US and IEA make progress on Afghan reserves

US and Islamic Emirate of Afghanistan (IEA) officials have exchanged proposals for the release of billions of dollars from Afghan central bank reserves held abroad into a trust fund, three sources familiar with the talks told Reuters.

Significant differences between the sides remain, however, according to two of the sources, including the IEA’s refusal to replace the bank’s top political appointees, one of whom is under US sanctions as are several of the movement’s leaders.

Some experts said such a move would help restore confidence in the institution by insulating it from interference by the IEA that took power a year ago but which foreign governments do not recognise.

While the IEA do not reject the concept of a trust fund, they oppose a US proposal for third-party control of the fund that would hold and disburse returned reserves, said an IEA source who spoke on condition of anonymity, Reuters reported.

The United States has been in talks with Switzerland and other parties on the creation of a mechanism that would include the trust fund, disbursements from which would be decided with the help of an international board, according to a US source who also declined to be named.

A possible model could be the Afghanistan Reconstruction Trust Fund, a World Bank-administered fund created to get donations of foreign development assistance to Kabul, the US source added.

“No agreement has been reached yet,” said Shah Mehrabi, an Afghan-American economics professor who is on the Afghan central bank’s supreme council, Reuters reported.

Some $9 billion in reserves have been held outside Afghanistan, including $7 billion in the US.