State officials exchange proposals for releasing Afghan funds, possibly providing some much-needed relief
\n KABUL\/ WASHINGTON
\nUS and Taliban officials have exchanged proposals for the release of billions of dollars from Afghan central bank reserves held abroad into a trust fund, three sources familiar with the talks said, offering a hint of progress in efforts to ease Afghanistan\u2019s economic crisis.
\nSignificant differences between the sides remain, however, according to two of the sources, including the Taliban\u2019s refusal to replace the bank\u2019s top political appointees, one of whom is under US sanctions as are several of the movement\u2019s leaders.
\nSome experts said such a move would help restore confidence in the institution by insulating it from interference by the Islamist militant group that seized power a year ago but which foreign governments do not recognise.
\nFreeing up cash may not solve all of Afghanistan\u2019s financial troubles, but it would provide relief for a country hit by a slump in foreign aid, persistent drought and an earthquake in June that killed 1,000 people. Millions of Afghans are facing a second winter without enough to eat.
\nWhile the Taliban do not reject the concept of a trust fund, they oppose a U.S. proposal for third-party control of the fund that would hold and disburse returned reserves, said a Taliban government source who spoke on condition of anonymity.
\nThe United States has been in talks with Switzerland and other parties on the creation of a mechanism that would include the trust fund, disbursements from which would be decided with the help of an international board, according to a U.S. source who also declined to be named in order to discuss the matter.
\nA possible model could be the Afghanistan Reconstruction Trust Fund, a World Bank-administered fund created to get donations of foreign development assistance to Kabul, the U.S. source added.
\n\u201cNo agreement has been reached yet,\u201d said Shah Mehrabi, an Afghan-American economics professor who is on the Afghan central bank\u2019s supreme council.
\nThe U.S. State Department and Switzerland\u2019s Federal Department of Foreign Affairs declined to comment; the Afghan central bank did not respond to requests for comment.
\nSome $9 billion in reserves have been held outside Afghanistan, including $7 billion in the United States, since the Taliban overran Kabul last August as US-led forces withdrew after 20 years of fighting the militants.
\nForeign governments and rights groups have accused the Taliban of human rights abuses including extrajudicial killings during and after the insurgency, and the movement has curtailed women\u2019s freedoms since regaining power.
\nThe international community wants the group to improve its record on women\u2019s and other rights before officially recognising it.
\nThe Taliban have promised to investigate alleged killings and say they are working to secure Afghans\u2019 rights to education and free speech within the parameters of Islamic law.
\n\u2018Positive Move\u2019
\nAt talks in Doha last month, the Taliban submitted to U.S. officials their response to the U.S. proposal for a mechanism to free up Afghan assets, said Mehrabi, the Taliban official and a senior diplomat.
\nExperts cautioned that releasing funds would bring only temporary relief and new revenue streams were needed to replace direct foreign aid that financed 70 percent of the government budget before it was halted after the Taliban takeover.
\nBut the exchange of proposals was seen by some as a glimmer of hope that a system can be created that allows for the release of Afghan central bank funds while ensuring they are not accessed by the Taliban.
\nNegotiations on the assets and other issues faltered after Washington cancelled meetings in Doha in March when the Taliban reneged on their promise to open girls\u2019 high schools.
\n\u201cIt is a positive move overall,\u201d that the Taliban did not reject the U.S. proposal, said Mehrabi, who added that he had not seen the Taliban counter-offer.
\nThe Taliban official said the group was open to allowing a State Department-appointed contractor to monitor Afghanistan\u2019s central bank compliance with anti-money laundering standards, and that monitoring experts would be able to go to Afghanistan.
\nBut the Taliban were concerned the U.S. idea could create a parallel central banking structure, the official added, and were not prepared to remove top political appointees including deputy governor Noor Ahmad Agha, who is under U.S. terrorism sanctions.
\nThe U.S. source denied the proposed trust fund would amount to a parallel central bank.
\nInitial Tranche
\nNegotiations have focused on an initial release of $3.5 billion that U.S. President Joe Biden ordered set aside \u201cfor the benefit of the Afghan people\u201d out of $7 billion in Afghan reserves held by the Federal Reserve Bank of New York.
\nThe other $3.5 billion is being contested in lawsuits against the Taliban stemming from the Sept. 11, 2001, attacks on the United States, but courts could decide to release those funds too.
\nU.S. Special Representative for Afghanistan Tom West in February said funds set aside by Biden potentially could be used to recapitalize a reformed central bank and the paralyzed banking system.
\nAfghanistan\u2019s economy went into freefall after the Taliban takeover, with the central bank\u2019s foreign-held reserves frozen, Washington and other donors halting aid and the United States ending deliveries of hard currency.
\nThe banking sector all but collapsed and the national currency, the Afghani, plummeted.
\nThe World Bank says it has strengthened, although shortages of dollars and Afghanis persist. High unemployment and soaring prices, fuelled by drought, the COVID-19 pandemic and Russia\u2019s invasion of Ukraine, worsened a humanitarian crisis.
\nExperts said releasing foreign-held funds to the central bank would help it stem the crisis.
\n\u201cYou need a central bank regulating the value of the currency, regulating prices, ensuring liquidity for imports … this is not optional. People won\u2019t eat,\u201d said Graeme Smith, a senior consultant for the International Crisis Group.<\/p>\n","protected":false},"excerpt":{"rendered":"
State officials exchange proposals for releasing Afghan funds, possibly providing some much-needed relief KABUL\/ WASHINGTON US and Taliban officials have exchanged proposals for the release of billions of dollars from Afghan central bank reserves held abroad into a trust fund, three sources familiar with the talks said, offering a hint of progress in efforts to […]<\/p>\n","protected":false},"author":2,"featured_media":273767,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[9866,192,444],"class_list":{"0":"post-273739","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-world","8":"tag-afghan-reserves","9":"tag-taliban","10":"tag-us"},"yoast_head":"\n