EXCLUSIVE-US continues talks over Afghan central bank assets – 8/22/2022 at 11:42

by Jonathan Landay

WASHINGTON, Aug 22 (Reuters) – U.S. President Joe Biden’s administration will continue negotiations to release billions of dollars in Afghan assets held abroad, according to three sources familiar with the situation.

In particular, Washington wants the transfer of billions of Afghan central bank assets held abroad to a Swiss-based trust fund, as Reuters reported last month. Disbursements would be made with the help of an international consultant and without going through the Taliban.

State Department and US Treasury officials told independent analysts at a briefing on August 11 – 12 days after a US strike killed the leader of al Qaeda in Kabul – that ‘they were going to continue these talks although their slowness is a source of frustration, two sources said on condition of anonymity.

The Taliban and the Afghan Central Bank (ABC) are not acting quickly, a US official said, according to a source: “The Taliban are sitting idly by and it’s infuriating.”

The State Department declined to comment on the meeting.

An American source who asked to remain anonymous confirmed the content of this meeting.

“The strike has not changed the US government’s commitment to setting up the international trust fund” and it “is working with the same speed and alacrity as before the strike,” the US source said.

The Taliban-run ministries of foreign affairs and information and the DAB did not immediately respond to a request for comment.

US officials have also discussed the project with Switzerland and other parties.

Washington and other donors halted financial aid to Afghanistan after the Taliban captured Kabul on August 15, 2021.

The United States also stopped sending funds in hard currency, effectively paralyzing the Afghan banking system, and froze $7 billion in Afghan assets at the Federal Reserve branch in New York. In February, Joe Biden ordered that half of that sum be set aside “for the benefit of the Afghan people.”

Initially, $3.5 billion would be paid into the trust fund and could be used to pay Afghan arrears to the World Bank and to print Afghanis, the national currency, and passports.

The remaining $3.5 billion is disputed in lawsuits brought against the Taliban following the September 11, 2001, attacks, but the courts may decide to release them.

Following the US strike, the State Department ruled out recapitalizing the DAB as a “short-term option”, saying that by harboring the al Qaeda leader, the Taliban fueled concerns “about hijacking of funds to terrorist groups”.

BLOCKING ON DEPARTURES FROM THE CENTRAL BANK

According to two sources, US officials said during the meeting that the talks had become complicated because the Taliban refused to give in to certain demands, in particular the departure of two members of the DAB, including number two.

The Taliban and DAB have also not formally agreed to place independent anti-money laundering monitors within the bank, although they agree in principle, the officials said, according to the sources.

Officials, the sources said, referred to Taliban and DAB intransigence, particularly regarding their refusal to cooperate in a scheme to send international aid held by the World Bank to aid agencies in Kabul.

They also said that Washington in March asked other governments to encourage private banks to restore correspondent banking relationships with Afghanistan, the sources said.

According to one source, a US official said there was “not much appetite” for the outreach made by US embassies in diplomatic memos.

This was partly due to the absence of independent anti-money laundering monitors at the DAB, the official said, according to the sources.

(Reporting Jonathan Landay in Washington, with contributions by Charlotte Greenfield in Islamabad; French version Valentine Baldassari, editing by Kate Entringer)

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