Biden Hurting Afghanistan’s Poor by Blocking Reserves, Official Says
(Bloomberg) -- The Biden administration’s move to freeze Afghan government reserves held in U.S. accounts last month would dry up liquidity, force banks to close and push the country into further poverty, an Afghanistan central bank official said.
Shah Mehrabi, a senior board member of Da Afghanistan Bank, has been lobbying members of U.S. Congress and policy makers for a “conditional release” of these funds amounting to about $9.4 billion. Mehrabi, who lives in the U.S. and has been a board member since 2002, said talks have been productive although he declined to provide further details.
“President Biden is not hurting the Taliban or the current regime,” Mehrabi said in an interview with Bloomberg News. “This is really hurting everyday Afghans and they will push them into further poverty.”
With no access to reserves, Afghanistan is likely to face a liquidity crisis with banks forced to close, said Mehrabi, who is an economics professor at Montgomery College in Maryland. This in turn will affect private companies, which won’t have access to their bank deposits, and severely impact an economy that depends on imports for virtually all its needs.
Mehrabi, who doesn’t represent the Taliban but has advised previous governments, is one of several Afghan central bank board members who live outside the country. The Taliban has since named the leader of their economic commission as the acting central bank governor last month. No plans on the financial system have been disclosed, although the Taliban have negotiated with banks to stay operational.
This week, the Taliban unveiled a new cabinet and appointed a little-known official as the acting finance minister. They also named Din Mohammad Hanif, who was a member of the Taliban’s negotiating team in Qatar, as acting economy minister.
Mehrabi said he proposed that the U.S. release up to $150 million a week so that the central bank can carry out money market auctions to boost liquidity and curb soaring inflation. Since the Taliban took over, Afghanistan’s currency has depreciated 10% to 15% and prices have jumped 20%-25%, he said.
The U.S. was able to work with the Taliban over evacuation plans when their troops withdrew from Afghanistan, and they could do the same over the reserves, Mehrabi said. “Their biggest concern is mostly political, not economical,” in releasing the funds.
Since Biden’s administration also negotiated with the Taliban on how to target other militant groups in Afghanistan like ISIS-K, then “why couldn’t they negotiate with this particular process of releasing funds?” Mehrabi asked.
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