Draghi Aims to Help UN Find a Way to Channel Aid to Afghanistan

01 Nov 2021, 11:08 AM IST

(Bloomberg) -- Italian Prime Minister Mario Draghi will assist the United Nations in setting up a system to route aid payments to Afghanistan, people familiar with the matter said.

UN Secretary General Antonio Guterres made the request on the sidelines of a Group of 20 summit in Rome, the people said, asking not to be named discussing confidential deliberations. Draghi was chosen because of his financial experience, which includes eight years at the head of the European Central Bank, according to the people.

The world’s wealthy economies decided to channel aid through the UN at an extraordinary summit convened by Draghi earlier this month. But just how to do it remains problematic in the face of the U.S.’s reluctance to offer any direct support to the ruling Taliban government.

Half of Afghanistan’s population was already reliant on aid before the Taliban took power in August, and the situation has only gotten worse. Since then, with the militant group officially labeled a terrorist organization, Afghanistan hasn’t been given access to the country’s central bank reserves and is effectively shut out of the international financial system.

Responding to Guterres’s request, Draghi suggested creating a task force of international experts from Europe, the U.S. and the rest of the world, according to the people. He also made it clear that channeling aid to the Afghan population wouldn’t amount to recognition of the Taliban regime.

To solve the Afghan issue, Draghi can leverage Europe’s experience in building a payment system from scratch for the euro. But it can also draw on European attempts to sidestep U.S. sanctions against Iran in recent years, which saw Draghi’s ECB potentially playing a role.

The fragile state of Afghanistan’s economy has raised fresh concerns about a potential mass exodus of refugees toward Europe that could potentially destabilize the continent’s governments.