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The US froze Iran’s assets for decades, and it could foretell what may happen to the Afghan central bank’s nearly $10 billion the Taliban is trying to get its hands on


Taliban fighters stand guard in front of the Hamid Karzai International Airport, in Kabul, Afghanistan, on Monday, Aug. 16, 2021. Rahmat Gul/AP

  • The Taliban has been unable to get its hands on billions of dollars in assets the US froze.

  • An expert told Insider the group has “almost no chance” of getting the Afghan central bank’s reserves.

  • It’s a situation that mirrors a decades-long saga between the US and Iran over frozen assets.

  • See more stories on Insider’s business page.

Nearly a month after the Taliban retook Afghanistan in a lightning-fast campaign, the militant group has been unable to get its hands on the Afghan central bank’s nearly $10 billion in reserves.

Most of the central bank’s $9.5 billion in assets, some of which are held in New York, were frozen by the US in August after the Afghan government collapsed.

Without the money, the Taliban lacks sufficient funding. It’s a situation mirroring the decades-long saga that unfolded when the US froze billions in Iranian assets after the 1979 Islamic Revolution that saw Ayatollah Khomeini take control of the government.

Iranian assets were frozen for decades. And since the revolution, the country kept trying to recover at least $400 million held in a Pentagon trust fund, the Wall Street Journal previously reported. It’s a saga that was drawn out from US presidential administration to administration.

The frozen money was a thorn in the side of the US-Iran relationship for decades until it was returned to Iran in 2016 under the Obama Administration in a dead-of-the-night transportation from Geneva. At the same time, four American citizens were released from Iranian jails, the Journal said, though the Obama administration insisted it wasn’t a ransom payment.

And it’s a saga that could be mirrored in Afghanistan as the Taliban announced on Tuesday a new interim government to rule the country for a second time.

a person holds a wad of afghani money

A person holds a bundle of Afghan afghani banknotes at a money exchange market, following banks and markets reopening after the Taliban took over in Kabul, Afghanistan, on September 4, 2021. REUTERS/Stringer

“With Iran, of course, it has gone on for decades,” Robert Hockett, a Cornell University professor of law and finance, told Insider on Wednesday. “And with the Taliban, it could also go on for decades, if the Taliban itself goes on for decades.”

“The United States has the legal authority to freeze assets that were held by a government when that government is replaced by a nongovernment,” he added.

In Iran’s case, The Iran-United States Claims Tribunal, a measure taken to resolve the crisis, went on for decades. Time magazine reported that money has flowed both ways, with Iran returning hundreds of millions to US banks and the US giving hundreds of millions in frozen funds to Iran.

US Secretary of State Antony Blinken on Wednesday said that any legitimacy or support for the Taliban’s new government “will have to be earned,” the Associated Press reported, and that any engagement with the militant group will be in the national interest of Afghanistan.

As for the frozen cash, Hockett said the “only way” that the Taliban could see the billions of dollars in reserves is “if it ceases to be the Taliban.”

“Because only if they were to cease being the Taliban, might they come to be viewed as a legitimate government of Afghanistan,” he said.

The former acting governor of the Afghan central bank, Ajmal Ahmady, previously told The New York Times that a stash of about $7 billion of the central bank’s reserves was held by the Federal Reserve Bank of New York, while $1.3 billion was held in international accounts.

Those assets, Hockett said, could sit frozen in the US “indefinitely.”

“There’s no sort of time, date, or limit on how long that can be,” he said. “It could literally be for hundreds of years, legally speaking. “

Read the original article on Business Insider



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