President Biden on Friday signed a hugely controversial executive order which effectively steals $7 billion in assets from Afghanistan’s central bank held in the US, which had previously been frozen by the administration.
The new Biden action is intended to make half of the $7 billion available as compensation for families of 9/11 victims, with the other half going to humanitarian assistance for Afghanistan. This comes as both international human rights bodies and activists have called for the unfreezing of the assets to help stave off Afghanistan’s total economic collapse under the Taliban, which is leading to starvation and widespread malnutrition, particularly impacting already impoverished families and children in the war-torn country.
The White House has said the action will ensure the funds stay out of the hands of the Taliban and “malicious actors”. The statement described it’s “designed to provide a path for the funds to reach the people of Afghanistan while keeping them out of the hands of the Taliban and malicious actors.”
Specifically the order will force all American financial institutions holding Afghan central bank assets to transfer the funds to a consolidated account at the Federal Reserve Bank in New York. As The Hill observes, “The effort is unusual, as it involves money held by a foreign government on U.S. soil. It is likely to be the subject of complex litigation.”
As for the $3.5 billion to be set aside for humanitarian aid for the Afghan population, there will still likely be strings attached determining whether it actually gets released. The Hill cites an admin official as follows:
The senior administration official said the Biden administration will spend the coming months setting up a third-party trust fund to administer the $3.5 billion in funds to support Afghanistan, as officials await a court ruling.
A senior administration official cautioned that the signing of the executive order is “a step in a process that might lead to the unlocking of these funds for the benefit of the Afghan people,’ noting that the situation involves complex litigation.
Previously Washington set as a condition for the release of funds that the Taliban undertake specific urgent reforms, including in women’s rights and education, eradicating terrorism, and allowing US passport holders to freely and safely leave the country.