Last week the United States cancelled all money transfers to Afghanistan as the Taliban horde approached the country’s capital, Kabul. The White House ordered the freezing of Afghan government accounts at both the Federal Reserve (FED) and U.S. commercial banks to prevent the Taliban from obtaining financing with American money.
By blocking Afghan Government bank accounts and withdrawing millions of dollars in cash from Afghanistan, the White House is seeking to prevent the Taliban from gaining access to nearly $500 billion in Afghan Government reserves in the United States.
The action is among Washington’s latest efforts to prevent further escalation of the political and humanitarian crisis that is emerging as a result of the Taliban regime’s takeover of Kabul.
“Any central bank assets the Afghan government has in the United States will not be made available to the Taliban,” a White House official confirmed to The Wall Street Journal.
Over the past few weeks, as the Taliban seized Afghanistan’s provincial capitals, the Department of the Treasury and the Fed stopped all dollar shipments and repatriated cash in Afghanistan to prevent the Taliban from accessing money provided by U.S. humanitarian aid.
Although the United States does not recognize the Taliban regime as the official Afghan government, control of state organs, including the Central Bank of Afghanistan, makes the Taliban the hegemonic power force in Afghanistan.
According to a Russian embassy spokesman, outgoing Afghan President Ashraf Ghani fled Kabul with four cars and a helicopter loaded with cash. However, Russian officials did not confirm either the type of currency or the denomination of the bundles of cash with which Ghani, who is sheltering in the United Arab Emirates, allegedly fled.
Taliban interrogated central bank officials
Ajmal Ahmady, chairman of Afghanistan’s central bank, fled the country on Sunday and commented in an interview with MarketPlace radio station that the money transfers were indeed blocked by the U.S. government. Despite the blockade, Ahmady confirmed that the Afghan central bank held about $9 billion in reserves, half of which is in foreign accounts.
Ahmady denounced on his Twitter account that the Taliban are allegedly asking the bank’s staff for information on the location of the institution’s assets.
He also claims that with the United States blocking the accounts of the central bank and the Afghan government, the Taliban will not have access to more than 0.1 % of the money that once belonged to the Islamic Republic of Afghanistan.
Earlier this month, the Afghan central bank began limiting the amount of cash, including dollars, it was sending to its branches across the country in response to the news of the Taliban advance. Ahmady says that by the time the first provincial capital fell, two weeks ago, almost all dollar reserves had been repatriated to the United States.
Despite the Afghan Central Bank’s precautions, the Taliban advance took its officials by surprise. On Friday, Ahmady was still negotiating with international bankers about loans to Afghanistan and explaining the bank’s recent decisions. He and other bank officials only became aware of the Taliban advance on Sunday when they were told that Ghani and his cabinet had fled Kabul.
In Washington, Secretary of State Anthony Blinken said on Saturday that the United States would use its financial power to pressure the Taliban, by implementing trade sanctions as well as blocking financial aid, which is crucial to the functioning of the Afghan state, as its finances were 80 % dependent on humanitarian aid.
“Support from the international community, none of that will be forthcoming,” Blinken said at a press conference, where he also stated that “sanctions won’t be lifted, their ability to travel won’t happen, if they’re not sustaining the basic rights of the Afghan people and if they revert to supporting or harboring terrorists who might strike us.”
Afghanistan has a $460 million emergency reserve with the International Monetary Fund. However, the multilateral body decided to block access to these reserves. For the time being, the Taliban do not seem to have access to the accounts of the late Islamic Republic of Afghanistan and will have to continue to rely on their traditional sources of income: extortion, poppy cultivation and trafficking, emerald mining and trafficking of children and women.