World Bank works to redirect frozen funds to Afghanistan for humanitarian aid only -sources

WASHINGTON – The

World


Bank

is finalizing a proposal to deliver up to $500 million from a

frozen


Afghanistan


aid

fund to

humanitarian

agencies, people familiar with the plans told Reuters, but it leaves out tens of thousands of public sector workers and remains complicated by U.S. sanctions.

Board members will meet informally on Tuesday to discuss the proposal, hammered out in recent weeks with U.S. and U.N. officials, to

redirect

the

funds

from the

Afghanistan

Reconstruction Trust Fund (ARTF), which has a total of $1.5 billion.

Afghanistan

‘s 39 million people face a cratering economy, a winter of food shortages and growing poverty three months after the Taliban seized power as the last U.S. troops withdrew from 20 years of war.

Afghan experts s

aid

the

aid

will help, but big gaps remain, including how to get the

funds

into

Afghanistan

without exposing the financial institutions involved to U.S. sanctions, and the lack of focus on state workers, the

sources

s

aid

.

The money will go mainly to addressing urgent health care needs in

Afghanistan

, where less than 7% of the population has been vaccinated against the coronavirus, they s

aid

.

For now, it will not cover salaries for teachers and other government workers, a policy that the experts say could hasten the collapse of

Afghanistan

‘s public education, healthcare and social services systems. They warn that hundreds of thousands of workers, who have been unp

aid

for months, could stop showing up for their jobs and join a massive exodus from the country.

The

World


Bank

will have no oversight of the

funds

once transferred into

Afghanistan

, s

aid

one of the

sources

familiar with the plans. A U.S. official stressed that UNICEF and other recipient agencies would have “their own controls and policies in place.”

“The proposal calls for the

World


Bank

to transfer the money to the U.N. and other

humanitarian

agencies, without any oversight or reporting, but it says nothing about the financial sector, or how the money will get into the country,” the source s

aid

, calling U.S. sanctions a major constraint.

‘NOT A SILVER BULLET’

While the U.S. Treasury has provided “comfort letters” assuring

bank

s that they can process

humanitarian

transactions, concern about sanctions continues to prevent passage of even basic supplies, including food and medicine, the source added.

“It’s a scorched earth approach. We’re driving the country into the dust,” s

aid

the source. Crippling sanctions and failure to take care of public sector workers will “create more refugees, more desperation and more extremism.”

Any decision to

redirect

ARTF money requires the approval of all its donors, of which the United States has been the largest.

A State Department spokesperson confirmed that Washington is working with the

World


Bank

and other donors on how to use the

funds

, including potentially paying those who work in “critical positions such as healthcare workers and teachers.”

The spokesperson s

aid

the U.S. government remains committed to meeting the  critical needs of the  Afghan people, “especially across health, nutrition, education, and food security sectors … but international

aid

is not a silver bullet.”

BYPASSING TALIBAN

Established in 2002 and administered by the

World


Bank

, the ARTF was the largest financing source for

Afghanistan

‘s civilian budget, which was more than 70% funded by foreign

aid

.

The

World


Bank

suspended disbursements after the Taliban takeover. At the same time, Washington stopping supplying U.S. dollars to the country and joined in freezing some $9 billion in Afghan central

bank

assets and halting financial assistance.

A

World


Bank

spokesperson confirmed that staff and executive board members are exploring

redirect

ing ARTF

funds

to U.N. agencies “to support

humanitarian

efforts,” but gave no further details. The United Nations declined to comment.

Initial work has also been done on a potential swap of U.S. dollars for Afghanis to deliver the

funds

into the country, but those plans are “basically just a few PowerPoint slides at this point,” one of the

sources

s

aid

. That approach would deposit ARTF

funds

in the international accounts of Afghan private institutions, who would disburse Afghanis from their Afghan

bank

accounts to

humanitarian

groups in

Afghanistan

, two

sources

s

aid

.

This would bypass the Taliban, thereby avoiding entanglement with the U.S. and U.N. sanctions, but the plan is complex and untested, and could take time to implement.

One major problem is the lack of a mechanism to monitor disbursements of

funds

in

Afghanistan

to ensure Taliban leaders and fighters do not access them, a third source s

aid

.

Two former U.S. officials familiar with internal administration deliberations s

aid

that some U.S. officials contend that U.S. and U.N. sanctions on Taliban leaders bar financial

aid

to anyone affiliated with their government. –

Reuters