foreign interests

Withdrawing Afghanistan’s Money Is Another Mess for Biden

His plan to divide billions in frozen funds is unlikely to help many Afghans.

Afghani banknotes seen at a currency exchange in early February in Kabul. Photo: Saifurahman Safi/Xinhua News Agency via Getty Images
Afghani banknotes seen at a currency exchange in early February in Kabul. Photo: Saifurahman Safi/Xinhua News Agency via Getty Images

On Friday, President Joe Biden unveiled his plan for distributing the approximately $7 billion in Afghan central-bank funds located in the U.S., money his administration froze after American forces withdrew from Afghanistan and the country fell back into the hands of the Taliban last summer. The Biden administration’s controversial proposal would split the funds in half, with $3.5 billion allocated for humanitarian aid to Afghanistan, and the rest going to the families of 9/11 victims.

The $7 billion, along with about $2 billion in Afghan central-bank holdings in other countries, have been in limbo since the U.S. drawdown and Taliban takeover. As no country formally recognizes the Taliban as a legitimate government, these funds have remained frozen, while hundreds of millions of dollars in foreign aid have been suspended. Cutting off Afghanistan from this money has also catalyzed the country’s economic collapse under Taliban rule. Most Afghans are now facing food shortages, with the U.N. estimating that 23 million are at risk of severe hunger this winter and 9 million at risk of famine. The humanitarian crisis has led to calls from Taliban leaders and sympathetic foreign governments, including China and Russia, for the U.S. to unlock the frozen assets in their entirety.

The 9/11 families’ claim to the money stems from a lawsuit they filed not long after the September 11 attacks against a variety of parties they held responsible for their relatives’ deaths, including Osama bin Laden, Al Qaeda, and the Taliban. A court eventually found the defendants liable by default and awarded the plaintiffs around $7 billion in damages in 2012, but the judgment was seen as symbolic, since there was no way to collect on it. But after the Taliban returned to power and Afghanistans assets were frozen in U.S. banks, lawyers for the families argued that the funds should be used to pay that judgment. For the past few months, the lawyers and the Biden administration have been negotiating over access to the money. The 9/11 families have asserted a legal right to the entire $7 billion, and the final distribution of the funds awaits the resolution of ongoing litigation. Actually getting the money to its intended recipients, whomever they are ultimately determined to be, will take several more months.

The Taliban, of course, is furious at the Biden administration’s decision, but Afghan citizens and Afghan American advocates have also denounced the plan as theft. This money, they argue, belongs not to the Taliban but rather to the Afghan people, who should not be punished for crimes they did not commit by having their sovereign assets seized and their economy crippled. Former Afghan president Hamid Karzai argued in a Sunday press conference that “Afghan people are as much victims” as those who lost loved ones on 9/11, and that seizing the funds in the name of 9/11 families “is unjust and unfair and an atrocity against Afghan people.”

Some progressive lawmakers in the U.S. have called on the administration to unfreeze the funds, as well, in order to prevent the spiraling humanitarian disaster in Afghanistan from getting worse.

Internally displaced Afghans are seen in a camp in Balkh, Afghanistan, on November 13, 2021. After the Taliban takeover, most aid organizations left the country, forcing those who had fled the conflict to take shelter in the camps to struggle to live on their own. The situation in the camps has deteriorated, and assistance for basic needs is almost never provided. According to the families in the camp, almost no aid had been provided by any aid organization in recent months. Photo: Sayed Khodaiberdi Sadat/Anadolu Agency via Getty Images

There has always been next to no chance that the Biden administration would simply release the funds into the Taliban’s hands. The U.S. and its allies have insisted that the militant group should not get any money until it makes credible commitments to form a more inclusive government, guarantee women’s and minorities’ human rights, allow girls to attend schools, and sever all ties with terrorist organizations. The Taliban does not appear sincerely interested in doing any of these things.

Meanwhile, Biden is in no position, domestically, to invite attack lines about him giving a $7 billion “gift” to the Taliban — which would be the inevitable political consequence of him unfreezing the funds unconditionally, even if it were the right move from a humanitarian perspective. Speaking with the Washington Post last week, a Biden administration official insisted that the funds would be closely monitored, saying: “It is not going to the Taliban; it is going to be used for the benefit of the Afghan people.” But providing any assistance to Afghanistan will be logistically difficult and politically hazardous no matter what pains the administration takes to keep it from going directly to the Taliban.

As to how, exactly, the U.S. will be able to ensure that funds benefit the Afghan people without benefitting the Taliban, the administration hasn’t made that clear, and in reality, it may be impossible. This reflects a fundamental tension in the worlds of development economics and humanitarian aid that defies easy resolution. The countries where people have the greatest need for aid are often the same countries that are governed by the very worst people in the world. They are either failed states whose territory is under tenuous and contested control by various militias and warlords, or deeply corrupt authoritarian regimes in which the Swiss bank accounts of the political and military elite take precedence over the needs of the people.

Donor countries and global financial institutions know that any money that enters these countries is likely to be siphoned off to fund illegal and often destabilizing activities. Unfortunately, money is fungible, and no matter how strictly donors earmark aid for food and medicine, it’s not particularly hard to convert into guns, bombs, drugs, Manhattan real estate, or other illicit goods. Even in-kind donations can be diverted and sold for cash on the black market. This leaves the people of these countries doubly screwed over: first by their rulers for running their country into the ground, and then again by foreign powers and donors that can’t or won’t help them because there’s no way to do so without somehow funding tyranny or terrorism.

The Gaza Strip is a prime example of this tragic dynamic: There, Hamas performs all the essential functions of government, from organizing trash collection to paying civil servants’ salaries. Yet Hamas is also both a brutally repressive fundamentalist regime and a violent terrorist organization. Most governments don’t agree with its aim of destroying Israel, so they don’t want to give Hamas any resources. The Israeli-Egyptian blockade that strangles the flow of goods across Gaza’s borders is in principle meant to deny Hamas the means to build rockets — but it also denies Gazans food, medicine, electricity, clean water, and the opportunity to become economically self-sufficient. Is weakening Hamas, which is not going away despite decades of efforts to undermine it, worth all that suffering? Wherever you stand on that question, it’s not a tradeoff anyone can simply avoid.

So donors look for ways to circumvent the bad regimes and help people more directly. A vast network of U.N. agencies and NGOs works tirelessly to deliver aid to desperate people without enriching the kakistocracy that made them so desperate in the first place, but even when these organizations are not themselves corrupt or ineffectual, they too have to face the facts on the ground. Just try getting anything done in parts of central Africa, for instance, without paying protection money to one militia or another; it’s a great way to get yourself killed.

Afghan mothers, seeking care for their often malnourished babies, line up outside a hospital in Kabul on January 16. Photo: Sayed Khodaiberdi Sadat/Anadolu Agency via Getty Images

It is eminently reasonable to want to keep these billions out of the hands of the Taliban, but withholding cash from the entire country ensures that millions of Afghans will remain impoverished, starving, and aid-dependent. Turning $7 billion of central-bank reserves into $3.5 billion in humanitarian assistance means Afghanistan will end up with less than half of what it originally had — perhaps far less. How much of that $3.5 billion will be lost to overhead, petty corruption, and waste? It is far more expensive and less productive for an NGO to buy wheat from Iowa, ship it to Kabul, and dole bread out of the back of an aid truck than for Afghan farmers to obtain credit for seed grain from their own central bank. And Human Rights Watch has meanwhile pointed out that “even if the U.S. gave [the money] to a humanitarian trust fund, current restrictions on Afghanistan’s banking sector make it virtually impossible to send or spend the money inside the country.”

It is worth bearing in mind that the Taliban could go a long way toward ameliorating this crisis if they would moderate their fanaticism enough to meet the conditions the U.S. and other Western powers have set for unfreezing assets and lifting sanctions. Yet considering how unlikely they are to do so, the Biden administration needs to decide how willing it is to exacerbate Afghanistan’s economic and humanitarian crisis to punish the Taliban. Don’t hold your breath, though, for an honest public conversation about that.

Withdrawing Afghanistan’s Money Is Another Mess for Biden