UN sets up trust fund for ‘people’s economy’ in Afghanistan

The United Nations said on Thursday it had set up a special trust fund to provide urgently-needed cash directly to Afghans through a system that would tap into donor funds frozen since the Islamic Emirate of Afghanistan (IEA) takeover in August.

Achim Steiner, the UN Development Programme’s (UNDP) administrator, said that Germany, a first contributor, had pledged 50 million euros ($58 million) to the fund, and that it was in touch with other donors.

“Discussions over the last few weeks have focused on how we do find a way to be able to mobilise these resources in view of the economic implosion that is now unfolding and the international community’s repeated commitment not to abandon the people of Afghanistan,” he told a news briefing.

This comes after US Deputy Treasury Secretary Wally Adeyemo said on Tuesday he sees no situation where the IEA would be allowed access to Afghan central bank reserves, which are largely held in the United States.

The IEA has called for the United States to lift a block on more than $9 billion of Afghan central bank reserves held outside the country as the government struggles to contain a deepening economic crisis.

“We believe that it’s essential that we maintain our sanctions against the Taliban (IEA) but at the same time find ways for legitimate humanitarian assistance to get to the Afghan people. That’s exactly what we’re doing,” Adeyemo told the Senate Banking Committee.

Washington and other Western countries are grappling with difficult choices as a severe humanitarian crisis looms large in Afghanistan. They have been trying to work out how to engage with the IEA without granting them legitimacy, while ensuring humanitarian aid flows into the country.