Financial assistance

Sanctions against Afghanistan: the current situation and what could change in the future

The withdrawal of international troops from Afghanistan and the consequent announcement of a Taliban interim government have sparked controversy and debate around the world. The Taliban, which identifies itself as the Islamic Emirate of Afghanistan, is an internationally designated terrorist organization.

This presents a legal minefield as governments, charities and businesses strive to provide humanitarian aid and engage with the new government without breaching sanctions.

Unsurprisingly, compliance with sanctions will be problematic. David Sauvage review the current situation and consider how it might evolve.

Current sanctions

Taliban-related sanctions have been implemented by the UN, EU, UK and US for 20 years.

The UN first applied sanctions against Afghanistan in 1999 in response to Taliban activities, which included the formation of international terrorist groups. Currently, the UN has imposed sanctions on more than 130 members of the Taliban, many of whom are now part of the interim government. Of particular interest are Prime Minister Hasan Akhund, a UN-designated terrorist, and new Home Secretary Sirajuddin Haqqani, the son of the founder of the Haqqani network (which has been classified by Washington as a terrorist group). Haqqani is on the FBI’s “most wanted” list following his involvement in suicide bombings and his links to al-Qaeda.

On July 4, 1999, President Clinton froze Taliban assets under Executive Order 13129, following reports that the Taliban had allowed Osama bin Laden and Al Qaeda to use Afghanistan as a safe haven. The effects of this order continue today, with Taliban-linked groups in Asia and Africa being sanctioned under US anti-terrorism sanctions programs. This means that all assets held by the Taliban that fall under US jurisdiction are frozen. With the dominance of the US dollar in international affairs, the risk of inadvertent breaches of US sanctions around the world is significant.

Likewise, the EU imposed restrictive measures against Afghanistan and the Taliban in October 1999. The measures include an asset freeze, a ban on arms exports and travel restrictions.

Following its exit from the EU, the UK implemented the Afghanistan (Sanctions) (Leaving the EU) Regulation 2020, which aligns the UK’s sanctions with those of the European Union. In addition, the UK Office of Financial Sanctions Implementation (“OFSI”) recently reminded UK businesses, non-governmental organizations (NGOs) and financial institutions of the UN sanctions already in place against individuals and entities associated with the Taliban.

The future of sanctions against Afghanistan

The eyes of the world are now on Afghanistan. Concerns range from human rights violations to the protection of minority groups to advocacy for democratic elections. An emergency G7 summit chaired by Boris Johnson saw British Foreign Secretary Dominic Raab insist the UK was ready to use “all the levers at our disposal”, including financial means and resources. sanctions to protect the Afghan people.

The extent to which Western governments choose to impose new sanctions will invariably depend on the behavior of the Taliban and the resulting impact on both national harmony and international relations. Another concern within the EU is the impact of migration if the Afghan economy collapses.

Josep Borrell, EU foreign policy chief, recently said the EU had no choice but to engage with the Taliban government and maintain a diplomatic presence in Afghanistan. However, the strict conditions set by the EU with regard to a favorable engagement with the new Taliban government, including a demand for respect for human rights, are very likely to cause the talks to finally break down.

G7 committee chairs said, “There is little indication from its past or present behavior that the Taliban are committed to any of these principles, so the G7 countries should be prepared to isolate the Taliban and impose severe penalties if violations reach an agreed threshold.

The United States has spoken equally on the issue of sanctions should the situation in Afghanistan deteriorate. A bill, the “Afghanistan Counterterrorism, Oversight, and Accountability Act”, was recently introduced in the US Senate demanding assessments and the imposition of sanctions against the Taliban and the countries that assist them in Afghanistan. However, following the controversy over the impact of the sanctions on Afghan civilians, the US Treasury Department has also issued several general clearances, which facilitate the flow of US humanitarian and financial aid to the Afghan people. However, these general authorizations lack clarity and, for aid organizations, there have already been difficulties in understanding the practical modalities of their implementation.

Herein lies the delicate balance that must be struck by Western powers seeking to promote a more moderate Taliban government. As a country almost entirely dependent on foreign aid, the Afghan people cannot afford to be afflicted with the same brush of sanctions as those currently serving in the interim government. To avert a humanitarian catastrophe, the US, UN, EU and their Western allies must find ways through which food and medical supplies can legally enter the country. This can prove difficult if the Taliban continue to rule in a manner close enough to the 1990s, which to the detriment of the population can ultimately lead to tightening of restrictions against the Taliban and, therefore, Afghanistan.

In Russia, sectoral sanctions introduced in 2014 were designed to minimize the impact on the Russian people by targeting specific activities and funding channels linked to the Russian government. As a cash and resource poor country, the likelihood of similar sanctions in Afghanistan is slim. The wide range of sanctions applied around the world further complicates the situation.

Considerations

If additional sanctions were to be applied, the United States is very likely to lead the charge. This will create further compliance risks and costs for those who choose to continue to engage with Afghanistan. To date, the US Office of Foreign Assets Control (“OFAC”) and OFSI have not yet issued formal guidelines on transactions related to Afghanistan.

In light of this, financial institutions are reducing their risks and denying or delaying financial flows to humanitarian agencies. However, this practice is not exempt from criticisms and concerns, including the risk of violation of sanctions, facilitation of money laundering, damage to reputation and invasive investigations by regulators. It is hardly surprising that simply blacklisting businesses linked to Afghanistan is an obvious risk management approach for many organizations. This has a ripple effect for NGOs and charities. Despite assurances from OFAC that the Biden administration will work with financial institutions, NGOs and international organizations to facilitate humanitarian aid, as well as OFSI, which recently updated its guidelines on works charities, too many financial institutions have now been burned to trust these assertions in the face. value.

Only time will tell if Afghan officials have really changed. However, without troops on the ground, it seems likely that the sanctions are here to stay, no matter what the dire impact on the Afghan people. As with the plethora of sanctions regimes around the world, compliance will become more complicated.


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