The Biden administration on Wednesday announced it will create a new fund out of some of Afghanistan’s frozen central bank reserves, aiming to alleviate the country’s mounting humanitarian crisis without enriching the Taliban.
In a statement, the Treasury Department said a new oversight body will deploy $3.5 billion of Afghanistan’s central bank reserves to help stabilize the country’s ravaged economy. The fund — which will be run in part by Swiss government officials and Afghan economic experts — can be used to help the country pay for critical imports, such as electricity, and will not be accessible to Taliban officials, according to the department.
With a deal elusive, economists and aid groups have grown increasingly concerned about Afghanistan’s economy amid an exodus of capital and people. The United Nations estimated in August that approximately 4 million children are malnourished and close to 95 percent of the country is not getting enough to eat. Some economists say the new fund is insufficient to meet the country’s needs, given that the central bank reserves are critical for shoring up a currency that has cratered.
“This move can’t possibly compensate for the harm to the Afghan economy and millions of people who are starving, in large part because of the U.S. confiscation of Afghanistan’s central bank reserves,” said Mark Weisbrot, co-director of the Center for Economic and Policy Research, a liberal think tank.Still, the United States is leaving open the possibility that Afghanistan could eventually reclaim the bank assets in full.
“The shortcomings of economic management are contributing to the economic and humanitarian crisis in Afghanistan,” Adeyemo wrote in the letter. He added, “There is currently no institution in Afghanistan that can guarantee that these funds would be used only for the benefit of the people of Afghanistan.”
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