Asset freeze, Sanctions and Humanitarian Disaster: How the World Should Handle the Taliban Regime

Foreign aid only cannot rebuild Afghan society and aid workers cannot sustain 40 million Afghans unless and until there is an internal viable system.
Keywords: Taliban, Afghanistan, Society, US, Negotiations, Conflict, Humanitarian, Disaster, Sanctions, Rules, Assets, Security Council
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It is interesting to note the fact that there were no United States’ sanctions against the Taliban regime during September 1996 upto July 1999 when the group was ruling most part of Afghanistan. There have been numerous instances of negotiations between the US and the Taliban during this period. The Taliban used to negotiate with the United Nations as well during their previous rule. In January 1997, Taliban Foreign Minister Mullah Wakil Ahmad Muttawakil visited New York to press before the UN Secretary General to give the UN seat to the Taliban. On 15 May 1998, Taliban signed a Memorandum of Understanding with the UN regarding (a) the issue of privileges and immunities/security of UN staff, (b) the Mahram edict (female staff unaccompanied by a Mahram, i.e. a close male relative, such as a husband, brother or father) and (c) equal access to education and health care for Afghan girls and women.

When al Qaeda bombed US embassies in Nairobi and Dar es Salaam on 7 August 1998, the US retaliated by launching Tomahawk missiles at sites in Afghanistan and Sudan. The 1998 bombings led to the imposition of the first ever sanctions against the Taliban. President Bill Clinton signed the Executive Order 13129 on 4 July 1999, “Blocking Property and Prohibiting Transactions with the Taliban”. The Order blocks all property subject to U.S. jurisdiction in which there is any interest of the Taliban.

The Security Council imposed similar sanctions against the Taliban on 15 October 1999 by adopting resolution 1267 (1999). The US and UN sanctions primarily targeted the freezing of Taliban’s assets. The Taliban as a group was not added to the sanctions list because at that time no such list existed. Resolution 1267 provided the legal basis to form a sanction committee and prepare a sanctions list. It was only on 17 June 2011 that the UN sanctions separated the Taliban (UNSCR 1988) from Al Qaeda (UNSCR 1989). President George Bush issued Executive Order 13224 on 23 September 2001, as a response to the 9/11 attacks, which has been renewed every year without fail.

In this background, human right activists and NGOs are pitching for lifting of sanctions against Taliban (i.e., renouncing asset freeze and reopening of bank transactions), facing the new situation that Taliban have taken Kabul and are struggling to maintain peace and survival of ordinary Afghans. They argue that lifting sanctions is not the same thing as recognizing the Taliban regime.

However, these are saner voices with a humane heart. I agree with this philosophy of cooperating with the Taliban irrespective of recognition. Unfreezing assets is part of this broad humanitarian consideration and it is much easier to advocate unfreezing of the Afghan government’s assets. 

But when one sees the issue from a micro perspective, it looks different and dangerous. Afghanistan’s takeover by the Taliban was neither democratic, nor negotiated and never inclusive. It was based on force majeure. Therefore, any asset that may come under their control may not be used for the development of the country but for the benefit of a few concerned persons.

Since the Taliban is a militia force, it does not recognize government servants nor accept the legitimacy of personnel loosely employed by the group. In that case paying salary or asset distribution in the society is lopsided and depends on the wish and will of the dispensers. So even if the Taliban are capable of paying salaries, the same may not reach all who are in service but only the selected ones as decided by the Taliban.

The other problems are – lack of institutional mechanisms to handle money. Various ministries work independently and they have their own revenue collection mechanisms and their own budgets. So, there is no synchronism or conformity to uniform law on financial transactions. The Taliban are also divided among themselves. Some of them are still on the US and UN list of prohibited persons. If they got the money, it is natural to believe that they may not use it for the benefit of their country but for their personal interests.

Finally, what about the Afghan masses? The masses are suffering because of the Taliban’s victory although they also suffered under the previous regime. Since the Taliban are not trustworthy and adhere to no rule except the ones created and interpreted by themselves, the economic opportunities in the country immediately evaporated. All banks closed, all small business units stopped functioning, all embassies (except a few) closed, all developmental programmes stopped, aid flow into the country ceased, transport business (Air and Road and also operations from Chabahar port) stopped and all the local business as well as agricultural enterprises were threatened.

All these led to huge job losses and vanishing of assets from the country. The economy collapsed because of a lack of a viable government or practical rule. Therefore, the Afghan masses, who were employed in various establishments as well as creating wealth for the country left to fend for themselves. The lucky ones left the country along with their foreign backers, those who emigrated long before the mayhem intensified and others moved in search of a livelihood to neighbouring countries.

However, the majority still live in the country and face the brunt of economic collapse and devastation. Under such circumstances, it is unrealistic to hope that the masses of the country can be fed simply by releasing frozen assets. Even if the frozen assets, which amount to $9.5 billion are released, not all those businesses will return to Afghanistan. Unemployment and the predicament of the country’s economy will remain the same. Foreign supplied food programmes or aid can barely meet the need.

And then when we think about the frozen foreign assets there is another story where the devil is in the details. The most recent financial statement of the Afghan Federal Bank known as Da Afghan Bank (DAB) shows that it holds total assets of about $10 billions, including $1.3 billion-worth of gold reserves and $362 million in foreign currency cash reserves, based on currency conversion rates on 21 June 2021, the date of the report. It parked its assets at the Federal Reserve Bank of New York (FRBNY). DAB’s statement confirms that gold bars worth $1.32 billion are held at the FRBNY. The DAB also revealed that the bank owned investments worth $6.1 billion, the majority of which were in the form of U.S. Treasury bonds and bills. DAB possesses shares as investment at the Switzerland based Bank for International Settlements and also at the Turkey based Economic Cooperation Organisation Trade and Development Bank. DAB’s cash holdings worth $362 million and gold bars and silver coins worth $160 million, which were held at the Arg Palace, have already gone to the Taliban.

Despite the asset freeze, on 28 October 2021, the Department of State stated that the US has announced nearly $144 million in humanitarian assistance in Afghanistan and for Afghan refugees. In total, the aid programme amounts to $474 million in 2021, the largest amount of assistance from any nation.  And since the US cannot run its own assistance programme, it has been doing so through other UN bodies.

Foreign aid only cannot rebuild Afghan society and aid workers cannot sustain 40 million Afghans unless and until there is an internal viable system. Aid workers can only address parts of the problems and can mitigate a fraction of the difficulties faced by Afghans. Take for example the aid from India. Nearly 8 million Afghan children used to receive protein-rich biscuits from India in Afghan schools. India did not stop the aid but the Taliban takeover of the Arg Palace in Kabul snapped Indo-Afghan ties. Logistics have been disturbed and viable workable conditions vanished. The US asset freeze has nothing to do with these unfortunate developments. Schools were closed because of the new rule, new mandate and negligence of the sector by the Taliban apart from economic considerations. Even if the US releases all the frozen money, that will not ensure the smooth functioning of schools.

The world has already heard the eloquent but shocking advocacy of Imran Khan in Islamabad during the OIC conference in which he argued that denying education to girls is part of Afghan culture. So even if asset freeze is relaxed and recognition provided to the Taliban, Afghanistan’s girls education will never be taken seriously, women will never be able to walk alone without a male companion and without a veil. The banking system will continue to be dominated by untrained Taliban and production will not take root in the country.

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Dr Saroj Kumar Rath

Dr Saroj Kumar Rath teaches at the University of Delhi.

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