According to two senior US officials, the Biden administration has collaborated with Switzerland and Afghan economists to establish a new fund that would eventually serve as a mechanism to deploy billions of dollars in frozen Afghan funds to support economic stability in the nation.
Although the US is transferring $3.5 billion to the new “Afghan Fund,” officials claimed they won’t immediately release the funds since there isn’t a reliable institution in Afghanistan to ensure the money will benefit the Afghan people.
The competent management of the bank and guarantees that the money won’t be given to terrorists or criminals are two essential conditions for the transfer of these cash to the Afghan central bank, the officials stated.
“We do not have that confidence today,” said a senior US official. At minimum the Afghan central bank will need to “demonstrate its independence from political influence and interference.” It will also need to demonstrate it has “instituted adequate anti-money laundering and countering the financing of terrorism controls” and “complete a third party needs assessment and onboard a reputable third party monitoring,” the official explained.
In a letter this week from the US deputy secretary of the Treasury, which CNN received, the US restated the procedures it had previously specified for the central bank, also known as the Da Afghanistan Bank (DAB), to take. The letter lists, among other expectations, the need for the DAB to exhibit its independence from Taliban influence and meddling.
President Joe Biden signed an executive order earlier this year that permits the $7 billion in frozen assets from the central bank of Afghanistan to eventually be distributed domestically and possibly support legal actions brought by the families of those killed in the September 11, 2001, terrorist attacks. After the Afghan government fell last year and the Taliban seized power, the money were frozen by the US administration.
Afghanistan, which has been in Taliban control for more than a year, is on the verge of an economic collapse. The Biden administration has come under pressure from lawmakers to release the funds so that the nation can continue to function and pay for needs like teacher wages. The UN stated last month that the country is not receiving enough humanitarian aid to support its economy.
According to US officials this week, it is difficult to predict when the central bank will be able to live up to the expectations set. The recapitalization of the Afghan central bank is not a “near-term option,” according to recent statements made by US officials.
As soon as the required actions are done, setting up the new fund would allow the funds to flow swiftly.
“The people of Afghanistan face humanitarian and economic crises born of decades of conflict, severe drought, COVID-19, and endemic corruption,” said Wendy Sherman, US deputy secretary of state. “Today, the United States and its partners take an important, concrete step forward in ensuring that additional resources can be brought to bear to reduce suffering and improve economic stability for the people of Afghanistan while continuing to hold the Taliban accountable.”
Two Afghan economists and a representative from each of the US and Swiss governments will make up the board of the fund. The officials highlighted that the Taliban are not a part of this financial scheme.
According to a senior US official, the US continues to engage in “pragmatic engagement” with the Taliban in order to serve the Afghan people and further American objectives.
By establishing this process, the US is making it clear that they do not intend to recognize the Taliban, who are currently in charge of the country, but do intend to release the monies that have been frozen to the Afghan people if the DAB can take the required action.
“I think relief organizations as well as countries that care about Afghans have sought to continue to work with almost 500,000 civil servants that continue to work on behalf of the people that includes teachers and includes health workers includes engineers, and it’ll include depth technocrats as well,” said the senior US official.