Afghanistan’s Taliban Friday denounced the U.S. decision to transfer $3.5 billion in Afghan central bank reserves to a Swiss-based trust fund, declaring it an “illegal venture” and vowing to impose financial penalties on entities that facilitate it. 

Washington said Wednesday it would move the previously frozen financial assets into the newly created Afghan fund in Switzerland to be used to help stabilize the Afghan economy, but the ruling Islamist Taliban will have no role in disbursement.

The Taliban Foreign Affairs Ministry attacked the plan, calling it “unacceptable” and a “violation of international norms.” It renewed the demand for the U.S. to unfreeze the reserves and lift financial sanctions to allow Afghan traders access to the international banking systems to help improve the poverty-stricken country’s economy.

“If the reserves are disbursed without taking into consideration legitimate demands of the Afghans, the Islamic Emirate will be forced to impose fines against, and ban activities of, all individuals, institutions and companies that facilitate this illegal venture and seek to misuse the central bank reserves for humanitarian and other purposes,” the ministry said. 

The Taliban, who retook control of Afghanistan a year ago, call their all-male government an Islamic emirate, but the outside world has not recognized it because of human rights and terrorism-related concerns. 

The United States froze $7 billion of Afghanistan’s financial reserves in New York immediately after the Islamist group seized power in August 2021, when the internationally backed Kabul government security forces collapsed in the face of the then-insurgent Taliban, and all American as well as NATO troops withdrew from the country. About $2 billion in additional Afghan funds are held in several other Western countries.

In February, President Joe Biden authorized the release of half of the frozen reserves and left the rest for 9/11 victims to pursue through ongoing litigation. 

“The Afghan Fund will protect, preserve, and make targeted disbursements of that $3.5 billion to help provide greater stability to the Afghan economy. The Taliban are not a part of the Afghan Fund, and robust safeguards have been put in place to prevent the funds from being used for illicit activity,” the U.S. Treasury Department said Wednesday.

Washington has said the fund, managed by a board of trustees, could pay for critical electricity imports, debt payments to international financial institutions, fund the printing of new currency and ensure Afghanistan remains eligible for development aid.

U.S. Deputy Treasury Secretary Wally Adeyemo said in a letter that sending the money to Afghanistan’s central bank would put the funds at risk of not being used for the benefit of the Afghan people.

Taliban authorities argue they repeatedly have made it clear in direct talks with U.S. officials their readiness to open the Afghan central bank to third-party monitoring of anti-money laundering and counter-terrorism financing programs. Dozens of Taliban leaders are under international sanctions and two hold top positions in the central bank. 

Chief Taliban spokesman Zabihullah Mujahid told VOA that his government, through sustained meetings with U.S. officials over the past year, has “practically demonstrated” the Taliban are addressing U.S. concerns so the two sides can “turn the page of confrontation” and normalize ties. 

“But from their side unfortunately, we have not seen any positive reaction so far,” Mujahid said.   

China also has criticized the U.S. move, saying the frozen funds are “the national property” of Afghanistan and “the live-saving money” of the people there. 

Chinese Foreign Ministry spokesperson Mao Ning, while addressing a news conference Thursday, urged Washington to fully unfreeze the Afghan assets and lift “unilateral sanctions” on the country.

“They should have been returned to Afghanistan in full at once, should have been handled independently by Afghanistan itself and should have been used to improve people’s livelihood and advance peace and reconstruction in Afghanistan without hindrance,” she said.  

The Taliban have barred teenage girls from returning to school across most of Afghanistan and ordered female staff in many government departments to stay home. Women also are required to cover their faces in public and are not supposed to travel beyond 70 kilometers unless accompanied by a male relative.

The Taliban have rejected international calls for removing the school ban and easing restrictions on women, saying their polices are in line with Afghan culture and Islamic law. 

The U.N. has warned that the isolation of Afghan financial systems and other sanctions have pushed the national economy to the brink of a collapse, deepening an already bad humanitarian crisis in the country of about 40 million people. More than half of them face acute hunger, according to aid groups. 

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