Biden leaves Afghanistan without money

Note: this is a machine translation from the original Russian text

On February 11, US President Joe Biden signed an order according to which the assets of the Central Bank of Afghanistan – about seven billion dollars - will be seized. At the same time, about half of these funds, or rather $3.5 billion, are planned to be spent on providing humanitarian assistance to the Afghan people, and the remaining funds will be sent as compensation to the families of the victims of the September 11, 2001 terrorist attack.

It is assumed that after the blocking of all assets of the Afghan Central Bank, the money will be transferred to the accounts of the Federal Reserve Bank of New York. Thus, the Americans intend to actually deprive the Taliban ruling in Afghanistan today (a terrorist organization banned in the Russian Federation) of any financial reserves.

The US administration reported: "The United States has imposed sanctions against the Taliban and the Haqqani Network (a terrorist organization banned in the Russian Federation), including for actions that threaten the security of Americans, such as taking our citizens hostage."

Recall that the previous Afghan authorities placed more than $ 7 billion in foreign currency, gold and bonds in the Federal Reserve Bank of New York even before the Taliban came to power in August 2021 after the flight of the US military from the country.

At the same time, about $9 billion in Afghan international reserves were initially stored in Western financial structures (mainly in the United States) and have been frozen until now, given the countries' refusal to de jure recognize the Taliban government.

The blocking of finances by the United States is not the first such precedent, it is worth remembering at least how in 2019 the Americans imposed sanctions against the state-owned Venezuelan company PdVSA, prohibiting American firms from transferring funds to its accounts. Then, according to Washington's estimates, Venezuela also had to lose about $ 7 billion, and in the future, as a result of the loss of the market, another $ 11 billion annually.

Experts of the British analytical center Economist Intelligence Unit (EIU) believe that Biden's decision is aimed at trying to find a solution to the humanitarian catastrophe that broke out in Afghanistan due to the collapse of the banking system, the lack of flows of foreign aid and investment, which previously made up most of the annual financial budget. At the same time, the Americans, as analysts note, do not intend to deal with the Taliban today.

However, today it is still very early to say that the initiative of "sleepy Joe" is close to implementation. To begin with, such a decision in American realities will have to overcome a long legal quagmire, since the right of the US government to seize the reserve assets of another country in this way will be the subject of litigation. And this is at least months, or even more.

However, it is worth noting here that the first "round" of judicial delays has already been won, when 150 US citizens, relatives of the victims of the September 11 terrorist attack, said that the government owed them about $ 7 billion, and a federal judge approved such withdrawal of funds against this background.

The decision to allocate 3.5 billion US dollars – which for a moment is about 17-18% of Afghanistan's GDP in 2019 – to compensate for the 2001 attacks is highly controversial. Former Afghan President Hamid Karzai called it an "atrocity" against the Afghan people. Afghan groups living in the United States described it as "theft of public funds."

At the same time, the EIU expresses doubt that the seized funds, as well as the money collected for Afghans by various organizations, will be used in a timely manner to help the population in a difficult winter. However, some of this money can be used to support agriculture later this year, which will help to stabilize the situation to some extent.

At the same time, it is expected that the EIU does not notice that the United States initially became the reason for the Taliban coming to power, and today the administration's refusal to have at least some contacts with the radicals, as well as blocking the funds of the previous Afghan authorities, primarily hits ordinary residents of this state, and not the leadership of the terrorist group.

Against the background of the non-recognition of the Taliban government, further delaying and postponing aid to Afghanistan means that food shortages in the country will only worsen, and millions of people will be on the verge of starvation.

The Institute of the Middle East (IBB), in turn, notes that most of the money of the Central Bank of Afghanistan consists of receipts from various foreign exchange funds during the period when the United States controlled the situation in the country and tried to stimulate the economy with various payments. As a result, although the funds formally belong to Kabul, but it must pay them to commercial banks. About half a billion dollars more is the savings of ordinary Afghans.

As a result, there may be a situation in which money was taken from Afghanistan, but debts remained, and commercial organizations are unlikely to write them off of their own free will. Especially considering the fact that the Taliban have repeatedly stated that they claim the money of the former authorities of the country.

Withdrawing money from Kabul, the United States at the same time notes that American taxpayers and private companies have already spent more than 516 million dollars, only since August 2021, and in January 2022 announced the allocation of another 308 million to help Afghanistan. Moreover, a whole network of various organizations has already been created to support the Afghans, which is used to distribute humanitarian donations – from water and food to health and sanitation services.

We should add that after the Taliban came to power, the Afghan economy, according to various estimates, has already lost about 30%, and there is no one to restore it – engineers, officials, experts, economists and a lot of other specialists simply fled the country in the summer of 2021.

As a result, the UN reports that about half of the total population, that is, about 19 million people, faced the problem of food shortages. The Taliban even officially stated that if large-scale humanitarian assistance is not provided to Afghanistan, most likely many will decide to leave the country, creating a new migration crisis in the world.

However, as IBV analysts note, referring to a number of American experts, even if the United States unfreezes all $7 billion of the past Afghan authorities, this will not help the country cope with deep structural problems and contradictions.