Washington will continue discussions despite the late Al Qaeda leader's presence in the country and foot-dragging by the Taliban and Afghan Central Bank, according to sources.

Dozens of prominent US and international economists, including Nobel Prize winners, have urged the US to release Afghanistan's reserves over the humanitarian crisis, saying that
Dozens of prominent US and international economists, including Nobel Prize winners, have urged the US to release Afghanistan's reserves over the humanitarian crisis, saying that "the full $7 billion belong to the Afghan people." (Andrew Biraj / File / Reuters)

US President Joe Biden's administration will press ahead with talks on releasing billions of dollars in Afghanistan's foreign-held assets. 

This is despite the late Al Qaeda leader's presence in Kabul and Washington's frustration with the pace, according to three sources with knowledge of the situation, Reuters news agency reported on Monday.

The decision to pursue the initiative to help stabilise Afghanistan's collapsed economy underscores growing concern over a humanitarian crisis as the United Nations warns that nearly half the country's 40 million people face "acute hunger" as winter approaches.

The core of the plan, which US officials have discussed with Switzerland and other parties, is to transfer billions in foreign-held Afghan central bank assets into a proposed Swiss-based trust fund. 

Disbursements would be made with the help of an international board and bypass the Taliban, many of whose leaders are under US and UN sanctions. The Taliban presented a counterproposal in talks in Doha in late June. 

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Deepening crisis

Afghanistan's economic and humanitarian crises deepened when Washington and other donors halted aid that funded 70 percent of the government budget following the Taliban's capture of Kabul on August 15, 2021, as the last US-led foreign troops departed after 20 years of war.

Washington also stopped flying in hard currency, effectively paralysing Afghanistan's banking system, and froze $7 billion in Afghan assets in the US Federal Reserve Bank of New York. In February, Biden ordered half the sum set aside "for the benefit of the Afghan people." Other countries hold some $2 billion of Afghan reserves.

Initially, the $3.5 billion Biden sequestered would be released into the proposed trust fund and potentially could be used to pay Afghanistan's World Bank arrears and for printing Afghanis, the national currency, and passports, both in short supply.

The other $3.5 billion is being contested in lawsuits against the Taliban stemming from September 11, 2001, attacks on the United States, but courts could decide to release those funds too. 

Families of 9/11 victims penned an open letter to Biden this month calling on him to modify the executive order about the funds.

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"Victims of terrorism, including 9/11 victims, are entitled to their day in court. But they are not entitled to money that lawfully belongs to the Afghan people," they said in their letter, which was first reported by Politico.

The assets also eventually could go to recapitalising DAB, bolstering its ability to regulate the Afghani's value, fight inflation, and provide hard currency for imports.

But after Al Qaeda chief Ayman al Zawahiri was killed, the State Department excluded recapitalising DAB as "a near-term option," saying that by harbouring him in breach of the 2020 US troop pullout deal, the Taliban had fueled concerns "regarding diversion of funds to terrorist groups."

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Challenges

Two sources quoted the US officials as telling the briefing that proceeding with the talks has become more difficult because of Taliban resistance to several internationally backed demands, such as replacing two senior Taliban members heading DAB, one of whom is under US and UN sanctions. 

The Taliban and DAB also have not formally agreed to install independent anti-money laundering monitors at the bank although they have consented in principle, the officials said, according to the sources.

The officials, the sources said, presented examples of what they described as Taliban and DAB intransigence.

They included refusing to cooperate with a UN-administered scheme to funnel badly needed international aid funds held by the World Bank to humanitarian agencies in Kabul.

The officials also told the briefing that Washington in March asked other governments to encourage private banks to restore "correspondent" relationships with Afghanistan by which international transactions are facilitated, the sources said.

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Source: TRTWorld and agencies