US to return stolen Afghan central bank funds to Swiss bank

United States is set to announce the release of a significant portion of funds seized from the Afghan central bank after months of silence. The funds will be transferred to the Bank for International Settlements in Basel, Switzerland, and the United States will establish a trusteeship to oversee the disbursement of the money for monetary policy and humanitarian aid purposes.

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 continues to operate independently. Humanitarian and economic experts said the central bank – which operates independently of the Afghan central government in the same way as the US Federal Reserve – is best suited to the task of stabilizing the Afghan economy and mitigating the crisis. humanitarian.

The news was reported for the first time by Turkish media TRT World and confirmed to The Intercept by a source involved in the negotiations. “The [Da Afghanistan Bank] the funds belong to the DAB and should be returned to Afghanistan,” said Suhail Shaheen, a Taliban spokesman who heads the political bureau. “At this critical time when 99% of Afghans live below the poverty line, it is absolutely necessary that the reserve[s] return to the country. »

After Kabul fell to the Taliban, the United States seized $7 billion in foreign currency reserves from the Da Afghanistan Bank and ordered European allies to seize another $2 billion stored there. Without a reserve currency to stabilize prices and balance exports and imports, the Afghan economy went berserk, with prices soaring, the currency collapsing and imports coming to a halt. Personal bank accounts were frozen and most workers’ paychecks were stopped. The result was a dystopian scenario: widespread famine affecting more than 90% of the population, even as food supplies remained plentiful. More than a million Afghans have fled the country because of these conditions.

Earlier this year, the Biden administration said it would take half the money from the Afghan people and set it aside for a handful of plaintiffs represented by Jenner & Block LLP, which sued the Taliban over the attacks on September 11, and would dedicate the other half “for the benefit of the Afghan people”.

The move was widely criticized by international aid organizations and economists, who continued to call for the funds to be used to stabilize the Afghan economy. In February, The Intercept reported that Lee Wolosky, co-chair of the litigation department at law firm Jenner & Block LLP, who had worked on the lawsuit, had been appointed to assist Afghan evacuees in September 2021. He returned to the firm. in February; the White House said he recused himself from the move which would be a boon to his business. Meanwhile, several other 9/11 families began to fight for the other half. The United States has still not officially recognized the Taliban government.

Part of the funds sent to Switzerland will be reserved for monetary policy to stabilize the currency and fight against inflation, the primary vocation of the central bank and the necessary condition for reviving the economy. But some of the money, a source involved in the talks said, could be set aside for “humanitarian aid”, siphoned off to pay for things such as electricity. Useful as it may seem, using central bank funds for electricity will quickly deplete reserves, leaving the country where it is now, with no reserves to fuel economic activity. It is unclear why the United States insists on departing from the very mission of the central bank that the United States has built, which is one of the few functioning institutions left by the occupation.

The Taliban have agreed to allow a third party to monitor whether the funds have been disbursed to the central bank to ensure that they are being used independently for monetary purposes. If the Monitor discovered a breach, the United States could seize the funds again with a single keystroke.

The White House was unable to comment immediately.

Correction: September 13, 2022, 6:10 p.m.
The Bank for International Settlements is based in Basel, Switzerland, not Geneva.

Edward N. Arrington