US to disburse $3.5bn of frozen Afghan funds

Washington is set to transfer part of the country’s central bank reserves to a fund in Switzerland

The US is preparing to release half of the $7 billion of seized Afghan central bank funds and transfer them to a bank in Switzerland for further disbursement. The Taliban, meanwhile, demands the money be made available to the Afghan government.

The move was announced on Wednesday by the US Treasury, which stated that the $3.5 billion would be placed in a so-called ‘Afghan Fund’ set up at Switzerland’s Bank for International Settlements, and that the funds would be used to bolster Afghanistan’s macroeconomic stability by paying for things such as electricity imports and covering arrears at international financial institutions.

According to Bloomberg and other media outlets, two representatives of the Treasury, who spoke to journalists on the condition of anonymity, explained that the main purpose of the move is to prevent the Taliban regime from gaining access to the money, which was seized following the US withdrawal from Afghanistan last year. 

“We don't agree with the transfer of money to the account indicated, but [we wish for it] to be transferred to Da Afghanistan Bank {DAB, the country’s central bank},” a Taliban DAB official told the TRT World news outlet, adding that the Afghan government would not object to a third-party monitoring system to ensure the funds are spent properly.

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In February, President Joe Biden signed an executive order to set aside half of the seized Afghan funds held by US institutions “for the benefit of the Afghan people,” while the other half has been held up in a federal court case involving the victims of the 9/11 attacks.

However, the international community has blasted the Biden administration for withholding the Afghan funds, with many arguing the move dealt a blow to ordinary Afghan citizens who are already reeling under widespread hunger and poverty.

The US has shrugged off criticisms of being responsible for the economic crisis in Afghanistan and has insisted that other nations such as Russia were not doing enough to help restore the Afghan economy, which suffered a collapse after Washington and its allies abruptly withdrew their forces last summer.

Russia’s UN envoy Vassily Nebenzia has hit back at such statements, accusing Washington of cynicism. “We are being asked to pull out our wallet to rebuild the country whose economy was virtually destroyed by the 20 years of occupation by the US and NATO,” he said last month, insisting that the US should bear the burden for its failures in Afghanistan.