A special fund, referred to as the Afghan Fund, has been set up in Switzerland to manage $3.5 billion to help stabilize the economy of Afghanistan. The money was part of the Afghan central bank reserves. A board of trustees will manage the Afghan Fund. The Taliban will have no role in the disbursement of the formerly frozen financial assets.
The Taliban are not happy about this new arrangement and want the money returned to Kabul. However, the U.S. government believes that if the Taliban had access to the funds that it would not be used for the benefit of the Afghan people. On September 16, 2022, the Taliban denounced the movement of the money to the Swiss-based trust fund, declaring it an “illegal venture” and a “violation of international norms”.
The money, belonging to Afghanistan’s central bank, Da Afghanistan Bank (DAB), is being transferred to the Afghan Fund by an executive order signed by President Biden. The U.S. Department of State says that robust safeguards have been put in place to prevent the funds from being used for illicit activity. The money will be in an account with the Bank for International Settlements (BIS) in Switzerland.
A board of trustees for the Afghan Fund will authorize targeted disbursements for critical economic measures such as the supply of electricity, support of the financial system, and essential banking services. The board members include two Afghan economic experts, a U.S. government representative, and a Swiss government representative.
The central bank reserves of Afghanistan, over $7 billion, were frozen by the United States in August 2021 after the Taliban seized power in Afghanistan. Half of the money has been set aside for the 9/11 victims to pursue through ongoing litigation.
The Afghan economy is in dire need of funding, jobs are scare, and there is a ongoing severe shortage of food that has lasted for over a year. The humanitarian crisis has seen some relief through efforts by international organizations; but much more needs to be done to revitalize the Afghan economy. The economy was struggling before the takeover of the Taliban, but it has gotten much worse since August 2021. The poverty rate over the past few years has been above 50 per cent, years of drought have affected the agricultural sector, and corruption has crippled some sectors of the economy.
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References:
“The United States and Partners Announce Establishment of Fund for the People of Afghanistan”, U.S. Department of the Treasury, September 14, 2022.
https://home.treasury.gov/news/press-releases/jy0947
“Executive Order to Preserve Certain Afghanistan Central Assets for the People of Afghanistan”, The White House, February 11, 2022.
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/