[News] More Afghan people may die from sanctions than from 20 years of war

[Anti-Imperialist News]

theintercept.com
<https://theintercept.com/2021/12/28/afghanistan-economy-collapse-us-sanctions/>
Humanitarian
Exemptions to Crushing U.S. Sanctions Do Little to Prevent Collapse of
Afghanistan’s Economy
More Afghan people may die from sanctions than from 20 years of war.
Lee Fang <https://theintercept.com/staff/leefang/> - December 28, 2021
------------------------------

*When the U.S.* pulled out of Afghanistan in August, ceding to the Taliban,
the country’s economy began a severe contraction — what the Financial Times
calls “one of the worst economic meltdowns in history.” The sprawling
crisis has left nearly 23 million people in extreme hunger, and at least 1
million children under the age of 5 are now facing the immediate threat of
starvation, according to the United Nations.

As commerce ground to a halt, food and fuel prices skyrocketed, in large
part due to economic sanctions placed on the Taliban by the U.S. As many as
300,000 Afghans have fled to neighboring Pakistan, and many more refugees
may soon leave the country. There are even reports that some Afghans have
resorted to selling their children
<https://nypost.com/2021/12/13/desperate-mom-in-afghanistan-forced-to-sell-her-twin-baby-for-104-so-she-can-save-the-other/>
in order to feed their families.

The Biden administration defends the sanctions by pointing to a series of
exemptions designed to allow humanitarian aid. The Treasury Department has
touted its role as a leading humanitarian donor to the people of
Afghanistan and its work to ensure that funds flow “through legitimate and
transparent channels” via official sanction exemption licenses.

But those humanitarian exemptions, overseen by the Treasury’s Office of
Foreign Assets Control, are nowhere near enough, according to experts who
spoke to The Intercept. The OFAC licenses, including new licenses released
December 22, have not curbed the global chilling effect of the sanctions
and are ineffective in preventing a spiraling disaster that could kill more
Afghan people than nearly 20 years of U.S.-backed war and occupation.

Businesses and individuals that violate U.S. sanctions on the Taliban risk
steep fines and criminal penalties. The broad sanctions imposed by the U.S.
lack specificity and raise the possibility that routine commercial
activities in Afghanistan could fall under sanctions policy.

“None of these OFAC licenses, none of them, addresses the issue of
international banks in their dealing with Afghan banks, hesitancy to deal
with Afghan taxes, banking transactions for commercial imports,” said Shah
Mehrabi, a member of Afghanistan’s central bank board. “The sanctions have
created a lot of fear in the minds of those who do not want to go ahead and
engage in taking this particular risk.”

[image: The UN Security Council votes on a draft resolution to allow a
humanitarian exception in Afghanistan sanctions regime, at UN Headquarters
in New York, on Dec. 22, 2021. The UN Security Council on Wednesday adopted
a resolution to exempt humanitarian assistance in Afghanistan from an asset
freeze against designated leaders of the Taliban and associated entities.
(Loey Felipe/UN Photo/Handout via Xinhua)]

The UN Security Council votes on a draft resolution to allow a humanitarian
exception in Afghanistan sanctions regime, at UN Headquarters in New York,
on Dec. 22, 2021.

Photo: Loey Felipe/UN Photo/Xinhua News Agency/Getty Images

OFAC has issued licenses for medicine, remittances, education salaries, and
other forms of humanitarian assistance. Additional licenses released last
week allow <https://home.treasury.gov/news/press-releases/jy0545>
exemptions for education funds and expand the scope of U.S. funds to aid
organizations in Afghanistan. Mehrabi, who teaches economics at Montgomery
College in Maryland, noted that much of Afghanistan’s domestic economy
faces impending failure, a problem that cannot be solved by “merely
allowing humanitarian aid to flow.”

The Treasury Department, added Mehrabi, has focused on piecemeal
humanitarian exemptions and has not addressed the central issue of how
Afghanistan can import and export goods, collect taxes, and pay salaries.
“We’re talking about an economy that’s going to collapse if Treasury does
not clarify what could be done to the liquidity issue,” said Mehrabi.

When the Taliban seized control of Afghanistan in August, U.S. sanctions
imposed since 2002 that criminalize any form of support for the Taliban as
a Specially Designated Global Terrorist group suddenly meant that penalties
could apply to leaders of a sovereign state. As U.S. forces withdrew,
American law firms
<https://www.lexology.com/library/detail.aspx?g=8722b5dd-85f8-47b9-b735-5737e112a3f3>
quickly alerted
<https://www.mmlawus.com/newsitem/pdf/taliban_resurgence_in_afghanistan_raises_sanctions_issues_for_financial_institutions_and_money_transmitters_1072.pdf>
international institutions
<https://nicholsliu.com/wp-content/uploads/2021/08/2021.08.24-Article-on-Afghanistan-Sanctions.pdf>
across
the globe that any business transaction in Afghanistan could risk violating
sanctions. Any routine tax payment or duty paid to an Afghan bureaucrat
could be construed as aiding and abetting the Taliban.

“Even if the Secretary of the Treasury does not specifically designate the
entire Government of Afghanistan, it will be very difficult for contractors
and grantees to know whether standard transactions with the Government of
Afghanistan, such as paying taxes, permit fees, utility fees, import
duties, or other routine payments will result in funds passing to the
Taliban or its leaders in control of various branches of the Afghan
government,” noted a client alert
<https://www.documentcloud.org/documents/21169083-20210824-article-on-afghanistan-sanctions>
from the law firm Nichols Liu.

Contractors and businesses, the firm noted, can expect banks to “de-risk
from Afghanistan,” meaning that fund transfers to or from Afghanistan “will
be intercepted by intermediary banks and blocked until the contractor or
grantee can demonstrate that the specific transfer to and the use of funds
in Afghanistan will comply with U.S. sanctions.”

“The banking industry is reading [the sanctions] as, ‘The entire government
is now the Taliban.’”

“The banking industry is reading [the sanctions] as, ‘The entire government
is now the Taliban,’” a former U.S. Treasury Department official told
<https://reliefweb.int/sites/reliefweb.int/files/resources/317-afghanistans-humanitarian-catastrophe.pdf>
the Crisis Group.

The far-reaching sanctions, along with a Biden administration decision to
freeze nearly $10 billion of Afghanistan’s central bank national reserves,
sent the economy into free fall. Payments to doctors and police stopped.
Hospitals ran out of medicine. Residents could not withdraw bank deposits.
Even a printing press in Poland contracted to print afghanis, the local
currency, could not deliver its shipment.

[image: A Taliban fighter checks passports at the Afghanistan-Iran border
crossing of Islam Qala, on Wednesday, Nov. 24, 2021. Afghans are streaming
across the border into Iran, driven by desperation after the near collapse
of their country's economy following the Taliban's takeover in mid-August.
In the past three months, more than 300,000 people have crossed illegally
into Iran, according to the Norwegian Refugee Council, and more are coming
at the rate of 4,000 to 5,000 a day. (AP Photo/Petros Giannakouris)]

Afghans are streaming across the border into Iran, driven by desperation
after the near collapse of their country’s economy. A Taliban fighter
checks passports at the Afghanistan-Iran border crossing of Islam Qala, on
Nov. 24, 2021.

Photo: Petros Giannakouris/AP

Rajeev Agarwal, the chief financial officer of KEC International, an Indian
firm tapped to build electric utility transmission lines in Afghanistan,
told investors in October that its five projects in the country suddenly
ceased payments in August. The “U.S. has choked all the funding lines to
Afghanistan,” reported Agarwal, according to a transcript of the call.

“Sanctions are intended to have a chilling effect, in that sanctions will
always go beyond the face of the text,” said Adam Weinstein, a research
fellow with the Quincy Institute for Responsible Statecraft. “No bank or
business wants to walk right up to the line when it comes to compliance
with U.S. sanctions policy, given that these are risk-averse institutions.”

Last week, 40 members of the House of Representatives wrote to President
Joe Biden urging him to ease sanctions and release Afghanistan central bank
funds controlled by the U.S. government. “No increase in food and medical
aid can compensate for the macroeconomic harm of soaring prices of basic
commodities, a banking collapse, a balance-of-payments crisis, a freeze on
civil servants’ salaries, and other severe consequences that are rippling
throughout Afghan society, harming the most vulnerable,” noted the letter
<https://progressives.house.gov/_cache/files/7/9/79c380ca-661d-4158-9a88-f3a67ca24cdd/0C4CB37A3A6799AA59E3FCF4E01FCF3F.12-20-21-afghanistan-humanitarian-crisis-letter-1-.pdf>,
led by Reps. Pramila Jayapal, D-Wash.; Sara Jacobs, D-Calif.; and Jesús G.
“Chuy” García, D-Ill.

The letter also called on the administration to provide clarity to
financial institutions, including what’s known as “comfort letters” from
the Treasury Department to reassure banks that they may engage in commerce
without risk of violating sanctions.

The Intercept asked the Treasury Department for comment about the concerns
raised by the congressional letter, including whether the agency has
provided comfort letters to reassure banks that they would not violate U.S.
sanctions while facilitating transactions in Afghanistan. Morgan
Finkelstein, a spokesperson for the Treasury Department, did not respond
directly to the question about the comfort letters and pointed to the
existence of the OFAC exemption licenses to respond to questions about
concerns that U.S. sanctions are damaging the Afghanistan economy.

“In contrast to sanctions programs administered and enforced by OFAC with
regard to North Korea, Cuba, Iran, Syria, and the Crimea region of Ukraine,
there are no comprehensive sanctions on Afghanistan,” reads an FAQ on the
Treasury site that Finkelstein sent. “Therefore, there are no
OFAC-administered sanctions that prohibit the export or reexport of goods
or services to Afghanistan, moving or sending money into and out of
Afghanistan, or activities in Afghanistan, provided that such transactions
or activities do not involve sanctioned individuals, entities, or property
in which sanctioned individuals and entities have an interest.”

Kevin Schumacher, deputy executive director of the nonprofit Women for
Afghan Women, noted that banks and other multinational firms are reluctant
to pay large legal fees to review hundreds of pages of Treasury Department
guidelines with each client just to engage in commerce with Afghanistan.
The problem, he said, is that the U.S. government “doesn’t really
understand who they are going after.”

“The OFAC licenses never work, never will.”

“That fear of the unknown,” said Shumacher, “is what prompts this massive
blanket sanction regime that has resulted in the tragedy that we are
seeing.”

“The OFAC licenses never work, never will,” added Shumacher. “The moment
that the banks see any sanction or any sort of restriction, they just walk
away from doing any transactions. That’s what’s happening now with
Afghanistan. The banks are not willing to take our business, and no amount
of OFAC licenses is going to satisfy their needs.”

[image: KABUL, AFGHANISTAN - DECEMBER 21: Afghans holding banners take part
in a protest and march towards former US embassy building demanding the
release of Afghanistan's frozen assets and resuming international funds
amid worsening economic conditions and rising poverty in the country in
Kabul, Afghanistan on December 21, 2021. Following Taliban's takeover,
international funds to Afghanistan were halted, and the country's assets
abroad were frozen. (Photo by Bilal Guler/Anadolu Agency via Getty Images)]

Afghans protest the former US embassy building demanding the release of
Afghanistan’s frozen assets and resuming international funds amid worsening
economic conditions in Kabul, Afghanistan, on Dec. 21, 2021.

Photo: Bilal Guler/Anadolu Agency/Getty Images

In the past, multinational corporations and banks have over-complied with
U.S. sanctions, ignoring OFAC licenses. Schumacher pointed out the history
with Iran: The U.S., while imposing stringent sanctions on Iran, released
OFAC licenses for the delivery of medicine and other medical products. But
banks, in fear of violating the U.S. sanctions, ignored OFAC licenses and
routinely blocked the trade of medicine and other health care products to
Iran.

The Washington Post reported
<https://www.washingtonpost.com/world/middle_east/sanctions-take-toll-on-irans-sick/2012/09/04/ce07ee2c-f6b2-11e1-8253-3f495ae70650_story.html>
in 2012 that despite OFAC licenses allowing the exports of medicine to
Iran, exports of medicine quickly dwindled. “The exemption of medicine from
sanctions is only in theory,” one Iranian importer told the Post.
“International banks do not accept Iran’s money for fear of facing U.S.
punishment.”

There is little appetite among politicians in Washington, D.C., to
radically reverse course. The Biden administration, facing low public
approval ratings following the exit from Afghanistan and a tough forecast
for the 2022 midterm elections, may be continuing sanctions for political
reasons. Releasing the sanctions could be viewed as recognition of the
Taliban as the legitimate rulers of Afghanistan, a symbolism that could
cement negative attitudes about the administration and its Afghanistan
policy. Senate Republicans, led by Sen. Mitt Romney, R-Utah, and Sen. Jim
Risch, R-Idaho, have released demands
<https://www.romney.senate.gov/romney-colleagues-introduce-comprehensive-afghanistan-legislation>
that the administration go even further in sanctioning the Taliban,
including any foreign governments that provide support to Afghanistan.

Earlier this month, the Intercept attempted to speak
<https://twitter.com/lhfang/status/1470522276130947073/video/1> to a number
of senators, Democrats and Republicans, about U.S. sanctions fueling
widespread famine in Afghanistan. Many refused to talk about the issue.

“I think we need to get aid to the Afghan people, but also I think it’s the
responsibility of the Taliban government to comply with what needs to be
done,” said Sen. Tammy Duckworth, D-Ill., without elaborating. Sen. Josh
Hawley, R-Mo., said any questions about Afghanistan should be posed to
Democrats and the Biden administration, not Republicans.

“We’ve deluded ourselves into thinking that sanctions are precise. They’re
not.”

The Intercept also reached out to the offices of Sen. Rand Paul, R-Ky., and
Sen. Bernie Sanders, I-Vt., two vocal opponents of sanctions overreach in
the past, to comment on Biden administration sanctions on Afghanistan.
Neither responded.

Sanctions are often held up as a politically and morally viable alternative
to war. Not many Democrats want to revisit the issue of Afghanistan, and
few politicians on either side of the aisle would recommend direct military
engagement with the Taliban. But the ongoing famine crisis and the
destruction of what remains of the Afghan economy could result in the
deaths of millions of people.

The glib attitude among many in Washington toward the destruction wrought
by sanctions was captured in a memorable exchange with the Clinton
administration about its heavy-handed policies against Iraq.

In 1996, CBS “60 Minutes” anchor Lesley Stahl asked then-Secretary of State
Madeleine Albright about the half-million children in Iraq who died from
malnutrition because of U.S. sanctions against Saddam Hussein’s government.
“Is the price worth it?” asked Stahl. “I think this is a very hard choice,”
replied Albright. “But the price — we think the price is worth it.”

“We’ve deluded ourselves into thinking that sanctions are precise,” said
the Quincy Institute’s Weinstein. “They’re not. They’re not a precision
weapon. They’re a blunt force, economic weapon that essentially kills
civilians.”
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