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The Taliban’s new order: ‘we’ll introduce a system for the world’



A delegation of Islamic scholars from across the Muslim world recently flew to Afghanistan to meet the country’s Taliban rulers. Their mission: to influence the Kabul regime’s policy platform.

The delegation, affiliated with the intergovernmental Organisation of Islamic Co-operation, which represents 57 states, hoped to convince the militant group to allow teenage girls to attend school. But despite citing Koranic verses as evidence of “this clear divine command”, they left with only vague affirmations of the Taliban’s intention to do so.

Days after the trip in late June, the Taliban’s supreme leader Haibatullah Akhundzada — who, according to a person familiar with the visit, refused to meet the delegates — made clear his displeasure with the sustained international lobbying efforts. “They say, ‘Why don’t you do this? Why don’t you do that?’” he said, according to a translation of an address he gave to Afghan scholars in Kabul on July 1. “Why does the world interfere in our work?”

After seizing power in August last year, the Taliban set about overturning the way the country has been governed since they were first ousted in 2001. The new rulers, isolated internationally and mistrustful of foreign powers, said they are creating the world’s only true Islamic regime, and believe they have little to learn from outsiders.

“Until now we’ve not seen a real Islamic system,” said one Taliban official. “Even though Iran and Saudi Arabia call themselves Islamic, we’ll introduce a new system for the world.”

To this end, the Taliban are dismantling much of what they see as the corrupt state and social norms of the western-backed governments that preceded them. They have installed ideologues and combatants to senior government positions while consolidating power by cracking down on local warlords. They aim to end the country’s dependence on foreign aid by boosting and centralising revenue collection, and are imposing hardline social strictures, including curbs on women’s rights.

Taliban forces gather around a poster showing supreme leader Haibatullah Akhundzada. In March he barred older girls from school indefinitely © Stringer/Reuters

“Islamic law is the baseline of what will be applied in Afghanistan. It won’t be socialist or democratic,” said Abdul Qahar Balkhi, a spokesperson for the Taliban’s foreign ministry.

No country has yet recognised Afghanistan’s new government. As the Taliban took over in the wake of departing Nato troops, western donors swiftly sought to cut the regime off from international support and finance.

The US and its allies imposed sanctions, froze Afghanistan’s $9bn foreign reserves and halted the foreign aid that made up about three-quarters of the previous government’s budget. The measures triggered a dramatic economic contraction and pushed about half of the 40mn population into acute food insecurity, according to the UN.

While the Taliban have appointed a Kabul-based cabinet of veteran leaders, they remain subservient to the supreme leader and his close advisers in Kandahar, the group’s stronghold.

Although senior Islamists head Afghanistan’s ministries, many bureaucrats from the previous government have been allowed to stay on and the Taliban have urged others to return.

Women and children walk in Kabul
Women and children in the street in Kabul. The Taliban have imposed hardline social strictures, including curbs on women’s rights © Oriane Zerah/FT

However, although some ministries are trying to continue the previous government’s work, others have diverged radically or been shut down. The women’s affairs ministry has been replaced with the Ministry for Propagation of Virtue and Prevention of Vice.

To boost the economy, the Taliban have sought to slash regulation and paperwork for traders to ease exports of goods such as fruit and coal to neighbouring countries such as Pakistan. The UN expects Afghanistan’s exports to rise to about $1.8bn this year from $1.2bn in 2019.

The Taliban said measures like these have allowed them to put together a modest budget for this year of 231bn afghanis ($2.5bn), compared with more than 440bn afghanis in 2020, which will allow them to pay public sector salaries but leaves little for new investment.

Afghanistan’s reliance on aid meant the country had not developed “the necessary capacities” to exploit its resources, said Balkhi. “We want sanctions to be lifted so that Afghans can build a level of security and a right to life — not through aid.”

Abdul Qahar Balkhi, Afghanistan’s foreign ministry spokesperson, centre, on a flight with other senior Taliban officials
Abdul Qahar Balkhi, Afghanistan’s foreign ministry spokesperson, centre, on a flight with other senior Taliban officials. He said Islamic law would be the government’s ‘baseline’ © Eyepress/Reuters

Central to this economic project is ending the corruption the Taliban and independent experts said was rampant under the previous government, from regional warlords involved in smuggling to police exacting bribes at checkpoints.

A UK Foreign Office-funded study released in July estimated the Taliban had “drastically reduced” up to $1.4bn in bribes estimated to have been siphoned off annually on cross-border trade alone.

Under the previous government, “mining was in the hands of warlords and the economy in those of a few families”, said finance ministry spokesperson Ahmad Wali Haqmal. “It’s hard to say we’ve eliminated corruption, but we’ve minimised it.”

Analysts and foreign officials said the regime has achieved this largely through strict internal discipline, fear and military strength rather than improved state capacity.

In June, for example, Taliban forces launched an offensive against rebellious leader Mawlawi Mehdi in the coal-rich Sar-e-Pol province, a power struggle stemming in part from tension over the lucrative trade in the fossil fuel. The regime reasserted control in a bloody campaign that displaced thousands of families and reportedly led to civilian deaths.

Taliban members stroll in Kabul
Taliban members stroll in Kabul. The Taliban segregate places of leisure on gender lines, with certain days reserved for men or women © Oriane Zerah/FT

But despite their discipline, the Taliban have faced intense internal rivalries since seizing power, notably over girls’ schooling, according to some officials.

Haibatullah’s decision in March to bar older girls indefinitely from school divided the group. Some senior figures such as supreme court chief Abdul Hakim Ishaqzai supported the ban, while others including defence minister Muhammad Yaqoob and interior minister Sirajuddin Haqqani opposed it, according to people familiar with the matter.

“Ninety-nine per cent of Taliban — high, mid and low-ranking — support the resumption of girls’ education,” one official said.

“The Talibs are . . . a very strong and cohesive movement to the outside world, but internally there are a lot of fractures,” said an international official. “Before they were a resistance movement with a clear objective — taking power. Now things are much more complex.”

But analysts and Taliban officials said that with discipline honed by two decades of insurgency, any disputes are far from erupting into an open confrontation that could split the regime.

“Obedience in the Taliban is very high,” said one veteran member. “When the [supreme leader] announced that girls’ schools were closed, in my heart I didn’t want it. But I will obey.”

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Sister Patricia Daly, 66, Dies; Took On Corporate Giants on Social Justice



For years, Sister Pat and other environmentalists had urged ExxonMobil to take significant steps to reduce greenhouse-gas emissions from its operations and products. In 2007, she proposed a resolution that called on that energy giant to set a firm date to report on its progress.

“We’re the most profitable company in the history of the planet,” she told Rex Tillerson, then the company’s chief executive (and later secretary of state in the Trump administration), at the company’s annual meeting, “but what will be our long-term health when we are really faced with the regulatory and other challenges around global warming?”

She added: “We are now, this company and every single one of us, challenged by one of the most profound moral concerns. And we have the wherewithal to respond to that.”

The proposal won 31 percent of the ballots, or about 1.4 billion shares, the largest tally for an ExxonMobil climate-change resolution. If not an outright victory, it was a page in a decades-long narrative that led ExxonMobil to put a climate scientist on its board in 2017. Three executives who recognized the urgency to address climate change joined the company’s board in 2021, nominated by a tiny activist hedge fund, Engine No. 1.

“The arc of her work led us to those victories by working from the inside and the outside,” John Passacantando, the founder of Ozone Action, an anti-global warming group, and a former executive director of Greenpeace, said in a phone interview.

In 1999, Vanity Fair named her to its Hall of Fame, applauding her as one who “translates belief into commitment and never backs down from a fight.”

Mary Beth Gallagher, who replaced Sister Pat as executive director of the Tri-State Coalition in 2017, said Sister Pat had not become frustrated when her resolutions were routinely voted down.

“She lived in hope,” Ms. Gallagher said. “We never talked about winning or losing. It was about raising consciousness and educating. If we’re not asking these questions, who will?”

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Families can make a tax-free rollover from 529 plans to Roth individual retirement accounts starting in 2024



Maskot | Maskot | Getty Images

Americans who save for college in 529 plans will soon have a way to rescue unused funds while keeping their tax benefits intact.

A $1.7 trillion government funding package has a provision that lets savers roll money from 529 plans to Roth individual retirement accounts free of income tax or tax penalties.

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The House passed the measure Friday and the Senate did so Thursday. The bill heads to President Biden, who’s expected to sign it into law.

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The rollover measure — which takes effect in 2024 — has some limitations. Among the largest: There’s a $35,000 lifetime cap on transfers.

“It’s a good provision for people who have [529 accounts] and the money hasn’t been used,” said Ed Slott, a certified public accountant and IRA expert based in Rockville Centre, New York.

That might happen if a beneficiary — such as a child or grandchild — doesn’t attend a college, university, vocational or private K-12 school, or other qualifying institution, for example. Or, a student may receive scholarships that mean some 529 funds are left over.

Millions of 529 accounts hold billions in savings

There were nearly 15 million 529 accounts at the end of last year, holding a total $480 billion, according to the Investment Company Institute. That’s an average of about $30,600 per account.

529 plans carry tax advantages for college savers. Namely, investment earnings on account contributions grow tax-free and aren’t taxable if used for qualifying education expenses like tuition, fees, books, and room and board.

Retirement plan changes in the omnibus spending bill

However, that investment growth is generally subject to income tax and a 10% tax penalty if used for an ineligible expense.

This is where rollovers to a Roth IRA can benefit savers with stranded 529 money. A transfer would skirt income tax and penalties; investments would keep growing tax-free in a Roth account, and future retirement withdrawals would also be tax-free.  

Some think it’s a handout for the rich

However, some critics think the rollover policy largely amounts to a tax handout to wealthier families.

“You’re giving savings incentives to those who can save and leaving behind those who cannot save,” said Steve Rosenthal, a senior fellow at the Urban-Brookings Tax Policy Center.

A 2012 analysis conducted by the Government Accountability Office found the typical American with a 529 account had “much more wealth” than someone without: $413,500 in total wealth for the median person, about 25 times the amount of a non-accountholder.

You’re giving savings incentives to those who can save and leaving behind those who cannot save.

Steve Rosenthal

senior fellow at the Urban-Brookings Tax Policy Center

Further, the typical owner had a roughly $142,000 annual income versus $45,000 for other families, the GAO report said. Almost half, 47%, had incomes over $150,000.

The new 529-to-Roth IRA transfer provision doesn’t carry income limits.

Limitations on 529-to-IRA transfers

While the new tax break primarily benefits wealthier families, there are “pretty significant” limitations on the rollovers that reduce the financial benefit, Jeffrey Levine, a certified financial planner and certified public accountant based in St. Louis, said in a tweet.

The restrictions include:

  • A $35,000 lifetime cap on transfers.
  • Rollovers are subject to the annual Roth IRA contribution limit. (The limit is $6,500 in 2023.)
  • The rollover can only be made to the beneficiary’s Roth IRA — not that of the account owner. (In other words, a 529 owned by a parent with the child as beneficiary would need to be rolled into the child’s IRA, not the parent’s.)
  • The 529 account must have been open for at least 15 years. (It seems changing account beneficiaries may restart that 15-year clock, Levine said.)
  • Accountholders can’t roll over contributions, or earnings on those contributions, made in the last five years.

In a summary document, the Senate Finance Committee said current 529 tax rules have “led to hesitating, delaying, or declining to fund 529s to levels needed to pay for the rising costs of education.”

“Families who sacrifice and save in 529 accounts should not be punished with tax and penalty years later if the beneficiary has found an alternative way to pay for their education,” it said.

Are 529 plans already flexible enough?

Some education savings experts think 529 accounts have adequate flexibility so as not to deter families from using them.

For example, owners with leftover account funds can change beneficiaries to another qualifying family member — thereby helping avoid a tax penalty for non-qualified withdrawals. Aside from a kid or grandkid, that family member might be you; a spouse; a son, daughter, brother, sister, father or mother-in-law; sibling or step-sibling; first cousin or their spouse; a niece, nephew or their spouse; or aunt and uncle, among others.

Owners can also keep funds in an account for a beneficiary’s graduate schooling or the education of a future grandchild, according to Funds can also be used to make up to $10,000 of student loan payments.

The tax penalty may also not be quite as bad as some think, according to education expert Mark Kantrowitz. For example, taxes are assessed at the beneficiary’s income-tax rate, which is generally lower than the parent’s tax rate by at least 10 percentage points.

In that case, the parent “is no worse off than they would have been had they saved in a taxable account,” depending on their tax rates on long-term capital gains, he said.

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Goldman grumbling grows for banking giant to sack CEO David Solomon



The knives are out for Goldman Sachs CEO David Solomon, and this time the people brandishing them aren’t the usual suspects — his junior staffers annoyed that they have to work late or come into the office several times a week.

Solomon’s problems are more serious and existential, I am told, and how he handles what can best be described as a revolt in some quarters of Goldman’s middle and upper management ranks could determine how much longer he stays in his job.

Solomon, 60, took the job in 2018 and was always somewhat of an odd choice to run the white-shoe investment bank that usually cultivated its leaders from within. He cut his teeth at a decidedly un-Goldman-like venue: the scrappy investment bank Bear Stearns (ultimately one of the causalities of the 2008 financial crisis).

He joined Goldman in 1999, as a partner, no less, because his deal-making chops allowed him to skip layers of management.

In other words, Solomon is an outsider at a firm with a wickedly insular culture. He has a quirky side gig as a DJ in the summer Hamptons party circuit. He’s also not one for small talk, and doesn’t consult with a lot of people before handing down his edicts. 

“He doesn’t breed a lot of love,” said one former Goldman executive who knows Solomon well.

Lots of people at Goldman don’t like him, and they’re letting their views be heard both internally and with pals at rival firms.

Solomon as a DJ
Solomon is an outsider at a firm with a wickedly insular culture.
David Solomon/Instagram

For the record: I’ve met Solomon and like him for his no-BS style. And until pretty recently, the numbers show him doing a great job. Goldman was running on all cylinders in deals and trading. Even as the market corrects, shares are up about 60% since Solomon took over as CEO in 2018 compared to around a 44% rise in the S&P during that time.

Goldman is still the top M&A shop, even widening its market share over rivals in that important business line. Solomon was the first among his fellow CEOs to see the downturn and enact significant layoffs to cut costs.

Still, the grumbling about Solomon is spreading to the managing director and partner class. High-priced Wall Street talent don’t call all the shots at any firm, of course. But Goldman’s MDs and partners have historically been a powerful force when the board decides the fate of current management, which makes Solomon’s hold on his job increasingly precarious as more and more of them defect from his camp.

David Solomon as a DJ
Solomon was the first among his fellow CEOs to see the downturn and enact significant layoffs to cut costs.
David Solomon/Instagram

Here’s how they’re building a case against him: Goldman’s longtime archrival investment bank Morgan Stanley now easily dwarfs Goldman in market value, $144 billion to $116 billion, continuing a trend that predates Solomon. That comes amid a slowdown in banking deals, Goldman’s bread-and-butter business, and Solomon’s home turf.

Morgan’s CEO James Gorman deftly expanded the firm’s wealth management operations, which provide steady revenues. Solomon’s effort to diversify was an overindulgence in something called Marcus, a digital retail bank launched by his predecessor Lloyd Bankfein that Solomon made his baby. So far, it’s been a disaster, so much so that Solomon has been forced to scale back, possibly on the way to winding it down.

Goldman, meanwhile, has missed targets in its recent earnings announcements, and more downward surprises could be in store as markets continue to wobble. Bonuses are down, in some places cut in half, albeit from the nosebleed levels of 2021.

Goldman Sachs headquarters
The grumbling about Solomon is spreading to the managing director and partner class.
AFP via Getty Images

Traders did well in 2022 because Goldman’s are particularly adept in profiting off turbulence, but part of their pool is being diverted to bankers to keep them in-house until the deal slowdown ends.

Since Solomon is a banker, he’s also being accused of favoritism, which in truth is a pretty lame charge, since bankers often subsidize trader bonuses when the markets aren’t profitable. Still, the Goldman trading department is powerful and can spark management change, as it has done in the past.

There’s also a question about Solomon’s allegiance to Goldman’s stand-alone culture. In its 153-year existence, Goldman has operated on the assumption that it would be the acquirer in any major strategic acquisition. Solomon’s experience at Bear, then one of the most transactional places on Wall Street, means he could be looking for a deal and not one that keeps Goldman in charge.

Morgan Stanley CEO James Gorman deftly expanded the firm’s wealth management operations, which provide steady revenues.
Morgan Stanley’s James Gorman deftly expanded the firm’s wealth management operations, which provide steady revenues.
AFP via Getty Images

At a time when most Goldman insiders believe he needs to do a “transformational deal,” i.e., something big that allows it to better compete against Morgan Stanley and super banks like JP Morgan, there is speculation that Solomon might allow Goldman to be swallowed whole by, say, a big asset manager or bank if the price was right.

As best I can tell, this grumbling, though real, doesn’t immediately threaten Solomon’s job. Then again, there is something to be said for keeping your producers happy.

Jack Welch, the legendary CEO of General Electric, was a notorious screamer and demanding beyond belief. Yet Welch knew how to nurture his people.

Former General Electric CEO Jack Welch
Jack Welch was a notorious screamer and demanding beyond belief. Yet Welch knew how to nurture his people.
Getty Images

“Jack could chew your ass, then put his arm around you and make you feel great,” one of his longtime executives, Bob Nardelli, once told me.

It’s why so many other talented execs chose to stay around under Welch, abuse and all, and left when his successor took over, watching GE implode from the outside.

Maybe it’s a good time for Solomon to take a page from Welch and start hugging it out.

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