IEA slams Washington’s Afghan Fund move, says it’s an ‘illegal venture’

Afghanistan’s Ministry of Foreign Affairs on Saturday said the United States’ decision to transfer $3.5 billion of the country’s frozen foreign reserves to a Swiss fund without any input from the Islamic Emirate of Afghanistan (IEA) was unacceptable and a violation of international norms.

In a statement issued by the ministry, it said: “The Islamic Emirate, as an accountable government to its people, expresses its explicit opposition to the specific iteration of this mechanism.

The foreign ministry said if the reserves are disbursed without taking into consideration legitimate demands of the Afghans, the Islamic Emirate “will be forced to impose fines against, and ban activities of, all individuals, institutions and companies that facilitate this illegal venture and seek to misuse Central Bank reserves for humanitarian and other purposes.

“The reserves of the Central Bank, like those of other states, are used for currency stabilization, strengthening financial systems and facilitating international transactions. These reserves can never be used for any disbursement purposes.

“Disbursing these reserves for other purposes without the express agreement of the Afghan people is a negative step against Afghan economic stability taken by the United States,” the statement read.

The ministry said Washington had taken this step without finalizing negotiations or reaching an agreement with the IEA, “showing ill faith to undermine economic stability and well-being of the Afghans.”

According to the ministry, “despite commitments to and compliance with international financial practices by the Central Bank of Afghanistan, a decision has been made to forcibly transfer the wealth of the Afghan people to another country.

“We therefore call on all individuals and sides to condemn this illegal and oppressive action and support the Afghan people on this issue. Through this statement, we would like to present our objection to the countries and institutions involved in this issue and we will continue to monitor the situation through diplomatic channels.”

The ministry stated that “the principle causes of the humanitarian crisis in Afghanistan are the twenty-year American war, endemic corruption by the US-backed administration, and, following the change in government, the imposition of sanctions against Afghanistan and its banking sector, which has prevented investors benefiting from newly created economic opportunities.”

“We again urge the United States of America to unfreeze the reserves and lift restrictions on financial systems of the Afghan people so that they may have access to banking systems and stabilize their economy,” the statement read.

On Wednesday, the US State Department announced that Washington, in coordination with international partners including the Government of Switzerland and Afghan economic experts, has established the Afghan Fund, which will see the money transferred to a Swiss bank.

On Thursday, DAB issued a statement asking for the decision to be reconsidered.

In a press briefing on Wednesday night, State Department spokesman Ned Price said: “Today, the Department of State and the Department of the Treasury, in coordination with international partners including the Government of Switzerland and Afghan economic experts, announced the establishment of a fund to benefit the people of Afghanistan.”

“This fund will protect and preserve the Afghan central bank reserves, while making targeted disbursements to help stabilize Afghanistan’s economy and, ultimately, support its people and work to alleviate the worst effects of the humanitarian crisis,” he said.

He stated the Islamic Emirate of Afghanistan (IEA) is “not a part of this financing mechanism and resources disbursed will be for the benefit of the Afghan people, with clear safeguards and auditing in place to protect against diversion or misuse.”

He said however that the Afghan Fund is “explicitly not intended to make humanitarian disbursements. The Afghan Fund itself is to facilitate macroeconomic stability inside Afghanistan.”

“This is not what that fund is for. This fund is to provide macroeconomic stability in Afghanistan that will enhance the effectiveness of humanitarian assistance from the United States and other donors.”