US 'agrees' to release Afghan funds through Swiss bank

Sources privy to negotiations say that Washington is working on a plan to deposit $3.5 billion with the Bank of International Settlements and have the money distributed under a third-party monitoring system.

The United States has agreed to release a part of Afghanistan’s frozen assets, which were seized after the Taliban came to power last year, TRT World has learned from reliable sources.

The $3.5 billion in fund is to be likely released to the Bank of International Settlements (BIS) based in Basel, Switzerland, a source privy to the matter said. 

"An international board of experts has also been set up to disburse the money," the source told TRT World.

The announcement is expected to be made in the coming weeks.

Around $9 billion of Afghanistan’s central bank foreign currency assets held with US and other foreign banks were frozen after the Taliban took over Kabul on August 15 and drove out the US-backed government of President Ashraf Ghani. 

US President Joe Biden's administration went ahead with talks on releasing Afghanistan's foreign-held assets last month despite the late al Qaeda leader Ayman al Zawahiri's presence in Kabul.

The State Department, however, ruled out recapitalising Afghanistan’s central bank (DAB) as "a near-term option" after Zawahiri was killed, claiming that the Taliban had raised worries by harbouring him in violation of the 2020 US troop withdrawal agreement.

In the new development, DAB could receive the funds for end use "but the US would want a strict compliance with anti-money laundering and terrorist financing protocols in addition to a third-party supervision of the funds", the source said.

The international board of experts is tasked with ensuring all those conditions are met. 

The Taliban government is open to a US proposal for third-party supervision but wants to retain authority over how it is used.

"The frozen reserve is the property of the people of Afghanistan; it is a reserve of the central bank used in its transactions," Taliban spokesperson, Suhail Shaheen, told TRT World. 

"It is for the people of Afghanistan to decide on what to do with its reserve and how to use it. Unilateral decision about the reserve of Da Afghanistan Bank is illegal unless agreed to by DAB."

Humanitarian disaster

The US has been under pressure from human rights activists and the Afghan diaspora to release funds to alleviate the humanitarian disaster unfolding in the war-ravaged country. 

For the US and its Western allies, which have so far refused to recognise the Taliban government, the major obstacle has been to find a way to spend the funds without letting the Taliban get its hands on the money. 

“The release of these funds is important to ease the hardship of Afghan people who are finding it difficult to pay for even basic necessities,” Shah Mehrabi, an Afghan-American economics professor who is on the Afghan central bank’s Supreme Council, told TRT World. 

Mr Mehrabi reiterated the importance of determining how the funds should be dispersed in order to “bring stability in prices and reduce the volatility in exchange”.

Ongoing discussions

The US has been in discussions with Switzerland about the establishment trust, which can help disburse the funds. 

Most of Afghanistan's foreign assets - around $7 billion - are held with the Federal Reserve Bank of New York. 

The negotiations to release the funds, which are essential to tackle what the UN is calling an “immensely bleak” future for the Afghans, have centered around the $3.5 billion, which US President Joe Biden has set aside for Afghanistan.

The remaining $3.5 billion of Afghanistan’s money with the FED has been logged in to be distributed as compensation to the victims of September 11 attacks, which led to the US invasion of Afghanistan in 2001. 

The US government has faced criticism for holding back Afghan funds at a time when ordinary Afghans are reeling under hunger and poverty. Many have slammed the US for politicising the funds against the Taliban, even though it was Al Qaeda which was responsible for 9/11 attacks.

Nevertheless, families of 3,000 victims killed in attacks on the Twin Towers in New York and other cities have pushed the US courts to seize Afghanistan's assets. 

A US federal judge in 2012 awarded the group that amount following a default judgement against several members of the Taliban, al Qaeda, and Iran.