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FILE PHOTO: A displaced Afghan woman holds her child as she waits with other women to receive aid supply outside an UNCHR distribution center on the outskirts of Kabul, Afghanistan October 28, 2021. REUTERS/Zohra Bensemra -

The Biden administration is seeking to free up half of the US$7 billion in frozen Afghan central bank assets on US soil to help the Afghan people while holding the rest to possibly satisfy terrorism-related lawsuits against the Taliban, the White House said on Friday (Feb 11).

President Joe Biden signed an executive order declaring a national emergency to deal with the threat of an economic collapse in Afghanistan, setting the wheels in motion for a complex resolution of competing interests in the Afghan assets.

The US Justice Department is due on Friday to present a plan to a federal judge on what to do with the frozen funds amid urgent calls from US lawmakers and the United Nations for the money to be used to address the dire economic crisis that has worsened since the Taliban's takeover of Afghanistan in August.

Senior US administration officials said they would work to ensure access to US$3.5 billion of the assets - which stem mainly from aid to Afghanistan over the past two decades - to benefit the Afghan people.

They said Washington would set up a third-party trust in coming months to administer the funds but details were still being worked out on how that entity would be structured and how the funds could be used.

The multi-step plan calls for the other half of the funds to remain in the United States, subject to ongoing litigation by US victims of terrorism, including relatives of those who died in the Sep 11, 2001, hijacking attacks, the officials said.

Washington froze the Afghan funds after the Taliban's military takeover in August, but has faced pressure to find a way to release the money without recognizing the new Afghan administration, which says it is theirs.

Suhail Shaheen, the Taliban’s designated representative to the United Nations, called for the entire amount to be unfrozen and kept under control of the Afghan central bank.

"The reserve is the property of Da Afghanistan Bank and by extension, the property of the people of Afghanistan. We want the unfreezing of the entire amount as a reserve of Da Afghanistan Bank," Shaheen told Reuters.

The spokesman of the Taliban’s Doha office blasted the US move in a tweet: "Stealing and takeover of frozen money which belongs to the Afghan people by US shows the lowest level of human and moral decline of a country and a nation."

Control over the funds is complicated by lawsuits filed by some Sep 11 victims and their families seeking to cover unsatisfied court judgments related to the attacks that killed nearly 3,000 people.

Biden's new executive order requires US financial institutions to transfer all Afghan central bank assets held into a consolidated account at the Federal Reserve Bank of New York.

Afghanistan has another US$2 billion in reserves, held in countries including Britain, Germany, Switzerland and the United Arab Emirates. Most of those funds are also frozen. US officials said they had been in touch with allies about the frozen assets, but Washington was the first to offer a plan for how to use them to help the Afghan people.

The United States, the largest single donor of humanitarian aid in Afghanistan, also plans to keep working with the UN and humanitarian aid groups on separate US aid flows, the officials said, adding that they expected significant multilateral engagement in creation of the new trust fund.

Washington is also working closely with the UN to ensure the international body's agencies and aid groups have the liquidity needed to support critical humanitarian assistance programs, the White House said.

Reuters reported on Thursday that the UN aims to kickstart a system to swap millions of aid dollars for Afghan currency that would help solve that issue.

UN Secretary-General Antonio Guterres has called for a mechanism to free up about US$9.5 billion in frozen Afghan reserves, including in the United States.

US sanctions ban financial business with the Taliban, but Washington has granted waivers to allow humanitarian support for the Afghan people. A new license will be needed to allow transfers from the envisioned trust, officials said//CNA