Economists call for return of frozen Afghan assets

WASHINGTON－A roll call of prominent economists urged the United States on Wednesday to hand over to Afghanistan $7 billion in central bank reserves frozen nearly one year ago.

"We are deeply concerned by the compounding economic and humanitarian catastrophes unfolding in Afghanistan, and, in particular, by the role of US policy in driving them," 71 economists and development experts said in a letter to US President Joe Biden and US Treasury Secretary Janet Yellen.

"Without access to its foreign reserves, the central bank of Afghanistan cannot carry out its normal, essential functions. Without a functioning central bank, the economy of Afghanistan has, predictably, collapsed."

The signatories included Nobel economics laureate Joseph Stiglitz and Yanis Varoufakis, who served as Greece's minister of finance when the country was negotiating with creditors after the 2008 economic collapse. In the letter they argued the US could not justify holding onto the reserves, which it froze in US banks as the prior Washington-backed government in Kabul fell to the Taliban in August 2021.

Washington and other capitals say they want to find a way to release the funds not benefiting the Taliban.

The economists said that the plunge in economic activity and the sharp cuts to foreign aid by previous supporters of the country after the US military withdrawal had sent the Afghan economy into a tailspin.

"Seventy percent of Afghan households are unable to meet their basic needs," they wrote. "Some 22.8 million people－over half the population－face acute food insecurity, and 3 million children are at risk of malnutrition."

Their predicament is worsened by the refusal of the US to return to the Afghan central bank the $7 billion in foreign exchange reserves, as well as $2 billion blocked by Britain, Germany, and the United Arab Emirates, they said.

"These reserves were critical to the functioning of the Afghan economy, in particular, to manage money supply, to stabilize the currency and to pay for the imports－chiefly food and oil－on which Afghanistan relies," they wrote.

The economists said a recent US offer to give the Taliban access to half the money by setting up a trust with international oversight was not enough. "By all rights, the full $7 billion belong to the Afghan people," they said in the letter.

"Returning anything less than the full amount undermines the recovery of a devastated economy."

Agencies Via Xinhua