EXPLAINER
The story so far: On February 11, U.S. President Joe Biden signed an executive order declaring that the United States —which had frozen the Afghan reserve fund belonging to the central bank of Afghanistan —will allow nearly $3.5 billion of that fund for the humanitarian needs of the Afghan people. That apart he also opened the possibility that U.S. victims of terrorism will be considered for a part of the fund. The announcement has effectively blocked the Taliban administration in Kabul from accessing the funds. The Taliban has branded the move as “theft”.
What is the source of the Afghan funds in the U.S.?
At the time of the fall of Kabul to the Taliban in August 2021, at least $9 billion belonging to Afghanistan was parked abroad in various countries. The USA held around $7 billion and others like Switzerland, Germany, the United Arab Emirates and two other countries held the rest. The money belonged to Da Afghanistan Bank (DAB). The U.S. Government had frozen the funds but there was speculation about its fate since the Taliban returned to Kabul. The complication is partly also due to the fact that the Taliban has not received any international recognition in the past six months since the fall of Kabul. Key regional powers like India have urged the international community to go slow in recognising the militants who continue to have figures like Sirajuddin Haqqani who remain in the terror blacklist of the United Nations. To make matters worse, the Taliban has so far failed to get the seat reserved for Afghanistan at the United Nations. Afghan analysts like Khalilullah Safi however maintain that apart from the reserves of the central bank, the U.S. government is also in possession of some of the gold deposits of Afghanistan that dates back to the days of the Government of King Zaheer Shah.
What is the domestic situation of Afghanistan?
The economic situation in Afghanistan crashed immediately in the aftermath of the takeover by the Taliban as supply lines were disrupted and inflation shot up prices across the country. An unusual draught came as an additional burden. As the revenue system inside the country collapsed, the Taliban administration found itself incapable of proceeding along the lines as described in the February 29, 2020 agreement between the U.S. and the Taliban delegation in Doha, Qatar. The Taliban-U.S. agreement had envisaged that an Afghan Islamic Government as determined by intra-Afghan dialogue would be formed when Taliban joins the mainstream Government. The U.S. had pledged in that agreement that it will "seek international cooperation for reconstruction" of Afghanistan. But in view of the military takeover by Taliban and in the absence of any "intra-Afghan dialogue", the agreement's financial sections were not activated. However, Taliban has been demanding that the $9 billion belongs to the Afghan people and the U.S. should return the money.
What is the U.S. argument on taking control of the reserve?
The U.S. does not agree that the reserve belongs to the Afghan people. White House officials claimed that "fundamentally, these reserves, including the $7 billion in the U.S., ....are proceeds of the sustained and significant international assistance" that Afghanistan received in the previous two decades during the rule of President Hamid Karzai and President Ashraf Ghani. They argue that a part of that amount came from international donors. According to official U.S. sources, the move was not sudden as they have been deliberating over the past several months how some of that amount could be used to support the humanitarian needs of the Afghan people. The U.S. has declared that it will access around $3.5 billion for supporting the humanitarian needs of the Afghan people (through international aid agencies). This contribution is expected to be channelled through international aid and relief agencies like the World Food Programme that are involved in providing food support to Afghanistan.
How are the reserves relevant for victims of terrorism in the U.S.?
While part of the reserves, $3.5 billion, has been designated for a trust fund to support the humanitarian assistance for Afghanistan, the plan for the rest of the fund out of the total of $7 billion is yet to be decided, said an official on February 11. The official said the rest of the money would be kept in the U.S., the use of which is to be decided as per the current litigation against the Taliban by American victims of terrorism. Taliban has long been in focus in the courts of the United States where victims of the 9/11 attacks have often claimed damages from the group for providing support to Osama Bin Laden's Al Qaeda network which carried out the attacks across locations in the United States with a team of 19 Arab hijackers and civilian aircraft. A group of 150 family members of people killed in the 9/11 attacks sued the Taliban and Al Qaeda in 2010. These families have urged the U.S. government to allow them access to the funds. The White House official said that the transfer of the funds to these families of victims will depend on the court order. The declaration of the court in New York will therefore finally determine the future course of the funds.
What has been the Taliban’s response?
Taliban spokespersons have described President Biden’s announcement as “unilateral”. Suhail Shaheen, the “Permanent Representative-designate for the United Nations” of the Taliban has assured that the reserve of the Da Afghanistan Bank does not belong to “governments or factions” and is a “property” of the Afghan people. It is meant for implementation of “monetary policy, facilitation of trade and boosting of the financial system of the country.” He described the U.S. move as an act of “injustice” against the Afghan people.
