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US ‘agrees’ to release Afghan funds through Swiss bank

ghazi52

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US ‘agrees’ to release Afghan funds through Swiss bank​


The Frontier Post

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Shereena Qazi

KABUL: Sources privy to negotiations say that Washington is working on a plan to deposit $3.5 billion with the Bank of International Settlements and have the money distributed under a third-party monitoring system.

The United States has agreed to release a part of Afghanistan’s frozen assets, which were seized after the Taliban came to power last year, TRT World has learned from reliable sources.

The $3.5 billion in fund is to be likely released to the Bank of International Settlements (BIS) based in Basel, Switzerland, a source privy to the matter said.

“An international board of experts has also been set up to disburse the money,” the source told TRT World.
The announcement is expected to be made in the coming weeks.

Around $9 billion of Afghanistan’s central bank foreign currency assets held with US and other foreign banks were frozen after the Taliban took over Kabul on August 15 and drove out the US-backed government of President Ashraf Ghani.

US President Joe Biden’s administration went ahead with talks on releasing Afghanistan’s foreign-held assets last month despite the late al Qaeda leader Ayman al Zawahiri’s presence in Kabul.

The State Department, however, ruled out recapitalising Afghanistan’s central bank (DAB) as “a near-term option” after Zawahiri was killed, claiming that the Taliban had raised worries by harbouring him in violation of the 2020 US troop withdrawal agreement.

In the new development, DAB could receive the funds for end use “but the US would want a strict compliance with anti-money laundering and terrorist financing protocols in addition to a third-party supervision of the funds”, the source said.

The international board of experts is tasked with ensuring all those conditions are met.

The Taliban government is open to a US proposal for third-party supervision but wants to retain authority over how it is used.

“The frozen reserve is the property of the people of Afghanistan; it is a reserve of the central bank used in its transactions,” Taliban spokesperson, Suhail Shaheen, told TRT World.

“It is for the people of Afghanistan to decide on what to do with its reserve and how to use it. Unilateral decision about the reserve of Da Afghanistan Bank is illegal unless agreed to by DAB.”

Humanitarian disaster

The US has been under pressure from human rights activists and the Afghan diaspora to release funds to alleviate the humanitarian disaster unfolding in the war-ravaged country.

For the US and its Western allies, which have so far refused to recognise the Taliban government, the major obstacle has been to find a way to spend the funds without letting the Taliban get its hands on the money.

“The release of these funds is important to ease the hardship of Afghan people who are finding it difficult to pay for even basic necessities,” Shah Mehrabi, an Afghan-American economics professor who is on the Afghan central bank’s Supreme Council, told TRT World.

Mr Mehrabi reiterated the importance of determining how the funds should be dispersed in order to “bring stability in prices and reduce the volatility in exchange”.

Ongoing discussions

The US has been in discussions with Switzerland about the establishment trust, which can help disburse the funds.
Most of Afghanistan’s foreign assets – around $7 billion – are held with the Federal Reserve Bank of New York.

The negotiations to release the funds, which are essential to tackle what the UN is calling an “immensely bleak” future for the Afghans, have centered around the $3.5 billion, which US President Joe Biden has set aside for Afghanistan.

The remaining $3.5 billion of Afghanistan’s money with the FED has been logged in to be distributed as compensation to the victims of September 11 attacks, which led to the US invasion of Afghanistan in 2001.

The US government has faced criticism for holding back Afghan funds at a time when ordinary Afghans are reeling under hunger and poverty. Many have slammed the US for politicising the funds against the Taliban, even though it was Al Qaeda which was responsible for 9/11 attacks.

Nevertheless, families of 3,000 victims killed in attacks on the Twin Towers in New York and other cities have pushed the US courts to seize Afghanistan’s assets.

A US federal judge in 2012 awarded the group that amount following a default judgement against several members of the Taliban, al Qaeda, and Iran.

Courtesy: TRTWorld


 

FuturePAF

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At least it’s a start, if it’s under third party supervision but the Talibs get to decide how it’s used, it’s a step toward recognition.

Hopefully good relations with the west will incentivize the Afghans to find ways to resolve all issues with neighbors including Pakistan. The US really needs to get into the Afghan mining sector before China gets to buy it on the cheap if the US is to outcompete the Chinese.
 

ghazi52

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US to move $3.5bn in Afghan central bank assets to Swiss-based trust


Reuters
September 14, 2022



<p>A sign marks the US Treasury Department in Washington. — Reuters</p>



A sign marks the US Treasury Department in Washington. — Reuters
The United States on Wednesday announced that it would transfer $3.5 billion in Afghan central bank assets into a new Swiss-based trust fund that will be shielded from the Taliban and used to help stabilise Afghanistan’s collapsed economy.

The Afghan Fund, managed by a board of trustees, could pay for critical imports like electricity, cover debt payments to international financial institutions, protecting Afghanistan’s eligibility for development aid, and fund the printing of new currency.

“The Afghan Fund will protect, preserve and make targeted disbursements of that $3.5bn to help provide greater stability to the Afghan economy,” the US Treasury said in a statement.

US officials said no money would go to the Afghan central bank, known as DAB, until it is “free of political interference” — diplomatic parlance for replacing the bank’s top Taliban officials, two of whom are under US and UN sanctions, with banking professionals — and anti-money laundering safeguards are instituted.

“Until these conditions are met, sending assets to DAB would place them at unacceptable risk and jeopardize them as a source of support for the Afghan people,” US Deputy Treasury Secretary Wally Ademeyo said in a letter to the central bank’s Supreme Council seen by Reuters.

The new fund is based in Geneva and has an account with the Basel-based Bank for International Settlements (BIS), which provides financial services to central banks.
“The BIS is establishing a customer relationship with the Fund for the Afghan People.

The BIS role is limited to providing banking services to and executing the instructions of the Board of Trustees of the Fund without involvement in the Fund’s governance or decision making,” the BIS said, adding it would comply with all applicable sanctions and regulations.

The fund will not resolve serious problems driving dire economic and humanitarian crises threatening to worsen as winter approaches. Nearly half of Afghanistan’s 40m people face “acute hunger,” according to the United Nations.

The Taliban’s biggest fiscal challenge is developing new revenues to compensate for financial aid that provided up to 75 per cent of government spending that the United States and other donors ended after the Islamists seized Kabul in August 2021 as the last American troops left, ending two decades of war.

“The economy of Afghanistan faces serious structural issues, exacerbated by the Taliban takeover,” a senior US official, speaking on condition of anonymity, told reporters in a briefing about the new fund.

The crises also have been fueled by decades of war, drought, the Covid-19 pandemic, endemic corruption, and a cutoff of the central bank from the international banking system.

The creation of the new trust fund comes after months of talks between US President Joe Biden’s administration, Switzerland, other parties and the Taliban, who demanded the return of $7bn in Afghan central bank assets held in the United States.

The talks continued despite US anger at the Taliban’s harboring of late al Qaeda chief Ayman al-Zawahiri — killed on July 31 in a CIA dr one strike on his Kabul safe house — and international outrage at the militants’ human rights crackdown, including barring girls from state-run secondary schools.

Biden in February sequestered “for the benefit of the Afghan people” the $3.5bn in DAB assets to be transferred into the new trust fund.

The other $3.5bn is being contested in lawsuits against the Taliban stemming from Sept. 11, 2001, attacks on the United States.

Courts could decide to release that money, which could be deposited in the new trust fund.

Another approximately $2bn in Afghan central bank assets held in European and Emirati banks also could end up in the fund.

The fund, US officials said, will be overseen by a board comprising a US government representative, a Swiss government representative, Anwar Ahady, a former Afghan central bank chief and former finance minister, and Shah Mehrabi, a US academic who remains on the DAB Supreme Council.
 

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