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US, Taliban make headways on frozen Afghanistan assets

AT

Kabul: U.S. and Taliban officials have exchanged proposals for the release of billions of dollars from Afghan central bank reserves held abroad into a trust fund, three sources familiar with the talks said, giving a hint of progress in efforts to ease Afghanistan’s economic crisis.

Some experts said such a move would help restore confidence in the institution by insulating it from interference by the Taliban that seized power a year ago but foreign governments do not recognize.

While the Taliban do not reject the concept of a trust fund, they oppose a U.S. proposal for third-party control of the fund that would hold and disburse returned reserves, said in report by Reuters.

The United States has been in talks with Switzerland and other parties on the creation of a mechanism that would include the trust fund, disbursements from which would be decided with the help of an international board, according to a U.S. source.

A possible model could be the Afghanistan Reconstruction Trust Fund, a World Bank-administered fund created to get donations of foreign development assistance to Kabul, the U.S. source added.

Some $9 billion in reserves have been held outside Afghanistan, including $7 billion in the United States, since the Taliban overran Kabul last August as U.S.-led forces withdrew after 20 years of fighting the Taliban.

The international community wants the group to improve its record on women’s and other rights before officially recognising it.

Experts cautioned that releasing funds would bring only temporary relief and new revenue streams were needed to replace direct foreign aid that financed 70 percent of the government budget before it was halted after the Taliban takeover.

Negotiations have focused on an initial release of $3.5 billion that U.S. President Joe Biden ordered set aside “for the benefit of the Afghan people” out of $7 billion in Afghan reserves held by the Federal Reserve Bank of New York.

The other $3.5 billion is being contested in lawsuits against the Taliban stemming from the Sept. 11, 2001, attacks on the United States, but courts could decide to release those funds too.

The World Bank says it has strengthened, although shortages of dollars and Afghanis persist. High unemployment and soaring prices, fuelled by drought, the COVID-19 pandemic and Russia’s invasion of Ukraine, worsened a humanitarian crisis.

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