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U.S. unfreezes billions of Afghanistan's money aiming to stabilize its economy

STEVE INSKEEP, HOST:

The United States says Afghanistan can have some of its money back. The U.S. says it found a way to ensure that Afghans benefit from their central bank funds while the country's Taliban rulers do not. Last year, you may recall, when the Taliban seized power, the U.S. froze billions of dollars' worth of assets belonging to the Afghan central bank. This was money the Afghans had deposited or invested in the United States. Neither the U.S. nor anybody else has recognized the Taliban. And the U.S. has ignored the calls to give the money to them. But a new fund is designed to help the people who face economic desperation. Thomas West is the U.S. Special Representative for Afghanistan. And he's on the line. Ambassador, welcome back to the program.

THOMAS WEST: Thank you very much for having me.

INSKEEP: What's the plan here?

WEST: So the purpose of this fund, which has been months in the works, is to preserve, protect and to make targeted disbursements of Afghan reserves to support the Afghan people, to support macroeconomic stability. We have been working with Swiss partners on this initiative closely. And we are really grateful to them for their support. This is going to make available to the Afghan people a large amount of money, really, that's for macroeconomic stability, so we can keep Afghanistan current on its arrears to international financial institutions. We can potentially keep them current on electricity payments, as well as other purposes.

INSKEEP: I'm just trying to think that through. When you say electricity payments, I know that Afghanistan gets some of its electricity from outside the country. You're saying that if they're having trouble paying those bills to keep the lights on, this money might be used to pay the bills and keep the lights on.

WEST: That's right. I have to say, the first option is going to continue to be to have the Afghan central bank, which is called the Afghanistan Bank, make those payments themselves. They have made some of those payments. There are courageous technocrats that remain in that institution. And we hope that we don't have to make payments from this foundation. But it is possible. And this is a new source for those purposes.

INSKEEP: Does the Taliban ever touch this money?

WEST: No.

INSKEEP: Which I gather would be important to you because the leader of al-Qaida was recently found in Kabul and hit by a drone strike. We were there. The NPR team actually was in Kabul at the time. And some were awoken by the strike. People will naturally ask if there is, nevertheless, some way the Taliban would benefit from the distribution of this money no matter what you do.

WEST: We're going to have an external auditor as part of this foundation, as part of this fund. And we will rigorously ensure that none of this money goes to the Taliban.

INSKEEP: I want to ask about the way the money is being used. You've indicated that it will go to help people. It appears it doesn't go to the central bank that is now overseen by the Taliban. That's an institution that's supposed to manage inflation. Now, we spoke the other day on the program with Shah Mehrabi, who is on the board of the central bank. He says inflation is out of control, that this hurts millions of people. He did recognize the administration is aiming for aid to people, but he added this. Let's listen.

SHAH MEHRABI: No increase in humanitarian aid can compensate for the macroeconomic harm of soaring prices for basic commodities. It could not fully compensate for the banking collapse or balance of payment crisis and other consequences that could ripple through the Afghan society and harm the most vulnerable people.

INSKEEP: Is he right, that you're leaving the central bank so weak that millions of people will be harmed far more than you can help them?

WEST: Steve, we have to deal in realities. And the fact is, when the Taliban forcefully took the country, many dozens of senior, capable technocrats left that central bank. And they hollowed out the institution. That is a body that no longer has a credible - what we call AML/CFT architecture in place - that's anti-money laundering and countering financial terrorism - controls in place. It's a body that doesn't have the kind of software and policies in place that we expect from any central bank in the world to be sure that we don't see money go to terrorists, go to criminals. And so we are pragmatic in this administration. I think it's in our interest to see a more capable central bank in place, one with independent monitoring in place. And so we're going to work on that basis.

INSKEEP: Can you at least imagine some future configuration of that central bank where it did feel independent of the Taliban rulers and you could deal with it like a normal central bank?

WEST: Right now, we're quite far off. I don't want to mislead you. We're not on the cusp of recapitalizing the Afghan central bank, of recapitalizing the financial system. I would want to have confidence to say to the American people that I am sure that if we were to proceed with even an iterative recapitalization of the financial system that none of that money would go to terrorists, would go to criminals. And today, I can't say that. But in time - is it possible? - yes, it's possible. But we're not there today.

INSKEEP: I want to ask about the rest of the money because some people will know that while $3.5 billion are being placed in this fund, there's an equivalent amount of money that's being held back by the Biden administration. The president is reserving that money for 9/11 families who sued for a share of it. And so some clearly want the money. Some other families have said they don't want the money. I've got a quote here, actually, from Kelly Campbell of an organization called 9/11 Families for Peaceful Tomorrows. Quote, "the idea that they are on the brink of famine and that we would be holding onto their money for any purpose is just wrong." Now that you have this fund to help the Afghan people, should you just put all the money there?

WEST: Steve, the scope of the humanitarian catastrophe in Afghanistan is truly dire. And the United States has done more than any country to answer that need. We have contributed $815 million in humanitarian aid. We have passed seven - what are called general licenses, which provide comfort to any organization, relief, or even a company that is seeking to meet the need. We have championed a U.N. Security Council resolution that provides for the flexibility of those organizations to meet the need.

So we will continue to try to erect a policy architecture that helps the Afghan people get the food they need, get the medicine they need and so forth. We've worked with international financial institutions, including the World Bank, to be sure that suspended assets in their systems go to meet basic services. But when it comes to assets, you talk to any economist, and they will say that foreign reserves need to be preserved for the conduct of monetary policy. And so that is what the suspended reserves will be used for.

INSKEEP: Ambassador, it's been a pleasure talking with you. Thanks for taking our questions.

WEST: Thank you, Steve.

INSKEEP: Tom West is the U.S. Special Representative for Afghanistan. Transcript provided by NPR, Copyright NPR.