Biden freezes Afghan currency reserves to cut off Taliban cash

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Biden freezes Afghan currency reserves to cut off Taliban cash

The Biden administration has frozen billions of dollars in Afghan currency reserves and other assets held in US bank accounts following the Taliban reconquest of that country’s government, a report said Tuesday.

The freeze was implemented Sunday following discussions between Treasury Secretary Janet Yellen and other officials at the Treasury and State Departments, according to The Washington Post.

While those discussions took place, the Taliban swept into Kabul, completing a 96-hour route through Afghanistan that dealt a death blow to the Western-backed government of President Ashraf Ghani.

Afghanistan’s central bank held $9.4 billion in reserve assets, a little less than half of the country’s gross domestic product in 2019. Most of that money is held outside Afghanistan’s borders, though it isn’t clear how much of it is in the United States, the paper said, citing the International Monetary Fund.

An Afghan currency exchange dealer counts money as dealers have been hit hard following the fall in value of the Afghani currency, leading to a rise in food prices in Kabul, Afghanistan, on July 16, 2021.
The departure of foreign troops and the advance of the Taliban is contributing to mounting political and economic insecurity in the country.
Haroon Sabawoon/Anadolu Agency via Getty Images

The decision to freeze the assets is likely to put a further squeeze on the already-fragile Afghan economy and heighten the necessity for the US to boost humanitarian aid to a population coming under the yoke of the Taliban once again.

In June, the State Department announced more than $266 million in humanitarian assistance to Afghanistan, bringing the total since 2002 to $3.9 billion. President Biden vowed Monday that the US “will continue to support the Afghan people” and “lead with our diplomacy, our international influence, and our humanitarian aid.”

On Tuesday, National Security Adviser Jake Sullivan hinted to reporters that the US could use sanctions to force the Taliban away from some of the more oppressive policies from their first stint in charge of Afghanistan. Current American economic sanctions prohibit US citizens from engaging in “any transaction or dealing” with the Taliban.

“The reason I don’t want to go into great detail on it is, I want to be able to have our team communicate directly to the Taliban both what the costs and disincentives are for certain types of action and what our expectations are,” Sullivan said. “That is a conversation that we will intend to have, and I think many other countries, including likeminded allies and partners, will be having that as well.”

Taliban fighters stand guard along a roadside near the Zanbaq Square in Kabul on August 16, 2021
Taliban fighters stand guard along a roadside near the Zanbaq Square in Kabul on August 16, 2021.
WAKIL KOHSAR/AFP via Getty Images

With the currency reserves out of their reach, the Taliban are likely to resort to the money-raising methods they used during their first stint in power from 1996 to 2001: taxation on the opium and heroin trade, as well as illegal mining. There is also the possibility that Chinese or Russian firms could reach out to gauge the regime’s interest in mineral or fuel development concessions.

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