the Taliban triumph, a topic that has not received much commentary.

1.Instability in South Asia. The renewal of an extremist, uncompromising Islamist emirate will greatly exacerbate external and internal tensions with-and within-the countries bordering Afghanistan. Iran, though also governed by an Islamist theocracy,  is viewed as  a Shiite heresy by the Taliban . China is seen as an oppressor of Sunni Muslims , in particular the Uighurs. Then there is Pakistan, a longtime supporter of the Taliban, especially stemming from its intelligence services, the ISI. It has its own domestic divisions. and the Taliban victory will embolden its Islamist extremist elements. As Pakistan is a nuclear-armed state, this does not bold well for global stability. Instability  in this region will disrupt the already fragile economic recovery from the global impact of the Covid pandemic. Expect to see major price fluctuations in many key commodities and within the global supply chain as a direct consequence of the Taliban victory, further exacerbating already deepening inflationary trends.

  1. Loss of confidence in America’s ruling elites. After the attacks on the United States by Al-Qaeda on September 11, 2001 the U.S. had one legitimate and essential strategic objective in Afghanistan: ensure that this country would never again serve as a launching pad for an attack on the United States by Islamist extremist non-state actors. Not nation-building, or transforming cultural and tribal behaviors in Afghanistan that have existed for a millennium. Yet, that is what America’s ruling elites tried to do. Rather than focus on the one essential goal of protecting American national security, they decided to remake this feudal land into a Westernized, pluralist democracy. What was worse, they made this effort on the cheap. The collective military deployments by the U.S. and its NATO allies were a fraction of the minimum required to achieve this elusive and ill-conceived objective for even a short-term  period. The failure of this ill-defined mission  is a shattering, unmitigated defeat for the elites that rule the United States. It is a staggering reverse, far worse than the Vietnam experience, for America’s defeat in 1975 did not have long-term negative strategic  consequences.  This will be viewed by the world, correctly, as not only a national humiliation, but also a clear indicator of decline, rooted in the ineptitude of America’s ruling class. The loss of global confidence in America’s political leadership will have long-term effects on collective  trust in the United States as a stable economic power. The benefits of previous confidence in American stability-access to cheap loans through foreign purchases of U.S. government debt instruments-will diminish, leading to higher borrowing costs at a time of unprecedented annual government deficits and an overall national debt that is spiraling out of control.
  2. New phase in “War on Terror.” The intellectual bankruptcy that characterizes the political rulers of the U.S. has been on full display as the Afghanistan debacle unfolds. Reacting in stunned fashioned, the American political elites give one the impression of being pathologically disconnected from reality. For example, with the Taliban at the very gates of Kabul, the spokesperson for President Biden and others in his administration have urged this Islamist extremist movement to think of their “international reputation,” and have warned that economic aid to Afghanistan would be “reduced.” Anyone who knows anything about the Taliban understands that this movement does not do international reputation building or economic development. It has one agenda only: to establish the strictest interpretation of Sharia law , not only in Afghanistan but in any other land it can impact. This means that Al-Qaeda will once again  have complete access to Afghanistan to launch its global assault on the infidel powers, especially the United States. Al-Qaeda’s rival in the Islamist radical world, ISIS, may also be permitted safe space in Afghanistan by a resurgent  Taliban. All these forces, operating within  an Islamist mindset, will view  the defeat of the U.S. as a sure sign from divine providence that their global jihad must be renewed and intensified. Inevitably this will result, at some point , in another severe attack on the American homeland. As with 9/11, this will lead to a substantial increase in  defense spending and collateral damage to the American economy. There will  be one important difference this time. Twenty years ago, in relative terms,  the American economy was much stronger, and government finances were vastly healthier, with much lower deficits and an overall national debt far lower than at present, even factoring in the effects of inflation. This means that the anti-American  global jihadists, already invigorated by the U.S. defeat in Afghanistan, will conduct their new attacks on the U.S. at a time of great economic instability. Any new Al-Qaeda or ISIS attack on the American homeland will likely trigger severe negative economic  aftershocks, which, in the context of already deeply negative trends created by the Covid  pandemic, could lead to a long-term recession or even an economic depression. In other words, the next stage of the “War on Terror” must be factored in as a consequential  economic event.