President Joe Biden on Friday issued an executive order to transfer the $7 billion in Afghan central bank assets frozen in the U.S. so they can be used to compensate victims of the Sept. 11 terrorist attacks and support aid efforts in Afghanistan.
The order directs U.S. financial institutions to move Afghan central bank funds into a consolidated account held at the Federal Reserve Bank of New York, with the U.S. seeking to tap $3.5 billion for assistance to the Afghan people.
The other $3.5 billion will remain in the U.S., pending ongoing litigation brought by the victims of the Sept. 11 attacks.
“This is one step forward in the United States’ effort to authorize the transfer of a significant portion of the funds to meet the needs of the Afghan people,” the White House said in a fact sheet, adding that the order “is 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.”
Taliban officials had sought access to the funds after seizing control of Afghanistan last year, but existing counterterrorism sanctions make financial transactions with the political movement illegal.
Earlier this month, the Treasury Department said that international banks were allowed to transfer money to Afghanistan for humanitarian purposes, despite those sanctions. The U.S. also detailed how nongovernmental organizations could pay teachers or healthcare workers employed by the Afghanistan government without violating the law.
In the wake of its withdrawal from Afghanistan in August, the U.S. has been working with the United Nations to ensure aid groups have the necessary liquidity to provide humanitarian assistance to the Afghan people.
Late last month, United Nations Secretary-General Antonio Guterres said the nation was “hanging by a thread” and called on countries to suspend rules blocking aid operations.
“We need to give financial institutions and commercial partners legal assurance that they can work with humanitarian operators without fear of breaching sanctions,” Guterres told the U.N. Security Council.
The U.S. in August froze nearly $9.5 billion in assets belonging to the Afghan central bank and stopped shipments of cash to the nation. Besides the just over $7 billion in reserves held in the United States, the rest are largely in the U.K., Germany, Switzerland, and the United Arab Emirates, a senior administration official said.
Friday’s announcement comes after months of deliberation within the administration, as officials weighed various legal options and political concerns. In addition to the litigation from Sept. 11 victims, the move from the Biden administration risks discouraging other governments from storing their money in the U.S. for fear their assets also could be seized.
Biden utilized a provision of the International Emergency Economic Powers Act to “direct and compel” that the foreign assets are moved to a segregated account, according to the senior administration official.
Administration officials also discussed alternatively using a provision of the Federal Reserve Act that allows the disposal of property belonging to the central bank of a foreign nation if an “accredited representative” of that government approves.
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