US battles Taliban sanctions as Afghan crisis looms

WASHINGTON – The US war in Afghanistan is over, but the fight for the finances of the Taliban has only just begun.

The fate of billions of dollars in international reserves and foreign aid represents its own set of politically and legally burdensome decisions as the world faces what Afghanistan will look like under the Taliban. The stakes are extraordinarily high, as millions of Afghans risk becoming collateral damage from a strangulation of sanctions against the Taliban that remain in place, threatening to sink an economy the United States has spent two decades trying to crack. to support.

With a humanitarian crisis looming, the Biden administration is examining how to adapt this network of sanctions so that aid can continue to reach the Afghan people. The challenge is how to let donor money continue to flow without further enriching the Taliban, whom the United States considers a terrorist organization. Experts say such a situation, in which a group deemed to be terrorists takes control of an entire country, is unprecedented and poses a complex test for the United States’ sanctions program.

“It’s a new world,” said Adam M. Smith, a senior sanctions official in the Obama administration’s Treasury Department. “I see no case in which an already designated terrorist group has become the ruling power of a country in its own right. “

He explained that the Treasury Department is soon to decide what exceptions, or licenses, it will grant for certain types of transactions. He also needs to determine whether all of Afghanistan, or just the Taliban leadership, remains under sanctions so the world will know how to engage with the government.

“We have to find a way to encourage goods and services in Afghanistan, otherwise you are going to have 30 million Afghans with collateral consequences here and it will be a disaster,” Smith said.

As the Taliban rose to power last month, the United States moved quickly to retain as much influence as possible. He blocked his access to $ 9.5 billion in international reserve funds and pressured the International Monetary Fund to suspend the distribution of more than $ 400 million in foreign exchange reserves.

A Treasury Department official said the United States will not ease the pressure of sanctions on Taliban leaders or severe restrictions on their access to the international financial system. The militant group continues to be classified as a specially designated global terrorist group, and it is also subject to United Nations sanctions, which the United States and other countries must enforce.

But a willingness to show some flexibility is already being felt. Last week, the Treasury Department told aid organizations that it was taking steps to allow relief work to continue for the Afghan people. On August 25, the agency issued a specific license, similar to the one it issued in places like Syria and Venezuela, to allow the delivery of food, shelter, medicine and medical services to Afghanistan. .

There are also signs that financial flows to the country, which have been interrupted for the past two weeks, are resuming.

Financial institutions in the United States are waiting for the Biden administration to clarify whether ownership of Afghanistan is considered Taliban property, banking officials said. Banks fear violating US sanctions if they facilitate transactions with the country.

But Western Union said on Thursday it would resume money transfer services in Afghanistan so customers can send money to loved ones and waive the fee for transferring money into the country for two weeks. . A spokeswoman for the company said it made the move after the U.S. government said remittances to Afghanistan were allowed.

A Treasury Department official confirmed that the agency had contacted financial institutions to make it known that personal remittances were allowed.

The Treasury Department has experience in trying to allow aid to reach populations that are ruled by hostile governments and has issued licenses for humanitarian aid to arrive in such places. In June, it issued clearances to ship supplies to fight the coronavirus to Iran, Syria and Venezuela.

A terrorist group presents its own challenges, however, and keeping aid money out of the hands of the Taliban will not be easy, especially if they control the country. The group is known to plunder the wealth of Afghan citizens with exorbitant taxes, and an influx of food or medicine from abroad would be an opportunity to grab them and sell them for fundraising. Harsh penalties could also force the Taliban to rely even more on illicit finance and the drug trade, despite their public disavowal of such practices.

“There must be greater engagement in the fight against money laundering and terrorist financing due to the increased risk posed by the Taliban takeover,” said Alex Zerden, Treasury Department financial attaché at the United States Embassy in Kabul from 2018 to 2019..

The complexity of dealing with the situation in Afghanistan comes as the Treasury Department conducts a broader review of its sanctions program. Critics criticized the previous administration for imposing random sanctions, often undermining their effectiveness. The Biden administration has said it is not conducting an intelligence review on specific sanctions, but rather is focusing on ways to modernize the practice so that it is more effective.

The Treasury Department has not proposed any timeline for this review. It comes as Senate Republicans blocked two of President Biden’s nominations for key Treasury Department sanctions roles, Brian E. Nelson and Elizabeth Rosenberg. While the Biden administration has been less vocal than the Trump administration about its use of sanctions, it is still set to make around 1,000 designations this year, according to law firm Gibson, Dunn & Crutcher.

Any easing of sanctions for the Taliban could come at a political price.

Senators Marco Rubio of Florida and Rob Portman of Ohio, both Republicans, on Monday urged Treasury Secretary Janet L. Yellen to protect the Taliban from all internationally held assets belonging to Afghanistan.

“The Taliban are sponsors of terrorism with close ties to Al Qaeda, so they cannot be trusted to distribute money to the Afghan people who desperately need it, and will instead use all funds.” to actively advance priorities hostile to US interests, ” they wrote in a letter. “We can and must work for alternative means to support the Afghan people, but we cannot allow any resources to be used to strengthen an oppressive Taliban regime. “

Khalid Payenda, who resigned as Afghan finance minister last month, told an event at Georgetown University’s School of Foreign Service on Thursday that the Taliban appeared to be struggling to revive financial operations government and the country would soon run out of money. He said the world must find ways to provide economic support to the Afghan people without giving money to the Taliban and that sanctions must be maintained as leverage.

“I think giving full access to the reserves would be catastrophic,” Payenda said, accusing the Taliban of still having ties to Al Qaeda. “The Taliban know they cannot run a government without the finance and technical assistance that comes from other countries. “

The White House made it clear this week that it would not let go of any economic leverage on the Taliban prematurely. Officials in the Biden administration have insisted that such leverage would be important to ensure that the Taliban live up to their commitments to let Americans, permanent residents and Afghan citizens with special immigrant visas leave the country. country.

“When we talk about the Afghan reserves, the access of the Afghans to the banking system, the access of the Afghans to any kind of fundamental operation of the economy, think of the fact that the United States has been essentially the custodians of it. over the past 20 years, “Jake Sullivan, the White House’s national security adviser, told CNN.

Arguing that the Taliban now have a degree of dependence on the United States, he added: “They understand how much their ability to provide anything to their citizens in the direction of a functional economy rests. on the international community. It is based on the United States.