Headline, January 20 2022/ ''' '' AFGHANS STUDENTS AFFAIRS '' '''


 AFFAIRS '' '''


''PLEASE LET innocent Afghans have their cash. Inaction by the U.S. imperils the country's banking system as parents of hungry students and children are denied access to their own savings.''

Malnourished children and students with withered arms have been arriving at clinics in Afghanistan for months now. Although the markets are full of food, too many people lack the money to buy it.

Since the U.S. forces withdrew and the Taliban seized control in August, prices have skyrocketed. Even those people lucky enough to have savings in the bank have to line up for hours to withdraw a small fraction of it.

The Afghan government had been heavily dependent on foreign aid, which was largely cut off when the Taliban took power. International assistance made up of 45 percent of Afghanistan's gross national product and funded 75 percent of the government's budget.

The Taliban remain on the U.S. sanctions list, so the international community has refused to give them money. Targeted financial sanctions are an appropriate and powerful tool to punish bad actors and odious regimes.

The mere threat of them can achieve results. But too often their cumulative effect over time is indistinguishable from collective punishment.

RIGHT NOW the entire financial system in Afghanistan risks collapse. Ordinary people and students who have nothing to do with the Taliban have been largely cut off from the international banking system.

Right now the entire financial system in Afghanistan risks collapse. Ordinary people have been largely cut off from the international banking system. Even though U.S.Treasury Department officials say that the central bank of Afghanistan is not under sanctions, financial institutions around the world are treating it as if it was.

Foreign banks are refusing to wire money to Afghanistan, not only because they don't want to deal with the reputational risk, but also because they fear that the long arm of the U.S. Treasury might one day punish them for it. As a result it has been difficult to get cash into the country.

The Biden administration was right  tooffer aid to stave off the immediate humanitarian crisis caused by hunger, drought and harsh winter. The administration has also issued a flurry of licenses to allow personal remittances and humanitarian aid to pass through banks unmolested.

But the very existence of those licenses implies that the rest of Afghanistan's economy is off limits. That means shopkeepers can't open lines of credit to import goods, and farmers can't receive payment for their crops through international banks.

Aid is not enough. Commercial activity is what feeds a nation. Lack of activity in the Taliban has led many Afghans to take money out of the banks and hide it under the mattress or spirit it out of the country. But commercial activity is also being suppressed by fear of what the U.S. Treasury Department will do to Afghan banks.

In August, the U.S. government froze roughly $7 billion that Afghan central bank held in reserves in the United States; at issue is who is legally authorized to withdraw the money.

[Roughly $2.5 billion more is said to be held in banks in Europe.] Since then, groups of victims of the Sept 11, 2001, terrorist attacks have laid claim to the money that is being held in New York to enforce to enforce prior judgments they secured against the Taliban, complicating the issue who can legally collect it.

The U.S. government has been negotiating with the victims' lawyers behind closed doors in an attempt to strike a deal that could lead to some of the money being donated to a humanitarian fund for the Afghan people.

BUT even a deal the funnels some money into a humanitarian trust fund for Afghanistan seems unlikely to shore up Afghanistan's central bank, which needs foreign currency to perform its core functions.

Given the Sept 11 lawsuit, it may not be possible to free up the funds frozen in New York in time to stave off a crisis. It maybe more realistic for funds to be released from the banks in Europe, which hold a smaller but still significant amount of Afghanistan central bank's money.

It maybe more realistic for Funds to be released from banks in Europe, which hold a smaller but still significant amount of the Afghanistan central bank's money.

Hundreds of millions of dollars in the frozen overseas account are part of the life savings of Afghan citizens, which should not be rendered inaccessible.

It would not cost American taxpayers a dime to issue letters of comfort to European banks to make it clear that they will not be punished for giving private Afghan citizens access to their money.

The war has been lost, but that doesn't mean every institution that Americans worked with is destined to disappear. There's still time to save Afghanistan's central bank.

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