The United States on Wednesday announced that it would transfer $3.5 billion in Afghan central bank assets into a new Swiss-based trust fund that will be shielded from the Taliban and used to help stabilise Afghanistan's collapsed economy.
The Afghan Fund, managed by a board of trustees, could pay for critical imports like electricity, cover debt payments to international financial institutions, protecting Afghanistan's eligibility for development aid, and fund the printing of new currency.
"The Afghan Fund will protect, preserve and make targeted disbursements of that $3.5 billion to help provide greater stability to the Afghan economy," the US Treasury said in a statement.
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US officials said no money would go to the Afghan central bank, known as DAB, until it is "free of political interference" – diplomatic parlance for replacing the bank's top Taliban officials, two of whom are under US and UN sanctions, with banking professionals – and anti-money laundering safeguards are instituted.
"Until these conditions are met, sending assets to DAB would place them at unacceptable risk and jeopardize them as a source of support for the Afghan people," US Deputy Treasury Secretary Wally Ademeyo said in a letter to the central bank's Supreme Council seen by Reuters.
The new foundation is based in Geneva and has an account with the Basel-based Bank for International Settlements (BIS), which provides financial services to central banks.
"The BIS is establishing a customer relationship with the Fund for the Afghan People. The BIS role is limited to providing banking services to and executing the instructions of the Board of Trustees of the Fund without involvement in the Fund's governance or decision making," the BIS said, adding it would comply with all applicable sanctions and regulations.
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The fund will not resolve serious problems driving dire economic and humanitarian crises threatening to worsen as winter approaches. Nearly half of Afghanistan's 40 million people face "acute hunger," according to the United Nations.
The Taliban's biggest fiscal challenge is developing new revenues to compensate for financial aid that provided up to 75% of government spending that the United States and other donors ended after the Islamists seized Kabul in August 2021 as the last American troops left, ending two decades of war.
"The economy of Afghanistan faces serious structural issues, exacerbated by the Taliban takeover," a senior US official, speaking on condition of anonymity, told reporters in a briefing about the new fund.
The crises also have been fueled by decades of war, drought, the Covid-19 pandemic, endemic corruption and a cutoff of the central bank from the international banking system.
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Creation of the new trust fund comes after months of talks between US President Joe Biden's administration, Switzerland, other parties and the Taliban, who demanded the return of $7 billion in Afghan central bank assets held in the United States.
The talks continued despite US anger at the Taliban's harboring of late al Qaeda chief Ayman al-Zawahiri – killed on July 31 in a CIA drone strike on his Kabul safe house – and international outrage at the militants' human rights crackdown, including barring girls from state-run secondary schools.
Biden in February sequestered "for the benefit of the Afghan people" the $3.5 billion in DAB assets to be transferred into the new trust fund.
The other $3.5 billion is being contested in lawsuits against the Taliban stemming from the September 11, 2001, attacks on the United States. Courts could decide to release that money, which could be deposited in the new trust fund.
Another approximately $2 billion in Afghan central bank assets held in European and Emirati banks also could end up in the fund.
The fund's board also comprises US Ambassador to Switzerland Scott Miller, Anwar Ahady, a former Afghan central bank chief and former finance minister, and Shah Mehrabi, a US academic who remains on the DAB Supreme Council.