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U.S. Eases Sanctions to Allow Routine Transactions With Afghan Government

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The move allows financial dealings with civil servants at government institutions, even if those ministries are now overseen by Taliban members.WASHINGTON — The Biden administration moved on Friday to relax sanctions that have contributed to the collapse of Afghanistan’s economy since the Taliban takeover in August, issuing a measure that makes clear that people can lawfully engage in transactions with the Afghan government in most circumstances.The measure, known as a general license and announced by the Treasury Department’s Office of Foreign Assets Control, says that people can lawfully transfer money to civil servants in government agencies — including ministries now led by Taliban officials. The move covers transactions like taxes, fees, import duties and the purchase or receipt of permits, licenses or public utility services.In a statement, Wally Adeyemo, the deputy Treasury secretary, portrayed the move as part of a larger effort by the United States to not just support the flow of humanitarian aid to Afghanistan, but also to facilitate commercial and financial activity there that could allow the economy to function — without directly benefiting Islamist extremists.“In light of this dire crisis, it is essential that we address concerns that sanctions inhibit commercial and financial activity while we continue to deny financial resources to the Taliban, the Haqqani network and other malign actors,” he said.The measure appeared aimed at making it harder to blame the United States government’s sanctions for the unfolding economic disaster in Afghanistan. The economic situation is creating a humanitarian crisis, including widespread starvation, that is spurring a huge wave of migrants to leave the country.The malnutrition ward of the Indira Gandhi Children’s Hospital in Kabul last month.Jim Huylebroek for The New York TimesA senior Biden administration official, speaking on the condition of anonymity in a background briefing for reporters, cautioned that many other factors were contributing to the economic collapse in Afghanistan. Those include the abrupt cutoff of huge amounts of Western foreign aid that had paid for government salaries and infrastructure projects, as well as the exodus of technocrats and others with special expertise after the Taliban swept into control.In a statement describing the move, the Treasury Department also emphasized that theme.“While sanctions relief alone cannot reverse longstanding structural challenges and the flight of technocratic and government experts due to the Taliban’s mismanagement, it can ensure that sanctions do not prevent economic activity that the people of Afghanistan rely on to meet their most fundamental needs,” it said.The general license excludes doing business with any entity in which the Taliban or the Haqqani network owns a majority interest. It also does not permit payments related to luxury items or services.The Afghan central bank, known as Da Afghanistan Bank or D.A.B., is among the governing institutions that will face fewer obstacles under the measure. The central bank had formerly propped up the value of the Afghan currency by regularly auctioning United States dollars.That activity has ceased, and the value of the Afghan currency has plunged — making food too expensive for many poor Afghans to buy. At the same time, a currency shortage has led to limits on how much those Afghans who have bank accounts may withdraw from them.Many officials from the bank fled in August, and the Taliban has installed its own leaders to oversee it. But in the briefing, a senior administration official said the U.S. government had been exploring ideas for restarting some normal central bank activities if it can be made truly independent, with controls to prevent money laundering and third-party monitoring. The official said much of whether that could be done was in the hands of the Taliban.The notion of potentially trying to resuscitate Afghanistan’s central bank is in some tension with a move this month by the Biden administration regarding about $7 billion the central bank has deposited at the Federal Reserve Bank in New York, money whose fate has been a major focus since the Taliban takeover.When the government of Afghanistan dissolved, the bank made those funds unavailable for withdrawal. The Taliban have since claimed a right to them, while relatives of people killed in the Sept. 11 attacks are trying to seize the funds to pay off the Taliban’s default judgment debts to them from lawsuits they had brought against the Taliban, Al Qaeda and others.On Feb. 11, the Biden administration moved to split those funds in half — in a way that would potentially leave the bank decapitalized. Mr. Biden invoked emergency powers to try to move $3.5 billion into a fund that will be used for the benefit of the Afghan people. The administration left the remaining money for the Sept. 11 plaintiffs to continue pursuing in court.It will be up to a judge to decide whether those funds can be lawfully used to pay off the Taliban’s judgment debts, a question that raises several thorny and unresolved legal issues.The Treasury Department noted that nothing in the new general license “affects the property or interests in property of Da Afghanistan Bank that are protectively blocked” pursuant to Mr. Biden’s recent action. More

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    As Humanitarian Disaster Looms, U.S. Opens Door for More Afghanistan Aid

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    The Treasury Department and the United Nations offered new protection for aid from sanctions meant to pressure the Taliban.Facing pressure to prevent a humanitarian and economic catastrophe in Afghanistan, the Biden administration on Wednesday took steps to allow more aid to flow into the Taliban-led country.The measures exempt aid groups from stringent economic sanctions that were imposed against the Taliban before they seized control of the government and have been strangling Afghanistan’s economy under its leadership. But diplomats and activists said that easing the restrictions might not be enough to rescue the country from what one U.N. official on Wednesday called “shocking” need and suffering.At the same time, some Republicans said the Biden administration risked legitimizing and even funding Taliban leaders.The U.S. actions and mixed response underscore the challenge that Afghanistan continues to pose for the Biden administration four months after the last American troops withdrew from the country. Administration officials have been struggling to address the dire humanitarian needs without empowering the Taliban.The United States fought a 20-year war against the Taliban and does not recognize them as the legitimate government of Afghanistan. After the group’s takeover in August, the Biden administration halted most aid to Afghanistan, froze $9.5 billion of its foreign reserves and pressured the International Monetary Fund to delay emergency support.A combination of the coronavirus pandemic, a severe drought, the loss of foreign aid and frozen currency reserves have left Afghanistan’s fragile economy on the brink of collapse, with aid groups warning that the harsh winter could lead to mass starvation and a refugee crisis.After weeks of calls for swifter action, the Treasury Department said on Wednesday that it was issuing new “general licenses” that would make it easier for nongovernmental organizations, international aid groups and the U.S. government to provide relief to Afghans while maintaining economic leverage over the Taliban to prevent human rights abuses and terrorist activity..css-1xzcza9{list-style-type:disc;padding-inline-start:1em;}.css-3btd0c{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:1rem;line-height:1.375rem;color:#333;margin-bottom:0.78125rem;}@media (min-width:740px){.css-3btd0c{font-size:1.0625rem;line-height:1.5rem;margin-bottom:0.9375rem;}}.css-3btd0c strong{font-weight:600;}.css-3btd0c em{font-style:italic;}.css-1kpebx{margin:0 auto;font-family:nyt-franklin,helvetica,arial,sans-serif;font-weight:700;font-size:1.125rem;line-height:1.3125rem;color:#121212;}#NYT_BELOW_MAIN_CONTENT_REGION .css-1kpebx{font-family:nyt-cheltenham,georgia,’times new roman’,times,serif;font-weight:700;font-size:1.375rem;line-height:1.625rem;}@media (min-width:740px){#NYT_BELOW_MAIN_CONTENT_REGION .css-1kpebx{font-size:1.6875rem;line-height:1.875rem;}}@media (min-width:740px){.css-1kpebx{font-size:1.25rem;line-height:1.4375rem;}}.css-1gtxqqv{margin-bottom:0;}.css-1g3vlj0{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:1rem;line-height:1.375rem;color:#333;margin-bottom:0.78125rem;}@media (min-width:740px){.css-1g3vlj0{font-size:1.0625rem;line-height:1.5rem;margin-bottom:0.9375rem;}}.css-1g3vlj0 strong{font-weight:600;}.css-1g3vlj0 em{font-style:italic;}.css-1g3vlj0{margin-bottom:0;margin-top:0.25rem;}.css-19zsuqr{display:block;margin-bottom:0.9375rem;}.css-12vbvwq{background-color:white;border:1px solid #e2e2e2;width:calc(100% – 40px);max-width:600px;margin:1.5rem auto 1.9rem;padding:15px;box-sizing:border-box;}@media (min-width:740px){.css-12vbvwq{padding:20px;width:100%;}}.css-12vbvwq:focus{outline:1px solid #e2e2e2;}#NYT_BELOW_MAIN_CONTENT_REGION .css-12vbvwq{border:none;padding:10px 0 0;border-top:2px solid #121212;}.css-12vbvwq[data-truncated] .css-rdoyk0{-webkit-transform:rotate(0deg);-ms-transform:rotate(0deg);transform:rotate(0deg);}.css-12vbvwq[data-truncated] .css-eb027h{max-height:300px;overflow:hidden;-webkit-transition:none;transition:none;}.css-12vbvwq[data-truncated] .css-5gimkt:after{content:’See more’;}.css-12vbvwq[data-truncated] .css-6mllg9{opacity:1;}.css-qjk116{margin:0 auto;overflow:hidden;}.css-qjk116 strong{font-weight:700;}.css-qjk116 em{font-style:italic;}.css-qjk116 a{color:#326891;-webkit-text-decoration:underline;text-decoration:underline;text-underline-offset:1px;-webkit-text-decoration-thickness:1px;text-decoration-thickness:1px;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:visited{color:#326891;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:hover{-webkit-text-decoration:none;text-decoration:none;}The actions came soon after the United Nations Security Council passed a related resolution, sponsored by the United States, that exempts humanitarian activities in Afghanistan from international sanctions for a year.Biden administration officials note that the United States remains the world’s top provider of humanitarian aid to Afghanistan, even after it cut off most assistance after the Taliban takeover.“We are committed to supporting the people of Afghanistan,” Wally Adeyemo, the deputy Treasury secretary, said in a statement.The department’s general licenses allow financial transactions involving the Taliban and members of the Haqqani network, who share power in the new Afghan government, as long as the money is used for purposes such as projects to meet basic human needs, civil society development, environmental and natural resource protection and similar efforts. The United States considers both groups terrorist organizations.The Treasury move expands the type of relief activity that can take place in Afghanistan and broadens the level of contact that international groups can have with the Taliban. It also allows the Taliban to collect taxes related to that assistance.Alex Zerden, the Treasury Department’s financial attaché at the U.S. Embassy in Kabul from 2018 to 2019, called the move “absolutely a step in the right direction,” saying it addressed requests for clarity from private sector and nongovernmental organizations about how to operate in Afghanistan without violating U.S. sanctions and providing the Taliban with illegal revenue.But many close observers said far more remained to be done.“We need a bigger humanitarian response, but without a functioning economy and banking system, we are facing terrible odds,” David Miliband, the president and chief executive of the International Rescue Committee, wrote on Twitter. “Need massive economic stabilization package to stop the rip current.”The United States provided Afghanistan with $3.95 billion in foreign aid last year, about two-thirds of which was security assistance for the former government’s fight against the Taliban. U.S. humanitarian aid for the country and for Afghan refugees in the region has totaled nearly $474 million so far this year.“We’re very conscious of the fact that there is an incredibly difficult humanitarian situation right now, one that could get worse as winter sets in,” Secretary of State Antony J. Blinken said in a news conference on Tuesday.He added that the United States was determined to ensure “that the Taliban make good on the expectations of the international community,” including by respecting women’s rights, not carrying out reprisals against political enemies and denying safe haven to international terrorist groups.Morgan Ortagus, a State Department spokeswoman during the Trump administration, condemned the U.S. actions as “extremely dangerous.” She said on Twitter that the Treasury Department licenses “send the signal that if you take over enough territory with enough people in it, you too can gain legitimacy.”The Security Council resolution, which was adopted unanimously, seeks to reduce the legal and political risks of delivering aid to Afghanistan. It exempts humanitarian activities such as payments and delivery of goods and services from U.N. sanctions for a one-year period, and requires updates to ensure that aid is not diverted to the Taliban.China on Monday blocked a narrower version drafted by the United States that would have allowed only case-by-case exemptions.After passage of the broader measure, China’s U.N. ambassador, Zhang Jun, said on Twitter that the new resolution “can only fix the faucet, but to keep the water running, the international community need to make joint efforts.”Citing “shocking levels of need and suffering,” the top U.N. official for emergency humanitarian efforts, Martin Griffiths, said the effect that the 160 aid organizations working in Afghanistan could have “depends on the cooperation of the de facto authorities in the country and on the flexibility of the funding we receive.”Governments and international organizations have been accelerating their efforts to provide assistance in recent weeks.The World Bank has said that the Afghanistan Reconstruction Trust Fund donors would transfer $280 million to UNICEF and the World Food Program by the end of the year to provide humanitarian aid.The Treasury Department this month issued a license allowing personal remittance payments to be sent to people in Afghanistan. And the United States on Wednesday announced that it would donate another million Covid-19 vaccine doses to Afghanistan, bringing the total U.S. contribution to 4.3 million doses.But the need remains enormous. Three former U.S. military commanders in Afghanistan and several former ambassadors and other officials this month signed a letter, published by the Atlantic Council, calling on the Biden administration to show “the courage to act” and expedite creative steps to prop up the Afghan economy and feed the hungry without benefiting the Taliban.“We believe the United States has a reputational interest and a moral obligation in vigorously joining efforts to help the Afghan people preserve at least some of the social and economic gains made over the last 20 years,” the authors wrote. “We believe that ways to do so can be found, while erecting barriers to assistance being diverted to purposes other than those for which it is intended.”Such admonitions came as Taliban officials pleaded for swift international relief, which they said was also in the West’s self-interest.“The impact of the frozen funds is on the common people and not Taliban authorities,” the Taliban’s deputy foreign minister, Sher Mohammad Abbas Stanikzai, said on Sunday, according to Reuters.Mr. Stanikzai warned that if “the political and economic situation doesn’t change,” Afghan refugees would pour into neighboring countries and Europe.Rick Gladstone More

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    Why the Taliban Desperately Need Cash to Run Afghanistan

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    The group has long tapped underground banks and opium to fund Afghanistan’s insurgency. Fixing the nation’s problems will require a lot more than that.As Afghans pay surging prices for eggs and flour and stand in long lines at the bank, money changers like Enayatullah and his underground financial lifeline have found themselves in desperate demand.Enayatullah — his family name withheld — holds down a tiny point in a sprawling global network of informal lenders and back-room bankers called hawala. The Taliban used hawala to help fund their ultimately successful insurgency. Many households use it to get help from relatives in Istanbul, London and Doha. Without cash from hawala, economic life in whole swaths of Afghanistan would come to a crashing halt.That is now a very real possibility. Foreign aid has dried up. Prices are surging. The value of the afghani currency is tumbling. The country’s $9.4 billion in reserves have been frozen.And hawala won’t be enough, said Enayatullah, who says people’s need for money has become so desperate in the last week he raised his commission to 4 percent per transaction, about eight times his usual rate. The system is now struggling with a lack of money, leading the Taliban and dealers themselves to rein in activity to preserve cash.“The demand,” Enayatullah said, “is too much.”The Taliban won the war in Afghanistan, and an economic crisis may be their prize. They have been cut off from the international banking system and from the country’s previous funding sources, like the International Monetary Fund, the World Bank and the United States government. Foreign aid makes up nearly half of economic output.Without other sources of money, millions of Afghan people could lose the gains they made, in fits and starts, over the past two decades. Already, drought conditions have created a real risk of hunger.“We have conflict. We have war. This is another misery,” said Shah Mehrabi, a board member of Afghanistan’s central bank. “You will have a financial crisis and it will push families further into poverty.”Food prices soared last week after the Taliban took over, at a market in Kabul, Afghanistan.Jim Huylebroek for The New York TimesLong before Afghanistan had formal institutions like banks, it had the hawala system. Millions of Afghans, shut out from formal banking, used it to send and receive remittances, as have migrant workers and others around the world.The system functions on the premise that people want to send equivalent amounts of money between two locations. Loans and transfers are recorded on ledgers, but money doesn’t have to change hands. Those features make it useful for evading taxes, paying bribes and laundering ill-gotten gains.Hawala was a necessity under the Taliban-led Afghanistan of two decades ago, before the American invasion in 2001, when money from illicit sources greased the country’s financial wheels. In addition to hawala, opium from the country’s vast poppy fields and smuggling brought the country money from the rest of the world, offsetting weak trade. As insurgents, the Taliban funded themselves by taxing smuggled goods like televisions and fuel, in transactions often financed through hawala, and through the drug trade.But the Afghanistan of 2021 is a country transformed. The economy, though its growth has been unsteady over the past decade, is five times the size it was in the early 2000s. Once scarce in most places, electricity is now widely available. Smartphones and internet access are common.Foreign money helped. Over the two decades, the United States spent more than $145 billion on reconstruction activities in Afghanistan, according to the U.S. government. Much of it was used to build the Afghan security forces, but funds also went toward large-scale infrastructure projects and an economic support fund. More than three quarters of the Afghan government’s $11 billion annual public expenditures was paid for by donor funding.The Taliban will be hard-pressed to make up that shortfall.Since taking over Afghanistan, the Taliban have said they will stop production of opium. But for the hawala system to work, Afghanistan must ultimately find sources of hard currency to lubricate the lines of credit that would snake back into the country. With exports in 2019 of about $870 million — mostly carpets, plus figs, licorice and other agricultural products — Afghanistan has little to offer on a large scale that is as lucrative as opium.The Taliban could see support from governments like Pakistan, Iran and China that might have their own reasons for keeping relations with Afghanistan warm. Trade has already started up again with Iran, said David Mansfield, an independent consultant and an expert on rural Afghanistan, citing satellite imagery of fuel tankers and transit trucks moving across the border. He has estimated that during its insurgency, the Taliban was able to raise more than $100 million a year from informally taxing goods from Iran and southern Afghanistan.Even if the Taliban raised several multiples more than that, it would mean a return to the minimalist state like the 1990s.“Economic crisis, humanitarian disaster, more refugees,” Mr. Mansfield said. “The other side of this is we have an Afghan population in the past 20 years who have seen some degree of transformation. Their livelihoods have improved.”People stood in line outside Azizi bank in Kabul on Sunday, the first day banks reopened in Afghanistan’s capital.Jim Huylebroek for The New York TimesThe hawala system, though central to life in Afghanistan, won’t be enough on its own. While many hawala transactions exist only on ledgers, they are ultimately backed by cold, hard cash often held by hawala dealers called hawaladars. In Afghanistan, say experts, hawaladars regularly use the local currency, the afghani, to buy American dollars from Afghanistan’s central bank, a transaction that can help stabilize the afghani’s value.Understand the Taliban Takeover in AfghanistanCard 1 of 6Who are the Taliban? More