US freezes billions in Afghanistan assets as it blocks Taliban from seizing country’s wealth

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The Biden administration froze Afghan government reserves held in US bank accounts on Sunday, blocking the Taliban from accessing billions of dollars.

Two people familiar with the matter spoke to The Washington Post about the decision, speaking on the condition of anonymity to discuss government policy not yet made public.

The decision was made by Treasury Secretary Janet Yellen and officials in Treasury’s Office of Foreign Assets Control, the people said. The State Department and White House were also involved in the decision.

An administration official said in a statement: “Any Central Bank assets the Afghan government have in the United States will not be made available to the Taliban.”

The Biden administration is also likely to face hard choices over how to manage existing sanctions on the Taliban. This may make it difficult to deliver international humanitarian assistance to the Afghan people.

The previous Afghan regime held $9.4bn in gross reserves at the end of April, the International Monetary Fund reported.

Most of those reserves were held outside of Afghanistan, a source told the AFP.

The US Government has previously seized the reserves of countries whose governments it doesn’t recognise, such as Venezuela.

After the US Government named opposition leader Juan Guaido as Venezuela’s rightful head of state, it freed up some of the billions of dollars in seized reserves to pay health sector workers.

Central governments typically hold assets offshore to ensure access to backup funds if their national currency rapidly devalues.

Last week, Republican lawmaker Andy Barr had urged the Federal Reserve to make sure that official assets held by Afghanistan in the US don’t fall into the hands of the Taliban.

“Access to these accounts would bolster the Taliban’s rise,” Mr Barr, the ranking Republican on the House Financial Services Committee’s national security panel, said.

Mr Barr made the request in a letter to New York Fed President John Williams.

The Taliban’s rapid takeover of Afghanistan amid the withdrawal of US and allied troops has caught the international community off-guard.

On Monday, British Foreign Secretary Dominic Raab said the UK was considering imposing sanctions on the Taliban.

Mr Raab said Britain would use “all of the financial means at our disposal” to pressure the Taliban.