Biden will split frozen assets between 9/11 victims, Afghan aid

$7 billion in Afghan foreign reserves currently being held in the Federal Reserve Bank of New York

Biden walks across the South Lawn after returning to the White House on Marine One on Thursday. (Anna Moneymaker/Getty Images)
Biden walks across the South Lawn after returning to the White House on Marine One on Thursday. (Anna Moneymaker/Getty Images)
Posted February 11, 2022 at 3:24pm

President Joe Biden signed an executive order Friday kick-starting a legal process for dividing billions of dollars in frozen Afghan foreign reserves between victims of the Sept. 11 terrorist attacks and the deepening humanitarian crisis in Taliban-controlled Afghanistan.

When the hard-line group seized control of Afghanistan last August, the Biden administration quickly froze access to $7 billion of the former Kabul central government’s foreign reserves being held at the Federal Reserve Bank of New York. Since then, the Taliban have fruitlessly been demanding access to the funds.

Under national security authorities provided to the president, the new executive order will block Taliban access to the funds in New York and direct that the monies be transferred to a new account within the Federal Reserve.

Half of the funds will be kept back for eventual distribution to the families of victims of terrorist attacks that have outstanding legal judgments against al-Qaida and its Taliban allies, according to a senior administration official who briefed reporters Friday on a background press call.

The other $3.5 billion will be put in a trust fund “for the benefit of the Afghan people,” the modalities, governance structure and uses of which are still being worked out, the official said, adding it will be “several months” before those funds are released for humanitarian purposes.

“This has been quite a legally complicated road,” the official said, discussing the Biden administration’s efforts since August to determine which parties have legitimate ownership claims to the funds and how to limit any benefits to the Taliban that would come from release of the frozen reserves.

Many Democrats, including Senate Foreign Relations Middle East subcommittee Chairman Christopher S. Murphy of Connecticut and Reps. Jason Crow of Colorado and Tom Malinowski of New Jersey, joined by a few Republicans, such as Rep. Peter Meijer of Michigan, have called in recent weeks for the Biden administration to divvy up access to the $7 billion in frozen reserves between Afghan humanitarian needs and legal judgments for terrorism victims.

“This approach heeds bipartisan calls from Congress to use the reserves to mitigate the serious and ongoing crisis in Afghanistan” while also recognizing ongoing efforts by victims and their families of the Sept. 11 attacks to pursue their legal judgments in court, the official said.

In addition to the $7 billion in Afghan Central Bank assets held in the United States, another roughly $2 billion in Afghan foreign reserves is held frozen in Germany, Switzerland, the United Arab Emirates and elsewhere. Those governments have yet to take steps to begin releasing the funds in support of the Afghan people, in part, said a second senior administration official briefing reporters, because of legal claims in their own countries against the frozen funds that still must be resolved.

Some outside experts argue that no amount of foreign aid injected into Afghanistan will be enough to slow the economic spiral that has plunged the country into the world’s severest ongoing humanitarian crisis.

Many of the deeper structural problems plaguing Afghanistan’s economy can be attributed not only to the Taliban’s internationally toxic brand but also to sanctions on the group imposed by the United States and the United Nations, which have caused foreign businesses to cut off many of their commercial transactions with the import-dependent country.

“Freeing up $3.5 billion of Afghanistan’s reserves to meet urgent humanitarian needs is welcome, but this crisis cannot be solved without action to ease the international constraints imposed on Afghanistan’s economy and banking system,” Masood Ahmed, a former director of the International Monetary Fund’s Middle East and Central Asia Department and the current president of the left-leaning Center for Global Development think tank, said in a statement.