Biden releases $7bn in frozen Afghan funds to split between 9/11 families and aid

Joe Biden signed an executive order Friday releasing $7bn in frozen Afghan reserves to be split between humanitarian efforts for the Afghan people and American victims of terrorism, including relatives of 9/11.

In a highly unusual move, the convoluted plan is designed to tackle a myriad of legal bottlenecks stemming from the 2001 terrorist attacks and the chaotic end of the 20-year war in Afghanistan, which ignited a humanitarian and political crisis, the New York times reports.

The elected Afghan government was dissolved in August after the Taliban seized control, leaving behind just over $7bn in central bank assets deposited in the US Federal Reserve bank in New York. As Afghanistan’s top elected officials, including the president and central bank governor, fled the country, the Fed froze the account as it was unclear who was legally authorised to access the funds.

The Taliban took over the central bank – known as Da Afghanistan Bank – and immediately claimed a right to the money, but under longstanding counter-terrorism sanctions it is illegal to engage in financial transactions with the organisation. Furthermore, the US does not recognize the Taliban as the legitimate government of Afghanistan.

As the Biden administration mulled over what to do with the funds, a group of relatives of victims of the September 11 attacks, who years ago won a default judgment against the Taliban and al-Qaida, sought to seize the Afghan bank assets. In a case known as Havlish, the plaintiffs persuaded a judge to dispatch a US marshal to serve the Federal Reserve with a “writ of execution” to seize the Afghan money.

The Biden government has intervened in the lawsuit, and is expected to tell the court that the victims’ claims for half the money should be heard (several other victims’ groups have also asked for a share). If the judge agrees, Biden will seek to direct the remainder toward some sort of trust fund to be spent on food and other humanitarian aid in Afghanistan – while keeping it out of the hands of the Taliban.

The process is likely to be long and messy, with advocates and some 9/11 victims arguing that the Afghan assets should all go to help the Afghan people who are facing mounting hardship.

The money – which includes currency, bonds and gold – mostly comes from foreign exchange funds that accumulated over the past two decades when western aid flowed into Afghanistan. But it also includes the savings of ordinary Afghans, who are now facing growing violence and hunger with the economy and rule of law in freefall.