The Biden administration is working to prevent the Taliban from accessing more than $400 million in emergency reserves that the International Monetary Fund will distribute to Afghanistan next week, a Treasury Department official said Wednesday.
The IMF is funded by contributions from its 190 member countries, and the United States is the largest shareholder. So its opposition to the Taliban gaining access to the reserve assets, known as special drawing rights, will carry significant weight as the fund decides what to do in the coming days.
Created after World War II to help stabilize the global economy, the fund is monitoring its shareholders’ response to the rise of the Taliban in Afghanistan to determine whether to release the assets, according to a person familiar with the matter. and who was not authorized to speak in public.
The IMF approved a $650 billion foreign exchange reserve allocation earlier this month as part of an effort to help developing countries cope with the coronavirus pandemic. The reserves, which can be exchanged for dollars or other currencies, will be distributed among the countries, and Afghanistan will receive about $460 million of them next week. Afghanistan currently owns about $52 million in SDRs.
The rapid fall of the Afghan government and the lack of clarity about whether the Taliban will be internationally recognized have put the IMF in a difficult position. The agency is run by its member states, and if a government is not recognized as legitimate, it cannot access existing or new SDRs, said the person familiar with the matter.
Canada, the European Union and Russia have publicly said they are unwilling to recognize the Taliban as the government in Afghanistan.
Jake Sullivan, the White House’s national security adviser, said Tuesday it was too early to say whether the United States will recognize the Taliban as the legitimate force in Afghanistan.
“Ultimately, it’s up to the Taliban to show the rest of the world who they are and how they intend to move forward,” Sullivan said. “The track record hasn’t been good, but it’s premature to go into that question at this point.”
The United States remains involved with the Taliban over the transfer of power in Afghanistan, but has been careful not to let go of the influence they have over the group.
The Treasury Department decided this weekend to block access to $9.4 billion in Afghanistan’s central bank international reserves, most of which are held in accounts of the Federal Reserve Bank of New York.
Understand the Taliban Takeover in Afghanistan
Who are the Taliban? The Taliban emerged in 1994 amid the unrest following the 1989 withdrawal of Soviet troops from Afghanistan. They used brutal public punishment, including flogging, amputations and mass executions, to enforce their rules. Here’s more about their origin story and their track record as rulers.
There is a precedent for the IMF to block countries from their foreign exchange reserves. Earlier this year, the fund said Venezuela would not have access to the $5 billion in SDRs it would have received due to a dispute over the legitimacy of the Maduro government.
The Biden administration supported the allocation of new SDRs over opposition from some Republican lawmakers who claimed the United States was giving money to opponents such as Russia, China and Iran. Treasury Secretary Janet L. Yellen has rejected that idea, arguing that the United States would not agree to exchange dollars for SDRs with a country it considers a bad player.
A group of lawmakers sent a letter to Ms Yellen on Tuesday urging her to intervene in the planned release of $650 billion in emergency reserves from the International Monetary Fund.
“The potential of the SDR allocation to provide nearly half a billion dollars in unconditional liquidity to a regime with a history of supporting terrorist acts against the United States and its allies is extremely concerning,” they wrote.
Treasury official declined to say what steps the US was taking to prevent the Taliban from accessing the SDRs
An IMF spokeswoman declined to comment on when it would be determined whether the foreign exchange reserves would be transferred to Afghanistan.