Afghanistan is facing catastrophe in part because the Biden administration froze billions of dollars in the country’s reserves after the US-backed government collapsed last August. Coupled with sanctions on its banking sector, the move plunged Afghanistan into financial calamity, depriving it of the money needed to buy food and other imports on which the country is heavily dependent. The UN Refugee Agency said in January that Afghanistan was “sliding into the world’s worst humanitarian crisis”, with 24 million people – more than half the population – in need of emergency assistance. emergency, an increase of 30% compared to last year.
Faced with this emergency, as well as the devastating earthquake that struck the east of the country this week, Biden aides have begun talks to return to the Afghan government at least partial use of the frozen funds that are kept in American institutions. In negotiations with Taliban officials, they attempted to set up a system whereby central bankers and career bureaucrats could manage assets to stabilize the Afghan economy – while simultaneously erecting safeguards that would ensure that the funds would not misused by the Taliban, people familiar with the matter said. One option discussed by people familiar with the talks is to have the money administered by a third-party trust fund, two people familiar with the matter said, although the exact structure of such an arrangement is unclear.
Senior administration officials expressed optimism about the progress of the talks, but warned that several obstacles to a deal remain. The people spoke on condition of anonymity to describe private diplomatic negotiations.
“It would be accurate to say that negotiations are ongoing,” said Shah Mehrabi, a professor of economics at Montgomery College in Maryland and a senior board member of Afghanistan’s central bank since 2002. to try to find a mechanism that will allow the transfer of reserves to the central bank of Afghanistan.
Mehrabi declined to comment on details of the negotiations. He said talks were ongoing between the United States and the Taliban, but stressed that “the mechanism has not been finalized by all parties involved.” Mehrabi said food prices have jumped 18% in recent months. Basic household items increased by 35% in the first months of the year; in May, household goods inflation hit 42%, Mehrabi said.
“These reserves belong to the Afghan people; they are needed to stabilize prices,” he said. “The sooner it is delivered to the central bank of Afghanistan, the sooner we will see the impact of the reduction in prices which are essential for ordinary Afghans to afford food, cooking oil, sugar and fuel. Now they can’t do that.
The White House referred the questions to the Treasury Department. A Treasury spokeswoman declined to comment.
The fate of Afghanistan’s place in the global economy has challenged the Biden administration for months, following the debacle of the US withdrawal from the region and the rapid collapse of the Afghan government and takeover. control by the Taliban. The White House has tried to allow essential aid to flow into the country by authorizing companies to carry out humanitarian activities, but aid groups and many Afghans say these efforts have been insufficient in the face of worsening conditions. crisis. In recent months, the United States has tried to use the United Nations as a channel to allocate aid while circumventing the leadership of the Taliban, but these efforts have amounted to only a fraction of the billions that the coalition led. by the United States once gave to the country.
Biden administration freezes billions of dollars in Afghan reserves, starving the Taliban of cash
Complicating the challenge for the Biden administration, the Taliban failed to meet US demands to guarantee the rights of women and minorities — instead, they cracked down on dissent and closed schools for girls, among other measures of this type. “Our fight was against the invaders to liberate Afghanistan from occupation and establish Islamic law,” Acting Foreign Minister Amir Khan Muttaqi previously told The Washington Post. “There will be no change in our position.”
This left the fate of the reserves uncertain. The White House announced last February that the $7 billion in reserves held by foreigners in Afghanistan would be split in half, with $3.5 billion held for pending legal claims by families of victims of the 9/11 terrorist attacks. September 2001. The administration promised to return the remaining $3.5 billion to Afghanistan, but it remained unused. In a statement, the White House said the move was “designed to allow funds to reach the Afghan people, while keeping them out of the hands of the Taliban and malicious actors.”
But international aid groups and some congressional Democrats have said US policy has proven insufficient to deal with the growing economic crisis in Afghanistan, which has been exacerbated by global food price spikes driven by the invasion of Ukraine by Russia. Save the Children, an international aid group, estimated last month that around 10 million children in Afghanistan “go hungry every day”. The non-profit organization estimated that 20,000 people “were pushed into starvation” from March to May alone. Erik Sperling, executive director of advocacy group Just Foreign Policy, said the United States needed to act faster.
“It is widely understood that the reserve freeze was guaranteed to blow up the Afghan economy, and without a workaround, there is a risk of hundreds of thousands of deaths at the hands of the United States,” Sperling said. “It’s great news if they work diplomatically to find a solution to save innocent Afghans.”
Editor Susannah George contributed to this report.