US creates fund to manage frozen funds to Afghanistan without them falling into Taliban hands

The U.S. government announced Wednesday the creation of an external fund to manage $3.5 billion (about 3.5 billion euros) worth of Afghan reserves after determining that it cannot rely on the Taliban to manage them in case the funds are unfrozen.

“The United States, through the Treasury Department and the State Department and in coordination with international partners, including the Government of Switzerland and Afghan economic experts, is announcing the creation of a fund to benefit the Afghan people,” a State Department spokesman said.

He stressed in a statement that “the United States remains committed to supporting the people of Afghanistan in the midst of the current economic and humanitarian crises” and detailed that U.S. President Joe Biden has authorized that the $3.5 billion in Central Bank reserves “be used to benefit the population while keeping them out of the hands of the Taliban and other malicious actors.”

“The Afghanistan Fund will protect, preserve and make concrete disbursements of this $3.5 billion that will help bring greater stability to the Afghan economy,” he said, before stressing that “the Taliban are not part” of the mechanism. “Robust safeguards have been put in place to prevent the funds from being used for illicit activities,” he has argued.

Along these lines, he has outlined that “the Afghanistan Fund will maintain its account within the Bank for International Settlements (BIS), based in Switzerland” and added that “an external auditor will monitor and audit the fund, as required by Swiss law.”

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“The people of Afghanistan face humanitarian and economic crises born of decades of conflict, severe drought, COVID-19 and endemic corruption,” explained U.S. Under Secretary of State Wendy Sherman, who described the decision as “an important and concrete step to ensure that additional resources can be delivered to reduce suffering and improve economic stability for the people of Afghanistan, while continuing to hold the Taliban accountable.”

Sherman has argued that “the United States is the largest donor of humanitarian aid” and stressed that Washington “has worked with the World Bank and the Asian Development Bank to make more than $1 billion available to provide assistance for basic services and other urgent needs, in addition to delivering $814 million in direct humanitarian aid to partners in support of the Afghan people while preventing the funds from benefiting the Taliban.”

For his part, Deputy Treasury Secretary Wally Adeyemo has advocated that “the Afghanistan Fund will help mitigate the economic challenges facing Afghanistan while protecting and preserving the $3.5 billion in reserves of Da Afghanistan Bank (DAB), the Central Bank of Afghanistan, for the benefit of the Afghan people.”

“The Taliban’s repression and economic mismanagement have exacerbated long-standing economic challenges in Afghanistan, including actions that have reduced the capacity of key economic institutions, and have caused the return of these funds to Afghanistan to be unsustainable,” he said. “Through this fund, the United States will work closely with our international partners to facilitate the use of these assets to improve the lives of the people of Afghanistan,” he said.

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Biden ordered in March the unfreezing of these assets to facilitate humanitarian aid to the Central Asian country after decades of conflict that culminated in the victory of the Taliban movement in August 2021 and the subsequent suspension of international aid programs that remained in place with the ousted Afghan government.

The White House then defended that the goal was to “open a path for the funds to reach the people of Afghanistan, while keeping them out of the hands of the Taliban and other malicious actors,” as described by the United States, while the Central Bank of Afghanistan recalled that these funds are necessary “to implement monetary policy, facilitate international trade, and stabilize the financial sector” and stressed that “the true owners of these reserves are the citizens of Afghanistan.”

The Taliban have repeatedly demanded that the United States unfreeze these funds and hand them over to the new authorities and have argued that Washington’s refusal is deepening the serious crises in the Central Asian country and limiting their ability to respond to the situation. However, the United States views these requests with suspicion and considers that there is no way to guarantee that the money will not be diverted to other purposes, including support for terrorism.

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