U.S. issues new general license on Afghanistan financial transactions - U.S. officials

A displaced Afghan woman holds her child as she waits with other women to receive aid supply outside an UNCHR distribution center on the outskirts of Kabul, Afghanistan October 28, 2021. REUTERS/Zohra Bensemra

WASHINGTON, Feb 25 (Reuters) - The U.S. Treasury on Friday issued a new general license allowing international aid organizations and private firms to conduct commercial and financial transactions with Afghan government institutions.

The new license represents a shift in U.S. policy that had impeded ordinary commerce with Afghan government agencies headed by U.S. sanctioned Taliban and Haqqani Network leaders since the Islamists seized power in August as U.S.-led forces withdrew.

It maintains prohibitions on transactions with sanctioned leaders and other blocked individuals and excludes transfers of luxury items.

The license makes clear "that while sanctions on the Taliban remain in place, this action facilitates the private companies and aid organizations working with governing Afghan institutions and paying customs duties, fees and taxes," a senior administration official told reporters on a conference call.

Some experts have questioned whether sanctioned Taliban and Haqqani network leaders can be prevented from benefiting from transactions with the agencies they control without efficient oversight mechanisms.

The new license is part of what U.S. officials said are ongoing U.S. efforts to help contain an economic collapse that quickened in August when Washington and other donors cut financial aid underpinning 75 percent of Afghanistan's public spending.

"Our action today recognizes that in light of this dire crisis, it is essential that we address concerns that sanctions inhibit commercial and financial activity," Deputy Treasury Secretary Wally Adeyemo said in a statement.

The financial aid cut and a freeze of some $9 billion in Afghan central bank funds - $7 billion by Washington - have fueled a cash crunch and a humanitarian crisis that the United Nations warns has pushed more than half the population of 39 million toward starvation.

U.S. President Joe Biden last week issued an order sequestering half of the $7 billion frozen in the Federal Reserve Bank of New York for possible use to recapitalize the crippled Afghan central bank. read more

Reporting by Jonathan Landay and Arshad Mohammed; editing by Diane Craft

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