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Audit fails to win U.S. backing for release of Afghan central-bank funds

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A U.S. funded audit of Afghanistan’s Islamic Emirate-run central bank has failed to win Washington’s backing for a return of bank assets from a $3.5 billion Swiss-based trust fund, said two U.S. officials and a former U.S. official, a move that would help ease the country’s financial crisis, Reuters reported.

The audit has not changed the U.S. Treasury’s view that the bank must make reforms before the department will support disbursements from the Afghan Fund to Da Afghanistan Bank (DAB), said a U.S. Treasury official on condition of anonymity.

The Swiss-based Afghan Fund was set up last year with half of about $7 billion in central bank funds that were frozen in the Federal Reserve Bank of New York in August 2021 after IEA took control of the country as the last foreign forces withdrew following two decades of war.

DAB must show that it is free “from political influence and interference,” said the Treasury official, referring to the need for professional bankers to replace the three IEA officials who oversee the bank and are under U.S. and U.N. sanctions.

It also must prove that it has “adequate” controls against money-laundering and terrorism financing and install a “reputable” independent monitor, said the Treasury official.

“Our assessment of DAB remains unchanged,” said one of the U.S. officials. Reuters quoted the two officials and the former U.S. official, who has knowledge of the U.S. position, spoke on condition of anonymity because of the confidentiality of the matter.

The IEA administration spokesman and a spokesperson for the Afghan central bank did not respond to request for comment.

Concerns in Washington and other capitals about the bank’s leadership and anti-money laundering safeguards are at the heart of a standoff over the IEA’s demand for the return of DAB cash frozen in the United States and other countries after the Islamic Emirate return.

Because the four-member board that oversees the trust fund must approve disbursements unanimously, the support of its U.S. government representative is essential.

Afghanistan remains mired in grave humanitarian and economic crises that some experts say has been worsened by U.S. restrictions hampering DAB’s ability to perform key central bank functions, such as ensuring stable exchange rates and prices, read the report.

The audit, funded by the U.S. Agency for International Development (USAID) and conducted by an outside contractor, examined DAB’s controls against money laundering and terrorism financing, and its banking oversight and payments departments, according to an April report by the U.S. Special Inspector General for Afghanistan Reconstruction (SIGAR).

The findings have not been made public, Reuters reported.

Calling the audit, a “preliminary assessment,” the Treasury official said its “limitations” suggested that “more comprehensive third-party assessment efforts may be needed.”

Shah Mehrabi, an Afghan-American economics professor who is on DAB’s governing board and co-chairs the Afghan Fund board, said the audit – which he has not seen – was completed in March and currently is with the State Department.

The State Department declined to comment.

Mehrabi and his co-chair, Anwar ul-Haq Ahady, a former DAB governor and former finance minister, told Reuters that they would consider the findings once they are available.

Mehrabi said use of the Afghan Fund’s assets should focus on stabilizing prices and ensuring banks had enough liquidity, as the entire financial system was at risk from declining foreign donor funds to Afghanistan.

The other $3.5 billion in DAB assets frozen in US is being sought in lawsuits against the IEA brought by families of victims of the Sept. 11, 2001, attacks on the United States. A U.S. judge in February ruled against the plaintiffs who are appealing.

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Khalilzad condemns Pakistani airstrikes, questions Islamabad’s intentions

He questioned whether Pakistan genuinely wanted a negotiated solution, asking whether the country’s leadership was seeking to resolve the dispute or pursuing broader strategic objectives.

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Former US Special Representative for Afghanistan Reconciliation Zalmay Khalilzad has condemned Pakistan’s overnight airstrikes in eastern Afghanistan, saying the attacks have caused heavy civilian casualties despite repeated calls for dialogue to resolve tensions between the two countries.

In a statement posted on social media, Khalilzad said Pakistan had once again resorted to military action despite appeals from the international community and many Pakistanis to settle disputes through diplomatic means.

“I have always condemned the killing of Afghan civilians by Pakistan, and I condemn it again today,” he said.

His comments came after Afghanistan’s Islamic Emirate said Pakistani military aircraft carried out strikes in the eastern provinces of Paktia, Paktika and Kunar overnight. 

According to Deputy Spokesman Hamdullah Fitrat, at least 36 civilians, including women and children, were killed and 163 others wounded. 

The Islamic Emirate said the deadliest attack occurred in Mandokhail village in Paktia’s Chamkani district, where an initial strike hit a civilian home before a second strike allegedly targeted villagers responding to the scene. Officials also reported civilian casualties in Paktika province and the destruction of a residential home in Kunar province.

Khalilzad said Islamabad had also failed to respond to numerous proposals put forward by the Islamic Emirate aimed at addressing security concerns between the neighbouring countries.

He questioned whether Pakistan genuinely wanted a negotiated solution, asking whether the country’s leadership was seeking to resolve the dispute or pursuing broader strategic objectives.

“I also wish to point out that Islamabad has not responded to the numerous proposals and plans put forward by the Taliban (IEA) government, despite indicating that it agrees with them.

“In the continued absence of any constructive effort or response from Pakistan, it is time to ask an important question: Does Islamabad genuinely seek a solution and an agreement?”

Khalilzad further suggested that continued military action could indicate an effort to keep Afghanistan unstable, raising questions about whether such instability benefits foreign actors, including China, while running counter to US interests.

“Is this conflict really what Islamabad claims it is? Or is Pakistan’s security and military establishment pursuing other objectives? If so, what are those objectives?

“Is the goal to keep Afghanistan unstable?

“Is Pakistan’s security establishment being encouraged or rewarded by China to create conditions that would allow Afghanistan to fall further under Chinese influence? Or is it both?,” he asked.

Khalilzad warned that if this were the case, the consequences could include greater regional instability, an expansion of activities by extremist groups such as ISIS-Khorasan, and increased Chinese influence in Afghanistan.

Relations between Afghanistan and Pakistan have remained strained in recent years, with both sides accusing each other of failing to address cross-frontier security threats. 

Pakistan has previously said its military operations target militant groups responsible for attacks inside its territory, while Afghan authorities have repeatedly condemned cross-Durand Line strikes as violations of Afghanistan’s sovereignty and say civilians continue to bear the brunt of the violence.

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Dozens of civilians reported killed in Pakistani airstrikes on eastern Afghanistan 

The most severe attack was reported in Mandokhail village in Paktia province, where a second strike hit the area as local residents gathered to assist victims of the first airstrike

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Islamic Emirate of Afghanistan (IEA) officials say at least 36 civilians were killed and more than 160 others wounded in a series of overnight airstrikes carried out by Pakistani military aircraft in the eastern provinces of Paktia, Paktika and Kunar.

According to Hamdullah Fitrat, deputy spokesman for the Islamic Emirate, the dead include women, children and elderly civilians.

The most severe attack was reported in Mandokhail village in Chamkani district of Paktia province, where officials said a residential home was struck by Pakistani fighter jets. The initial strike reportedly killed an elderly man and a child and injured several other members of the family.

Fitrat said a second strike hit the area as local residents gathered to assist the victims, killing a further 28 people and injuring 158 others.

In Giyan district of neighbouring Paktika province, officials said a house in Walust village was bombed, killing six civilians, most of them women and children.

Meanwhile, in Barolo village in Manogai district of Kunar province, another residential home was reportedly destroyed in an airstrike. No casualties were reported there, although the property sustained extensive damage.

The Islamic Emirate said that, based on preliminary information, three civilian homes were completely destroyed during the attacks.

The reported strikes come amid renewed tensions along the Afghanistan-Pakistan border, where both sides have repeatedly accused each other of allowing militant groups to operate from their respective territories. 

Pakistan has previously conducted cross-border strikes, saying it is targeting militants responsible for attacks inside Pakistan, while Afghan authorities have condemned such operations as violations of the country’s sovereignty and insist civilians are disproportionately affected.

Further details are expected as officials continue assessing the damage and verifying casualty figures.

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Afghan minister says ‘outsiders’ should not claim to support Afghanistan’s independence

The meeting was attended by governors of Sar-e-Pul and Samangan provinces, local officials, religious scholars, and a number of local residents.

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Minister of Borders, Ethnic Affairs and Tribes Noorullah Noori has said that those who interfered in Afghanistan over the past twenty years should now not claim to support a “free and independent Afghanistan.”

According to a statement, Noori made the remarks during a public gathering titled “Unity and Coordination with the People” held in the Kohistanat district of northern Sar-e-Pul province, during his official visit to the province.

The meeting was attended by governors of Sar-e-Pul and Samangan provinces, local officials, religious scholars, and a number of local residents.

Noori stated that under the Islamic system, the beliefs, history, freedom, and values of the Afghan people are protected and safeguarded. He added that those who, over the past twenty years, tested the Afghan people for their own “malicious objectives” should not now claim to support Afghanistan’s independence.

He further emphasized that the people of Afghanistan are not aligned with the Islamic Emirate out of compulsion, but rather support the Islamic system based on faith, ideology, culture, and political belief.

Participants of the gathering also stressed the importance of strengthening the Islamic system and enhancing national unity. They stated that the current system enjoys domestic legitimacy among the Afghan people and that those plotting against it are not accepted by society.

They further added that they will continue to defend the existing system through unity and solidarity and will not allow insecurity or external interference in Afghanistan’s internal affairs.

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