Biden’s Decision on Frozen Funds Stokes Anger Among Afghans

KABUL, Afghanistan — Afghans said they were outraged by the Biden administration’s decision to divert billions in frozen assets from the Afghan central bank to American families of 9/11 victims, as Afghanistan hurtles deeper into economic catastrophe.

The move, which would effectively bankrupt the country’s central bank, adds to the growing animosity that many Afghans have felt toward the United States since the troop withdrawal that paved the way for the Taliban’s takeover of the country in August.

“It is a cruel act and a betrayal of the rights of the Afghan people,” Fazl Ahmad, a shopkeeper in Kabul, the capital, said on Saturday. “It is clear that the poor economic situation right now is due to the U.S. economic constraints on Afghanistan.”

After the Taliban seized power, the Biden administration froze the roughly $7 billion in central bank assets that the now-defunct Western-backed government had on deposit at the Federal Reserve Bank in New York, amid uncertainty over who — if anyone — now had the legal authority to gain access to the account.

On Friday, the Biden administration began a process aimed at letting relatives of victims of the Sept. 11, 2001, terrorist attacks who have legal claims against the Taliban pursue $3.5 billion of those assets. The Taliban sheltered Qaeda leaders who planned the Sept. 11 attacks during the Taliban’s previous rule of Afghanistan.

The White House said a roughly equal amount would be steered toward humanitarian aid for Afghanistan, which is facing one of the world’s worst humanitarian catastrophes. In a statement, it said the move was “designed to provide a path for the funds to reach the people of Afghanistan, while keeping them out of the hands of the Taliban and malicious actors.”

But for many Afghans, the decision to put half of the assets into American hands amplified frustrations about the stranglehold that the United States has had on the country’s financial system since it withdrew its troops.

For months, the Afghan economy has teetered on the brink of disaster. The millions of dollars in aid that propped up the Western-backed government is gone, and American sanctions have crippled the banking system and impeded humanitarian organizations’ ability to deliver aid.

As the humanitarian crisis has worsened, American officials have wrestled with difficult questions over how to meet their obligations to suffering Afghans without putting money in the hands of the Taliban.

But Afghans increasingly say that U.S. policies have done little to punish the Taliban, while taking a devastating toll on millions of ordinary people.

“Americans consider this punishing the Taliban, but it is punishing Afghans,” Mohammadullah Khan, 45, of Helmand Province said in response to the White House’s announcement on Friday.

Under the Western-backed government, Mr. Khan worked for an American-funded nonprofit organization in the southern province. But after the Taliban seized power, its funding disappeared — as did Mr. Khan’s job. Six months later, he is still unemployed and struggles to buy food for his wife and six children.

Mr. Khan is one of millions of Afghans with empty cupboards. Three-quarters of Afghanistan’s population has plunged into acute poverty, with 4.7 million people likely to suffer severe malnutrition this year, according to the United Nations.

“Life is getting worse day by day,” said Haji Abdul Nafi, 40, a shopkeeper in the city of Kandahar. “We cannot earn money for a living, we cannot do business with other countries, we cannot import and export goods — we are almost cut off from the world.”

Mr. Nafi said he was dismayed by the United States’ announcement on Friday. If American officials worried that releasing the funds to the central bank would result in the Taliban enriching themselves, then the assets should have remained frozen rather than being reallocated, he said.

“This is our money — this does not belong to the Taliban,” Mr. Nafi said. Giving billions of it to families of 9/11 victims would “break the hearts of millions of ordinary people in Afghanistan,” he said.

On Saturday, the Afghan central bank — known as Da Afghanistan Bank — demanded in a statement that the Biden administration reverse its decision. Some Taliban officials went further in condemning the move.

“The money frozen by the United States is the right of the Afghan people, and we will fight to get that right just like we did over the past 20 years,” the police spokesman for Kabul, Khalid Zadran, said on Twitter.

The White House’s decision drew criticism from human rights groups, lawyers and financial experts who warned that the move could gut the country’s central bank for years to come, crippling its ability to establish monetary policy and manage the country’s balance of payments.

Experts also said that the $3.5 billion set aside for humanitarian assistance would do little good unless the United States lifted restrictions on the Afghan banking system that have obstructed the flow of aid into the country.

“The decision would create a problematic precedent for commandeering sovereign wealth and do little to address underlying factors driving Afghanistan’s massive humanitarian crisis,” John Sifton, the Asia advocacy director at Human Rights Watch, said in a statement.

Experts also caution that aid can go only so far to revive an economy in collapse.

At his office in Mandawi Bazaar, one of the oldest marketplaces in Kabul, Aqa Gul expressed dismay on Saturday. The owner of an import-export company, he said his business had been crippled by the banking system’s collapse, which he blamed on American policies.

“The people of Afghanistan are already in a very bad economic situation,” he said. “If the United States gives Afghanistan’s assets to others, the economy will only get worse.”

Christina Goldbaum and Safiullah Padshah reported from Kabul, and Taimoor Shah from Kandahar, Afghanistan. Yaqoob Akbary contributed reporting from Kabul.