How to help Afghans without aiding the Taliban

In Taliban-controlled Afghanistan, aid groups are overwhelmed by the starving. The United Nations warns that more than half of Afghanistan’s population won’t be able to get enough food this winter. It’s not a shortage of food that is the biggest problem. It’s actually the loss of Western cash, which was once the mainstay of Afghanistan’s economy.

As fears of a humanitarian disaster mount, the West faces a desperate dilemma: Can it help Afghans without aiding the Taliban?

The answer depends on your definition of “aid.” But a range of creative solutions are circulating — with some already being put to use — that could begin to address warnings from relief agencies that Western sanctions on the Taliban are hurting the Afghan people.

Since the fall of Kabul in August, the Taliban — unrecognized and under sanctions by the United States and European Union — have been barred from accessing $10 billion in Afghan government funds, mostly frozen in the U.S. Federal Reserve. The flow of foreign assistance, which used to be sufficient to pay the bulk of public spendings, has slowed down to a trickle.

The result is a convergence of financial woes that take the troubles of a poverty-stricken, war-torn country, mixes them with the hardships faced by U.S.-sanctioned states like Iran and Venezuela, then piles on the dire experience of a nation like Argentina during its catastrophic debt default and banking crisis. The Taliban are deprived of foreign financing, so they cannot pay their salaries. This leaves families without food. Taliban-controlled Afghanistan’s Central Bank is cut off from international banks and cannot supply enough money to local banks. This, in turn, makes it impossible for them to fund individuals and businesses. The broader private banking system is so starved of cash that even Afghans who have savings are waiting hours in line for minimal withdrawals.

“We have to figure out, are we really willing to see the government of Afghanistan devolve and crash by cutting off money?” Sean Callahan, chief executive of Catholic Relief Services, told me. “How many more people does that throw into need?”

For the Afghan people, a solution is urgent. As my colleague Pam Constable reported, the Taliban have scant resources to protect millions of vulnerable people against another harsh winter. There is a greater chance of a humanitarian catastrophe if many are faced with difficult choices between fuel and food.

That disaster, for the most part, is man-made. Before the Taliban took over, many Afghans struggled. But 80 percent of Afghanistan’s budget depended on overseas funding. Constable stated that a “large, newly poor urban working class” was formed after the flow of foreign funding had been cut off.

“Everywhere we go, we find thousands more people who need help,” Babar Baloch, a spokesman for the Office of the U.N. High Commissioner for Refugees in Geneva, told Constable.

The Biden administration, as my colleague Karen DeYoung reported, has joined much of the world in saying that the Taliban cannot be recognized unless it ensures the human and civil rights of all Afghans, including minorities and women, and breaks ties with terrorist organizations such as al-Qaeda. The U.S. Treasury issued limited licenses to allow humanitarian aid, which included hundreds of millions from Washington. Last month, U.S. Treasury expanded definitions of humanitarian aid under pressure from U.S. legislators and aid groups.

Callahan and others say new exemptions have helped, but not nearly enough. For example, they have allowed Catholic Relief Services to increase aid operations, including paying teachers, without worrying about being in violation of U.S. sanction. They have not solved the larger problem of getting money to Afghanistan from abroad and moving it about the country.

Many large banks remain too wary of Washington’s sanctions regime to handle transactions to Afghanistan, aid groups say. Many charities have had to resort to expensive and cumbersome systems to get funds in Afghanistan. This is a way that few people see as an effective solution to the humanitarian crisis.

Even with the administration’s new exemptions, “we’re not getting a lot of assistance from the banks,” Callahan said. “Money transfers continue to be a challenge.”

A senior U.S. Treasury official told me that the department had not levied specific sanctions on Afghanistan’s central bank and was actively reviewing options for addressing the country’s cash crunch. There are still challenges.

He blamed the hesitancy of foreign banks to do business with the central bank on their own internal risk calculations, including the lack of a recognized government and fears that deposits could be diverted to criminal activities including terrorism. In addition, he said, litigation from 9/11 families has tied up the more than $7 billion frozen by the New York Federal Reserve following the fall of Kabul, complicating any possible release of funds.

Even if the United States was to consider unfreezing those funds, technical questions, he said, would need to be addressed — including who could legally ask for them in a Taliban government unrecognized by Washington.

Yet observers say there are plenty of options that could help, and there are signs the Biden administration is moving in that direction after sharp criticism in recent months of not doing enough to address the humanitarian crisis.

The Post’s David Ignatius on Tuesday reported that Secretary of State Antony Blinken had backed a plan to ease Afghanistan’s liquidity crisis through a new World Bank “humanitarian exchange facility.” The facility would allow donors to convert their dollars and euros into the local currency to pay doctors, nurses and other aid workers. The facility is likely to begin operating in mid-February and is expected to send $20 million to $40 million into the country each month.

The State Department, he reported, has also encouraged the World Bank to make money available from a $1.5 billion Afghanistan Reconstruction Trust Fund, with an initial payment of about $280 million released in recent weeks and hundreds of millions more in the pipeline. The administration is additionally “encouraging a cash infusion program” that would ship between $120 million to $150 million a month to ease Afghanistan’s liquidity crisis through a financial services company based in Europe.

More radical steps have also been floated, some of which either the Taliban or Washington could oppose. Alex Zerden is an ex-Treasury official who argues that the Afghan central bank should be privatized to facilitate large transfer and protect them against Taliban looting. The core functions of the central bank — including the auctioning of dollars to local banks — can be transferred to private banks, with approval and monitoring by the United States.

Shah Mehrabi, a member of the Afghan central bank’s governing board and an economics professor at Montgomery College in Maryland, has floated the idea of tapping frozen Afghan government assets overseas for small monthly transfers to the central bank, solely for purpose of auctioning off dollars to private banks, according to the New York Times editorial board. He argues that such auctions are simple to track and can be stopped if money is misused.

Since the U.S.-based funds are caught up in litigation, the Times points to the $2.5 billion worth of Afghan central bank reserves in Europe as an alternative source.

Less radical solutions could help, too. Human Rights Watch, aid groups and other organizations suggest that U.S. Treasury drafts letters to large foreign banks, stating explicitly that wire transfers are not allowed. Amanda Catanzano (a senior official of the International Rescue Committee) outlined a range of solutions including U.N. sanctioned currency Swaps, jump-starting banking systems by defrosting foreign assets owned by certain Afghan corporations and individuals, and not just the government.

“The idea that Washington can’t do more is disingenuous,” John Sifton, Asia Advocacy Director at Human Rights Watch, told me. “There’s a lot they can do that they’re not doing now.”

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