China, Iran Step in to Aid Afghanistan as US Freezes Kabul’s Foreign Assets After Taliban Takeover

The runaway governor of Afghanistan’s central bank has warned of risks of inflation on food and other items as well as currency depreciation in the country owing to the US decision to freeze $9 billion worth of Kabul’s foreign assets and suspension of dollar payments to the nation. The American decision comes after the Taliban’s* takeover of Kabul.

China has said that it “stands ready” to continue to play an active role in Afghanistan’s reconstruction efforts, in the wake of the United States freezing more than $9 billion of Kabul’s foreign assets at the New York-based Federal Reserve Bank and other financial institutions after the takeover of the nation’s capital by the Taliban last week.

“China always pursues a friendly policy toward the entire Afghan people. For a long time, China has provided much assistance in economic and social development in Afghanistan”, Foreign Ministry spokesperson Wang Wenbin said at a briefing on Monday.Wang was responding to a question about whether China “plans to provide financing” to the Taliban government in Afghanistan.

The Chinese official also hit out at the US for not honouring its “pledge to assist Afghanistan in areas including development and reconstruction, and humanitarian assistance”.

“The US side repeatedly and explicitly pledged to help Afghanistan to maintain stability, forestall turbulence, and promote peace and reconstruction. However, we have seen continued reports about the insincere, dishonest, and unscrupulous acts of the US side”, the Foreign Ministry official stated.Beijing’s remarks come against the backdrop of the US Treasury Department’s decision to freeze nearly $9 billion in assets belonging to Da Afghan Bank (DAB), the nation’s central bank.

Ajmal Ahmady, the runaway governor of Afghanistan’s central bank who fled the nation after the Taliban takeover, says the Federal Reserve Bank holds nearly $7 billion of the nation’s overall foreign reserves, including $3.1 billion in US bills and bonds, gold and cash accounts.

Nearly $700 million of DAB’s funds are held in the Switzerland-based Bank of International Settlements (BIS), which is known as the banker for the world’s central banks. The balance of Afghanistan’s international reserves are held in other bank accounts.

Only 0.1 to 0.2 percent of the available funds are accessible to the Taliban, he claims.

Beijing, backed by Islamabad, has long supported the idea of extending the China-Pakistan Economic Corridor (CPEC) into Afghanistan. The $62 billion-CPEC is a network of regional connectivity projects extending from China’s Xinjiang Province to the Pakistani port city of Gwadar on the Arabian Sea. CPEC is the flagship project of the One Belt One Road (OBOR) initiative.

The Chinese Foreign Ministry said in May of this year that it was in talks with the Afghan Foreign Ministry to extend the CPEC into the country. After the takeover of Kabul by the Taliban on 15 August, Pakistan’s Foreign Minister Shah Mahmood Qureshi and his Chinese counterpart reaffirmed that they would continue to “cooperate” in Afghanistan, as per an official readout of a telephone call between the two chief diplomats on 18 August.

The Chinese state media outlet Global Times also reported on 18 August that Beijing was “planning to return” to run the Mes Aynak copper mine, believed to be the world’s second-biggest. A Chinese consortium led by the state-owned China Metallurgical Group Corp (MCC Group) was awarded a 30-year contract in 2008 to extract and process copper from the mine.

The Taliban, whose political leadership was hosted for talks by Chinese Foreign Minister Wang Yi in July, has said it welcomes assistance from Beijing.

Meanwhile, Reuters reported on Monday that Iran has resumed its fuel exports to Afghanistan following a request from the new (Taliban) government there.

“The Taliban sent messages to Iran saying you can continue the exports of petroleum products”, Hamid Hosseini, a spokesperson for Iran’s Oil, Gas and Petrochemical Products Exporters Union was quoted as saying by Reuters.Iran, one of Afghanistan’s biggest trading partners, suspended its exports to the nation on 6 August owing to the deteriorating security situation.

*The Taliban is a terrorist organisation banned in Russia and many other nations.