Billions of USD have been frozen since the Taliban took over Afghanistan
A new report finds that Western economic measures imposed on Afghanistan since the Taliban takeover are preventing aid agencies from moving funds into and within the country, blocking millions from receiving emergency relief.
The report published by the Norwegian Refugee Council (NRC) shows that it will be impossible to reach millions of people who need assistance, unless the US Treasury and other donor agencies take immediate action to enable banks to facilitate humanitarian financial transfers, and support the Afghan central bank to resume its key functions.
The report analyses existing payment routes for aid funding and reveal that none meet the basic criteria of being sufficiently safe, scalable and cost-effective to meet humanitarian needs. Worse still, these financial mechanisms are almost entirely inaccessible to local aid organizations and Afghans themselves, contributing to rising needs and economic freefall.
“The unresolved liquidity crisis is a key driver in what is becoming the worst humanitarian catastrophe in the world. We recently called for USD 4.4 billion for starving Afghans – the biggest call of its kind in the history of humanitarian work. But unless the US Treasury and other Western financial authorities enable us to transfer the aid money, we will be forced to work with our hands tied, unable to get that money to the communities who desperately need it,” warned Jan Egeland, NRC’s Secretary-General.
The situation in Afghanistan is worsening by the day with 23 million people facing acute hunger, the near-total collapse of many public services, and the likelihood of near countrywide poverty in 2022. Afghans are forced to use desperate coping mechanisms, including feeding children just one meal to cover both breakfast and lunch. Yet aid organizations are unable to scale up life-saving operations because formal financial channels into the country are almost completely blocked.
While measures such as humanitarian licences and exemptions to sanctions are crucial steps, they alone are not enough to get aid to where it is most needed. Banks need legal clarity and incentives to facilitate financial transfers to aid groups. Aid agencies also need to be able to withdraw that money once it reaches their accounts in Kabul. This is critical given the Afghan economy is in freefall, local banks are on the brink of collapse, and acute shortage of banknotes in circulation.
“Millions of Afghans will suffer unimaginable consequences unless the Afghan central bank is provided with sufficient support to resume its key functions, including the purchase and circulation of banknotes, with appropriate safeguards in place. Unless this happens, we will struggle to respond to this crisis and the country’s economy will continue to skydive,” said Egeland.
More than 8 out of 10 aid workers in Afghanistan surveyed for the report said it was “critical” or “urgent” to have the international bank transfers unblocked. The same number said that limits on cash withdrawals were also seriously hampering their ability to work in the country.
Over the past six months, NRC has repeatedly faced blockages to getting funds into Afghanistan and withdrawing money for use in humanitarian operations.
“The US and European governments risk setting aid organizations up to fail and are putting millions of lives at risk. They need to not only support banks to allow transfers of much-needed funds into Afghanistan but also put in place long overdue measures to allow aid agencies to withdraw those funds once they reach the country,” said Egeland.