Global Policy Forum

By Alan Sipress

The Bush administration is preparing to release $221 million in Afghan government assets frozen in 1999 and expects to provide them to Afghanistan's new cash-starved administration by the end of this week, a senior Treasury Department official said yesterday.

The assets, which belong to Afghanistan's Central Bank, were frozen by the Clinton administration in 1999 because of the Taliban's role in harboring al Qaeda militants linked to attacks the previous year on U.S. embassies in Kenya and Tanzania.

Following the Taliban's ouster from power, the United Nations last week lifted international sanctions on the Afghan Central Bank, clearing the way for the Treasury Department to release the assets.

The administration's decision to make the money available comes as U.N. officials are warning that Afghanistan's three-week-old administration led by Hamid Karzai could collapse if it fails in the coming days to come up with about $100 million to make its payroll. U.N. officials said they are concerned that public support for the interim government could wane if it is unable to pay its 210,000 civil servants and 25,000 police, already owed back wages.

"Obviously, this is giving them access to assets they need to run the country," the official said.

But he added that the process of releasing the funds is not directly tied to appeals for international assistance to Karzai's government. "This is something that was bound to occur in the course of events, and now it's happening," the official said.

The money would become available on the eve of an international conference in Tokyo on Jan. 21-22 to raise funds for the reconstruction of Afghanistan. Estimates of the country's requirements have varied widely from about $10 billion to far higher totals.

Secretary of State Colin L. Powell is to visit Kabul this week for talks with Karzai and other Afghan officials on his way to the Tokyo conference.

The bulk of the assets to be released, $196 million, is gold reserves maintained by the Afghan Central Bank at the U.S. Federal Reserve bank, he said. These reserves date from before 1996, when the Taliban took control in Kabul. The U.S. government never recognized the Taliban as the legitimate rulers of Afghanistan, thus denying the radical Islamic regime access to the gold.

The Afghan Central Bank will also gain access to an additional $25 million in deposits at the Federal Reserve and commercial banks, the Treasury official said.

While administration officials in recent months have acknowledged that $254 million in Afghan assets were frozen in 1999, they have previously refrained from detailing their source. The difference between that number and the $221 million that will be released largely reflects the lower price of gold today. About $9 million covers other assets belonging to other Afghan entities, such as the official airline; that money cannot yet be unfrozen because of U.N. and U.S. restrictions, officials said.

The U.N. Security Council is poised today to lift a flight ban on Ariana Airlines, the Afghan state airline, according to U.N. diplomats. It is part of a push by the world body to accelerate the transfer of Taliban-controlled assets to the new Afghan government.

"We . . . have recognized that there are immediate needs of the Afghan administration to get up and running," State Department spokesman Richard A. Boucher said. "We're working hard on the issue of unfreezing their assets so that those can be in the hands of the government to support the efforts of getting underway as well as reconstruction."

Before the $221 million can be unfrozen, the State Department must complete the process of ruling that the money's release would serve U.S. foreign policy interests, and Afghan government representatives must be designated by the U.S. government to withdraw the funds. The Treasury Department must also centralize the assets under the Federal Reserve. The Treasury official said these steps would take between two and four days.

The imminent release of assets by the United States would not cover about $34 million deemed by U.S. officials to belong to Taliban-controlled banks and other entities, which were frozen by the administration after the Sept. 11 attacks on New York and Washington, officials said.

FAIR USE NOTICE: This page contains copyrighted material the use of which has not been specifically authorized by the copyright owner. Global Policy Forum distributes this material without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. We believe this constitutes a fair use of any such copyrighted material as provided for in 17 U.S.C íŸ 107. If you wish to use copyrighted material from this site for purposes of your own that go beyond fair use, you must obtain permission from the copyright owner.