U.S. sets up relief fund with frozen central bank money

WASHINGTON >> A year after the tumultuous U.S. withdrawal from Afghanistan, the Biden administration said Wednesday it will transfer $3.5 billion in frozen Afghan central bank funds to benefit the Afghan people, as hunger grips every province there.

Funds will be dispersed after trustees of the new Afghan Fund meet to determine a timetable. The trustees are two Afghan economists, a U.S. government representative and a Swiss government representative.

Notably, the Taliban government will not have access to the fund, which will be held at the Bank for International Settlements in Switzerland. The bank in a news release said its 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.”

In the interim, Afghanistan’s central bank, which in February had $7 billion in frozen funds, “must demonstrate that it has the expertise, capacity, and independence to responsibly perform the duties of a central bank,” the U.S. Treasury and State departments said in a joint statement. “Robust safeguards have been put in place to prevent the funds from being used for illicit activity.”

International funding to Afghanistan was suspended and billions of dollars of the country’s assets abroad, mostly in the United States, were frozen after the Taliban took control of the country in August 2021 following the U.S. military’s withdrawal.

The World Bank says income and economic output in Afghanistan have dropped between 20% and 30%, imports have declined by roughly 40%, and 70% of Afghan households report they are unable to fully meet basic food or non-food needs.