The Biden administration in August froze the majority of the Afghan central government’s $9.4 billion in assets — most of which is held in U.S. bank accounts — after the Taliban took control of Kabul and the country. The Biden administration has said recognition, and release of funds, will not come until the Taliban form an “inclusive” government, guarantee the rights of minorities, women and girls — including full female education — and sever all ties with terrorist groups including al-Qaeda that threaten the U.S. homeland, and end all reprisals against Afghans.
As Afghanistan and the Taliban remain isolated, the country’s economy and financial system have appeared increasingly on the brink of collapse in recent weeks, exacerbated by a devastating drought, the pandemic, and the sudden withdrawal of United States and other foreign aid that had poured into the country during the course of the war.
The afghani, the country’s currency, lost almost 12 percent of its value against the United States, according to Al Jazeera. The United Nations has warned that the country’s banking system is at risk of a “colossal” failure that would lead to a 30 percent contraction of the Afghan economy. UNICEF has estimated as many as 1 million children could die of “severe acute malnutrition” as the country’s economy deteriorates.
Some international groups have urged the United States to expand humanitarian assistance such as food and medical aid, but the letter from House Democrats argues these measures are unlikely to be sufficient to respond to a deteriorating economy. U.S. sanctions on the Taliban have also shut the country off from the international financial system, although Treasury has approved some exemptions to facilitate international aid.
“Maintaining this policy could cause more civilian deaths in the coming year than were lost in 20 years of war,” the lawmakers said in the letter, spearheaded by Reps. Pramila Jayapal (D-Wash.), Chuy Garcia (D-Ill.) and Sara Jacobs (D-Calif.). The letter pointed to support from the Afghan Chamber of Commerce and Investment and the Afghanistan Banks Association, as well as members of Afghanistan’s central bank.
A Treasury official said in a statement that the United States is the world’s biggest source of humanitarian assistance to Afghanistan and that the administration is searching for other ways to help, while also pointing to the licenses it has approved to help the flow of international aid to the country.
The statement also said it is unclear if the United States has the authority to unilaterally release the reserves, which are part of litigation related to the victims of the Sept. 11, 2001, terrorist attacks. The Treasury statement also said Afghanistan’s difficult financial problems would not necessarily be solved by releasing the funds.
The Treasury statement also raised the possibility that the funding could be used by the Taliban for things other than humanitarian aid. An official with the White House National Security Council also said the matter is being reviewed in conjunction with other international allies that hold part of the Afghan reserves, adding that no country has so far formally recognized the Taliban.
Congressional Republicans have been adamant that the United States cannot allow the Taliban to access even smaller amounts of funding, such as a special fund allocated by the International Monetary Fund.
“It’s not clear to me they can do this without recognizing the Taliban as the government of Afghanistan, which they don’t want to do,” said Adam M. Smith, who served on the National Security Council and as senior adviser to the director of the Office of Foreign Assets Control during the Obama administration.
But Shah Mehrabi, an economics professor at Montgomery College in Maryland and a senior member Afghanistan’s central bank board sine 2002, said releasing the reserves were essential to preventing an economic collapse. Mehrabi stressed he is not calling for the unconditional release of all the reserves, but said he has recommended they be turned over in small increments and monitored and audited by U.S. officials to ensure their proper use.
“If these funds are not released, what is going to happen is the central bank will not be able to perform its main functions, and the impact on the economy overall will be devastating,” Mehrabi said. “Mark my words: If this is not done, you will have Afghans fleeing en masse on foot — they’re already doing it — carrying their babies in one hand and their belongings in the other … And soon Europe will have a massive refugee crisis on its hands.”
Karen DeYoung contributed to this report.