US watchdog: Taliban have no legal claim to multibillion-dollar Afghan fund

The watchdog overseeing U.S. assistance to Afghanistan stated that the Taliban have no legal claim to the billions of dollars allocated for the country, as they are not recognized as the legitimate government and are under sanctions. In its latest report released on Friday, the Special Inspector General for Afghanistan Reconstruction (SIGAR) suggested that the Trump administration and Congress should consider reclaiming nearly $4 billion set aside for Afghanistan and returning it to U.S. government control.

In 2022, the U.S. transferred $3.5 billion in Afghan central bank assets, which had been frozen in America, to the Swiss-based Fund for the Afghan People. The fund has since grown to nearly $4 billion, according to the report. Although no payments benefiting Afghans have yet been made, the fund’s purpose is to protect and stabilize the Afghan economy.

The report noted, “The Taliban want these funds even though they have no legal entitlement, as they are not recognized by the U.S. as Afghanistan’s government, are listed as a Specially Designated Global Terrorist organization, and are under U.S. and UN sanctions.”

In response, the Afghan Ministry of Economy stated that more than $9 billion of Afghanistan’s foreign exchange reserves have been frozen and warned that any U.S. actions regarding these reserves’ allocation or transfer would be unacceptable. The ministry called on the international community to return the funds to the Afghan central bank to help ensure the country’s economic stability. It also argued that U.S. spending has had little positive impact on Afghanistan’s economy.

The SIGAR report follows President Trump’s decision to freeze foreign aid for 90 days to review whether projects align with his policy objectives. Since the U.S. withdrawal in 2021, the U.S. has spent nearly $3.71 billion in Afghanistan, much of which has been directed to UN agencies. Another $1.2 billion remains available for potential disbursement, according to the report.

While U.S. humanitarian aid may have helped prevent famine amid Afghanistan’s economic collapse, the report highlights that it has not stopped the Taliban from taking Americans hostage, dismantling women’s rights, censoring the media, allowing Afghanistan to become a “terrorist safe haven,” and targeting former Afghan officials.

The U.S. remains the largest donor to Afghanistan, but the report also noted that much of the aid is taxed or diverted. “The further the cash gets away from the source, the less transparency there is,” Chris Borgeson, SIGAR’s deputy inspector general for audits and inspections, told The Associated Press last August.