Some Hope for Afghans in Need

Embargoes imposed to coerce dictators also punish suffering populations. For years, lawyers, economists, and policy wonks have searched for technocratic solutions to this dilemma—for example, by designing “targeted” economic and travel sanctions against individual leaders and their cronies. As America’s use of sanctions grows, such efforts have become a booming field of public-policy design and

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Embargoes imposed to coerce dictators also punish suffering populations. For years, lawyers, economists, and policy wonks have searched for technocratic solutions to this dilemma—for example, by designing “targeted” economic and travel sanctions against individual leaders and their cronies. As America’s use of sanctions grows, such efforts have become a booming field of public-policy design and, occasionally, bold experiments.

The Biden Administration’s announcement this week that it will release $3.5 billion in frozen Afghan-central-bank funds to a new Swiss foundation—the Afghan Fund, whose mission will be “to benefit the people of Afghanistan”—is such an experiment. The foundation’s bespoke rules will increase Afghan participation in deliberations over the money’s fate and broaden international responsibility, yet allow the Biden Administration to wield a veto over any disbursements. The Taliban are not a party to the project.

Unfortunately, it seems doubtful that the Afghan Fund will achieve the Administration’s stated purpose—“to help provide greater stability to the Afghan economy,” as a joint Treasury and State Departments announcement this week put it—anytime soon. The Afghan economy is in desperate condition, and hunger is spreading. Quickly deploying the $3.5 billion in reserves to recapitalize the Afghan central bank, known as Da Afghanistan Bank or D.A.B., could help revive the country’s moribund commercial-banking system and fund needed imports, among other things. Yet the Taliban have not been willing or able to change their management of the central bank to meet Washington’s requirements—for example, to remove one of the bank’s deputy governors, who is a listed by the U.S. as a terrorist. The Biden Administration went public this week with demands that the Taliban demonstrate that D.A.B. will be free from political interference, and that the regime adopt money-laundering-prevention measures and accept outside monitoring.

In political Washington, perhaps the greatest obstacle to releasing the reserves remains the Taliban’s support for Al Qaeda and other legally designated terrorist groups. The Taliban’s hubristic willingness to provide haven to Ayman al-Zawahiri, a direct author of 9/11, who was discovered hiding in downtown Kabul and killed by an American drone in late July, has cemented the already formidable bipartisan resistance in Congress to doing business with the restored Islamic Emirate, as the Taliban regime calls itself. Taliban spokesmen have denied knowing that Zawahiri was hiding in Kabul. But, according to a briefing by the Biden Administration, senior members of the regime’s Haqqani faction knew of his presence. The family network’s most powerful figure, Sirajuddin Haqqani, is the acting interior minister.

The Afghan Fund’s plan to empower Afghan leadership might improve the odds, long though they may be, that the Taliban will eventually implement the reforms that Washington and European allies require. (Other countries besides the U.S. have frozen Afghan deposits.) The Administration has named two Afghan-born finance experts, Anwar-ul Haq Ahady and Shah Mehrabi, as “co-founders” of the Afghan Fund. They are to appoint a diverse committee of Afghan advisers.

The fund’s creation is “a very positive first step,” Mehrabi told me. D.A.B. “was the envy of our neighbors” during much of the life of the Islamic Republic, the NATO-backed government that collapsed in August, 2src21. During the past year, Afghanistan “has suffered a brain drain,” he added. “We need to rebuild.”

In the short run, the Afghan Fund might also be able to obtain Taliban coöperation and American acquiescence for relatively small disbursements to benefit civilians, such as the manufacture of bank notes. But the over-all record of technocratic innovations like the Afghan Fund is not encouraging. One problem is complexity. The foundation’s decision-making board so far has four members—Mehrabi, Ahady, a U.S.-government representative to be named, and a Swiss-government representative to be named—and can make decisions only unanimously. That is potentially a recipe for gridlock. The board may expand to include a European Union member. Suggestions that an apolitical member of the current D.A.B. staff be appointed have so far been turned aside. “The devil is in the details,” William Byrd, a development economist who worked for years in Kabul for the World Bank and is now a senior expert at the United States Institute of Peace, told me. Byrd had not examined the Afghan Fund’s design when we spoke this week, but, from past experience, he said, “the nuts and bolts of the arrangement are going to be quite important and could very well determine its success or failure.”

At the World Bank, Byrd was involved in the early development of the Afghanistan Reconstruction Trust Fund, a mechanism that regulated large flows of international-donor funds to the fledgling government led by Hamid Karzai. That fund’s relative success, Byrd argued, came from “simple management arrangements with clear responsibilities, along with sound financial engineering, governance, and accountability.” As the new Afghan Fund operates, “the last thing you would want is for the U.S. to be heavily involved.”

By sending the money to Switzerland, the Biden Administration has made plain that the funds are not U.S. property but, rather, are part of the sovereign wealth of Afghanistan. Yet the Administration’s decision to award itself a veto over disbursements reflects a reality that it would be reckless on counterterrorism grounds—not to mention politically untenable in Washington—to simply hand the money over to the Taliban, given the restored emirate’s record. The Taliban’s closure of secondary schools to girls and failure to protect Hazara minorities targeted by the Islamic State make a decision to release funds even more unlikely.

In the end, Washington’s veto, like the imposition of economic sanctions, is best understood as power politics. And the ineluctable fact that nations battle hard over resources such as multibillion-dollar piles of cash is one reason that clever technocratic designs like the Afghan Fund have failed in the past. Rich countries generally don’t hesitate to leverage their financial advantages, and dictators and extremists generally don’t care what international lawyers or policy wonks want them to do.

The oil-for-food program, conceived by the Clinton Administration to relieve Iraqi civilian suffering under Saddam Hussein, is one case study. During the program’s life, between 1996 and 2srcsrc3, Hussein skimmed off hundreds of millions of dollars in kickbacks to shore up his police state, while the U.S. used its U.N. veto to play hardball, slowing and blocking exports to Iraq in ways that exacerbated Iraq’s humanitarian crisis, as recounted in the ethicist Joy Gordon’s book, “Invisible War.”

The Afghan Fund may turn out to be just a Swiss bank account for funds that will remain blocked for years. Yet the initiative offers at the least the possibility that Afghans themselves will play a leading role in deciding what to do next. Mehrabi said that reforms to prevent money laundering at the Taliban-controlled central bank, which are among the Biden Administration’s requirements, should be achievable and could allow for confidence-building in Kabul and Washington alike.

“Look, people are dying of hunger,” Mehrabi said. “State and Treasury deserve to be commended; they’ve brought a lot of attention to relieving the hardship. But we need to be concerned about the structure of the economy. We need to be able to go ahead and rebuild these institutions.” As for the Taliban, he added, “I cannot answer the question of whether they will coöperate.” ♦

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