Economists urge US to return Afghanistan’s frozen assets

Several dozen prominent U.S. and international economists on Wednesday called on the United States to hand over $7 billion in central bank reserves to Afghanistan, which were frozen when the Taliban took control of the country nearly a year ago.

“We are deeply concerned by the mounting economic and humanitarian disasters unfolding in Afghanistan, and particularly the role of US policy in driving them,” 71 economists and development experts said in a letter to US President Joe Biden and the US – Treasury Secretary Janet Yellen.

“Without access to its foreign exchange reserves, the central bank of Afghanistan cannot carry out its normal, essential functions,” they wrote.

“Without a functioning central bank, Afghanistan’s economy has predictably collapsed.”

Signatories included Nobel laureate in economics Joseph Stiglitz and Yanis Varoufakis, who was Greece’s finance minister when the country was negotiating with creditors after the 2008 economic collapse.

In the letter, they argued the United States could not justify holding onto the reserves it froze in American banks when the former Washington-backed government in Kabul fell to the Islamist Taliban in August 2021.

The economists said the collapse in economic activity and drastic cuts in foreign aid by the country’s former supporters after the US military pulled out sent Afghanistan’s economy into a tailspin.

“Seventy percent of Afghan households are unable to meet their basic needs,” they write. “Some 22.8 million people – more than half the population – are acutely food insecure, and three million children are at risk of malnutrition.”

This is made worse by the United States’ refusal to return to the Afghan central bank the $7 billion in foreign exchange reserves as well as $2 billion blocked by Britain, Germany and the United Arab Emirates, they said.

“These reserves have been critical to the functioning of the Afghan economy, particularly to manage the money supply, stabilize the currency and pay for the imports — mainly food and oil — on which Afghanistan depends,” they wrote.

The economists said a recent US offer to give the Taliban access to half the money by setting up a trust with international supervision was not enough.

“Actually, the full $7 billion belongs to the Afghan people,” they said.

“Returning less than full amount undermines the recovery of a devastated economy.”