Crisis of mistrust renews Washington’s refusal to release Afghanistan’s banking assets

Mohamed Yosry

Afghanistan is experiencing a crisis due to the United States refusing to release the country’s banking assets since the Taliban seized power in the country in mid-August 2021, despite the deterioration of the humanitarian conditions in the country, without the movement itself being affected by the crisis, and Washington’s insistence not to release those assets is exacerbating the economic crisis in the country that is suffering collapse in all sectors.

Beginning of the crisis

The beginning of the crisis of frozen Afghan banking assets dates back to August 2021 when the Taliban seized power in the country, as many global financial institutions began to take precautionary steps, fearing the movement’s disposal of the country’s funds in illegal matters or support for terrorist groups.

More than $470 million from the International Monetary Fund was supposed to reach Afghanistan one week after the movement took power as part of the IMF’s response to the global economic crisis, but that did not happen.

The administration of US President Joe Biden also announced that the assets of the Afghan government in the United States were no longer available, and the US Treasury Department made it clear at the time that the Taliban would not receive any financial aid supported by the United States.

Washington has withheld about $7 billion in Afghan assets held by the Federal Reserve in the form of safe, liquid assets such as bonds and gold.

Developments and suggestions

A process also began to partially unfreeze Afghan assets abroad after establishing a special fund for it in Switzerland during September 2022 with the aim of returning funds withheld since the Taliban came to power to the Afghan Central Bank, which is managed by the Bank for International Settlements (BIS) in Basel, but the fund has not been able to solve that crisis so far in light of the stalled negotiations that increase the suffering of the Afghan people.

The frozen BIS assets amount to about $3.5 billion, equivalent to half of the frozen funds since the Taliban took power in 2021, which were not affected by this problem, and the entire Afghan people bear the bill for that crisis. This made a number of Afghan economists and academics make suggestions for an alternative solution to this problem, including that the money be returned in the form of monthly installments to the Afghan Central Bank to ensure price stability and to solve the problems that the Afghan people suffer from, while ensuring that these installments can be stopped in the event that the Taliban uses these funds for purposes other than intended.

Crisis of mistrust

The crisis of mistrust in the Taliban movement by the international community is seen in its failure to adhere to and fulfill its pledges that it agreed upon in the Doha Agreement before it came to power, by not providing safe havens for terrorist groups to operate on Afghan soil, in addition to the movement’s failure to cooperate with international and relief organizations in an appropriate manner, all of which led to the faltering of any solution to the crisis of frozen Afghan funds.

The facts also proved the existence of suspicious relations between the Taliban and armed groups, including al-Qaeda, after the announcement of the killing of the organization’s leader, Ayman al-Zawahiri, in a building belonging to the Minister of Interior in the Taliban’s interim government, in addition to the problems caused by the movement’s support for the Pakistani wing of the Taliban.