Michael Hughes
AOPNEWS
March 1, 2022

Three American senators urged the Biden Administration and the World Bank to immediately direct more than $1 billion from a reconstruction trust fund to pay the salaries of health workers and teachers in Afghanistan and inject liquidity into the country’s economy which they said is on the verge of full blown implosion.

The plea from U.S. Senators Chris Van Hollen, Chris Murphy, and Cory Booker comes as the Biden administration has been under fire for its handling of frozen Afghan funds. In a letter to U.S. Deputy Treasury Secretary Wally Adeyemo, the lawmakers argued that the administration at Tuesday’s World Bank Board of Governor’s meeting should press for tapping the remainder of the Afghanistan Reconstruction Trust Fund (ARTF).

“Today there are at least 400,000 civil servants in Afghanistan that are critical to continued delivery of basic human services like healthcare and education. But many of them are not being paid,” the senators said in the letter. “The United States should now take the next step, and encourage our colleagues on the board of the World Bank to urgently repurpose the $1.2 billion remaining in the ARTF for salary payments of healthcare workers and teachers.”

The senators added that with some nine million people a step away from famine, action is needed now to prevent Afghanistan from fully collapsing into a failed state. 

“Afghanistan is now suffering from a liquidity crisis, triggered by the lack of both U.S. dollars needed to pay for imports of food, fuel, and fertilizers, as well as afghanis needed to pay for goods in the market and local salaries,” the letter said.

The trio noted that the UN has proposed a Humanitarian Exchange Facility (HEF) which would serve as a safe clearinghouse to facilitate the exchange of afghanis and dollars for humanitarian operations while injecting some much needed liquidity into the economy.

The lawmakers said the United States should support technical assistance and robust funding from the World Bank to get the HEF up and running. Moreover, the senators added, the move would also bypass the Taliban and ensure the money goes straight to the Afghan people.

“These steps alone will not solve Afghanistan’s economic crisis. Navigating U.S. and international sanctions on the Taliban, resolving the issue of Afghanistan’s assets held at the U.S. Federal Reserve, and restoring a functioning economy in the country will take months if not years,” the senators wrote. “But the United States has an opportunity to start reversing Afghanistan’s economic collapse, beginning with bold leadership at the next Board of Governor’s meeting at the World Bank on March 1st. We urge you to support these steps.”

The lawmakers called on the Biden administration to “demonstrate the leadership Afghans and the world need right now.”

Last month, President Joe Biden controversially ordered $7 billion in Afghan Central Bank funds be diverted and split evenly between a humanitarian trust and compensation to terror victims. University of Illinois Professor of International Law Francis Boyle told Sputnik that seizing Afghanistan’s assets actually violates international law and could be considered a form of “economic warfare.”

Biden’s decision was poorly timed given UN chief Antonio Guterres had just urged the international community to immediately inject liquidity into the Afghan economy and ensure the country’s central bank is preserved as millions face starvation and death.

Acting Afghan Foreign Minister Amir Khan Muttaqi recently slammed the U.S. for failing to work with the Taliban on reconstruction efforts and went so far as to accuse the Biden administration of violating the Doha pact.

That said, the U.S. – after much criticism – finally took steps recently to ease certain sanctions in order to boost the Afghan economy.

On Friday, February 27, senior administration officials told reporters the U.S. issued a new General License to expand authorizations for commercial and financial transactions in Afghanistan – including with Afghanistan’s governing institutions – that would otherwise be banned due to sanctions.

However, the officials also said the new license – General License 20 – does not authorize financial transactions to the Taliban, Haqqani Network, associated entities, and any other blocked individuals in leadership roles of governing institutions. 

Secretary of State Antony Blinken in a statement last week said the affected sectors include personal and commercial banking, infrastructure development and maintenance, commercial trade, safety and maintenance operations for transportation systems, and telecommunications and information transactions.

Afghanistan’s poverty rate in 2020 stood at nearly 50 percent while only 10 to 20 percent of Afghan adults had bank accounts, according to U.S. officials.  In addition, the financial sector is suffering – Afghanistan’s loan-to-GDP ratio stood around 3 percent – the lowest in the world, Biden administration officials said.

Meanwhile, the IMF has estimated that Afghanistan’s economy faces a contraction of up to 30 percent in the post-Taliban era.