U.S. Eases Sanctions to Allow Routine Transactions With Afghan Government

The Afghan central bank, known as Da Afghanistan Bank or D.A.B., is among the governing institutions that will face fewer obstacles under the measure. The central bank had formerly propped up the value of the Afghan currency by regularly auctioning United States dollars.

That activity has ceased, and the value of the Afghan currency has plunged — making food too expensive for many poor Afghans to buy. At the same time, a currency shortage has led to limits on how much those Afghans who have bank accounts may withdraw from them.

Many officials from the bank fled in August, and the Taliban has installed its own leaders to oversee it. But in the briefing, a senior administration official said the U.S. government had been exploring ideas for restarting some normal central bank activities if the bank can be made truly independent, with controls to prevent money laundering and third-party monitoring. The official said much of whether that could be done was in the hands of the Taliban.

The notion of potentially trying to resuscitate Afghanistan’s central bank is in some tension with a move this month by the Biden administration regarding about $7 billion the central bank has deposited at the Federal Reserve Bank of New York, money whose fate has been a major focus since the Taliban takeover.

When the government of Afghanistan dissolved, the New York Fed made those funds unavailable for withdrawal. The Taliban have since claimed a right to them, while relatives of people killed in the Sept. 11 attacks are trying to seize the funds to pay off the Taliban’s default judgment debts to them from lawsuits they had brought against the Taliban, Al Qaeda and others.

On Feb. 11, the Biden administration moved to split those funds in half — in a way that would potentially leave the Afghan central bank decapitalized. Mr. Biden invoked emergency powers to try to move $3.5 billion into a fund that will be used for the benefit of the Afghan people. The administration left the remaining money for the Sept. 11 plaintiffs to continue pursuing in court.

It will be up to a judge to decide whether those funds can be lawfully used to pay off the Taliban’s judgment debts, a question that raises several thorny and unresolved legal issues.

Article source: https://www.nytimes.com/2022/02/25/us/politics/us-sanctions-afghanistan.html