US officials meet Taliban to discuss unlocking Afghan central bank reserves

Billions of dollars remain frozen even as the humanitarian situation in the country worsens

Afghans protest against a US decision to use part of the country's frozen funds to compensate American families of 9/11 victims, in Kabul, in February. EPA

A US delegation has met senior Taliban officials in Uzbekistan to discuss efforts to unfreeze about $3.5 billion in central bank reserves as the humanitarian crisis in Afghanistan deteriorates.

The US delegation told the militant group and technocrats there was a need to hasten efforts to unlock the reserves and repeated that the funds should be used to benefit the Afghan people, according to as Department of State readout on Thursday.

Special Representative for Afghanistan Thomas West and Undersecretary of the Treasury for Terrorism and Financial Intelligence Brian Nelson led the US side.

The meeting is the latest round of talks between the two sides as US President Joe Biden's administration is seeking to establish a mechanism to allow Afghanistan’s government to use its central bank reserves, while curtailing the Taliban’s access to the funds.

Negotiations have focused on an initial release of $3.5bn, which Mr Biden ordered set aside “for the benefit of the Afghan people”, out of $7bn in Afghan reserves held by the Federal Reserve Bank of New York.

The other $3.5bn is being contested in lawsuits against the Taliban stemming from the September 11, 2001, attacks on the US, but courts could decide to release those funds too.

Last month, a Taliban delegation led by Foreign Minister Amir Khan Muttaqi met US officials in Qatar to discuss the release of about $9bn in frozen Afghan funds.

Freeing up cash may not solve all of Afghanistan's financial troubles, but it would provide relief for a country hit by a slump in foreign aid, persistent drought and an earthquake in June that killed about 1,000 people.

Millions of Afghans are facing a second winter without enough to eat.

While the Taliban do not reject the concept of a trust fund, they oppose a US proposal for third-party control of the fund that would hold and disburse returned reserves, a Taliban government official told Reuters.

The Taliban are still struggling to fix the sanctions-hit economy close to a year after taking power when the US withdrew from the country.

Afghanistan has lost international aid that has accounted for more than 40 per cent of its gross domestic product and the UN has made several appeals for support, saying millions in Afghanistan faced severe hunger.

— Agencies contributed to this report.