A possible model could be Afghanistan Reconstruction Trust Fund though Taliban oppose US proposal for third-party control.

KABUL/WASHINGTON   -   The United States and Taliban of­ficials have exchanged proposals for the release of billions of dollars from Afghan central bank reserves held abroad into a trust fund, three sources familiar with the talks said, offering a hint of progress in efforts to ease Afghanistan’s eco­nomic crisis.

Significant differences between the sides remain, however, according to two of the sources, including the Tali­ban’s refusal to replace the bank’s top political appointees, one of whom is under U.S. sanctions as are several of the movement’s leaders.

Some experts said such a move would help restore confidence in the institution by insulating it from in­terference by the Islamist militant group that seized power a year ago but which foreign governments do not recognise.

Freeing up cash may not solve all of Afghanistan’s financial troubles, but it would provide relief for a coun­try hit by a slump in foreign aid, per­sistent drought and an earthquake in June that killed 1,000 people. Mil­lions of Afghans are facing a second winter without enough to eat.

While the Taliban do not reject the concept of a trust fund, they op­pose a U.S. proposal for third-party control of the fund that would hold and disburse returned reserves, said a Taliban government source who spoke on condition of anonymity.

The United States has been in talks with Switzerland and other par­ties on the creation of a mechanism that would include the trust fund, disbursements from which would be decided with the help of an in­ternational board, according to a U.S. source who also declined to be named in order to discuss the matter.

A possible model could be the Af­ghanistan Reconstruction Trust Fund, a World Bank-administered fund created to get donations of for­eign development assistance to Ka­bul, the U.S. source added.

“No agreement has been reached yet,” said Shah Mehrabi, an Af­ghan-American economics profes­sor who is on the Afghan central bank’s supreme council.

The U.S. State Department and Switzerland’s Federal Department of Foreign Affairs declined to com­ment. The Afghan central bank did not respond to requests for com­ment U.S. Special Representative for Afghanistan Thomas West, speaking at an Afghanistan-focused confer­ence in Uzbekistan on Tuesday, wel­comed the dialogue.

“We have made it clear that a fu­ture recapitalisation of the (Afghan­istan) central bank and the Afghan financial system is possible provid­ed that reasonable and serious steps are taken to professionalise the cen­tral bank, to enhance its AML/CFT (anti-money laundering and count­er-terrorist financing) architecture and its independence,” he said.

Some $9 billion in reserves have been held outside Afghanistan, in­cluding $7 billion in the United States, since the Taliban overran Kabul last August as U.S.-led forces withdrew after 20 years of fighting the militants.