U.S. plan to compensate 9/11 victims with Afghan central bank funds 'unconscionable': bank board member

A U.S. government proposal to use money from Afghanistan's central bank reserve to compensate victims of the Sept. 11 attacks is "unconscionable," says a member of the bank's board.

Shah Mehrabi, a member of the board of governors of Da Afghanistan Bank (DAB), called an executive order issued by President Joe Biden earlier this month to split $7 billion US in Afghan funds held in the United States between 9/11 victims and humanitarian aid in Afghanistan "shortsighted."

"It will continue to hurt millions of Afghan children, women and families that are suffering from one of the worst economic and humanitarian crises around the world," said Mehrabi, who is also an economics professor at Montgomery College in Montgomery, Md.

When the Afghanistan government fell to a bloody takeover by the Taliban in August, the U.S. government froze $7.1 billion in assets that Afghanistan's central bank held in the United States.

Following Biden's executive order, those funds were transferred to the U.S. Federal Reserve. However, the federal government will still need a court order authorizing the use of about $3.5 billion for humanitarian efforts in Afghanistan because of the ongoing claims against the bank's reserve.

The latter $3.5 billion or so will be held in the U.S. amid ongoing claims brought forward by Sept. 11 victims, some of whom have won default judgments against al-Qaeda and the Taliban. 

Mehrabi believes all $7 billion, as well as $2 billion held in Europe, should return to Afghanistan's central bank — and the country's citizens. Redirecting the reserve funds could help stem a potential famine in the country, he added.

"Afghans are desperate," Mehrabi told Day 6 host Peter Armstong. "They want to be able to have access to their funds, to be able to make a difference in the lives of these people so that they could afford to buy goods and services that they need."

A spokesperson for the Taliban tweeted criticism of Biden's plan earlier this month. "Stealing the blocked funds of Afghan nation by the United States of America and its seizure [of those funds] shows the lowest level of humanity . . . of a country and a nation," wrote Mohammad Naeem.

The Biden administration pushed back against criticism that all $7 billion — largely derived from donations by the U.S. and other nations to Afghanistan — should be released to Afghanistan, arguing that the 9/11 claimants under the U.S. legal system have a right to their day in court.

9/11 victims waiting 2 decades for support: lawyer

Kenneth Feinberg, a lawyer who oversaw the U.S. government's September 11th Victim Compensation Fund, which ran from 2001 to 2004, says it's not unreasonable to disburse the reserve funds to victims of terrorism who have been waiting two decades for financial support.

"You'll see an advocate of the 9/11 victims say … almost 3,000 people died on 9/11, and the money should go to them," he told Day 6.

He argued that the source of the bank's money is hardly clear cut, and splitting up what funds may have come from the Taliban as opposed to the legitimate Afghanistan government could potentially devalue the lives of U.S. victims.

"After there is an effort to develop a principled allocation of the funds, then that should be implemented with court approval," he said.

Disputes over who is entitled to what have already begun, according to The New York Times, as families of 9/11 victims involved in litigation against the Taliban are now pursuing assets from Afghanistan's central bank through the U.S court system.

Brett Eagleson, whose father was killed in the World Trade Center on 9/11, says while victims' families are supportive of funds being made available to Afghans, the remaining funds should be evenly distributed among the families in the U.S.

"Anything short of equitable treatment for and among the 9/11 families as it relates to these frozen assets is outrageous and will be seen as a betrayal" by the government, Eagleson said in a statement quoted by The Associated Press.

Central bank independent of Taliban rule: banker

Afghanistan's currency, the afghani, has plummeted, amplifying a dire economic crisis, Mehrabi said.

The Afghanistan central bank funds held in reserve in the U.S. were put there to ensure price stability in the country, he said.

Mehrabi further argues that the central bank is run separately from the Taliban, suggesting that safeguards could be put in place to protect the funds from misuse.

In the past six months, there has been no interference in the running of the independent central bank, nor any changes to the monetary law outlining its role, he said. 

"It is the group of Talibans and obviously al-Qaeda and other groups who are sanctioned," he said. 

"So in this case, you are allowing these reserves to be placed in the hands of the central bank [which] would allow [the] central bank to perform its main function of price stability."

Mehrabi says Biden's plan has outraged many Afghans.

"They call this theft," he said. 

"Others have said that this is a colonial power — in this case, the United States — dictating and stealing the reserves of people."

Written by Andrea Bellemare and Jason Vermes, with files from The Associated Press. Interview with Shah Mehrabi produced by Pedro Sanchez.