WASHINGTON – America’s war in Afghanistan is over, but the Taliban’s finances are just beginning.
The fate of billions of dollars in international reserves and foreign aid represents its own politically and legally strained choices as the world grapples with what Afghanistan will look like under Taliban rule. The stake is extraordinarily high as millions of Afghans face the prospect of collateral damage from the stranglehold of the Taliban’s sanctions, which are still in place, an economy the United States has tried for two decades support, threatens to sink.
Faced with an impending humanitarian crisis, the Biden government is examining how this web of sanctions can be tailored so that aid can continue to reach the Afghan people. The challenge is to keep donor money flowing without further enriching the Taliban, who see the US as a terrorist organization. Experts say that such a situation, in which a group believed to be terrorists takes over an entire country, is unprecedented and represents a complex test for the US sanctions program.
“This is a new world,” said Adam M. Smith, a senior sanctions officer in the Obama administration’s Treasury. “I cannot imagine a case in which an already named terrorist group has taken power over an entire country.”
He said that the Treasury Department would soon have to decide what exemptions or licenses it would grant for certain types of transactions. It must also decide whether all of Afghanistan or just the Taliban leadership is under sanctions so that the world knows how to deal with the government.
“We have to find a way to get goods and services into Afghanistan or 30 million Afghans will have side effects here and it will be a disaster,” said Smith.
When the Taliban came to power last month, the United States acted quickly to maintain as much influence as possible. It blocked its access to $ 9.5 billion in international reserve funds and put pressure on the International Monetary Fund to suspend distribution of more than $ 400 million in currency reserves.
A Treasury Department official said the United States would not ease sanctions pressures on Taliban leaders or significant restrictions on their access to the international financial system. The militant group continues to be classified as a Specially Designated Global Terrorist Group, and it is also subject to United Nations sanctions that the United States and other countries must enforce.
But the desire to demonstrate some flexibility is already evident. Last week, the Ministry of Finance signaled to humanitarian organizations that it was taking steps to enable relief work to continue for the benefit of the Afghan people. On August 25, the agency issued a special license, similar to the one it has issued in countries such as Syria and Venezuela, to enable the delivery of food, shelter, medicines and medical services to Afghanistan.
There are also signs that the financial flows into the country, which have been frozen for two weeks, are resuming.
Financial institutions in the United States have been waiting for the Biden administration to clarify whether Afghanistan’s property is considered Taliban property, banking industry officials said. Banks fear they could violate US sanctions if they allow transactions with the country.
Updated
9/2/2021, 5:49 p.m. ET
However, Western Union said Thursday that it would resume money transfer services to Afghanistan so its customers can send money to loved ones and that it would waive fees for transfers into the country for two weeks. A company spokeswoman said she made the decision after the US government said it allowed money transfers to Afghanistan.
An official from the Treasury Department confirmed that the agency had contacted financial institutions to inform them that personal transfers were allowed.
The Treasury Department has experience trying to service people ruled by enemy governments and has issued humanitarian aid licenses to arrive at such locations. In June, it issued licenses to send relief supplies to fight the coronavirus to Iran, Syria and Venezuela.
However, a terrorist group presents its own challenges and it will not be easy to keep aid out of the hands of the Taliban, especially if they control the country. The group is notorious for using exorbitant taxes to steal wealth from Afghan citizens, and an influx of food or medicine from abroad would be an opportunity to confiscate and sell them to raise funds. Harsh sanctions could also force the Taliban to rely even more heavily on illegal finances and drug trafficking, despite their public opposition to such practices.
“Due to the increased risk that the Taliban takeover entails, the fight against money laundering and terrorist financing must be stepped up,” said Alex Zerden, from 2018 to 2019 financial attaché of the Treasury Department at the US embassy in Kabul.
Dealing with the situation in Afghanistan is becoming more complex as the Treasury Department carries out a broader review of its sanctions program. Critics have accused the previous administration of arbitrarily imposing sanctions and often undermining their effectiveness. The Biden government has stated that it is not conducting intelligence reviews of certain sanctions, but rather is focusing on ways to modernize the practice so that it is more effective.
Understanding the Taliban takeover in Afghanistan
Map 1 of 6
Who are the Taliban? The Taliban emerged in 1994 amid the unrest following the withdrawal of Soviet forces from Afghanistan in 1989. They used brutal public punishments, including flogging, amputation and mass executions, to enforce their rules. Here is more about their genesis and track record as rulers.
Who are the Taliban leaders? These are the top leaders of the Taliban, men who for years have been on the run, in hiding, in prison and dodging American drones. Little is known about them or how they plan to rule, including whether they will be as tolerant as they say they are. A spokesman told the Times that the group wanted to forget their past but had some restrictions.
The Treasury Department did not offer a schedule for this review. It’s taking place while Senate Republicans have blocked two of President Biden’s nominations for top sanctions positions at the Treasury, Brian E. Nelson and Elizabeth Rosenberg. Although the Biden administration has been less vocal than the Trump administration about the application of sanctions, it is still well on its way to making about 1,000 nominations this year, according to the law firm Gibson, Dunn & Crutcher.
Any easing of sanctions for the Taliban could come at a political price.
Senators Marco Rubio from Florida and Rob Portman from Ohio, both Republicans, called on Treasury Secretary Janet L. Yellen on Monday to keep all internationally held Afghan assets out of the Taliban.
“The Taliban are sponsors of terrorism and have close ties to al-Qaeda, and therefore cannot be trusted to distribute money to the Afghan people who are in dire need and will instead use all means to actively set priorities that are hostile to US interests. “They wrote in a letter. “We can and should work to create alternative means of supporting the Afghan people, but we must not allow resources to be used to strengthen a repressive Taliban regime.”
Khalid Payenda, who resigned as Afghan finance minister last month, said Thursday during an event at Georgetown University’s School of Foreign Service that the Taliban appear to be struggling to resume government financial operations and that the country is about to run out of money would. He said the world must find ways to provide economic support to the people of Afghanistan without giving the Taliban the money and that sanctions must be maintained as leverage.
“I think it would be catastrophic to give full access to the reserves,” said Payenda, accusing the Taliban of still having links with al Qaeda. “The Taliban know that they cannot run a government without the finances and technical assistance of other countries.”
The White House made it clear this week that it will not let go of its economic influence on the Taliban prematurely. Biden government officials insisted that such interference is important to ensure the Taliban honor their pledges to allow Americans, permanent residents and Afghan citizens to leave the country on special immigrant visas.
“When we talk about Afghan reserves, Afghan access to the banking system, Afghan access to any kind of basic operation of the economy, remember that the United States has been basically the steward of them for the past 20 years. “Jake Sullivan, the White House national security advisor, told CNN.
He argued that the Taliban are now somewhat dependent on the United States, adding, “They understand the extent to which their ability to provide their citizens with everything needed for a functioning economy depends on the international community. It’s up to the United States. “
