US to transfer $3.5 billion in Afghan central bank assets to Swiss-based trust

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WASHINGTON — The United States announced Wednesday that it will transfer $3.5 billion in Afghan central bank assets to a new Swiss-based trust fund that will be protected from the Taliban and used to help stabilize the collapse of the Afghan economy.

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

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

US officials have said no money will go to Afghanistan’s central bank, known as ATM, until it is “free from political interference” – diplomatic parlance to replace senior Taliban officials in the bank, two of which are under US and UN sanctions, by banking professionals. – and anti-money laundering guarantees are put in place.

“Until these conditions are met, sending assets to the DAB would put them at unacceptable risk and jeopardize them as a source of support for the Afghan people,” the deputy treasury secretary said. American Wally Ademeyo in a letter to the Supreme Council of the central bank seen by Reuters. .

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The new fund has an account at the Basel-based Bank for International Settlements, which provides financial services to central banks.

The fund will not solve the serious problems at the root of serious economic and humanitarian crises that threaten to worsen with the approach of winter. Nearly half of Afghanistan’s 40 million people face “acute hunger”, according to the United Nations.

The Taliban’s biggest fiscal challenge is developing new revenue to offset the financial aid that provided up to 75% of government spending that the United States and other donors ended after the Islamists took over. Kabul in August 2021 as the last US troops left, ending two decades of war.

“Afghanistan’s economy faces serious structural problems, exacerbated by the Taliban’s takeover,” a senior US official told reporters on condition of anonymity during a briefing on the new fund.

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The crises have also been fueled by decades of war, drought, the COVID-19 pandemic, rampant corruption and a central bank cut off 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, which demanded the return of $7 billion in central bank assets. Afghan detained in the United States.

Talks continued despite US anger over Taliban hosting of late al-Qaeda leader Ayman al-Zawahiri – killed July 31 in a CIA drone strike on his home safe in Kabul – and international outrage at the activists’ crackdown on human rights, including the banning of girls from public secondary schools.

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

The remaining $3.5 billion is being contested in lawsuits against the Taliban following the September 11, 2001 attacks in the United States. The courts could decide to release this money, which could be deposited in the new trust fund.

About $2 billion more of Afghan central bank assets held in European and Emirati banks could also find their way into the fund.

The fund, U.S. officials said, will be overseen by a board comprising a U.S. government official, a Swiss government official, Anwar Ahady, a former head of Afghanistan’s central bank and former finance minister, and of Shah Mehrabi, an American academic who remains at the DAB. SUPREME Board.

(Reporting by Jonathan Landay; Editing by Will Dunham)

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