China urges end to sanctions on Afghanistan, highlighting split with West

China has called for economic sanctions on Afghanistan to be lifted and the Taliban to be given access to billions of dollars in frozen foreign exchange reserves, highlighting a deepening rift between Beijing and the West over the future of the country.

"Afghanistan's foreign exchange reserves are national assets. They belong to the people and should be used for the people," China's foreign ministry said in a statement, citing remarks made by Wang Yi, the country's foreign minister, at a virtual meeting of the G20 on Afghanistan. "They must not be used as a bargaining chip to force political pressure on Afghanistan."

Multilateral financial institutions, including the World Bank and the IMF, should normalise lending to the country, Mr Wang added, and “unilateral” sanctions should be lifted.

Afghanistan faces an acute financial and humanitarian crisis following the Taliban takeover of the country. But Mr Wang’s comments reflect a growing divide between western governments and China and Russia over how to respond to the militant Islamist group’s return to power.

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The UK on Wednesday called for Russian president Vladimir Putin and Xi Jinping, his Chinese counterpart, to join a "co-ordinated international approach".

"If we want to avoid Afghanistan becoming a haven for global terror, then the international community – including Russia and China – needs to act as one in its engagement with the Taliban," said Liz Truss, the UK foreign secretary.

Joint effort

Her warning was issued after Mr Putin and Mr Xi agreed last week to share intelligence and hold regular talks on Afghanistan in a joint effort to prevent instability.

China’s foreign ministry also confirmed that the special envoys of China, Russia and Pakistan visited Kabul this week to meet members of the Taliban leadership.

The Afghan economy has been heavily reliant on international aid, charities and other groups over the past two decades, receiving $4 billion-$6 billion annually in development assistance as well as billions of dollars in US military support. That funding has come to an abrupt halt since the Taliban takeover.

Foreign governments recently pledged $1 billion in emergency relief over the next three months. But Afghanistan has nearly $9 billion in foreign currency reserves that could be used for emergency spending, most of which is held in international accounts. Access to central bank reserves held in US banks was frozen by the Biden administration.

The abrupt loss of income for many families has fuelled widespread hunger, with just 5 per cent of Afghan families obtaining enough to eat each day, according to the World Food Programme. Lost jobs, a lack of cash and spiralling inflation have also pushed urban middle-class households into poverty, the WFP added.

“The economic freefall in Afghanistan has been abrupt and unrelenting,” said Mary-Ellen McGroarty, WFP country director for Afghanistan.

‘Brink of collapse’

Tedros Adhanom Ghebreyesus, director-general of the World Health Organization who visited Kabul this week, has warned that Afghanistan's health system is "on the brink of collapse" and the country faces "an imminent humanitarian catastrophe".

Public hospitals have already begun to shut down due to lack of funds to buy supplies and pay doctors’ salaries.

Fears over Beijing’s rising influence have escalated in the wake of the US withdrawal.

But Yun Sun, a China foreign policy expert at the Stimson Center, a Washington-based think tank, said other countries would also hold sway in Kabul, including Qatar, Saudi Arabia, the Untied Arab Emirates and Pakistan.

“There are countries which have a bigger influence over the Taliban than China,” she said. “China stands out because it is the [world’s] number two power and has money.”

No international government has recognised the Taliban as Afghanistan’s legitimate government. – Copyright The Financial Times Limited 2021