US President Joe Biden’s administration will continue talks on releasing billions of dollars in assets held by foreigners in Afghanistan despite the presence of the late al-Qaeda leader Ayman al-Zawahiri in Kabul and procrastination by the Taliban and the Afghan central bank, according to three sources with knowledge of the situation.
The decision to continue with the initiative to help stabilize Afghanistan’s shattered economy underscores growing concern in Washington over a humanitarian crisis as the United Nations warns that nearly half of the country’s 40 million people face “acute hunger” as winter approaches.
At the heart of the US-led effort, as Reuters reported last month, is a plan to transfer billions of Afghan central bank assets held by foreigners into a proposed trust fund based in Swiss. Disbursements would be made with the help of an international adviser and bypass the Taliban, many of whose leaders are under US and UN sanctions.
Islamist extremists presented a counter-proposal during talks in Doha in late June.
US State Department and Treasury officials told independent analysts at a briefing on August 11 – 12 days after a CIA drone strike killed al-Qaeda leader Zawahiri on a balcony of his refuge in Kabul – that they will continue the talks despite frustration with the pace, two sources said. on condition of anonymity.
The Taliban and the Afghan central bank – known by the initials DAB – are not moving quickly, a US official has said, according to a source. “The Taliban are sitting on their hands and it’s infuriating.”
The State Department declined to comment on the briefing.
A knowledgeable US source who requested anonymity confirmed the substance of the briefing.
“The strike has not changed the US government’s commitment to setting up the international trust fund” and it “is working with the same speed and alacrity as before the strike,” the US source said.
The Taliban- and DAB-run ministries of foreign affairs and information did not immediately respond to requests for comment.
US officials also discussed the trust fund plan with Switzerland and other parties.
Afghanistan’s economic and humanitarian crises worsened when Washington and other donors cut off aid that funded 70% of the government’s budget after the Taliban captured Kabul on August 15, 2021, as the last troops foreign countries led by the United States were leaving after 20 years of war.
Washington also stopped stealing hard currency, crippling the Afghan banking system, and freezing $7 billion in Afghan assets at the US Federal Reserve in New York. In February, Biden ordered that half of the sum be set aside “for the benefit of the Afghan people.”
Other countries hold some $2 billion in Afghan reserves.
Initially, Biden’s sequestered $3.5 billion would go into the proposed trust fund and could potentially be used to pay Afghanistan’s arrears to the World Bank and to print Afghans, the national currency, and passports, both in short supply.
The remaining $3.5 billion is disputed in lawsuits against the Taliban following the September 11, 2001 attacks on the United States, but the courts could decide to release those funds as well.
The assets could also potentially be used to recapitalize DAB, bolstering its ability to regulate the value of the Afghan, fight inflation and provide hard currency for imports.
But after Zawahiri’s death, the State Department ruled out recapitalizing DAB as “a short-term option,” saying that by harboring the al-Qaeda leader in violation of the U.S. troop withdrawal agreement of 2020, the Taliban had fueled concerns “about the diversion of funds to terrorist groups.”
CENTRAL BANK ACTIVISTS
Two sources quoted US officials who told the briefing that continuing the talks had become more difficult due to Taliban resistance to several internationally-backed demands.
One calls for replacing the two high-ranking activists at the helm of the DAB – one is under US and UN sanctions – with experienced professionals to help build confidence that the bank was safe Taliban interference.
The Taliban and the ATM have also not formally agreed to install independent anti-money laundering monitors at the bank, although they have agreed to this in principle, the officials said, according to the sources.
Officials, the sources said, presented examples of what they described as Taliban and DAB intransigence.
In particular, they refused to cooperate with a UN-administered program to channel badly needed international aid funds to aid agencies in Kabul by the World Bank.
Officials also told the briefing that Washington in March asked other governments to encourage private banks to re-establish “correspondent” relationships with Afghanistan, which would facilitate international transactions, the sources said.
There “wasn’t much appetite” for the outreach made by US embassies in diplomatic memos called demarches, a US official said, according to a source.
This was partly due to the absence of independent anti-money laundering monitors at the ATM, the official said, the sources said.