The United States is preparing to announce the release of a significant portion of seized Afghan central bank funds after months of silence. The funds will be transferred to the Bank of International Settlements in Basel, Switzerland, and the U.S. will set up a trusteeship to oversee the disbursement of the money for the purposes of both monetary policy and humanitarian aid.
The plan will continue to bypass the Afghan central bank, undermining one of the few institutions established by the United States during the occupation that remains independently operating. Humanitarian and economic experts have said the central bank — which operates independently of the Afghan central government in the same way as the U.S. Federal Reserve — is best suited to the task of stabilizing Afghanistan’s economy and easing the humanitarian crisis.
The news was first reported by the Turkish outlet TRT World and confirmed to The Intercept by a source involved in the negotiations. “The [Da Afghanistan Bank] funds belong to DAB and should be returned to Afghanistan,” said Suhail Shaheen, a spokesperson for the Taliban who serves as head of the political office. “In this critical time when 99% of Afghans are living under the poverty line, it is direly needed that the reserve[s] return to the country.”
After the fall of Kabul to the Taliban, the U.S. seized $7 billion of foreign currency reserves from Da Afghanistan Bank and directed European allies to seize another $2 billion stored there. Without reserve currency to stabilize prices and balance exports and imports, the Afghan economy went berserk, with prices skyrocketing, the currency collapsing, and imports halting. Personal bank accounts were frozen, and paychecks for most workers stopped cold. The result has been a dystopian scenario: Widespread famine touching more than 90 percent of the population, even as food supplies remained plentiful. More than 1 million Afghans have fled the country because of these conditions.
Earlier this year, the Biden administration said it would carve out half of the Afghan people’s money and set it aside for a handful of plaintiffs represented by Jenner & Block LLP, who had sued the Taliban for the September 11 attacks, and dedicate the other half “for the benefit of the Afghan people.”
The move was broadly criticized by international humanitarian organizations and economists, who have continued to call for the funds to be used to stabilize Afghanistan’s economy. In February, The Intercept revealed that Lee Wolosky, co-chair of the litigation department at the law firm Jenner & Block LLP, who had worked on the lawsuit, had been appointed to help with Afghan evacuees in September 2021. He returned to the firm in February; the White House said he recused himself from the decision that would mean a windfall for his firm. Meanwhile, several other 9/11 families began fighting over the other half. The U.S. still hasn’t formally recognized the Taliban government.
Some of the funds sent to Switzerland will be set aside for monetary policy to stabilize the currency and combat inflation, the original purpose of the central bank, and the necessary condition to breathe life back into the economy. But some of the money, a source involved in the talks said, may be set aside for “humanitarian relief,” siphoned off to pay for such things as electricity. As helpful as that sounds, using central bank funds for electricity will quickly deplete the reserves, leaving the country back where it is now, with no reserves to fuel economic activity. It’s unclear why the United States is insisting on departing from the mission of the very central bank the United States constructed, which is among the few functioning institutions the occupation left behind.
The Taliban have agreed to allow a third-party monitor if the funds were released to the central bank to make sure they are used independently for monetary purposes. If the monitor found a violation, the U.S. could seize the funds again with a keystroke.
The White House was not immediately able to comment.
Correction: September 13, 2022, 6:10 p.m.
The Bank of International Settlements is based in Basel, Switzerland, not Geneva.