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Melissa Harris-Perry: This is The Takeaway. I'm Melissa Harris-Perry.

$7 billion. When the final US troops left Afghanistan in August, there was still $7 billion of Afghan central bank assets locked away in the Federal Reserve in the US. $7 billion that the new Taliban government claims belongs to them. $7 billion that could finally pay damages to the families of those who were killed on 9/11. Perhaps most urgently, this $7 billion, well, it could provide valuable relief for the Afghan people who are facing a dire humanitarian crisis in a nation we occupied for two decades.

Representative Pramila Jayapal: After our withdrawal from Afghanistan, US sanctions on the Taliban have impacted the broader functioning of the entire Afghan government, including schools and hospitals which cannot buy food for the patients, or gas to heat their buildings.

Melissa Harris-Perry: Representative Pramila Jayapal speaking on the floor of the House about out the crisis earlier this month.

Representative Pramila Jayapal: The New York Times reports that according to eight organizations, starvation could kill 1 million children this winter. These fatalities could far exceed civilian deaths resulting from 20 years of war.

Melissa Harris-Perry: Due to the reliance on foreign aid during the decades of US occupation, the American withdrawal has led to economic distress throughout Afghan society, as Reporter Ali Latifi told The Takeaway last month.

Reporter Ali Latifi: The poorest of the poor have always been poor in Afghanistan, including during the last 20 years, but now even the people who had managed to rise up, now they're wondering what are they going to do when their money runs out. For a lot of them, it either already has run out, or it's very close to running out in this point.

Melissa Harris-Perry: This week, President Biden signed an executive order that would split the $7 billion in half, giving just over half of it to support humanitarian aid in Afghanistan, and the other $3.5 billion would be freed up for a group of relatives of victims for the September 11th attacks who filed a lawsuit against the Taliban 20 years ago. This money could be used to pay those damages.

I sat down with Charlie Savage, New York Times National Security and Legal Reporter, an author of Power Wars. Charlie helps to explain why Biden is proposing a split of these funds, and why he's facing criticism.

Charlie Savage: We have to go back to August of last year when the government of Afghanistan for the last 20 years abruptly dissolves president of the country, and a lot of other top officials flee as the Taliban are taking over. One of the officials who fled was the acting president of the Afghanistan central bank known as Da Bank, or DAB sometimes. Da Bank, DAB, had deposited, in the vaults of the New York Fed, about $7 billion worth of various assets, gold, bonds, currency in other countries and so forth, that had largely accumulated over the last 20 years as a result of that government trying to get past the Taliban period and becoming a somewhat normal government in which lots of foreign aid was coming in, and the country was having currency circulating, and it was buying a lot of foreign goods, a huge import of food and equipment and other things coming in paid for with foreign aid.

All that international trade developed a surplus of foreign currency reserves, which accumulated in the vaults of several overseas banks, the largest of which was in New York, where the $7 billion was happening. The bank in New York made those funds unavailable for withdrawal, because there was no longer a person who clearly had authority to take that money out. The same way if I died, my savings account might be frozen, colloquial speaking, until the law decided who was my air who could access that account.

Melissa Harris-Perry: Charlie, one quick thing I just want to be sure that I'm clear about, when you're talking about funds accumulating in a vault, in my head, I'm at Gringotts in Harry Potter, and there's literally a pile of gold getting higher. Are these physical resources, or are these digital dollars?

Charlie Savage: I think it's sum of both. There's even gold there I think from before the original Taliban era. Your listeners might remember a movie called Die Hard with a Vengeance about a heist to steal a bunch of gold that was being stored in vaults under the streets of New York City. That heist, the story of that movie was based on the New York Fed, which plays a role in storing central bank assets, including gold and currency, but also bonds and other things for other banks from around the world. This has developed this over the last a hundred years or so because the United States has been a very stable place, and places where there's sometimes wars like Europe and World War II and so forth in the Middle East and Asia, of course. If one country is swept over by another, what's in bank vaults tends to get looted. The New York Fed has played a role in being a repository of central bank funds for countries around the world for a very long time, Afghanistan among them, and that's the money we're talking about here.

In September, while everyone is still kind of reeling from the Taliban takeover, the first order of business was the evacuation effort for people who were trying to get out the Kabul Airport and so forth. A plaintiff group made up of about 150 relatives of victims of 9/11, comprising about 50 victims of the 3,000 who died, who had long ago sued the Taliban, among other bad actors, like Al-Qaeda, for responsibility for their losses, and won a default judgment, because, of course, the Taliban and Al-Qaeda didn't show up in a New York courtroom to defend themselves. They had this default judgment from a judge saying, "Yes, the Taliban and these other people are responsible for your losses, and they owe you several billion dollars in compensatory and pain and suffering and so forth, punitive damages."

That judgment had always seemed a quixotic, merely symbolic justice, because there was no way to collect money from the Taliban, except now maybe there was, all of a sudden. Lawyers for that group, there's a lot of groups like that, but just one of those groups convinced a judge to send a US Marshall to the Federal Reserve Bank in New York and deliver a writ of attachment, which means locking down those funds, so that to start the process of taking them to pay off this old lawsuit judgment debt. The Biden administration then stepped in and said, "Wait a minute, this has all kinds of foreign policy implications, et cetera. The US government needs to tell the court what it think should happen."

That process took months, and that brought us to where we are now. The Biden administration decided to, first of all, use an executive order to grab half of that $7 billion. They split the baby, and they declared half of it, regulated by the Office of Foreign Asset Controls, and they declared that that meant it could not be seized by these plaintiffs, and their intention is to transfer that money, they need the judge's permission, but to transfer it to some kind of trust that would be used to benefit the Afghan people to pay for humanitarian relief efforts amid the famine that's breaking out there and so forth.

Then they left the other half behind and cleared a path for the 9/11 victims to continue to go after that other, roughly, $3.5 billion in court. Some people have reported that Biden simply gave the money to them. It's a little bit oversimplified. He tacitly blessed the court awarding this money, if it decides certain legal standards are met. There's a lot of stuff to litigate about whether this money can really be used to pay off a Taliban debt. He could have taken it all for the purpose of helping Afghans, and he chose to leave behind half.

Melissa Harris-Perry: That's really helpful. What that half then does, is it basically funds or makes possible actual resources. The point you'd made that these judgments, these previous judgements were creating a debt, saying you are indebted to this plaintiff, but without any sense that that was a debt that was ever going to be paid off, which was simply an acknowledgement of it. Now that that debt is potentially payable, at least in part, but you'd have to go through a new process in order, or not you, families would need to go through a new process in order to actually release those resources.

Charlie Savage: They need to convince the judge that this money that belongs to the state of Afghanistan, the former government of Afghanistan, the central bank of Afghanistan, is sufficiently associated with the Taliban, that it can be used to [unintelligible 00:10:00] to pay off the Taliban's debts. There's all kinds of complexities around that, including that the United States government does not recognize the Taliban as the legitimate government of Afghanistan, and has apparently no intention of doing that anytime soon, and the court lacks the authority to declare the Taliban the government of Afghanistan, that's only something a president can do.

Further, the United States has never declared the state of Afghanistan a state sponsor of terrorism. One of the laws that allows some sovereign assets to be used to pay off terrorism judgements like this generally works when that state has been declared a state sponsor of terrorism, and then some of their protections of sovereign immunity have been lowered.

The court is going to have a lot to work through here to decide whether this is a legitimate use of this money, the plaintiffs, both this group, that was the first in mind to put its hand up for it, and a lot of other 9/11 lawsuit clusters, which are now also jostling for permission and putting their hands out to try to grab some of [crosstalk]

Melissa Harris-Perry: First responders. Yes.

Charlie Savage: Many, many, many relatives of 9/11 victims, just normal victims, people who were in the towers, on the planes, filed these kinds of lawsuits. For various reasons, there were a number of them, and then just one big one that some people went with this law firm, some people went with that law firm. Only one of them was in a position where they already had a declared liquidated damages judgment, so they could go get a writ of attachment. The others just hadn't bothered basically because it was all symbolic anyway. Now they're trying to get their ducks in a row to also be able to go to this court and say, "We also want to attach these assets."

They're going to have to fight it out in court in terms of whether this is legitimate at all. They're going to fight with each other about whether the group that got there first gets to have their entire award paid off before the rest get anything, which might be how it works in New York. Also it might seem questionable because there's nothing special about that group, everyone has suffered the same kind of loss. There's a variety of ways in which this make it ugly.

Melissa Harris-Perry: Let's talk about the other half of the money, those resources that the Biden administration is saying they're going to use to assist Afghans currently living in Afghanistan who are dealing with this basically total collapse of their economy since we departed. Can you help us to understand a bit more about how decisions would be made about those dollars?

Charlie Savage: As an entry point on that, I think it's maybe helpful to your listeners first to understand what is happening in Afghanistan with a little more depth, and then what is controversial about this whole maneuver. Afghanistan, for the last 20 years, has had an economy that has been, let's say, artificially inflated compared to your average country because of the absolutely massive amounts of nation building related foreign aid pouring into that country from the United States and other western allies, and just other do good countries. Huge amounts of salaries of government officials and roads that were being built and everything else was coming in as foreign aid money. Then that money was circulating through salaries, they're not being paid now and so forth, and eventually coming back out of the country because they had a huge trade imbalance. They were importing massive amounts of equipment and food that they were not making up for with their own exports. They had meager exports. The difference was made up by all this foreign aid. That's how their economy functioned.

After the Taliban takeover, that is all collapsing for about [unintelligible 00:13:48] different reasons. The people's salaries are not getting paid. The value of the Afghan currency called the Afghani is collapsing because the central bank is no longer exchanging it for dollars in weekly currency auctions. No one has confidence that this economy's going to get any better under the Taliban. Those who do have hard assets are either putting it in their mattress, or they're, more likely if they can, they're sending it out of the country because they just don't think they'll be able to hold onto it under Taliban rule. Banks are therefore facing a currency shortage crisis. They can't let people withdraw money, even as the money is losing value.

A lot of very poor people who were already on the edge of being able to sustain themselves, now can no longer afford to buy food. The whole system of having currency as a means of exchange so that people will move things from where they are to where they need to be, like the stores of shelves, is completely drying up in the country, is collapsing into a barter economy. As a result of this disaster that is still unfolding, and mass starvation, a huge new wave of migrants is about to, and already starting to come out of Afghanistan and trying to escape this situation, and is going to doubtless reach Europe and cause new ways of instability, not unlike after Syria in 2014. It's just a terrible, terrible situation stemming from an economy that no longer works, and doesn't really have a good opportunity to work.

One part of that is also that there are sanctions on the Taliban that make it illegal, both under American law, but also under the United Nations, to send money into Afghanistan in a way that might benefit the Taliban as a counter-terrorism measure. Everything is just locked up. The half of these assets that the Biden administration has decided to move out of the grasp of the 9/11 families is going to be spent currently on adding to what governments have already allocated, including a lot from the United States for humanitarian assistance, food, medicine, winter clothing, and so forth, to benefit the Afghans.

One of the controversies about this is, should any of this money go to 9/11 families? We've already talked about whether it's really the Taliban's money, then that has to be worked out in court if the Taliban is not considered the government of Afghanistan. Another part is that this will cripple the central bank. The central bank already was crippled, has been paralyzed since August, but one of the things it did that kept that economy functioning, was it put huge amounts of US dollars in pallets, literal pieces of paper, US dollars, and flew them in planes to Kabul once a week or so. The central bank would then hold an auction and sell those dollars in exchange for Afghan currency. That propped up the value of the Afghan currency, and allowed currency to circulate so that the Afghan currency was worth something, so that banks had money in their equivalent of ATMs if those people who had accounts went in to withdraw their money and so forth. That process has completely stopped, and so the Afghan currency has plunged, and banks don't have enough currency to give anyone.

There is an argument that some have put forward that the central bank should be permitted to resume that practice of selling dollars into the economy, and maybe there's a way of keeping the Taliban from just taking the money once it lands in Kabul. There's not a lot of confidence among US officials that that's true, that the Taliban would just get the controls are possible. I think there's also a lot of skepticism that that would actually solve the problem. Because of all these other problems with the economy I've discussed, the suspicion is, if you're an Afghan and you suddenly can get some of your stored wealth, you're not going to just resume normal functioning and go out and buy a car or buy some fuel or buy whatever, and so the normalcy resumes, you will do what everyone else who's been able to has already done, which is send it out of the country to preserve it from just being lost in the Taliban takeover environment. There might be a one time infusion of capital, but it won't make the economy work, and then the bank will be out of money anyway. Probably that a lot of that money goes to the Taliban.

Melissa Harris-Perry: The dollars would just flow through, but then immediately right back out.

Charlie Savage: Yes. To the extent the Taliban don't just grab it for their own presumably nefarious sense. It's just a terrible, terrible situation for the people of Afghanistan and for the world, really. That doesn't have an easy answer. I think the Biden administration itself was in a somewhat of a no win situation. Once they stepped in, once they intervened at all, if they had taken all of the money to help the Afghans, they would've faced doubtless domestic political blowback. There would've been Republicans on the House, or maybe Democrats representing New Yorkers, especially too saying they had thrown 9/11 families under the bus.

They split the baby and took half instead of all for that purpose. That means now they're seen as having helped, even though this court still needs to figure it out. These 9/11 families take money, and from people who don't like the 9/11 family solution, you look on the internet or protest in Kabul, it's being portrayed as stealing money from starving babies in Afghanistan. Of course the 9/11 families themselves have a very sad story to tell. They've been looking for years to make some use out of these judgements that they went to court and legitimately obtained to compensate them for the losses of their loved ones on 9/11 too. It's all just terrible in many different directions.

Melissa Harris-Perry: Because of the complexity of this, and thank you for walking us through this very complex set of both legal, and fiscal, and international concerns, do you expect this to become politically important for the president and for Democrats and Republicans going into the midterms, or is this just one of those things that is a bit too complex in all of its multiple shadings to make a difference to voters at the ballot box.

Charlie Savage: Well, that's an interesting question. I think a lot of the criticism, from the vantage point of those who didn't think the 9/11 families should get any of this money, is coming from abroad. Not exclusively, just looking at the Twitter conversation, there's a number of people here who think that. In fact, I quoted a 9/11 victim with a group called 9/11 Families for Better Tomorrows, or More Peaceful Tomorrows, or something like that. It's a left-wing group that took that position.

In terms of affecting the ballot box, they probably did by leaving behind half the money for the families to go after, avoid creating a new political vulnerability for demagoguery against them. It is an unbelievably complicated issue, as we've been discussing. It doesn't seem like it's reducible to political election sloganeering as well as some others. It seems to me, therefore, I would be surprised if this becomes a midterm election issue.

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Melissa Harris-Perry: Charlie Savage is a New York Times National Security and Legal Reporter, and author of Power Wars.

Charlie, thank you so much for joining us and for walking us through all of that.

Charlie Savage: My pleasure. Thanks for having me on.

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