A snapshot of Taliban economy

Hundreds of thousands of people are associated with the weapons’ manufacturing industry now controlled by the Taliban

M Ziauddin June 24, 2016
The writer served as Executive Editor of The Express Tribune from 2009 to 2014

Now that the two-year long Operation Zarb-e-Azb against militant hideouts and sanctuaries in Fata, especially in North Waziristan, is nearing its conclusion and the process of reconstruction, rehabilitation and resettlement of internally displaced persons (IDP) is about to begin, it is time to revisit the state of the economy or non-economy of a region that has been under the virtual control of the Taliban for almost a decade. Fata’s economy, mainly pastoral-based, has remained in the clutches of the Afghan Taliban for years. The semi-autonomous region, bordering Afghanistan, has increasingly been defined, of late, by the Taliban militancy. The tribesmen are frequently reported to have access to high-tech gadgets, sophisticated weapons, luxury vehicles and links not just across the border in Afghanistan but also internationally. Money rather than faith is said to have been a major consideration in the militancy-infected areas, both as a source for financing the militancy as well as an incentive for control over smuggling routes or trade in or through the region.

According to a mid-2009 study published by the Pakistan Institute for Peace Studies (“Fata: Tribal economy in the context of ongoing militancy” by Asif Mian), Taliban’s share in the tribal economy is said to be higher than understood in general. According to one estimate, Taliban collect around Rs4 billion annually. The Afghan Taliban have long made their money in the opium trade. There are abundant natural resources in Fata such as marble, copper, limestone and coal which offer a potentially thriving mining industry. Trade with neighbouring Afghanistan has played an active role in Fata’s economy, and items imported and exported to the country via trucks pass through supply routes in Fata. The area has also been influenced to a great extent by the active Afghan opium trade. This has made Fata a transitional point for smuggling and trafficking of goods, as well as black markets. There is a sizeable indigenous weapons and firearms manufacturing industry in the region. Illegal trade of arms and narcotics, transit trade to Afghanistan via foreign exchange transactions through hawala, hundi and goods transport are among the major businesses in the tribal areas. The roads used for the transportation business had remained under Taliban control and could only be used subject to payments to the militants. The Fata areas controlled by Pakhtun militants are known to be major narcotics trafficking routes to Europe and beyond.

Hundreds of thousands of people are associated with the weapons’ manufacturing industry now controlled by the Taliban. These weapons are traded in huge markets in Darra Adam Khel, a town located between Peshawar and Kohat in Khyber-Pukhtunkhwa, Sakhakot (Malakand), Bara (Khyber Agency), Peshawar’s Karkhano Market, Miranshah, the main town of North Waziristan, and in Mohmand Agency. Some income-generation avenues are specific to particular tribal districts in Fata. Proceeds from a well-established marble industry are one of the major sources of income in Mohmand Agency, while trade of timber from forests in North Waziristan contributes substantially to the tribal district’s economy. Protection money extorted during transportation of marble and timber through Taliban-controlled areas also fills the militants’ coffers.

Smuggled goods are big business in all seven tribal districts, and traders in nearly every Fata agency have defined their niche market. If one agency is known as a trading hub for smuggled tyres, another deals exclusively in smuggled cars, weapons or chemicals. Indirectly controlled by Taliban, Karkhano Market situated in Peshawar’s Hayatabad industrial area, has 4,857 shops. Estimates suggest that around 40 per cent population of Bajaur, Mohmand and Khyber agencies is directly or indirectly associated with this market. Goods are brought to Karkhano Market from Iran, Central Asia and China through different routes. Karkhano shopkeepers have contacts in the world’s biggest markets. The tribes in Fata have a well-established hawala system, which is very efficient. Anyone wishing to make a financial transaction with an individual or institution anywhere in the world can do so in the tribal areas, irrespective of the amount involved and without any concern over the transaction’s reliability. It is estimated that in 2009, $5 million were taken out of the country through hawala or hundi annually.

Published in The Express Tribune, June 25th, 2016.

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Cool Henry | 5 years ago | Reply The author is scared to mention India - 'coz normalization of trade, commerce, travel and tourism between Afghanistan, India and Pakistan is the key to thriving economy in that region. A thriving economy will mean lasting peace will prevail - and that is going to be to the detriment of the 'establishment'.
avtar | 5 years ago | Reply Fata does not need any help from Pakistan as you have described their economy. Of course, Pakistan would like to take a share of Taliban sources of income and this would trigger conflict. If Chinese goods are coming via the "traditional" silk route, one wonders the needs for a new economic corridor!
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