United Nations: Taliban raised about USD 400 million last year through donations, taxes on Afghanistan`s poppy cultivation and extortion from narcotics dealers and construction companies, a UN report has said.
A team of UN Sanctions experts said in its report to the UN Security Council that the Taliban raised USD 400 million in the year that ended in March 2012.
Of this money, about USD 275 million went to Taliban leadership while USD 125 million was collected, spent or misappropriated at the local level.
The main source of revenue for the militant group has been donations as well as extortion money collected from drug traffickers and the billions pumped into Afghanistan for development projects.
"The team understands Taliban funding as follows: revenue raised from taxing the local economy serves primarily to support local operations and is only in a few cases channeled upwards," the report said.
"Revenue extorted from nationwide enterprises such as narcotics producers and traffickers, construction and trucking companies, mobile telephone operators, mining companies and aid and development projects goes to the Taliban Financial Commission which answers to the Taliban leadership," the report said, adding that donations are a "major" source of funding for the militia leaders.
Taliban also collects money from taxes, including a 2.5 per cent tax on wealth and a 10 per cent tax on harvest, mostly on poppy cultivation. Taliban also taxes water and electricity supplies and other services in certain areas, acting like local administrators.
The report quoted Afghan officials as saying that Taliban earned about USD 100 million from poppy trade in 2011-12, a small amount given that the total market of the drug crop is estimated at between USD 3.6 billion and USD 4.0 billion.
"This suggests that the Taliban do not make great efforts to exploit this potential source of revenue," the report said, adding that the money raised through the poppy trade is sufficient only to finance insurgency in the main poppy growing provinces of Helmand, Kandahar and Uruzgan.
It does not meet the Taliban`s requirements to meet the cost of insurgent activity elsewhere. In some areas, Taliban collect a 10 per cent tax from local shopkeepers and other small businesses.
According to estimates by the NATO-led International Security Assistance Force (ISAF), between USD 100 million and USD 155 million of the Taliban`s income went into mounting attacks in 2011, while the rest maintained the insurgency, the UN report said.
"Since 2006 the Taliban have managed to finance an ever-increasing number of attacks, reflecting a year-on-year increase in income," it said.
Taliban also extracts money from foreign development funds, the report added.
"Estimates of Taliban income from contracts funded by the United States and other overseas donors range from 10 per cent to 20 per cent of the total, usually by the Taliban agreeing protection money with the contractor or demanding a cut."
According to estimates by an ISAF financial task force, Taliban reaped USD 360 million over three years from a USD 2.16 billion United States military contract awarded to an Afghan trucking company.
"Although representing a fraction of the USD 31 billion worth of active United States contracts reviewed by the Task Force, this example shows how the Taliban are able to raise money from an Afghan economy distorted by and unable to absorb the huge amounts of money that have flowed into the country since 2001," said the report.
It added that estimates of Taliban income from contracts funded by the US and other overseas donors range from 10 to 20 per cent of the total, with the Taliban agreeing on protection money with the contractor or demanding a cut.
The report also said "there will be many upsets before Afghanistan is firmly on the road towards peace, stability and security."
"But the team has no doubt that the sanctions regime can help clear the way," the report said.