‘Not His Money’: Biden Splits Afghanistan’s Reserves

U.S. President Joe Biden has decided to allocate half of the $7 billion in Afghanistan’s foreign reserves held in U.S. banks and claimed by American families of victims of terrorism to provide aid to the famine-wracked country, a controversial decision that has set off a firestorm of controversy among former Afghan officials and rights groups.

The money, which represents the lion’s share of Afghanistan’s foreign currency reserves, had been frozen since the fall of Kabul to the Taliban last August. While Biden had faced pressure from rights groups to unlock the money as the humanitarian situation in the country has become one of the worst in the world, the administration had held off, fearing such a move could be seen as a tacit recognition of the Taliban. 

Friday’s executive order blocks the property of Afghanistan’s central bank held in the United States, while the administration transfers it into a consolidated account in the Federal Reserve Bank of New York. But senior administration officials stressed that the $3.5 billion in aid might not show up in Afghanistan for months because the assets are subject to an ongoing court case put forward by families of the victims of the 9/11 attacks.

The decision drew criticism from both human rights groups and the families. Afghans and victims of terrorism each believe they are entitled to the whole pot of money. But a senior administration official told Foreign Policy in a written statement that without the White House’s action, the reserves were likely to be tied up in the courts for years. Last September, the 9/11 families secured a writ of attachment that could potentially give them a first shot at Afghan financial assets. The move, administration officials said, gives the United States “the best chance of more quickly freeing up a large portion for humanitarian support.”

“What we’re talking about today is a process step and a step in a process that might lead to the unlocking of these funds for the benefit of the Afghan people,” a second senior administration official, speaking on condition of anonymity, told reporters on Friday. “No funds are going to be transferred until the court makes a ruling.”

During that time, officials said, the Biden administration will look for a third-party trust fund that would be able to provide the money to the Afghan people while minimizing and ensuring any possible benefit to the Taliban government in Kabul, which the United States has refused to recognize. 

Officials justified the move as essentially splitting the difference between two competing imperatives: heeding the desire of the U.S. Congress to mitigate a growing humanitarian crisis while also helping American families get restitution for the deaths of their family members to terrorism. Officials also said that as much as 80 percent of Afghanistan’s foreign currency reserves came from foreign aid donations given to the former government deposed by the Taliban.

But stranded Afghan diplomats, former officials, and experts roundly condemned Biden’s move, which they said took away a chance to stabilize the freefalling Afghan economy and currency. The United Nations Development Programme recently projected that up to 97 percent of Afghans could fall below the poverty line by mid-2022. 

“This is the worst thing he could do right now,” Haroun Rahmini, an assistant professor of law at the American University of Afghanistan, said of Biden’s move in a text message. “It makes sure the Afghan economy has no chance of stabilizing, meaning its people will have to rely on the disappearing goodwill of the international community to feed themselves.”

Officials have highlighted that the United States has provided more than $500 million in aid to the Afghan people since August, including a new contribution of more than $300 million last month. But despite the looming crisis, there are fears that the Biden administration has moved on from Afghanistan, choosing instead to prioritize victims of terrorism. 

“This action can be interpreted as the Biden administration is done with Afghanistan as a state, at least for now,” said Nasir Andisha, Afghanistan’s ambassador and permanent representative to the United Nations in Geneva, who has continued to run the embassy under the guise of the former government despite the Taliban takeover.

Beyond that, some viewed the move as the United States taking away Afghanistan’s sovereign property.

“Theft,” one former senior Afghan official told Foreign Policy in a text message. “It’s not his money to give away.” Former Afghan President Hamid Karzai on Monday also called on American courts to reverse Biden’s move. 

The White House is also being criticized for using the 9/11 victims court case as a shield to protect itself from political blowback. The former Afghan official said Biden was playing politics by splitting the money between Afghans and American victims of terrorist attacks, as midterm elections in the United States loom on the horizon. “Biden made a political decision not to fight it,” the official said. “It’s an election year.”

Yet Naheed Farid, a former member of the Afghan parliament, said the move, while highly unusual with Afghanistan facing a looming humanitarian disaster, could help deny international legitimacy to the Taliban. “Acknowledging that this reserve belongs to the people of Afghanistan, now that the Taliban have no national legitimacy, they can no longer claim any ownership of it,” she said. 

And with the November midterm elections nearing, some aides believe that Biden is taking an approach that could parry criticism from both Democrats and Republicans on Capitol Hill. In an email sent to congressional staffers obtained by Foreign Policy, the White House said it aimed to heed Congress’s calls to deal with the humanitarian crisis while recognizing victims of terrorism. 

One congressional aide, speaking on condition of anonymity to comment candidly about internal deliberations, said that in order to oppose Biden’s executive order, members of Congress would have to choose between dismissing the requests of the 9/11 families, which would be an unpalatable political move, and helping Taliban-controlled Afghanistan. The move could fracture consensus among both Republicans and Democrats, the aide said. 

But with almost 23 million people—more than half of Afghanistan’s population—facing acute food insecurity, experts are worried that unless the reserves reach Afghan hands, the situation on the ground could get even worse. 

“I can’t understand why he would do such a thing,” said Rahmini, the Afghan professor. “It’s cruel, sets a bad legal precedent, and is extremely short-sighted.”

Update, Feb. 15, 2022: This story has been updated to provide additional context about the Biden administration’s decision from a senior administration official. It has also been updated to provide additional information about the reaction in Afghanistan.