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$7 billion.. This is how Washington will dispose of frozen Afghan funds

The New York Times reported that President Joe Biden is working on dividing these assets, so that the families of the victims of the September 11 attacks will receive $3.5 billion, while the other half of the amount will go to humanitarian aid to Afghanistan.

The newspaper quoted sources familiar with the ongoing internal deliberations, that Biden is working to pave the legal way for some relatives of the victims of the September 11 attacks, to seek funds from half of those assets (3.5 billion dollars).

Meanwhile, the US president will issue an executive order, invoking emergency powers to consolidate and freeze all $7 billion in assets held by the Central Bank of Afghanistan in New York, and ask a judge to authorize the transfer of the other half to a trust fund to fund immediate humanitarian relief efforts in Afghanistan..

It is expected that these unusual steps will be officially announced soon, to address the tangle of legal, political, external and humanitarian problems caused by the September 2001 attacks, and to end the 20-year war in Afghanistan..

When the Afghan government was dissolved in August after the Taliban took control, and senior officials, including the president and central bank governor, fled the country, more than $7 billion in central bank assets were left at the US Federal Bank in New York.

Because it is no longer clear who is authorized to access those funds, or who has the legal authority to do so, the Federal Reserve has made the funds unavailable for withdrawal..

The Taliban immediately demanded the right to the money, but a group of relatives of 9/11 victims, one of several that won default rulings against the group in lawsuits, sought to seize control of that debt..

Meanwhile, Afghanistan’s economy was collapsing, pushing the country to the brink of mass starvation, which in turn led to a massive and destabilizing new wave of refugees, and sparked a clear need for massive spending on humanitarian relief..

Against this backdrop, the White House’s National Security Council led months of deliberations on Central Bank of Afghanistan funds involving senior officials from departments including Justice, State and Treasury, according to people who spoke to the New York Times on condition of anonymity.

It is reported that the funds owned by the Central Bank of Afghanistan, known as “Bank Da Afghanistan”, include assets such as currencies, bonds and gold.

A large portion of those assets came from the foreign exchange funds that had accumulated over the past 20 years, at a time when the United States and other Western countries were donating large sums to Afghanistan, helping to generate this activity.

In addition, about half a billion dollars of the bank’s assets belong to the reserves of Afghanistan’s commercial banks, which by law must keep a certain amount of their deposits, including the savings of the average Afghan, in the central bank. These assets are owned by Bank Da Afghanistan, but they owe the same amount to commercial banks.

It is noteworthy that after the Taliban seized control of Afghanistan, it appointed an official subordinate to it to lead the Central Bank, and demanded the immediate release of the funds held in New York.

But with the longstanding anti-terror sanctions imposed by the United States, it is illegal to engage in financial transactions with the Taliban.

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