With the Afghan government and economy short of cash, the Taliban are laying claim to the nearly $8 billion Afghan foreign reserves, which the US has frozen.
why it matters: Afghanistan is grappling with a humanitarian crisis, and donor countries and international institutions have cut aid that amounted to about 75% of the previous government’s budget.
- The US, the European Union and others are providing humanitarian aid through third parties at the grassroots level, but experts fear the economy is shrinking due to a severe cash crunch.
- UN Secretary-General Antonio Guterres said this week, “Right now, assets are frozen and development aid is halted, the economy is in shambles.” Of the approximately $9 billion in frozen Afghan wealth, between $7 billion and $8 billion is held in the US.
- Those reserves are “no. 1 issue on the Taliban’s agenda” in talks with foreign negotiators, according to a source familiar with those discussions.
- Taliban representatives asked the US to unfreeze the funds at the first meeting between the two sides late last week as the US completed its withdrawal on August 31.
On the other end: The Biden administration is set to leave Afghan assets in limbo for the time being.
- State Department spokesman Ned Price said On Tuesday that reserves are among “carrots and sticks”, the US has to impress the Taliban, and decisions on such issues will be based on the Taliban’s “conduct”.
- A senior administration official told Nerdshala that the current terrorism sanctions against the group and its leaders were due to the fact that the US did not recognize the Taliban government, and the funds could not be released legally “with the snap of a finger”. can be done. Cases in which “several groups of plaintiffs are seeking to attach money.”
- The official would not specify which trial, but the families of 9/11 victims have brought lawsuits against Afghanistan for harboring al-Qaeda.
- “The release of reserves is no guarantee that the Taliban will actually use it effectively to solve problems,” the official said. “The Taliban were in control in the 90s and were not a responsible economic manager and they have shown zero evidence that they will be responsible managers now.”
“The administration is in a real pickle here,” Laurel Miller, a former top State Department official on Afghanistan and now director of the Asia program at the International Crisis Group.
- “On the one hand, there is certainly an argument, technically speaking, for not releasing assets to a government that is not recognized,” Miller says.
- “There is also a political argument that may be the biggest obstacle, no matter whose assets it is, can be construed as giving billions of dollars to the Taliban.”
- “On the other hand, the fact that these assets are frozen is a factor that is hurting the Afghan economy, as is the liquidity crisis. There is a cash crunch in the Afghan banking system,” notes Miller.
state of play: United Nations is urgent demand additional funding and warned that as winter approaches, the crisis will deepen. Already, only 5% of Afghan households have enough to eat.
Between the lines: The senior US official argued that the reserves are a “separate issue” from the US response to the humanitarian crisis and that releasing them “will not solve Afghanistan’s enduring economic challenges.”
- But as the cash crunch in Afghanistan deepens, the pressure to release them will mount.