US to unfreeze Afghan assets

The UN says Afghanistan needs urgent help

The United States is preparing to release more than $200m of gold reserves and cash belonging to Afghanistan, as the shattered country makes increasingly desperate calls for help.

Aid is coming in, but hard cash is needed too

"This administration needs several million dollars tomorrow - otherwise, there will be no country when the billions are available," said Ahmed Fawzi, spokesman for the UN special representative for Afghanistan.

The assets held by the US more than cover the $10m which the UN says Afghanistan needs immediately, to pay more than 23,000 civil servants who are presently effectively working as volunteers.

But it will be only a tiny contribution to the $15bn which international financiers says Afghanistan needs over the next ten years, or the $45bn which the Afghan Planning Ministry wants.

Forthcoming assets

The $221m in assets to be released by the Bush administration, possibly by the end of the week, is mainly held in gold reserves by the Afghan Central Bank in the US.

Dubious money is changing hands in Kabul

It had been withheld because the US Government never recognised the Taleban regime as legitimate rulers.

In addition, the interim government can expect another $23m paid by foreign airlines transiting Afghan airspace.

The Taleban was banned from recouping the fees under UN sanctions imposed to force the militia to hand over Osama Bin Laden, suspected of masterminding US embassy bombings in Tanzania and Kenya in 1998 and the attacks on America last year.

Japan's pledge

Donors are meeting at a conference in Tokyo next week to make their pledges to Afghanistan, and a Japanese Government source said Japan may donate as much as $500m over the next two-and-a-half years.

But Afghanistan's interim Reconstruction Minister, Muhammad Amin Farhang, said that Afghans were losing faith in the outside world.

"Unfortunately, the promises that were made haven't been taken seriously," he said.

A "start-up fund" established after the inter-Afghan conference in Bonn last month called for donations of $20m. But pledges of only $17.8m have been made and, of those, only $8.6m has been paid.

Empty coffers

According to Mr Fawzi, Afghanistan's total state funds are now below $10m - and the interim government says it has a "a zero budget".

Unfortunately, the promises that were made haven't been taken seriously

Muhammad Amin Farhang, interim Reconstruction Minister

US Secretary of State Colin Powell is on his way to Kabul where he said he would reassure the leader of Afghanistan's interim administration, Hamid Karzai, that "the international community will stand alongside him and behind him".

"We didn't just ask him to take this job on alone," he told CNN on Monday.

Cash mess

The Afghan Government has also admitted to having no control over the national currency, the afghani, as markets are swamped by newly printed money of rapidly falling value.

Most are two or three months old, some with the same serial numbers, and the exchange rate fluctuates wildly as a result.

The confusion dates back to the Taleban, when the contract to print afghanis was actually held by the most powerful faction of the opposition Northern Alliance, Jamiat-e-Islami.

Now afghanis looted by the Taleban from the central bank are appearing back on the market, while some rich individuals are hoarding notes.

The Afghan Finance Ministry has called on the International Monetary Fund to set up a proper banking system for the country.