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The militant group of Taliban is back into power in Afghanistan after 20 years. The Taliban seized control in Afghanistan on August 15, 2021. Kabul was captured by the Taliban, who completed their control of the nation in a swift onslaught that saw provinces and warlords surrender without resistance. The dismal situation emerged after the United States and its allies decided to withdraw their troops from Afghanistan after two decades. For the first time since the 9/11 attacks, US President Joe Biden said earlier this year that the US will be withdrawing its troops from Afghanistan. According to the president, the US has spent over a trillion dollars in the country and has met its objectives.

This decision by the United States came as an opportunity for the Taliban to completely taking control of major states in Afghanistan and outrunning the Afghan military. The Taliban terrorists started the killing of civilians and entering their homes, taking away the girls and women, raping them, and treating them in the most inhumane manner. The airports across the country were flooded with people, attempting to leave their homeland at the earliest possible. The volatile climate in Afghanistan will undoubtedly have an impact on the local economy, but it will also have an impact on foreign markets.


History and Background

The Taliban, whose name means “students” in the Pashto language, first appeared in 1994 in the Kandahar region of southern Afghanistan. Following the withdrawal of the Soviet Union and the consequent fall of the government, it was one of the forces fighting a civil war for control of the nation. It was founded by so-called “mujahideen” warriors who, with the help of the United States, fought Soviet forces in the 1980s. In less than two years, the Taliban had seized complete control of the nation, declaring an Islamic emirate in 1996 and imposing a strict interpretation of Islamic law. Other mujahideen factions fled to the country’s north.

Following the Al-Qaeda attacks on September 11, 2001, on the World Trade Centre, Manhattan, Shanksville, Stonycreek Township, and Arlington County in the United States, US-backed soldiers in the north stormed into Kabul in November under the cover of US airstrikes. The Taliban dispersed into the countryside, where they launched a two-decade war against the Afghan government and its Western supporters. Mullah Mohammad Omar, the Taliban’s founder, and first leader went into hiding when the Taliban was deposed. His whereabouts were so mysterious that his death, in 2013, was only verified by his son two years later.

Recongnition of Taliban by the neighbouring countries of Afganistan.

With the onset of the Taliban taking over the control of Afghanistan yet again, the next big quest for the neighbours is conceding the organization. For some, it’s the polishing of their old fellowship while for others it’s either the warming up of relations or the reluctant acceptance of the new reality.

It’s never been hidden that Pakistan, Saudi Arabia, and UAE were the only governments who had recognized the Taliban back in 1996 when they first seized the power. But other than that, no other government had officially recognized the militant’s potential of governing the country effectively. Although, this time they are reluctantly trying to find ways to deal with the organization to avoid serious conflicts in the future.

Considering the recent discussions, E.U. has quite openly stated about their ‘No Rush to recognize’ motive. Whereas for France and Germany, individual governments usually are not recognizable unlike states, and currently, it’s not even much of relevance to them. Britain’s prime minister’s ‘take your time’ mood clearly urges upon taking extreme care of conditions before recognizing the militant group. Interestingly, the two adversaries of the U.S., Russia, and China are leading to make overtures to the Taliban. Russian prime minister has more of a logical reason behind the lead (“The Taliban movement currently controls virtually the entire territory of the country, including its capital. These are realities, and we should act based on these very realities, not allowing the Afghan state’s breakup…”) whereas, the Chinese government sees no other way of protecting the interests of Chinese Muslims and agreed to not intervene in the internal affairs of Afghanistan.

As for the U.S. and India, the situation seems much more intense and the actions have been quite diplomatic. The withdrawal of the troops by the U.S. has raised a lot of questions to which Biden’s reason of the validation of legitimacy and respect of human rights have been stated but for India, the security of the concerned Indian nationals living in Afghanistan and the worry of an expected re-alliance between the Taliban and pro-Pakistani militants are of much relevance at the moment.

Eventually, what will happen shall happen but up late, the countries are busy evacuating their nationals from Afghanistan and finding the ways & reasons to deal with the current chaos of the Taliban in the most diplomatic way possible.

Current scenario of the Taliban Attack


In Afghanistan, things are getting worse, day by day. Talking about the past few days, there had been twin blasts (by the ISIS-K) outside the Kabul airport killing at least 100 Afghans and 13 U.S. troops. Due to the deadline for evacuating nationals from the country, there has been a rising state of utter panic among civilians. Recent drone and missile attacks by the U.S. troops have also killed several civilians including children. There have been several protests carried out by the Afghan refugees and students in India, urging the government for help in regard to the security of their stranded families and relatives back in Afghanistan. Along with that, there have been several protests in Afghanistan as well as few other countries, carried out by women activists for the protection of their democratic rights but as of now, there has not been enough support provided by the governments. The latest updates have put forth the plight of 280 stranded Indians outside Kabul’s Hamid Karzai airport as they claim that they are not being allowed to enter, and there’s no official to help them either. Moreover, if the UN agency falls short of raising $200 million by September, Afghanistan shall loom with yet another catastrophe since the country is already facing economic collapse after foreign countries and institutions said they would withhold aid and monetary reserves after Islamist Taliban insurgents took control of the capital, Kabul on August 15.

Effect on Afganistan’s Economy

It is obvious to say that the economy of Afghanistan would have taken a backward thrust after the Taliban took control over it. With so many people have already left the country and many still trying to go out, the economy is expected to fall even more in an ever-more perilous situation. According to data from the Asian Development Bank, more than 47 per cent of the country was already poor in 2020, and 34.3 percent of those with employment live on less than $1.90 per day. Afghanistan ranks 173rd out of 190 countries in the World Bank’s 2020 Doing Business Survey, with most households relying on the low-productivity agriculture sector for income. Security issues, corruption, and political instability have all hampered private-sector development, causing Afghanistan to rank 173rd out of 190 countries. Pre-Taliban control, unemployment was at 11.7 percent in 2020, when people began fleeing the nation and several women were fired from their jobs. The economic outlook now looks more vulnerable as future financial support is under a cloud of uncertainty.

The IMF had announced that it will freeze its financial aid to Afghanistan due to the instability in the government. Afghanistan already depends heavily on aid from foreign countries, which will now be stopped due to the terrorist group taking over the country. The trade of rich minerals from Afghanistan which was a good source of income will come to a halt which further will affect the economy.

Impact on India’s investments and trade relations with Afganistan

India has enjoyed friendly diplomatic ties with Afghanistan for a long time and has played an active role in providing much-needed developmental assistance — both in terms of investments and bilateral trade to the country over the past few decades. But the takeover of Afghanistan by the Taliban has threatened the country’s trade relations with India. Moreover, this takeover has brought in a lot of uncertainties for both countries. The Indian government has invested more than $3 billion in Afghanistan throughout the years, including more than 400 infrastructure projects. It is believed that the major reason behind this heavy investment in Afghanistan is the country’s importance as a strategic ally in South Asia.

 According to a Delhi-based industry body the Chamber of Trade and Industry (CTI), India by far has been the largest market for Afghan products in South Asia. The total value of exports and imports tallies up to about $1.5 Billion between both the countries. India exports tea, cotton, and pepper whilst imports dried fruits, nuts, and medicinal herbs from Afghanistan. In a statement by CTI, it is revealed that the current situation might have a long-term impact on India’s economy specifically the bilateral trade since, in these circumstances the future is uncertain, and people’s shipments and payments may become stranded on a massive scale. Therefore, it has appealed to the government to take immediate notice of this and must find a way out.

The effect on countries in the world and their economies in general.

The takeover of Afghanistan by the Taliban will come as a threat not only to Afghanistan and its immediate neighbours but to the countries across the world. The Taliban is already recognized as a terrorist group by a lot of countries which in itself lays down the threat the group can pose. The proximity of terrorist attacks can increase by a large number. Also, Afghanistan has rich mineral deposits which account for over $1 trillion and this takeover is surely going to hamper the trade relations of Afghanistan with other countries across the world. No element has a negative impact on the financial markets like investor uncertainty. Investor confidence in Afghanistan might plummet as a result of recent instability and the overthrow of the president. Millions are attempting to escape the nation, implying that practically every element of the economy is failing.

People who are afraid of leaving the nation will not settle down to perform their work, which will have a detrimental impact on the economy. It’s only natural that the financial markets be down given the present state of the economy. Furthermore, several other nations, such as Germany, are beginning to expel their immigrant citizens. Investors, both international and domestic, are now showing little interest in the Afghan financial markets, which will have both short and medium-term consequences for the economy. Many investors would leave Afghanistan if the Taliban stay in power, as they are unsure of the working environment under the new Islamic administration. The financial markets will be affected on a worldwide scale as well. So far, the repercussions of Afghanistan’s turmoil may be seen in other areas of the world. Financial market indexes are falling, and investors are waiting to see how international leaders will respond to the crisis. Listed below are the countries which can be affected the most after such takeover-



Over the previous two decades, India has maintained a solid relationship with the civilian Afghan government, giving them development aid but the Taliban, which is traditionally an anti-Indian group will also help India’s biggest rivals- Pakistan and China to expand their presence in Afghanistan. Given Afghanistan’s history and the Taliban’s identity as an organization, India’s genuine security worries will continue.

Furthermore, the removal of American soldiers and the closure of consulates will deprive India of critical ISR (Intelligence, Surveillance, and Reconnaissance) capabilities. On the other side, India’s fears are heightened by the growing participation of Pakistan and China, both of which have suggested that they may recognize the Islamic Emirate.

Meanwhile, commerce between India and Afghanistan has grown significantly over the previous two decades, requiring a rethinking of land routes. In the Asian Heartland, Afghanistan sits at the crossroads of the North-South and East-West communication networks. In Afghanistan, insecurity poses a danger to regional connection initiatives. This can result in a huge financial loss to India.

In an ideal situation, India may continue to offer development aid provided the Taliban manage to administer Afghanistan based on inclusiveness and compliance with international responsibilities. Over the years, India has built strong ties with the Afghan people as well as regional nations such as Iran, Uzbekistan, and Qatar, which will be critical in safeguarding India’s interests in Afghanistan.


Since the Taliban’s inception in the mid-1990s, Pakistan’s army’s Inter-Services Intelligence Directorate (ISI) has backed them. Under duress in September 2001, the ISI temporarily withdrew its specialists and support, causing the Taliban the same fear and flight that the US departure had caused the Afghan army. However, the ISI immediately restored its backing, and the assistance is still being provided today. The success of the Taliban in Afghanistan will have far-reaching repercussions for Pakistan, some of which may be deadly and violent.

Pakistan’s Islamist groups have hailed the win in Afghanistan. The ISI is undoubtedly gloating at the collapse of Kabul as their humiliation of a second superpower, but it is wise enough to do it in secret.

The Pakistan Taliban, who have been at odds with the Pakistani army for years, is expected to benefit from the fall of the Afghan government. The Afghan Taliban and its Pakistani counterparts share a tense relationship. Individuals in the Afghan Taliban are undoubtedly in contact with their Pakistani brethren and will provide a haven in their new conquests. In the long run, there might be significant consequences. The Taliban in Afghanistan are vehemently anti-Shiite (against the Shia branch of Muslims). There have already been several violent occurrences. In Pakistan, which has a far bigger Shiite population than Afghanistan, this will exacerbate sectarian tensions.

Following the collapse of the government in Kabul, Pakistan’s bond rates have risen, indicating a loss of confidence in the economy among international investors. According to the research, if insecurity and instability in Afghanistan remain, Pakistan’s export income may suffer. Pakistan has announced that Afghan refugees will be accommodated in separate camps near the Afghan border, based on the present situation in the war-torn nation. Over three million Afghan refugees live in Pakistan, according to statistics, with over half of them doing so illegally.


As China watches the chaos unfold in Kabul, Afghanistan’s capital, it is likely to see more danger than opportunity. Since US President Joe Biden announced the entire withdrawal of US forces from Afghanistan in April 2021, there has been considerable discussion about how China may grab the opportunity to fill the void left by the US and increase its presence and influence in the country.

China is especially afraid that Afghanistan would become a stronghold for terrorists and extremists seeking independence for the predominantly Muslim province of Xinjiang, which Wang brought up at their July meeting. The Taliban responded by pledging that “no force would ever be allowed to utilize Afghan territory to participate in activities damaging to China.”

China would welcome the opportunity to benefit from Afghanistan’s vast mineral reserves and include Afghanistan in its Belt and Road Initiative in the long run, but it has certainly learned from America’s experience that even moderate expectations in Afghanistan must be restrained. The lack of progress at Beijing’s big investment in the Mes Aynak copper mine indicates its readiness to wait for a return on investment. Before attempting to promote its positive objectives in Afghanistan, Beijing would most likely take the time necessary to acquire assurance that its defensive security requirements are satisfied.


Iranian leaders have kept lines of contact open with the Taliban over the last year, anticipating a US exit. They now appear to be looking for a compromise with the Taliban, and they are worried about the potential of further instability in Afghanistan. The contours of any political deal between the two countries are yet unknown, however, Tehran is expected to prioritize stopping new refugee flows as well as arms and drug smuggling.

What is clear is that the Taliban’s ascendancy will have enormous economic implications for Iran. Economically, the two countries are more intertwined than most people realize. Iran’s hunt for economic possibilities in its own area, which has been shut off from the world economy due to US sanctions, has resulted in the development of these connections. The importance of Afghanistan in Iranian currency markets, as well as its prominence as a key destination for Iranian non-oil exports, indicate that Iran will pay a financial price for the Taliban’s success. The first major difficulty that Tehran faces in this regard is that recent international attempts to restrict the Taliban’s access to hard money would influence Iranian exchange rates.

Afghanistan has been a significant source of hard cash for Iran in recent years, as its foreign reserves have been blocked owing to US sanctions. According to reports, the two nations’ hard currency transactions amounted to as much as $5 million per day moved from Afghanistan to Iran. The outflows were so large that the Afghan central bank voiced worry that they were having a major influence on the Afghani’s exchange rate.

Long-term prospects for Iran’s economic development are low as long as Afghanistan’s political and economic situation remains unclear. A recent attempt by regional administrations to establish a unified agenda for connectivity looks to be in jeopardy today. Iran’s participation in this agenda was focused on the port of Chabahar, which was regarded as a means to link India to new commercial prospects, primarily by creating a trade route that bypassed Pakistan.


When the Taliban took control of Afghanistan, Russia was prepared for the fast changes following years of planning to build the basis for ties with the group, which it still deems a terrorist organization. Russian Foreign Minister Sergey Lavrov recently stated, that Moscow is not in a hurry to accept the Taliban as Afghanistan’s new rulers, but that there are encouraging signs that they are willing to allow other political groups to join the government and allow females to attend school.

In 2003, the Taliban was placed on Russia’s list of terrorist groups, and Moscow has yet to take anything to remove them. Russian law makes any communication with such groups illegal, but the Foreign Ministry has reacted to queries about the seeming inconsistency by claiming that its interactions with the Taliban are critical to international efforts to stabilize Afghanistan. A month before Taliban militants launched their offensive that culminated in the capture of Kabul, a delegation from the group travelled to Moscow to give assurances that they would not jeopardize Russia’s and its ex-Soviet allies’ interests in Central Asia, indicating that ties with Russia are a top priority for them.

Russian officials said they believe the Taliban’s promises, citing the Taliban’s focus on combating the Islamic State, which Moscow regards as Afghanistan’s major danger. Moscow has also praised the Taliban’s promise to tackle drug trafficking and stop the flow of narcotics via Central Asia from Afghanistan.

Russia is having military bases, energy pipelines, and infrastructure projects in Afghanistan, and to avoid any sort of financial loss, Russia is leaving no stone unturned by extending its approval and support of the Taliban. It is less about the ideology but more about money and security for Russia.

A predicted large-scale Refugee crisis

There has been a rising pressure of increased population in various nations due to the immigration of Afghan refugees.

Afghan refugees are among the world’s most enduring refugee populations. Over the last four decades, people have been uprooted from their homes, either to never see them again or, even if they return briefly, to have their lives swept away by a new outbreak of strife and bloodshed, forcing them to relocate elsewhere in the country or become refugees once more. seems never-ending. This time again, the mass exodus of the Afghan population is being predicted by the UN’s Refugee agency which has begun to pressurize various nations yet again with the problem of increased population.

The UN has warned that up to 500,000 Afghans may exit the nation by the end of the year and has urged neighbouring countries to maintain their borders open.

The new catastrophe adds to the 2.2 million Afghan refugees already in neighbouring countries and the 3.5 million people displaced within Afghanistan’s borders.

Several countries have stepped up in the evacuation process and are accepting refugees like Canada, Australia, Britain, India and U.S. But unlike the last migration crisis of 2015/16, the EU might not accept as many refugees as it did the last time (over a million) mainly due to political reasons and/or its greater capacity to deter and repatriate illegal migrants since the last crisis, it has beefed up its border and has coast-guarded agency Frontex. Many countries like Germany, Austria, Greece have been avoiding a repeat of the mass arrivals and other EU countries are set on averting a re-run of 2015/16, partly due to fears of a voter backlash.

According to figures from the United Nations Refugee Agency from early 2021, Pakistan already has 1.4 million Afghan refugees, while Iran has about a million. In both countries, the number of undocumented Afghans is considered to be significantly larger. Therefore, it might be difficult for Afghan refugees to take shelter in the EU. Although countries are still providing humanitarian aid to the civilians the future uncertainties tend to seem unfavourable for the refugees as the increased number of unregistered and illegal immigrants have led the nations to avoid exodus from Afghanistan to maintain their country population especially at the time of the coronavirus pandemic.

What holds in the future of Afganistan?

The current state of affairs doesn’t seem to end anytime soon. Not many countries have recognized the Taliban as a government and will continue to see it as a terrorist group. As mentioned above that the IMF has already frozen its aid to Afghanistan, the country shall continue to live in crisis. The US and its coalition allies have a moral duty, as many have pointed out. Right now, there is an emergency, and whatever happens in the future will be inextricably linked to decades of violence and interference.

 The laws laid down by the Taliban do not indicate any positive signs for the country for the time to come especially their laws against women. International support may be contingent on the Taliban’s actions in Afghanistan on women’s rights. However, there is an immediate need to remove women who are being targeted by the Taliban or believe they will be in the near future. Those in Afghanistan who are yearning to escape think they have no other option. Adding to that, the current situation in Afghanistan is mounting another dangerous crisis- the Humanitarian crisis as millions of Afghans are deemed to be on the verge of facing starvation due to the ongoing conflict, drought, and the covid pandemic to which, the World Food Programme (WFP) has issued the statement, calling on the political leaders to take required measures at the earliest.


What’s happening in Afghanistan might seem like a local issue but in its true reveal, it’s more about the global balance of power. With the sudden takeover of Afghanistan by the militant group- the Taliban, on August 15th, 2021 (after two decades), the onset of crisis after crisis seems to have just begun. Knowing that the geopolitical realities of the Afghan state have been fundamentally changing over the past few months and days, it is relatively surprising but not shocking to see the reactions of different nations around the globe. The humiliating departure of the U.S. troops from Afghanistan has brought in a predictable yet uncertain turmoil for not just Afghanistan but also for other countries like India, China, Pakistan, Middle East, Central Asia, Turkey, Qatar, and the US itself.

Additionally, the mass evacuation of civilians from the state is bound to bring change in the global and regional balance of power. The nations other than Pakistan, Russia, and UAE, are in no hurry of recognizing the militant group’s power and their potential of governing the country effectively. Currently, Afghanistan particularly, its capital Kabul, has been in the state of absolute panic for having several blasts and rocket attacks being carried out both by the terrorist group inclusively with the ISIS-K and the US troops, killing hundreds of vulnerable civilians (including children) at the fault of none.

This takeover, undoubtedly, shall bring in or has already brought a large-scale impact on Afghanistan’s economy as well as for other economies of the world. Talking about India in particular, the country shall face a loss of billions due to the upcoming political changes in Afghanistan, affecting its bilateral trades and huge investments in the latter. Whereas, for the other nations, the pressure of increased Afghan refugees i.e., another crisis of the mass exodus from Afghanistan and the negative effect on their economies are certain. Moreover, the current state of affairs in Afghanistan is leading the latter towards another crisis of Humanitarian, since the World Food Programme (WFP) has issued a statement about upcoming starvation for its people.

The Taliban takeover has put a lot of activists in the deep slumber of a potential threat to their democratic rights, women’s security in particular, and more so, making the state as a Harvard, Columbia, and Oxford Universities of Jihad, as stated by the finest voice of Afghanistan. At this time, India and other countries are advised to prefer not to become each other’s adversaries and rather take a uniform decision for avoiding any future conflicts especially, at the time when every nation is busy battling the coronavirus pandemic. All in all, it shall be thrilling to know what may happen in the upcoming days, with the Taliban expanding their power all over the country.

This Article is written by Naman Arora and Sant Kaur.





  • Karan Chawla, September 9, 2021 @ 11:03 pm Reply

    Very Informative

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