The U.S. will put $3.5 billion in Afghanistan’s central bank reserves under the control of a Swiss-based oversight board to pay for limited financial services in the country while ensuring the Taliban regime doesn’t get access to the money, the U.S. Treasury Department said.
The funds, which the U.S. froze after the Taliban takeover of Afghanistan last year, will be held at the Bank for International Settlements and distributed with the consent of a four-member board — one from the U.S., one from Switzerland and two Afghans not associated with the Taliban.
The funding will support Afghanistan’s macroeconomic and financial stability, two senior Treasury officials told reporters on condition of anonymity.
It will fund electricity payments and pay arrears at international financial institutions, but most of it will be set aside until the board decides that Afghanistan’s central bank has implemented money-laundering controls and has sufficient political independence.
The central bank, known as DAB, will have to demonstrate that it has expertise, independence and capacity to regulate inflation, among other metrics, the officials said. The Afghan members will be Anwar Ahady, the former Minister of Commerce and Industry and a former head of Afghanistan’s central bank, and Shah Mehrabi, a Maryland professor and former member of the central bank’s board, the people said.
The arrangement has been under discussion since President Joe Biden signed an executive order earlier this year setting aside half of the $7 billion in DAB funds held by U.S. institutions “for the benefit of the Afghan people.” Talks with the Taliban over the money stalled after the U.S. killed al-Qaeda leader Ayman al-Zawahiri in a drone strike, accusing the Taliban of sheltering the terrorist leader.
The remaining $3.5 billion is tied up in a federal court case involving the victims of the Sept. 11 attacks.
The U.S. will continue what one of the officials described as pragmatic engagement with the Taliban over how to use the money, but with no formal role for the group in the arrangement. If DAB and the Taliban stay current on payments to creditors, they could become eligible for $1 billion in international development funds from the International Monetary Fund, one of the officials said.