Via Teleconference
(February 25, 2022)
3:07 P.M. EST
MODERATOR: Good afternoon, everyone. And again, thank you for joining us for today’s background call on U.S. support for the people of Afghanistan.
Today’s briefing is on background and attributable to “senior administration officials.” The briefing is embargoed until its conclusion.
For your awareness only and for not reporting, our senior administration officials are [senior administration officials]. Again though, that’s for your information only; again, for the purposes of this call, they will be “senior administration officials.”
With that, I’ll turn it over to our senior administration official number one to give some opening remarks.
SENIOR ADMINISTRATION OFFICIAL: Thank you very much, and thank you all for joining us.
Over the course of the last several months, one area of focus for the Biden administration has been on ensuring that the Afghan people have access not only to humanitarian assistance but also to the ability to conduct regular commercial activity.
In order to make sure that the humanitarian crisis doesn’t get worse, one of the things we know that is critical is ensuring that the economy is able to function. And later today, we’re going to issue a new General License to expand authorizations for commercial and financial transactions in Afghanistan, including with Afghanistan’s governing institutions.
Treasury’s License authorizes all transactions involving Afghanistan and its governing institutions that would otherwise be prohibited by U.S. sanctions, to the extent required. However, it does not authorize financial transactions to the Taliban, Haqqani Network, associated entities, and any blocked individual who is in a leadership role of a governing institution in Afghanistan.
The License will ensure U.S. sanctions do not stand in the way of transactions and activities needed to provide aid and support the basic human needs of the people of Afghanistan. It reflects our deep commitment to support the people of Afghanistan during this ongoing humanitarian and economic crisis.
While sanctions relief alone cannot reverse longstanding structural challenges and the flight of technocratic and government experts due to the Taliban’s mismanagement, it can ensure that sanctions do not prevent economic activity that the people of Afghanistan rely on to meet their most fundamental needs.
This GL is in addition to the six other previously issued General Licenses, which also support the provision of humanitarian aid and support for basic human needs to the people of Afghanistan.
Today’s action is just the latest step in the Biden administration’s efforts to help address the substantial challenges facing Afghanistan’s economy. The administration has acted in full recognition of the challenging economic reality on the ground.
As many of you know, prior to the Taliban’s takeover, Afghanistan was dependent on external aid, receiving approximately $8.5 billion in grants each year, which financed 75 percent of public expenditures. Moreover, more than half of these foreign transfers were for military and security needs and have been terminated.
The poverty rate in 2020 stood at nearly 50 percent, and only 10 to 20 percent of Afghan adults had bank accounts. An underdeveloped financial sector also held back growth. Prior to 2021, Afghanistan’s loan-to-GDP ratio stood around 3 percent — the lowest in the world.
Overall, the IMF estimates that Afghanistan faces an economic contraction of up to 30 percent.
Our goal here is to make sure that we do everything we can to make sure that money is flowing to the Afghan people to help alleviate the humanitarian crisis that they face, but also to allow the commercial activity in Afghanistan to happen in order to build a (inaudible) cycle that will reinforce the livelihoods of the Afghan people.
In order to do this, it’s critical that Afghan institutions be put in a position where civil servants are allowed to function, including at the central bank, where we have made clear that in order for the international community to engage with the central bank, it’s important that it establishes independence, bring in a third party to validate that independence, and get the kind of technical assistance that is needed to ensure that they are able to put in place basic standards for the prevention of illicit finance, similar to what was done prior to August of 2021.
Our goal ultimately is to make sure that Afghanistan is a place where economic activity can happen and investments can happen in the long-term future of Afghanistan. This is why the U.S. government has partnered with NGOs to facilitate the provision and aid and financial resources to support humanitarian activities in Afghanistan.
Treasury and our interagency partners are working with the multilateral development banks, including the World Bank and Asian Development Bank, to provide substantial economic assistance to the people of Afghanistan.
In January, the administration announced an additional $308 million in USAID humanitarian assistance for Afghanistan, bringing total U.S. humanitarian aid for Afghanistan and Afghan refugees in the region to more than $780 million since October.
In December, the United States and other donors to the World Bank-administered Afghanistan Reconstruction Trust Fund decided to transfer $280 million.
To UNICEF — $100 million — 100 million of those dollars will go towards helping with things like paying teachers who have long needed support.
The World Food Programme will get another $180 million of that money.
These funds will enable UNICEF to provide essential health services, as well, to 12.5 million people, including 1 million vaccines, and allow the World Food Programme to provide food assistance to 2.7 million people in Afghanistan.
Treasury and our interagency partners are working to make additional resources available for the multilateral development banks, which together with the support — with support in December should result in approximately $1.75 billion in support from the multilateral development banks to meet critical basic human needs of the Afghan people.
Going forward, Treasury and the Biden administration will continue to apply rigorous sanctions to the Taliban and their collaborators until they halt their repressive actions, while providing necessary exemptions to facilitate the flow of legitimate aid to the Afghan people.
Our overall goal here is to ensure that the Afghan economy can function in the way that alleviates the humanitarian crisis and provides for opportunity going forward.
With that, let me turn it over to my colleague.
SENIOR ADMINISTRATION OFFICIAL: Thank you very much, [senior administration official]. Hello, everybody. This is the individual mentioned.
I want to zoom out just a bit and tick through a few of the efforts that we have to, sort of, place this General License in a broader context.
So, overall, I think the fundamental point I would make to you is that the most urgent priority animating both American diplomacy, as well as American decision-making on Afghanistan, is to meaningfully address the humanitarian and economic crises underway in Afghanistan.
There are too many Afghans starving today, too many Afghans who are cold. We all need to act faster. And that goes for the World Bank. It goes for the region. It goes for the Taliban as well.
But as [senior administration official] mentioned — as my colleague mentioned, we contributed over half a billion in humanitarian aid between August and December of last year. We’ve already announced $308 million to a $4.4 billion appeal that the U.N. announced in January.
We’re very pleased that the United Kingdom, together with OCHA, will be hosting a pledging conference later in March.
We’re very glad that the OIC held an Extraordinary Ministerial in Islamabad, that they announced a trust fund that will be managed by the Islamic Development Bank. And we hope that that trust fund results in pledges from OIC members as well.
As my colleague mentioned, we’re in very close touch with the World Bank. We’re pleased that nearly $300 million is already supporting the health sector out of the Afghanistan Reconstruction Trust Fund.
There’s an upcoming board meeting where I think there will be an additional large amount under consideration by the board as well. We’ve worked with the private sector, particular actors in Europe, to see shipments of hundreds of millions of dollars into Afghanistan explicitly for the purpose of helping humanitarian relief efforts scale up.
And I’m pleased to say that the Taliban have not interfered in the delivery of those dollars in any way to date, although we will watch it very closely.
We’re in close touch right now with the World Bank and UNOPS on the establishment of something they’re calling a “humanitarian exchange facility,” which, for folks who follow this issue closely will know, could help to provide more general liquidity in the economy, including Afghanis’.
And finally, I’d say that the President’s February 11th executive order, I think, was pretty widely misunderstood to begin with. We’ve seen some much more accurate coverage since then, but, fundamentally, that action was about protecting and preserving for the Afghan people $3.5 billion in assets.
Now, there’s an ongoing court process, and that court has not made any decisions on awards to litigants. But we were very glad to move ahead with an action that will protect and preserve for the Afghan people $3.5 billion in assets.
And then relatedly and finally, I’ll say that we have a range of really tough problems when it comes to fundamentally easing the economic crisis underway that we can’t solve by ourselves, and some are frankly unsolvable. And I’ll just mention two.
The first is that Afghanistan’s central bank lost a lot of capacity after the March military takeover by the Taliban. We saw some of the senior-most technocrats from that institution leave the country. And as a result, some of the functions that international financial institutions look to to ensure that their correspondent relationships are protected either atrophied or, in some cases, disappeared altogether.
Now, rather than just admire the problem, we have been engaging with technocrats at the central bank intensively since November and have made specific recommendations on measures and steps they can take to enhance both capacity as well as independence, and to stand up an AML/CFT architecture that, again, has largely disappeared.
And the final thing I would say is that, you know, when we talk to banks — both foreign banks as well as American banks — they are reticent to engage in this market not just for concerns about our sanctions posture — it’s a matter of profitability.
They have shareholders. Afghanistan is not a profitable place to do business at the moment. And so, what I would tell you is that, as we take this action today, it’s incumbent on the Taliban to pursue policies that will attract investment to the country.
And with that, I look forward to questions.
Q Yes, can you hear me? Hello?
SENIOR ADMINISTRATION OFFICIAL: Hi. Yes, we can.
Q Oh, great. I’m sorry to be dense about this, but I’m having a hard time understanding what these new measures actually do that wasn’t being done before. You know, you said it will make it easier for civil servants that are not blocked persons to operate. Does that mean that you’re going to lift all restrictions on dealings with civil servants like central bank officers and the people beneath them and just anybody who’s not actually on the list as a “blocked person” or be free to engage in banking transactions? Is that what this does? I’m sorry, I just — I don’t quite get the sort of shape of it.
SENIOR ADMINISTRATION OFFICIAL: Yeah, Karen, so let me just try and make it as clear as possible. What we’re saying is that the government of Afghanistan, as well as the country of Afghanistan isn’t blocked. If, before August of 2021, you were working closely with an Afghan civil servant in the DAB or in the Finance Ministry or in the Ministry of Education, you can continue doing that. You can continue to make regular payments as long as they are not going to the benefit of the Taliban, the Haqqani network, or named individuals.
So, what we’re doing here is clarifying our stance, which is taking what we had done with regard to humanitarian assistance, in terms of the GLs, and largely matching that in terms of commercial activity, and clarifying that people can go back to doing exactly what they’ve been — what many have already been doing, but making it very clear that you can continue to make commercial transactions in Afghanistan, as well as transactions with government individuals who aren’t blocked.
Q Hi, thanks for having this call. With respect to the frozen Afghan government accounts, you recently said there were “ongoing discussions” about the best use for about half the assets — the $3.5 billion. And you said that the money could be used to recapitalize the Afghan central bank? Can you give us an update on that situation — on those discussions? Have you made any kind of decision about recapitalizing the Afghan central bank? And can you say who’s involved with those discussions? Thank you.
SENIOR ADMINISTRATION OFFICIAL: So, maybe I can talk to the economics, and then I’ll turn it over to [senior administration official] to talk a little bit about some of the ongoing discussions.
And I think the truth of the matter is that the humanitarian situation is clearly interrelated with the economic situation on the ground. Getting the banking sector functioning is critical to this.
I think part of what we would like to do is make sure that the DAB is in a position where they can take back on normal central bank activity. And much of that is, frankly, in the hands of the Taliban.
Our General License puts them in a position where you can go back to interacting with Afghan government officials. But in order for the international community to be willing to interact with the DAB, they’re going to have to establish their independence, bring in a third party to help monitor that, and get back in some of — get in people to help with technical assistance given the number of technical officials who have left the country.
But I think one of the things we’re thinking through with my colleagues in the U.S. government and a number of our international partners and allies is how can we support the Afghan banking sector and the economy in order to make sure they can operate in a way that supports the Afghan people.
But I’ll turn it over to [senior administration official] to talk a little bit about those discussions.
SENIOR ADMINISTRATION OFFICIAL: Thank you. So, this was one thing that I thought some of the early coverage got wrong. And to be to be very clear, and I know I’ve said this before, but: No decisions have been made regarding specific uses of this $3.5 billion. And as we move ahead, a couple of things are happening.
Number one, we’ve begun discussions with a number of countries — I’m not in a position to share today with which countries — but regarding the establishment of a temporary financing mechanism.
And I think, as we look to set up that mechanism, we’re looking to be absolutely sure that — on its governance, as well as the potential uses of this money, which is, you know, Afghan reserves and for the benefit of the Afghan people — that we are talking to professional Afghans in this space, people who have served in leadership positions of the central bank, of the finance ministry; folks who’ve been technocrats; folks who have a strong opinion, as Afghans, about what would be a responsible use of these funds.
And so I’m not in a position today to get into more detail. I think it’s a completely legitimate question to say, you know, who are those folks? I hope we’re in a position to share that in the coming weeks, but I’m not in that spot today.
SENIOR ADMINISTRATION OFFICIAL: I think the one thing that I will say is that we’re thinking broadly about how we address the humanitarian crisis and not in a narrow way. And we know that the humanitarian crisis is related to broader macroeconomic concerns. So working closely with [senior administration official] and others, we’re thinking through how best, in consultation with those that [senior administration official] mentioned, to address the broader economic challenges that Afghanistan faces.
Q Hi, thanks for doing this. To clarify, just to make sure that I have a grasp of what you’re announcing today: If you’re an investor or a private company, you can work with Afghan civil servants again and not be penalized. Is that an accurate summation?
And then secondly, is this an iteration of what you — of what the Treasury put out earlier this month, in terms of licensing for humanitarian assistance and NGOs?
SENIOR ADMINISTRATION OFFICIAL: The simple answer is yes. And I think one of the things that we tried to do was we put out the humanitarian guidance because we had talked to a number of NGOs, and what they told us was they needed formal guidance, given their concerns about working in Afghanistan. And as we had conversations with commercial actors, people who were doing business there or small business in Afghanistan, they told us it would be helpful for us to provide more guidance that was similar to that for commercial activity as well.
So we also wanted to clarify that it’s possible for you to continue working with civil servants in Afghanistan. The key is to ensure that what you’re doing and the resources that you’re providing aren’t providing material support to people who are sanctioned.
So, if the individual is a civil servant who was working in the Afghan government in August of 2021, you can continue doing the same work you were doing with them at that point today.
Q I do not understand one particular thing. It seems that you are saying that the General License will permit ordinary dealings with Afghan civil servants so long as those dealings do not ultimately provide material support to or inure to the benefit of specific designated Taliban or Haqqani Network figures.
But given the fact that the Taliban essentially is now the governing authority, how is it that permitting people to do ordinary transactions with civil servants does not intrinsically inure to the benefit of and potentially provide material support to members of the Taliban and/or the Haqqani Network?
Money is fungible. How can these transactions not indirectly, if not directly, benefit the Taliban and Haqqani Network officials who are in power?
SENIOR ADMINISTRATION OFFICIAL: So, that’s a great question, and I’ll turn it over to my colleague in a moment. But this isn’t the only country in which we have this kind of situation.
In Burma, where we have sanctioned members of the junta, people are still permitted to do business with government entities there as well. And the thing that we’re tr- — the thing that we are doing here is we are making a careful, consideration here, where we are saying that you cannot provide material support to certain sanctioned individuals but we don’t want to cut off the country of Afghanistan, the people of Afghanistan from the resources they need to live and to try and address the economic and humanitarian crisis there.
This is something that we’ve been able to do in other situations and in other countries using our sanctions regime. And that’s exactly what we’re going to do here in Afghanistan.
But let me turn it over to my colleague to also respond.
SENIOR ADMINISTRATION OFFICIAL: Sure, thank you very much. I mean, one thing — I think when you dig into the mountain of paper that will be released as attached to this GL, you’ll see a lot of this in black and white, and that’ll be helpful.
So the General Licenses is one thing. You’ll see some very helpful Treasury FAQs. I’d say the second FAQ just gives very practical examples of what this — what this license now authorizes. You’ll see statements by folks, including Secretary Blinken, where we make clear that this License is aimed at facilitating a broad range of commercial activity in Afghanistan that benefits the Afghan people.
It’ll also make clear that, while sanctions on the Taliban remain in place, this action facilitates private companies and aid organizations working with Afghan governing institutions and paying customs, duties, fees, and taxes, even if those institutions are headed by sanctions — sanctioned individuals.
So I think a lot of the questions we’ve all gotten are around whether or not they can deal with sanctioned ministry — or ministries headed by sanctioned individuals, and this License makes very clear that they can.
SENIOR ADMINISTRATION OFFICIAL: Yeah, and I think I’ll just say it again that this is not something that we haven’t done in other sanctions programs that the Department of Treasury operates. And we’ve able to do it in a way that allows us to allow government institutions to function while making sure that the benefit — that money is not provided and material support is not provided to sanctioned individuals.
MODERATOR: Hello, everybody. Just wanted to let everyone know that we’ve officially run to the end of our time.
Well, first and foremost, I want to thank everyone for joining us, again, for this call this afternoon. The call is on background and attributable to “senior administration officials.” The embargo will be lifted at the conclusion of the call.
3:31 P.M. EST
