Biden to split frozen Afghan assets between possible aid and 9/11 families

President Biden signed an executive order on Friday to help enable $7 billion in frozen Afghan assets to be divided between humanitarian relief for the people of Afghanistan and the families of 9/11 victims.

Why it matters: Biden has come under significant pressure to release the U.S.-held assets, which belong to Afghanistan's central bank and were frozen after the Taliban's takeover in August. Afghanistan is facing an extreme humanitarian crisis, with more than 23 million people suffering from acute hunger.

• The crisis has been fueled by mass unemployment and the cessation of international financial aid, which had been the source of over 40% of Afghanistan's GDP under the previous government.
• Up to a million Afghan children under the age of five could die by the end of the year due to malnutrition and lack of basic services, according to UNICEF.

Details: The executive order will require U.S. financial institutions to transfer the $7 billion in frozen Afghan assets to a consolidated account held at the New York Fed.

• The families of 9/11 victims have sued the Taliban and are seeking access to the funds in federal court, meaning that any future transfer to Afghanistan for humanitarian purposes will depend on the court's decision.
• Even if the court allows half of the assets to be transferred for the benefit of the Afghan people, more than $3.5 billion would remain in the U.S. and be subject to ongoing litigation from 9/11 victims' families.

What they're saying: Pressed on whether the administration felt it was acting "responsibly" in light of the catastrophic humanitarian crisis, a senior U.S. official stressed that this is an "unprecedented" situation — and that the idea the government could ignore a federal court decision is "flatly wrong."

• "We have $7 billion of assets in the United States that are owned by a country where there's no government," the official said.

• "I think we are acting responsibly to ensure that a portion of that money can be used to benefit the people of the country where this money was given."
• "We have an independent judiciary and legal system here. We're acting responsibly to U.S. claimants who have claims that they have brought into court."

Between the lines: U.S. officials stressed that this is only the beginning of a multi-step, months-long process, which will require actions from the Treasury Department, Federal Reserve and financial institutions that would ultimately administer the funds.

The big picture: The U.S. has provided $516 million in humanitarian aid to Afghanistan since August and loosened some restrictions in December to make it easier for humanitarian groups to provide aid without running afoul of sanctions on the Taliban.