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UN warns of ‘colossal’ collapse of Afghan banking system

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The United Nations on Monday pushed for urgent action to prop up Afghanistan’s banks, warning that a spike in people unable to repay loans, lower deposits and a cash liquidity crunch could cause the financial system to collapse within months.

In a three-page report on Afghanistan’s banking and financial system seen by Reuters, the U.N. Development Programme (UNDP) said the economic cost of a banking system collapse – and consequent negative social impact – “would be colossal.”

An abrupt withdrawal of most foreign development support after the Islamic Emirate of Afghanistan (IEA) seized power on August 15 from Afghanistan’s Western-backed government has sent the economy into freefall, putting a severe strain on the banking system which set weekly withdrawal limits to stop a run on deposits.

“Afghanistan’s financial and bank payment systems are in disarray. The bank-run problem must be resolved quickly to improve Afghanistan’s limited production capacity and prevent the banking system from collapsing,” the UNDP report said.

Finding a way to avert a collapse is complicated by international and unilateral sanctions on IEA leaders, Reuters reported.

“We need to find a way to make sure that if we support the banking sector, we are not supporting Taliban (IEA),” Abdallah al Dardari, head of UNDP in Afghanistan, told Reuters.

“We are in such a dire situation that we need to think of all possible options and we have to think outside the box,” he said. “What used to be three months ago unthinkable has to become thinkable now.”

Afghanistan’s banking system was already vulnerable before the IEA came to power. But since then development aid has dried up, billions of dollars in Afghan assets have been frozen abroad, and the United Nations and aid groups are now struggling to get enough cash into the country.

The UNDP’s proposals to save the banking system include a deposit insurance scheme, measures to ensure adequate liquidity for short- and medium-term needs, as well as credit guarantees and loan repayment delay options.

“Coordination with the International Financial Institutions, with their extensive experience of the Afghan financial system, would be critical to this process,” UNDP said in its report, referring to the World Bank and International Monetary Fund.

The United Nations has repeatedly warned since the IEA took over that Afghanistan’s economy is on the brink of a collapse that would likely further fuel a refugee crisis. UNDP said that if the banking system fails, it could take decades to rebuild.

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Omari and Iranian ambassador meet to strengthen Afghan migrant labor ties

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Pakistan’s actions target militants, not religious sites: Khawaja Asif

He rejected claims equating these operations with India’s alleged strikes on mosques and religious seminaries in Bahawalpur and Muridke, stressing that Pakistan does not target religious or civilian sites.

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Pakistan’s Defence Minister Khawaja Muhammad Asif has dismissed comparisons between Pakistan’s counterterrorism operations along the disputed Durand Line and what he described as India’s attacks on religious sites, saying such parallels are “entirely wrong and inappropriate.”

In a statement issued Tuesday, Asif said Pakistan’s military actions are strictly aimed at verified camps belonging to Tehreek-e-Taliban Pakistan (TTP) militants operating from Afghanistan. He rejected claims equating these operations with India’s alleged strikes on mosques and religious seminaries in Bahawalpur and Muridke, stressing that Pakistan does not target religious or civilian sites.

The defence minister said the international community, including the United Nations, has repeatedly expressed concern over the threat of terrorism they claim is originating from Afghanistan. He said these concerns are reinforced by continued militant infiltration and attacks inside Pakistan, which, according to him, are carried out by armed groups entering from Afghan territory.

Referring to India’s allegations surrounding the Pahalgam incident, Asif said New Delhi has failed to present credible or verifiable evidence to support its claims. He added that Pakistan had offered to cooperate with an independent and impartial investigation, an offer that India declined.

Asif further said a recent United Nations report had described India’s actions as illegal and based on unsubstantiated claims, while affirming that Pakistan’s response was justified under international law. He said Pakistan has already addressed and clarified allegations regarding India, what he termed proxy extremist elements, and their alleged supporters.

Reiterating Pakistan’s stance, the defence minister said the country remains vigilant and determined to protect its sovereignty and national security. He emphasized that Pakistan will continue its counterterrorism efforts and will challenge what he described as baseless accusations and hostile narratives at all international forums.

Meanwhile, the Islamic Emirate of Afghanistan (IEA) has consistently rejected Pakistan’s accusations, maintaining that Afghanistan does not allow any group to operate from its soil. Afghan authorities have repeatedly stated that Pakistan’s security challenges are an internal matter and should be addressed domestically.

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Germany conducts first deportation to Syria in a decade

The deportation marks a historic shift in German migration policy and signals the government’s determination to enforce stricter measures against convicted foreign nationals.

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Germany has carried out its first deportation to Syria since the outbreak of the country’s civil war in 2011, sending a convicted Syrian national back to Damascus on a scheduled commercial flight.

The 37-year-old man, who had served a prison sentence in North Rhine-Westphalia for aggravated robbery, bodily harm, and extortion, was escorted by federal police to the Syrian capital, where he was handed over to local authorities on Tuesday, December 23.

The Federal Interior Ministry confirmed the deportation, which coincided with another removal of an individual to Afghanistan. The ministry said it had reached agreements with both Damascus and Kabul authorities to facilitate “regular” deportations of serious offenders and individuals considered security risks in the future.

The Afghan national had been imprisoned in Bavaria, including for intentional bodily harm. The ministry said this marked the second deportation of an Afghan criminal within a week.

“Criminals must leave our country. We stand for control, consequence, and zero tolerance towards offenders and threats,” said Interior Minister Alexander Dobrindt (CSU), emphasizing that the move reflects Germany’s commitment to law and order.

Dobrindt further justified the policy by highlighting the strain on local municipalities, which have faced challenges accommodating foreign nationals serving prison sentences. “We have reached the breaking point for a long time, and the overload in the municipalities is visible,” he said.

The deportation follows months of diplomatic negotiations after the fall of Bashar al-Assad’s regime in December 2024, which ended a 14-year civil war. The change prompted Germany to reassess its long-standing ban on returns to Syria.

The current coalition government, formed by CDU/CSU and SPD, explicitly committed in its agreement to resume deportations to Syria and Afghanistan, targeting criminals and “Gefährder” — individuals considered potential security threats. Chancellor Friedrich Merz has been a vocal supporter of the policy, meeting with Syria’s transitional president Ahmed al-Sharaa to discuss mechanisms for further returns.

The move carries symbolic weight amid heightened public concern over migration, with roughly one million Syrians currently residing in Germany, many of whom arrived during the 2015-2016 refugee influx under former Chancellor Angela Merkel.

While the German government asserts that the Syrian conflict is over, human rights organizations continue to caution against deportations, citing lingering instability, ongoing reconstruction challenges, and potential security risks for returnees.

The deportation marks a historic shift in German migration policy and signals the government’s determination to enforce stricter measures against convicted foreign nationals.

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