US to distribute frozen funds to Afghanistan, but only to an outside body

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The United States has decided to transfer $3.5 billion to a new ‘Afghan Fund’ to bring frozen Afghan money into use for promotion of economic stability in the country.

A report in CNN citing two US officials stated that due to a lack of a reliable institution that would ensure the use of funds for the Afghan people, Washington would not immediately release the funds to any institution in Afghanistan.

The report said that these funds would be controlled by an outside body independent of the Taliban government and the country’s central bank.

According to the Associated Press, two Afghan economists – a representative of the US government, and a representative of the Swiss government – will serve as trustees of these funds.

A US State Department official has said, “The Fund may use assets to provide Afghan banking sector liquidity, keep Afghanistan current on its debt service obligations, support exchange rate stability, transfer funds, as appropriate to public Afghan financial institutions, or any other use for the benefit of the Afghan people that is approved by the Fund’s Board of Trustees.”

The official said that the money could be transferred to the Afghan central bank under two conditions. The bank must show its independence from “political influence and interference”, and that it has taken “adequate anti-money laundering and countering the financing of terrorism control”, the official said.

It would also need to undergo third party monitoring, the official added.

Earlier in August 2022, CNN reported that the Biden administration had no intentions to release billions of dollars in assets held by the nation’s central bank any time soon, as it was worried about the money falling into the hands of terrorists after the killing of Al-Qaeda leader Ayman al-Zawahiri.