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Starving Afghans Use Crypto To Sidestep US Sanctions, Failing Banks, and the Taliban (theintercept.com) 104

Posted by msmash from the tech-for-good dept.
NGOs looking to provide emergency aid to Afghanistan are turning to cryptocurrency. From a report: When the Taliban took over Afghanistan in August of last year, Fereshteh Forough feared that the group would close her school in Herat, the country's third-largest city. Code to Inspire, an NGO Forough founded, was teaching computer programming to young Afghan women, and the Taliban oppose secondary education for women. Months later, the picture is much different -- and worse -- from what Forough imagined. The school survived, becoming mostly virtual, but has transformed from a coding boot camp into a relief organization. The biggest risk for Forough's students wasn't lack of education, it was hunger. Forough looked for a way to provide emergency checks to the women but was stymied by banks that don't want to risk violating severe U.S. sanctions.

JPMorgan Chase repeatedly blocked her attempts to transfer money, she said, and she grew increasingly alarmed by students who said they couldn't access cash at local Afghan banks -- many of which have closed or imposed strict withdrawal limits. In response, she turned to cryptocurrency to provide monthly emergency payments to help students afford enough food to survive. [...] There are several advantages to using crypto: Afghans fleeing the Taliban can take their assets with them without risk. Humanitarian agencies seeking to bypass banks and discreetly avoid the Taliban can provide cash directly to those in need. Smugglers and intermediaries who may steal or try to resell aid packages can be circumvented if aid is given directly through a digital transaction.
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Starving Afghans Use Crypto To Sidestep US Sanctions, Failing Banks, and the Taliban More

Starving Afghans Use Crypto To Sidestep US Sanctions, Failing Banks, and the Taliban

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  • Are the parents dead or something? (Score:3, Insightful)

    by Fly Swatter ( 30498 ) on Thursday January 20, 2022 @02:09PM (#62192019) Homepage
    If the school must feed children, something is wrong. well more than one something.

    • That's not the only thing about this story that doesn't add up.

      Like how are they managing to maintain the internet connection required to participate in the crypto economy when their ISP doesn't accept crypto as a payment, and the banks are "failing"?

      How are smugglers and intermediaries thwarted by crypto aid payments when the people who get those payments turn around and pay the smugglers and intermediaries in crypto?

      • Like most third world countries they skipped over landlines and hard lines to cell infrastructure.

        • That's a neat factoid, but the billing still uses regular banks.

          • Re: (Score:2)

            by xeno ( 2667 )

            That's a neat factoid, but the billing still uses regular banks.

            Outside of the first world economy, lots of people buy a sim and have a pay-as-you-go account, for which they prepay in cash. They might go to a store and buy a prepaid card to load onto the account, they might buy credits from a broker or reseller and redeem them via sms, etc etc. Paying in crypto would be a trivial change from the way payments are made already. Things work rather differently over there.

      • How are smugglers and intermediaries thwarted by crypto aid payments when the people who get those payments turn around and pay the smugglers and intermediaries in crypto?

        Because it works much better to "pull" aid by giving money directly to those in need than to try to "push" aid by delivering physical goods through a corrupt channel.

        When you "pull", you have the smugglers working on your side.

        • Only if the money winds up directly in the hands of the individuals who need it, and the bandits don't realize it. Unfortunately, in a place like Afghanistan, it's likely that any sort of significant aid will be taken away. The Taliban have no problem shooting people for any reason or no reason.

          The situation in Afghanistan is now owned by the Taliban and the countries that support the Taliban. The US is NOT on that list. We invaded them, true, but then we spent well over a trillion dollars trying to bu

          • Re: (Score:2)

            by mspohr ( 589790 )

            That's what the crypto does. It sends money directly to beneficiaries bypassing banks, government, Taliban, etc. to their cell phone.

      • My first question is "why the hell is the US sanctioning Afghanistan?"
        Not wanting to be occupied by a foreign power seems entirely reasonable to me. America should just get over it and stop starving people.

        • My first question is "why the hell is the US sanctioning Afghanistan?" Not wanting to be occupied by a foreign power...

          Wikipedia and many other sources are your friend in answering your thirst for knowledge about the world.. The Taliban are far from the liberators you might be imagining. Many of their forces come from impoverished, rural Pakistan. Taking over Afghanistan is a smash-and-grab robbery of an entire country. Freezing the financial assets of Afghanistan is intended as an obstacle to letting the

          • The question of why the Afghans were taken over by the Taliban is not different from why the Nazies took over Germany.

            Bad economic prospects trip a human psychological trait that leads to xenophobic memes and wars against internal or external foes.

            Lots of economic growth, a large reduction in the population, or even a huge reduction in the birth rate would get them out of this mode. But how likely is that?

          • I'm still confused about why that's any of America's problem?
            I mean sanctioning the Saudis for what they're doing in Yemen makes just as much sense.
            You can carry on pretending the United States is starving Afghans for some principles reason, but you're the bad guys. Again.

      • To, ahem, "add" on to your post

        >convert it to afghanis, the local currency, at money exchanges

        Seems like if banks are failing, so would be "money exchanges." And if they are not failing, they would be highly susceptible to corruption and exorbitant transaction fees.

        There's no question that a solution that can get aid directly to the innocent in need is a big win for everybody, but color me highly skeptical that cryptocurrency is doing this.

        • You are assuming those exchanges are themselves in Afghanistan but like most of the world these women still have access to the internet which is international. Even where state infrastructure is poor to non-existent there are often pirate adhoc wireless networks bringing access and this school was previously a coding school so it is fair to say everyone already had access/devices.

          On the other hand there are no shortage of private parties unofficially willing to buy/sell crypto for small cash values in the U

        • Re: (Score:2)

          by mspohr ( 589790 )

          Lots of informal moneychangers. No problem getting cash for your crypto.

    • Quite possibly. Or they're just as bad off themselves. The country is in a state of upheaval and historically hasn't been that stable, even long before the US became involved in the region.

    • Your sarcasm tags are missing. No one could be that unironically ignorant of the past fifty years...

    • Wow. You have a serious case of "first-world-itis". In Afghanistan, if a kid makes it from their house to the schoolhouse, it's a firkin miracle. Parents might be dead, kids might be sold into slavery, kid might be working to put food on the table, the Taliban might kidnap them or shoot them. Some other gang might kidnap them. The list goes on and on.

      "something must be wrong". Haha. More like "absolutely everything is wrong". Well, not wrong. Their society would probably be classified as "tribal/lawles

      • Re:Are the parents dead or something? (Score:4, Insightful)

        by mspohr ( 589790 ) on Thursday January 20, 2022 @05:57PM (#62192865)

        The US put them back to basics. Our "aid" went to US contractors, corrupt government not to people.

        • We didnt put them back in the slightest. The US barely had an impact on that place. Theyve been a medieval-level society for centuries. They were tribal-feudal before the US invaded, they basically waited for us to lose interest (just like they did the USSR) and then quickly returned to exactly the same way of life. They basically welcomed the Taliban back with open arms. They clearly have no interest in modernizing or changing. Fine. I firmly believe that countries should chart their own paths. But dont bl

          • Then why did we kill all of those people?

            • You're either really young, you've got a super-short memory, or you're trolling. Either way, here's a short history lesson:

              1. Taliban comes to power in Afghanistan.
              2. They welcome in Al Queda with open arms
              3. Al Queda mounts a direct attack on the US. You might have heard of it somewhere. It's called "9-11"
              4. Al Queda publicly claims credit for the attack
              5. We contact the Taliban and say "hand Al Queda over or bad things are gonna happen"
              6. Taliban says "go pound sand we love Al Queda"
              7. US

  • Good ole' US Sanctions! (Score:5, Insightful)

    by Arzaboa ( 2804779 ) on Thursday January 20, 2022 @02:17PM (#62192055)

    Sanctions always sound great to congress critters. Its easy to add sanctions, but completely removing them is close to impossible.

    By sanctioning countries like this, there is no doubt that we make people suffer. These sanctions work if your goal is less than or near zero growth in a country.

    The problem with these sanctions it that the populace suffers orders of magnitude more than the regimes they are always aimed towards. Typically you see that because of these sanctions, these places are unable to pave roads or lay down infrastructure of any sort. People starve. People can't work. People can't get medical attention.

    As I've traveled the world, it has become painfully obvious that it is never the ruling party starving or stuck without decent transportation.

    --
    The law of unintended consequences pushes us ceaselessly through the years, permitting no pause for perspective. - Richard Schickel

    • That’s the point though of sanctions.. to make the population suffer so they will do something about their government and if they don’t, then they aren’t innocent but accomplices.. so then they deserve what they get

      • I mean, that may be a realpolitik side effect but I don't think that is the intended purpose of sanctions. And especially if the result of sanctions is to disempower the population (hard to rise up if you are actually starving) they can hardly be rationally labelled as accomplice.

        These are wicked problems. If we somehow could muster the political will to turn the CIA's skill at regime change into instilling truly democratic governments, we might actually be able to make things better for the folks on the gr

        • No, I think the point is to create instability.. provide the conditions conducive for change.. problem is, that change is random and still subject to local conditions.. so often that means if the people don’t like democracy it won’t magically appear.. or if it does,. It’s easily voted out democratically

      • That’s the point though of sanctions.. to make the population suffer so they will do something about their government and if they don’t, then they aren’t innocent but accomplices.. so then they deserve what they get

        This is an extremely immoral way of dealing with it. This is similar but much worse than the public school policy that caused an uproar a while back where they were refusing to give school lunches to 1st graders because their parents didn't pay their bill.

        Not only is it immoral to punish one group so it will bring a different group in line, it doesn't necessarily have the result you want. Yes, some might blame the current government but many people and the current government will blame the USA. So now th

        • Re:Good ole' US Sanctions! (Score:4, Interesting)

          by JesseMcDonald ( 536341 ) on Thursday January 20, 2022 @07:17PM (#62193103) Homepage

          To play a little devil's advocate though, sanctions in their most basic form is just a refusal to trade. There is nothing inherently immoral or unethical about just not trading with someone. If I don't like a store owner, I have no obligation to shop at their store.

          No, sanctions are a refusal to let other people trade. This isn't just about the target of the sanctions being barred from bidding on government contracts or selling to the government. There may not be anything inherently immoral or unethical about just not trading with someone, but it is both immoral and unjust to threaten other people with theft, kidnapping, battery, or death (a.k.a. fines, prison, or capital punishment) for shopping at some store (or simply trading with others who do) just because you don't like the owner.

        • Wrong context. You're dealing with relationships between nations as nations, not the groups they comprise. While in many cases there can be some narrow targeting at leaders, they can often compensate by taking more form the people they govern.

          Try this metaphor - addicts need to hit rock bottom before they'll change. You can't worry about each and every cell in their body, part of rock bottom is the effect of the addiction on their cells.

      • That’s the point though of sanctions.. to make the population suffer so they will do something about their government and if they don’t, then they aren’t innocent but accomplices.. so then they deserve what they get

        Oh those North Koreans.... why won't they DO something about the Kim dynasty? It is the Democratic People's Republic of Korea after all. They've had over 70 years to take care of this. C'mon, leave your prison camps and get to the polls!

        • The point of China propping up the regime.. is .. to prevent it from becoming unstable.. China wants them around as a buffer zone.. so.. yes, they don’t abide by the sanctions.. if however.. they too would impose sanctions, the state would dematerialize as intended.. prison camps or not..

    • Re: (Score:1)

      by Yxven ( 1100075 )

      You're not wrong, but what is a better solution?

      When Russia invades Ukraine, we'll want to discourage that without going to nuclear war. What do you propose?

    • Re:Good ole' US Sanctions! (Score:5, Interesting)

      by Gravis Zero ( 934156 ) on Thursday January 20, 2022 @02:37PM (#62192135)

      The problem with these sanctions it that the populace suffers orders of magnitude more than the regimes they are always aimed towards.

      The populace isn't blameless here because they handed the Taliban back power after 20 years. The US did everything they could for them and it was decided that they didn't want it. They may not not intended it but these sanctions were always going to happen if the Taliban took power. It is indeed the law of unintended consequences.

      • It's actually simpler than this - all the Taliban needs to do to get sanction relief is to treat their women and ethnic minorities like humans. The longer they insist on staying in the dark ages, the longer these sanctions will guarantee that.

        • Re:Good ole' US Sanctions! (Score:5, Insightful)

          by youngone ( 975102 ) on Thursday January 20, 2022 @03:22PM (#62192317)

          all the Taliban needs to do to get sanction relief is to treat their women and ethnic minorities like humans.

          If that is the qualification, then why is the US not sanctioning Saudi Arabia?

          • Re: (Score:2, Interesting)

            by Anonymous Coward

            If that is the qualification, then why is the US not sanctioning Saudi Arabia?

            You mean the country most of the 9/11 terrorists came from? Wealth, strategic Middle East location and petroleum exports.

          • Women in Saudi Arabia are allowed to learn to read and get an education, to begin with.

          • why is the US not sanctioning Saudi Arabia?

            We absolutely should sanction them. However, politicians around the world are cowards and fear the fallout of increasing oil prices or worse, causing fuel shortages.

      • Everyone knew the Taliban would be back in power. So what is the point of sanctions if something is inevitable? It just illustrates they are toothless and poor will suffer.

      • The US did everything they could for them...

        Yeah [theguardian.com], ok, pull the other one [dw.com]

      • Right, first Russia wrecks the place, then the US wrecks it some more. And you act surprised that the populace doesn't thank the US and support the puppet government you left behind? Could y'all put you military on a leash, maybe keep them home for a few decades? As far as I can tell, since the Korean War, they mostly make bad situations worse. Iraq. Somalia. Libya. Not to mention all the failed adventures in Central and South America.
      • Do you also blame the 50% of Americans who elected Trump in 2016? If the alternative is worse then maybe they are making a rational choice. I'm no fan of the Taliban but the USA dumped 2 Trillion dollars over 20 years into a country whos GDP in 2000 was 4 Billion. Aid like that hollows out a country, it makes the only useful endeavor to be seeking aid. It wasn't war that destroyed the country it was inflation and corruption (and the fact the population almost doubled). An Afghan farmer couldn't sell hi

    • To play devil's advocate, is it the US's job to ensure a foreign country will prioritize its people over its government?

      We need some way to materially influence countries who would arm our interests in major ways. What is the alternative to sanctions? War?

    • It really just seems like a roundabout way of killing the poor and defenseless through starvation and there is no way the people in charge don't know this.

  • Hiding stuff, especially illegal stuff. Oh, and NFT's, so that the hyper-rich can feel just a little bit special (after all, they are, aren't they?).

  • "then women convert to afghanis, local currency" (Score:5, Interesting)

    by JoeyRox ( 2711699 ) on Thursday January 20, 2022 @02:43PM (#62192157)
    "Since September, we've been sending cash assistance, about $200 per month, for each family, because the majority of our students have said their family lost their jobs. They are the sole breadwinner of the family," explained Forough, whose family fled Afghanistan in the early 1980s, during the Soviet occupation, and now lives in New Hampshire. Code to Inspire pays its recipients in BUSD, a so-called stablecoin whose value is tied to the U.S. dollar, and then the women convert it to afghanis, the local currency, at money exchanges. "We created a safe way for our girls to cash out their crypto and pay for expenses, so they can pay for medical expenses and food and everything that's needed."

    If the local banks can't be used or trusted to exchange money then how are the local Afghans who are giving these women cash for their stable coin able to get the cash to give to them?

    • Re: (Score:2)

      by Junta ( 36770 )

      Indeed. The root of the problem is that the Taliban are in control and aim to intentionally limit these people from participating in the economy, by limiting their ability to get afghanis.

      If this does work in the short term, it means that the crypto-currency has value to some holder of afghanis because they can presumably turn around and use the crypto-currency. The long-term problem is that the Taliban would likely just crack down on crypto-currency and make it very dangerous to touch cryptocurrency for

    • Black and Gray markets often find ways to survive and operate in desperate situations such as this. It isn't abnormal.
      • Absolutely agree, and if those gray markets can operate to allow locals to convert stable coin to cash then they can operate without an interstitial conveyance like stable coins, or at least operate with other types of conveyances like traditional currencies.

    • Re:"then women convert to afghanis, local currency (Score:5, Interesting)

      by GlennC ( 96879 ) on Thursday January 20, 2022 @03:28PM (#62192349)

      ...how are the local Afghans who are giving these women cash for their stable coin able to get the cash to give to them?

      From reading the article, my guess is that they're part of the "hawala networks of informal money traders that many fear are tied to the drug trade or controlled by the Taliban."

      Given that cryptocurrencies are often used in the drug trade it wouldn't surprise me at all.

      • Hawala always provided the kind of money transfer services that cryptocurrencies are specifically designed for, so it's no surprise that they are in this game now.

        As usual, though, this take on hawala focuses on drug trade, and completely ignores the fact that it's also the system used for routine long distance transfers between family members etc.

    • Afghanistan has had informal banking systems for decades. Crypto bridges gaps but does not replace them. It routes around damage.

      https://foreignpolicy.com/2021... [foreignpolicy.com]

  • I was wondering what the topic would be today!

  • How is cryptocurrency turned to really world products like food

  • Does not compute (Score:5, Interesting)

    by pesho ( 843750 ) on Thursday January 20, 2022 @03:04PM (#62192233)

    Humanitarian agencies seeking to bypass banks and discreetly avoid the Taliban can provide cash directly to those in need. Smugglers and intermediaries who may steal or try to resell aid packages can be circumvented if aid is given directly through a digital transaction.

    How do you buy food in Afghanistan using bitcoin? If you are avoiding "intermediaries" who is selling you the food? Where is the food coming from in a country that does not produce enough to feed itself? At some point this whole thing has to interface with the banking system, either at he point NGOs buy crypto or at the point where the seller of the goods needs to cash in. How do you actually avoid the sanctions in such case without opening a whole new can of worms that involves among other thing money laundering?

    Can someone explain to me how on earth is crypto supposed to replace the current monetary systems? It is orders of magnitude more expensive to transact. For proof-of-work crypto transaction costs will grow as the blockchain grows: the more it gets used the more expensive it becomes to use. Crypto based monetary system will confine the growth of the whole economy to the rate of its own growth. We have had this before, it was called "The Gold Standard". It never worked and was rightfully abandoned. "Printing money" is universally bemoaned as a bad thing, but printing money is what allows economies to grow. Am I wrong to think that the major reasons Crypto is still around are speculation and its ability to some degree to anonymize shady transactions?

    Before someone accuses me that I don't understand how Crypto works, let me assure that I do. I also see the value of having chain of trust independent of a central authority. But trust alone is not enough to have a functioning monetary system.

    • It's a bad system but I suppose it is all they have. I am sure there are plenty of people with contacts in other countries such as Pakistan that are able to turn bitcoin into goods or currency such as the dollar.
    • It would be beneficial to dig into the actual article that helps explain some of your questions. This article isn't about using crypto currency as a viable currency. It is how people in a desperate situation are able to use it through the gray market in a country that is falling apart to buy a little bit of food. It isn't a long term solution for sure.

      • Re:Does not compute (Score:5, Informative)

        by pesho ( 843750 ) on Thursday January 20, 2022 @03:40PM (#62192385)
        I did read the article. That's why I am asking these questions. The article is all about who made what cool app and how with Crypto you can sidestep the talibans and the banks, but is a little thin on how you buy food with Crypto. From the TFA:

        . “We explored this option, but it is not for us,” said Kevin Schumacher, deputy executive director of Women for Afghan Women. “How do you pay 1,100 staff in 16 provinces, many of whom can’t read or write, with crypto?” “Even the smallest fluctuations in crypto rate can erase thousands of dollars off your books,” added Schumacher. He also feared that the Treasury Department and IRS would look down upon audits that included cryptocurrency payments. “Lastly, very, very, very few vendors in Afghanistan understand and use crypto.”

    • Yeah been wondering about this as well.

      Especially since if you want to use the crypto directly without converting to cash, that will mean the shops / sellers need to be able to accept the crypto. And eventually at some point, someone will want to convert the crypto to cash. And thats also assuming everyone "standardized" on a single crypto currency and not have different vendors supporting different crypto currencies.

      And even accepting crypto by shops/sellers/buyers requires some basic infrastructure, such

  • You have to take anything coming out of their with a big grain of salt. If you asked me how they were moving money in Afghanistan, I would have guessed Hawala [wikipedia.org] facilitated by strong encryption, since that's a long standing tradition despite attempts to outlaw it.

  • Reads like a Promotional Piece (Score:5, Insightful)

    by JKanoock ( 6228864 ) on Thursday January 20, 2022 @03:28PM (#62192351)
    Whoever wrote this article is terrible at hiding the fact that it is a promotional piece. No answers for easy questions like "How do they pay with crypto" while falling over themselves to state it's supposed virtues. One word, brutal.

    • Re: (Score:1)

      by Anonymous Coward

      Have you ever sent an email? Paying someone with crypto is about the same thing.

    • That dirty, dirty charity money.
  • Crypto is a scam, because us first world people with say so, and we mock we don't understand.

  • There are apparently about 2 million women between the ages of 18 and 24 in Afghanistan. why not offer all of them citizenship in the US or US-ally country of their choice.

    That would give them access to education and opportunity, potentially prepare them to lead in Afghanistan if they chose to return one day and probably be a boost economically to the receiving country in the long term.

    • Sanctions are brutal, hurting the poor the most. Levying sanctions should require a way out for those it hurts, yes, like targeted immigration to someplace safe. Not sure that the regime would allow mass emigration, but the country applying the sanctions can control their end of it.

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