According to two senior US officials, the Biden administration has collaborated with Switzerland and Afghan economists to establish a new fund that will employ billions of dollars in frozen Afghan funds to advance economic stability in the nation.
The US will transfer $3.5 billion to the new “Afghan Fund,” but authorities indicated they won’t immediately send the funds to an Afghan institution because there isn’t a reliable organization to ensure the funds will benefit the Afghan people.
Instead, it will be run by a third party that is not connected to the Taliban or the nation’s central bank.
According to a State Department representative, “The Fund may use assets to provide liquidity to the Afghan banking sector, keep Afghanistan current on its debt service obligations, support exchange rate stability, transfer funds as necessary to public Afghan financial institutions, or any other use for the benefit of the Afghan people that is approved by the Fund’s Board of Trustees.”
In the future, transferring these monies to the Afghan central bank may be possible, but it would depend on two important factors: the bank’s prudent management and guarantees that the money won’t be used to fund terrorism or criminal activity, the officials said.
Senior US official: “We do not have that confidence today.” The official explained that the Afghan central bank will need to “complete a third party needs assessment and onboard a credible third party monitoring” in addition to “demonstrate its independence from political influence and interference,” “instituted adequate anti-money laundering and countering the financing of terrorism controls,” and “complete a third party needs assessment.”
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 collapse of the Afghan government last year, the US government suspended the funds.
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.
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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.
By establishing the new fund, it will be possible to disburse money directly without going via the central bank.
According to Wendy Sherman, US deputy secretary of state, “the people of Afghanistan suffer humanitarian and economic difficulties born of decades of violence, catastrophic drought, COVID-19, and pervasive corruption.” The United States and its allies “took a major, concrete step forward today to ensure that additional resources may be brought to bear to lessen suffering and enhance 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 apparent that they want to release the funds that have been blocked but do not want to acknowledge the Taliban, who are currently in charge of the nation.
According to the senior US official, “I believe relief organizations and nations that care about Afghans have sought to continue working with almost 500,000 civil servants that continue to work on behalf of the people, including teachers and health workers and engineers, and it’ll also include depth technocrats.”
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By: Miss Cherry May Timbol – Independent Reporter
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