"...THE KINDNESS OF OTHERS":

The structure of Afghanistan rentier's economy is unsustainable. Under the previous regime, grants made up around 40% of GDP. The country runs a massive trade deficit, amounting to about 30% of GDP. It has required grant assistance to finance its trade deficit. And, at the moment, it's unable to access its foreign exchange reserves.

Afghanistan is a net food and energy importer. Domestic milling capacity remains inadequate, so the country imports substantial amounts of wheat flour. Officially, the country's top exports include raisins and pine nuts. In reality, its largest export is opiates. Ending the cultivation of poppy, as the Taliban have recently pledged to do, will be massively disruptive and jeopardize their support. The narcotics industry is a major provider of livelihoods, especially in southern Afghanistan.

While agriculture plays a big role in the Afghan economy -- making up approximately a quarter of GDP and providing income for around 60% of households -- Afghanistan is a recipient of significant food aid, totaling in the hundreds of millions of dollars annually. And these numbers will grow as drought, displacement, and the collapse of the previous government exacerbate food insecurity.

Afghanistan's existential challenges will consume the bandwidth of its new government, whose own capacity to govern is unclear, though the Taliban do not come to power entirely inexperienced. They will also have non-aid sources of revenue. Many members of the new cabinet served during the previous era of Taliban rule. And, as an insurgency, the group has operated as a quasi-state.

Informed by extensive fieldwork, scholar Ashley Jackson notes that shadow governance by the Taliban insurgency was "largely parasitic, seeking to take credit for what others provide." Graeme Smith and David Mansfield assess that the Taliban had already earned hundreds of millions of dollars annually by "taxing" international trade along Afghanistan's borders.

The Taliban will now command a much larger share of tax revenue from Afghanistan's border trade. But, as Vanda Felbab-Brown notes, those flows are contingent upon the goodwill of neighboring and regional states.

Humanitarian aid is also coming. While foreign governments have balked at recognition of the Taliban government, they seek to avert an all-out catastrophe and are making substantial pledges of humanitarian aid.

Nonetheless, the Taliban will struggle in bearing the burden of governing an entire country with a fast-growing population of nearly 40 million people. Transitioning from insurgency to government will involve choosing between gaining international legitimacy and jeopardizing internal cohesion and support from the population.

Much of the Taliban operates like a criminal syndicate, with significant involvement in the narcotics industry. Opiates and other forms of illicit trade are deeply embedded into the country's broader political economy -- partly because it lacks competitively-priced goods to formally trade.

While the Taliban face new cost-benefit calculi as a government, their choice of only senior Taliban figures for the "interim" cabinet -- including Sirajuddin Haqqani as interior minister -- indicates that their imminent priority is internal cohesion.

If the Taliban are intent on assuming some characteristics of a normative state, and if the group can overcome the current crisis, bring some degree of economic stability, and gain international recognition, then their next priorities should include developing a legitimate export base and sources of revenue for public expenditures.

Achieving this simply through agriculture is unlikely. Import substitution and diversifying cash crops remain vital, but it is difficult to see the country developing meaningful foreign exchange simply through low value-added agriculture.

However, connectivity projects and extractive industries have the potential to generate several billion dollars in annual revenue for the Afghan government as well as precious foreign exchange. These projects include the Turkmenistan-Afghanistan-Pakistan India (TAPI) gas pipeline, the CASA-1000 regional power project, the Hajigak iron ore and Mes Aynak copper mines, as well as substantive natural gas fields in the north.

Indeed, extractives and transit trade may be Afghanistan's only path out of state failure. 

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