Paying protection money was part of the cost of doing business in Afghanistan

Monday, September 28th, 2020

Westerners tend to be rather naive, as a recent recent Freakonomics podcast, When Your Safety Becomes My Danger (Ep. 432) illustrates:

Gretchen PETERS: I’ve heard the argument that paying protection money was part of the cost of doing business in Afghanistan. And I think it is a terrible, terrible argument. It’s just self-defeating for an organization to pay protection money and not deal with the problem from the start.


PETERS: He got a phone call one day from one of his team members saying the Taliban just fired a couple of R.P.G.’s at our project. Nobody’s been hurt. And so, he called up the Taliban commander and said, “What’s the problem? You told us you weren’t going to attack us anymore.” And he said, “No, no, nobody got hurt. We intentionally missed. But your payment’s due. You need to get over to the hawala market and send me my money.” And he said, “Oh, yes, I’m so sorry.” And went over and paid the money right away.


PETERS: So, the Taliban would fire warning shots when the bills were due. And they would often launch non-lethal attacks just before a contract was due. And that seemed to be an effort to try and get their security contracts renewed. And that would perpetuate this completely corrupt system.


Anja SHORTLAND: So, the question is, “Do you want to be economically active in territory that is controlled by the Taliban or not?”


SHORTLAND: If you do want to be active in that territory, you’ve got to make it somewhat in the interest of the Taliban. If they don’t get any economic benefit from your company being there, then they will attack you by any means possible.


SHORTLAND: You minimize the kidnapping by making sure that the people who control the territory get a certain flow of funds.


SHORTLAND: That is actually 99 percent of the business. So, it is disequilibrium behavior — as long as everyone pays, there is no need to kidnap anybody.


SHORTLAND: I started off with Somali pirates, and what really struck me about piracy was how many happy ends there were. How generally nonviolent it was from the moment that the pirates got on board, and how well the trades functioned.


SHORTLAND: I do find that if they work, then it is because somebody is making them work, somebody is creating institutions that turn what can be very tricky, one-off trades into repeated interactions. It’s about creating self-enforcing contracts.


SHORTLAND: When there is a famine in southern Somalia, and you want to get relief supplies in there, basically, you have to contract the trucking out and you have to accept that 50 percent of the supplies will disappear. So, the question is, “Do you want to provide relief supplies, knowing that a large proportion of it will end up in the hands of the Shabaab?” If you say no, then there is no way of delivering the aid.


SHORTLAND: That’s right. Or you’re trying to establish a protection protocol. But in general, it’s better for them to take their protection money and not bother anybody. And so, even if you’re working in a country that has an endemic kidnapping problem, it is possible for companies to keep their employees safe from kidnap by making some concession to whoever poses the risks to them.

Stephen DUBNER: When you say, “some concession,” usually in the form of some protection payment, yes?

SHORTLAND: Well, you would frame it in terms of, perhaps, a corporate social responsibility program, or you do a joint venture, or you do some community engagement. There are lots of words for this. The protection contract is implicit. It’s never spelled out. It is through subcontracting. And the more layers you can put between yourself and the warlord, the better this is going to work in terms of being caught by the media. It’s all about plausible deniability.

DUBNER: So, would “tax” be a better word generally?

SHORTLAND: Well, that’s effectively what it is. But if people are not really sure whether the cartel or the rebel group or the insurgents have the capacity to actually kidnap, they might skip a protection payment, which is effectively tax evasion and then they decide that they have to prove that they can do it, and then they will. And in a way, kidnap for ransom is a really good way of backing up that kind of threat because nobody needs to get hurt.

DUBNER: Now, of all the criminal enterprises and cartels and pirates that you’ve researched, how does the Taliban compare in terms of their efficacy and organization and ability to execute these plans?

SHORTLAND: Well, they control a lot of territory. And they use that territory to grow very high-value crops, like drugs. And therefore, they’re very well-resourced. And they also have a certain amount of legitimacy with the people whose territory they control. And therefore, they are very effective at delivering violence and that is and something that the U.S. government has recognized.

PETERS: In percentage, I can tell you that the Taliban were making about 25 percent of their budget in protection payments.


  1. Wilbur Hassenfus says:

    There’s an assumption there that warlords are by nature rational economic actors who only, regretfully, engage in violence if somebody else is acting very badly. However, they prefer harmless non-violent tactics like kidnapping. That may be true in many cases. Then again I once spoke to a young central American lady whose father had been kidnapped for money, and her sense of the experience was weeks of profound, life-altering terror. But she was raised in a kidnapping culture, so she may not have fully appreciated the rational economic aspects.

  2. Bob Sykes says:

    One has to wonder why they want us to leave.

  3. VXXC says:

    This only shows me academics don’t understand right from wrong.

    That and all foreign aid must cease, and all charities be regulated.

  4. Wang Wei Lin says:

    It’s their country and the rules are centuries old. Follow the rules. Pay in money or pay in blood either way you pay.

  5. Sunoma 69 says:

    In Afghanistan, you pay the Taliban or they take someone and put them in a hidden prison. In the US, you pay the USG or they take you and put you in a non-hidden prison.

    First is very bad, second is very good. Did I get it right?

  6. Bana says:

    My understanding was the Taliban had eradicated the poppy crop, but the US ramped it up once we were in-country, and continue to protect the poppy fields to this day. You seem to be eliding these facts, documented in numerous articles since we invaded.

  7. Kirk says:


    The Taliban made a huge deal out of “eradicating” poppy-farming back when they first took over Afghanistan. By the end of their time in power, they were quietly encouraging it, because there really isn’t any other cash crop that could be easily packaged and sold for profit in that part of the world. The US tried getting the grape/raisin industry going, but with the Taliban going after everyone who accepted our help, that was a non-starter.

    Frankly, the whole thing is a dog’s breakfast. If you truly eradicated the poppy crop, then guess what? The locals starve to death in poverty. Which is the reality for why everyone looks the other way over it all–They don’t want to allow the peace that would afford the opportunity for other crops, and the money is too good with the poppy crop. The warlords want something portable and compact to sell, soooo… Yeah.

    It is analogous to the issues with the whiskey taxes during the early days of the American republic. You couldn’t transport the wheat crop affordably to where you could sell it, so you distilled it down to whiskey which was portable enough, and which could be stored for a long, long time… Only thing was, the government man wanted his cut, so there ya go.

    Backcountry agriculture is always problematic. Doesn’t matter when, where, or what, it’s a problem. Most of the high-value crops that are easily portable out of the logistic nightmare that was frontier America or modern Afghanistan are also things that are illicit and high-profit. Go figure.

  8. Lucklucky says:

    “It’s their country”

    Is it a country? And is it theirs?

Leave a Reply