U.S. Frees Up Portion of $7 Billion in Frozen Afghan Assets
American officials said the Taliban will have no say in how the money is dispersed and that safeguards will be put in place to ensure that the money does not land in the wrong hands.
The Biden administration said Wednesday that it was establishing a special Afghan Fund to disperse portions of the nearly $7 billion in assets of the central bank of Afghanistan that have been frozen since the Taliban took control of the country last summer.
The Treasury Department said $3.5 billion of the total amount held in the bank would be deposited at a special bank in Switzerland and doled out on an as-needed basis to “provide greater stability to the Afghan economy.”
“The people of Afghanistan face humanitarian and economic crises born of decades of conflict, severe drought, COVID-19, and endemic corruption,” a deputy secretary of state, Wendy Sherman, said. “The Afghan Fund will be part of our ongoing diplomatic and humanitarian efforts on behalf of the people of Afghanistan.”
American officials stressed that the Taliban will have no say in how the money is dispersed and that safeguards, including regular reviews of the fund by external auditors, will be put in place to ensure that the money does not land in the wrong hands.
That task will fall, in the short term at least, on a board of trustees consisting two unnamed Afghan economic experts and one representative each from the governments of the United States and Switzerland.
While the treasury department said the money will be used to ease the suffering of ordinary Afghans, the statement announcing the new fund said at least some of the money would be used to pay off the country’s arrears with international lenders and pay for critical imports such as electricity.
The World Bank has reported that since the fall of Kabul in August 2021 and the American military withdrawal, the country’s economy has all but collapsed. Economic output is down between 20 percent and 30 percent, and about 70 percent of the country’s households are said to be destitute.
“The Taliban’s repression and economic mismanagement have exacerbated longstanding economic challenges for Afghanistan, including through actions that have diminished the capacity of key Afghan economic institutions and made the return of these funds to Afghanistan untenable,” the deputy secretary of the Treasury, Wally Adeyemo, said. “Through this Fund, the United States will work closely with our international partners to facilitate use of these assets to improve the lives of ordinary people in Afghanistan.”
The money in question has been sitting frozen at the New York Federal Reserve Bank for more than a year and has been the subject of a legal tussle between relatives of victims of the 9/11 terror attacks and the Biden administration.
Multiple groups of surviving relatives have sued — and won substantial court judgments against — the Taliban and other Afghan actors for their role in the attacks. The families have been unable to collect on those judgments, however.
Some of the family members want the money freed up to pay off those judgments; other groups of relatives want the money returned to what they say is its rightful owner — the central bank of Afghanistan and the Afghan people.
In February, Mr. Biden signed an executive order allowing half of the $7 billion total to be used for humanitarian assistance to the people of Afghanistan. The remaining $3.5 billion, the order stated, would remain frozen pending the outcome of the relatives’ litigation.