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SALAM WANTADAR

Donors eye Dec. 10 decision on shifting frozen funds for Afghanistan

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MONITIRING (SW) – Donors to the World Bank-administered Afghanistan Reconstruction Trust Fund (ARTF) have agreed to decide about a transfer of funds to humanitarian aid agencies by Dec. 10, a World Bank spokesperson said on Friday.

The World Bank’s board this week backed transferring $280 million from the $1.5 billion trust fund, which was frozen after the Taliban took over the Afghan government in August, to the World Food Programme and UNICEF, Reuters reported on Wednesday, citing sources familiar with the plan, reported Reuters.

The World Bank spokesperson gave no details on the proposal, but said ARTF donors met on Friday and agreed to make a decision on transfers out of the fund in one week.

No further details about the ARTF meeting were immediately available.

The U.S. Treasury Department had no comment.

Afghanistan’s 39 million people face a collapsing economy, a winter of food shortages and growing poverty since the Taliban seized power at the end of August as the last U.S. troops withdrew from 20 years of war.

While the U.S. Treasury has provided “comfort letters” assuring banks that they can process humanitarian transactions, concern about sanctions continues to prevent passage of even basic supplies, including food and medicine, the source added.

“It’s a scorched earth approach. We’re driving the country into the dust,” said the source. Crippling sanctions and failure to take care of public sector workers will “create more refugees, more desperation and more extremism.”

Any decision to redirect ARTF money requires the approval of all its donors, of which the United States has been the largest.

The State Department spokesperson confirmed that Washington is working with the World Bank and other donors on how to use the funds, including potentially paying those who work in “critical positions such as healthcare workers and teachers.”

The spokesperson said the U.S. government remains committed to meeting the  critical needs of the  Afghan people, “especially across health, nutrition, education, and food security sectors … but international aid is not a silver bullet.”

Established in 2002 and administered by the World Bank, the ARTF was the largest financing source for Afghanistan’s civilian budget, which was more than 70% funded by foreign aid.

The World Bank suspended disbursements after the Taliban takeover. At the same time, Washington stopping supplying U.S. dollars to the country and joined in freezing some $9 billion in Afghan central bank assets and halting financial assistance.

A World Bank spokesperson confirmed that staff and executive board members are exploring redirecting ARTF funds to U.N. agencies “to support humanitarian efforts,” but gave no further details. The United Nations declined to comment.

Initial work has also been done on a potential swap of U.S. dollars for Afghanis to deliver the funds into the country, but those plans are “basically just a few PowerPoint slides at this point,” one of the sources said. That approach would deposit ARTF funds in the international accounts of Afghan private institutions, who would disburse Afghanis from their Afghan bank accounts to humanitarian groups in Afghanistan, two sources said.

This would bypass the Taliban, thereby avoiding entanglement with the U.S. and U.N. sanctions, but the plan is complex and untested, and could take time to implement.

One major problem is the lack of a mechanism to monitor disbursements of funds in Afghanistan to ensure Taliban leaders and fighters do not access them, a third source said.

Two former U.S. officials familiar with internal administration deliberations said that some U.S. officials contend that U.S. and U.N. sanctions on Taliban leaders bar financial aid to anyone affiliated with their government.

ENDS

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