February 15, 2022, marked six months since the Taliban’s takeover of Kabul. Last year’s developments in Afghanistan created a financial dilemma for nations holding the country’s foreign cash reserves. The deposed Afghan government had approximately $ 10 billion in the Central Banks around the world – about $7 billion were in the US and the rest in Germany, Switzerland, the UK, the UAE[i]. In mid-August of 2021, when the Taliban seized Afghanistan, the United States (US) brought back sanctions and froze Afghan funds; economically voicing their disapproval for the new regime. That decision cut off Afghanistan from the global economy and left the banking system in shambles. According to UNDP estimates, ninety-seven percent of Afghans could be living in poverty this year.[ii] On February 11, 2022, US President Joe Biden signed an executive order[iii] that creates the possibility of dividing Afghanistan’s frozen assets between 9/11 victims and humanitarian aid to Afghans.
The US Executive Order on Afghan Funds
The Biden administration stated that it would ask a judge for permission to move $3.5 billion to a Trust Fund it would set up to support the needs of the Afghan people facing acute humanitarian crisis. The same order also stated, President Biden will clear a legal path for relatives of the victims of the 9/11 attacks to pursue $3.5 billion (out of the $7 billion that Afghan central bank had deposited in New York before the Taliban seized power), as they are entitled to the money following previous default ruling against the Taliban and other groups named in earlier lawsuits. According to the order, even if the pending judgement allows $3.5 billion to go to the people of Afghanistan, another $3.5 billion would stay in the US and remain “subject to ongoing litigation by US victims of terrorism”.[iv]
According to reports[v], some US$ 150 billion in non-military US aid flowed into Afghanistan between 2001 and 2020, plus billion more from international organizations. Nearly 80 percent of the budget of the Afghan Republic, which not only funded government ministries but also public services like healthcare, education, governance expenditure and infrastructure; came from the international community. Foreign aid stopped from all sources, thereby significantly impacting the economy of the aid dependent country.
The World Health Organization had predicted, around 3.2 million children are expected to suffer from acute malnutrition in Afghanistan. An estimated 22.8 million people, or 55 percent of the population, are expected to face emergency levels of food insecurity between November 2021 and March 2022.[vi] United Nations Secretary-General Antonio Guterres have been repeatedly warning the world about Afghanistan’s humanitarian crisis by highlighting that the country is “hanging by a thread”. He also called on the Security Council to authorize all transactions needed to carry out humanitarian activities in the Taliban-ruled state.[vii]
Being cognizant of the fact that governing a country with empty coffers can be extremely challenging, the Taliban had made repeated appeals to the US administration and international community to unfreeze the frozen Afghan funds. In a video appeal, Mullah Abdul Ghani Baradar said that “the world has to support Afghan people without political bias and carry out their humanitarian obligation.”[viii] The Taliban have utilized every platform of their interaction with regional and global powers to lobby in favor of the release of the frozen funds. Although there has been a unanimous recognition within the international community about the need to address the looming economic and humanitarian crisis in Afghanistan to help Afghan people; but they have been facing the delicate task of channeling aid to the stricken economy without propping up the hardline extremists.
In a special meeting held on 19th December last year, 57 members of Organization of Islamic Cooperation (OIC) resolved to work with the United Nations to try to unlock Afghanistan’s frozen assets held in the US.[ix] Subsequently on December 22, 2021 the United Nations Security Council unanimously adopted a resolution proposed by the United States that facilitates humanitarian aid to Afghanistan, while keeping funds out of the Taliban hands.[x] Although it reiterated that such assistance supports “basic human needs in Afghanistan” and is “not a violation” of sanctions imposed on entities linked to the Taliban.[xi] So far no country has formally recognized the Taliban government and the international community faces the delicate task of channeling aid to the stricken economy without propping up the hardline extremists.
Even at the recently concluded Oslo Talks between a Taliban delegation and the Western officials at the Norwegian capital, the key concerns of the Taliban remained access to frozen assets and international recognition; while the West focused on humanitarian aid and human rights.[xii] The release of the frozen assets would have surely resulted in major relief to Afghanistan but the Biden administration was not willing to budge, as that was the only leverage the international community was left with to force the Taliban to respect human rights and especially rights of women in the country. The US’s recent decision to finally release frozen assets although is a crucial step for the Taliban, but Washington’s twist to split the total fund and retaining half of it for 9/11 victim families has generated strong responses.
Response to Biden’s Executive Order
Afghans across the board have criticized the U.S. order, denouncing it as a move to poach their national assets as their country lurches toward economic collapse. There have been several demonstrations in Afghanistan’s capital which condemned Biden’s executive order freeing up $ 3.5 billion in Afghan assents for families of America’s 9/11 victims- saying the money belongs to Afghans. Reportedly, protesters were asking America for financial compensation for the tens of thousands of Afghans killed during the last 20 years of war in Afghanistan.[xiii]
The Taliban has called on the US President to reverse the move of the fractionalized flow of Afghan funds and has urged to reconsider the policy. The Taliban has branded the seizure of Afghan funds as “theft” and a signal of “US moral decay”.[xiv] They have rejected Biden’s action, calling it violation of the rights of Afghans. The Taliban has issued a warning stating if the US does not deviate from its position and continues its proactive actions, “the Islamic Emirate will also be forced to reconsider its policies towards the country.”[xv] Former President Hamid Karzai has also urged the Biden administration to repeal the decision. He said the money belonged to the Afghan people and that it was "wrong" to use it for other purposes- “We commiserate with American people [but] Afghan people are as much victims as those families who lost their lives. Withholding money or seizing money from the people of Afghanistan in their name is unjust and unfair and an atrocity against Afghan people.”[xvi]He requested President Biden to return the totality of Afghan assets to the people of Afghanistan.
Torek Farhadi, a financial adviser to Afghan government led by Ashraf Ghani questioned the legality of Biden’s order – “These reserves belong to the people of Afghanistan, not the Taliban…Biden’s decision in one-sided and does not match with international law”. He added, “No other country on earth makes such confiscation decisions about another country’s reserves.”[xvii] Biden’s Executive order also generated a social media storm with Twitter with “#USA_stole_money_from_Afghans”, “#AfghansDidntCommit9/11” trending among Afghans – pointing out that the 9/11 hijackers were Saudi nationals, not Afghans. It is important to note, while none of the attackers of September 11, 2001 were from Afghanistan, the mastermind of the attacks, Al Qaeda chief Osama bin Laden was given refuge by the Taliban government.
Afghans have argued that the humanitarian aid should come from U.S. coffers, not Afghan reserves which should be utilized to back up the country’s currency, help in monetary policy and manage the country’s balance of payment.[xviii] Amidst criticism, Thomas West, U.S. special representative for Afghanistan, clarified that the United States has not made a decision to convert the $3.5 billion moved to the Trust Fund specifically into humanitarian assistance. West said he is consulting with Afghan economic experts about how the $3.5 billion should be used in Afghanistan.[xix] These clarifications from the Biden administration may ease some anger, but in general, the Taliban has used Biden’s decision to gain goodwill- by taking a stand that the Afghan public supports. So far, it’s not clear if the US executive order on Afghan central bank assets will be able to bring relief to the Afghan people any time soon, but it seems to have given a boost to the beleaguered Taliban regime.
*Dr. Anwesha Ghosh is a research fellow at the Indian Council of World Affairs.
Disclaimer: Views are personal.
[i] “Who should control Afghanistan’s foreign cash reserves?” Al Jazeera, February 12, 2022. Available at: https://www.aljazeera.com/program/inside-story/2022/2/12/who-should-control-afghanistans-foreign-cash-reserves (Accessed on 18. 2.2022)
[ii] “97 percent of Afghans could plunge into poverty by mid 2022”.UNDP Afghanistan, September 9, 2022. Available at: https://www.undp.org/press-releases/97-percent-afghans-could-plunge-poverty-mid-2022-says-undp (Accessed on 18. 2.2022)
[iii] “FACT SHEET: Executive Order to Preserve Certain Afghanistan Central Bank Assets for the People of Afghanistan”. The White House Press Release, Feb 11, 2022. Available at: https://www.whitehouse.gov/briefing-room/statements-releases/2022/02/11/fact-sheet-executive-order-to-preserve-certain-afghanistan-central-bank-assets-for-the-people-of-afghanistan/ (Accessed on 18. 2.2022)
[v] Special Inspector General for Afghanistan (SIGAR) Report quoted in “Afghanistan crisis: What did billions in aid accomplish in 20 years?”, The Business Standard, Oct 27, 2021. Available at: https://www.business-standard.com/article/international/what-did-billions-in-aid-to-afghanistan-accomplish-5-questions-answered-121102700352_1.html(Accessed on 21.2.2022)
[vi] “1 million Afghan children at risk of dying by year-end amid food crisis: WHO”. The Hindustan Times, Nov 12, 2021. Available at: https://www.hindustantimes.com/world-news/1-million-afghan-children-at-risk-of-dying-by-year-end-amid-food-crisis-who-101636737033919.html (Accessed on 21.2.2022)
[vii] “Afghanistan 'hanging by thread': UN chief sounds alarm over humanitarian crisis”. India Today, Jaunary 27, 2022. Available at: https://www.indiatoday.in/world/story/afghanistan-hanging-by-thread-un-chief-humanitarian-crisis-security-council-taliban-1904952-2022-01-27 (Accessed on 21.2.2022)
[viii] “Taliban deputy PM calls for aid without 'political bias'”. The Economic Times, Jaunary 9, 2022. Available at: https://economictimes.indiatimes.com/news/international/world-news/taliban-deputy-pm-calls-for-aid-without-political-bias/articleshow/88761256.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst (Accessed on 21.2.2022)
[ix] “Pakistan-Saudi rift widens after OIC Foreign Ministers Summit”, ANI, December 24, 2021.
Available at: https://www.aninews.in/news/world/asia/pakistan-saudi-rift-widens-after-oic-foreign-ministers-summit20211224205549/(Accessed on 21.2.2022)
[x] “UNSC adopts resolution to provide aid to Afghanistan.” Al Jazeera, Dec24, 2021. Available at: https://www.aljazeera.com/news/2021/12/22/un-security-council-afghanistan-aid-resolution /(Accessed on 21.2.2022)
[xii] Anwesha Ghosh, “Afghan civil society and Western officials held Talks with Taliban delegation in Oslo.” ICWA Issue Brief, Feb5, 2022. Available at: https://www.icwa.in/show_content.php?lang=1&level=3&ls_id=7005&lid=4754 /(Accessed on 22.2.2022)
[xiii] “Afghans protest US move to unfreeze $3.5B for 9/11 victims”. APNews, Feb13, 2022. Available at: https://apnews.com/article/afghanistan-joe-biden-taliban-kabul-terrorism-040a362ce4181f95d113d3ddb425f8d1/(Accessed on 22.2.2022)
[xiv] “Joe Biden Seeks to Split Afghan Assets between Aid and 9/11 Victims, Taliban Calls it 'Theft'”. News 18, February 13, 2022. Available at: https://www.news18.com/news/world/joe-biden-seeks-to-split-afghan-assets-between-aid-and-911-victims-taliban-calls-it-theft-4768343.html (Accessed on 23.2.2022)
[xvi] “Karzai: Biden order on frozen funds ‘atrocity against Afghans’. Al Jazeera, Feb 14, 2022. Available at: https://www.aljazeera.com/news/2022/2/14/former-afghan-president-karzai-calls-on-us-not-to-withhold-funds(Accessed on 22.2.2022)
[xvii] “Afghans protest US move to unfreeze $3.5B for 9/11 victims”. APNews, Feb13, 2022. Available at: https://apnews.com/article/afghanistan-joe-biden-taliban-kabul-terrorism-040a362ce4181f95d113d3ddb425f8d1(Accessed on 23.2.2022)
[xviii] Torek Farhadi, (Financial adviser to Afghan Republic) quoted in the article “Afghans protest US move to unfreeze $3.5B for 9/11 victims”. APNews, Feb13, 2022. Available at: https://apnews.com/article/afghanistan-joe-biden-taliban-kabul-terrorism-040a362ce4181f95d113d3ddb425f8d1(Accessed on 23.2.2022)
[xix] “U.S. Engagement with Afghanistan After Six Months of Taliban Rule” USIP Report, Feb 15, 2022. Available at: https://www.usip.org/events/us-engagement-afghanistan-after-six-months-taliban-rule (Accessed on 23.2.2022)