US President Joe Biden signed an executive order on Friday unfreezing $7 billion (€6.15 billion) in assets in the United States belonging to Afghanistan's central bank.

The White House is freeing up the funds for humanitarian aid to Afghanistan and for compensation to the victims of the attacks of September 11, 2001. The latter will remain in the US as lawsuits brought by the September 11 victims make their way through the courts.

Biden's executive order requires US financial institutions to transfer any Afghan central bank assets that they hold into a new consolidated account at the Federal Reserve Bank of New York.

Why is the US unfreezing Afghan assets now?

Last month, a US judge gave the White House until Friday to draft a plan for how it wished to handle the billions in Afghan assets frozen in the United States.

Members of Congress and the United Nations had called on the administration to free up the funds to address Afghanistan's extreme economic crisis.

Ahead of Friday's announcement, one US government source told Reuters news agency that the Afghan funds would be released for "the benefit of the Afghan people and for Afghanistan's future."

Why were the Afghan central bank's assets frozen?

Afghanistan's central bank holdings in the US were frozen in August after the fall of Kabul to the Taliban. The Taliban's rapid takeover of Afghanistan came after the chaotic US and NATO withdrawal from the country after nearly 20 years.

Almost 80% of the national budget for Afghanistan prior to the Taliban takeover came from the international community. With that funding absent, the country's economy nosedived.

How have rights groups reacted?

The Biden administration's move to divide Afghanistan's frozen assets was met with sharp condemnation from rights organizations and Afghan advocates.

The US-based advocacy group, Afghans for a Better Tomorrow, said it was "outraged" by the move.

The decision to divvy up half of Afghanistan's reserve funds to give to 9/11 victims' families is "short-sighted, cruel, and will worsen a catastrophe in progress" in Afghanistan.

Addressing the victims' families, the group urged for them to reconsider their litigation, saying the money "will not bring justice, but ensure more misery and death in Afghanistan."

Human Rights Watch (HRW) warned that the US move could set "a problematic precedent."

HRW's Asia Advocacy Director, John Sifton, said the move would "do little to address underlying factors driving Afghanistan’s massive humanitarian crisis."

"The Taliban are cruel, brutal, and misogynist, but why should the Afghan people be punished for that?" he added.

How will the money be spent?

The US government has faced mounting pressure from the international community to free up the funds for humanitarian purposes in a way that does not recognize the Islamic militant group.

The funds that will remain in the US will be earmarked for compensation to the victims of the September 11 attacks and their families.

The Taliban asserts the money that belonged to the Afghan government is now theirs as they claim to have taken over responsibility for the government.

In addition to US holdings, Afghanistan also holds an additional $2 billion in reserves. Most of that is held in countries including Germany, Switzerland, the UAE and the UK.

The September 11, 2001, terrorist attacks carried out by al-Qaeda killed nearly 3,000 Americans, mostly at the World Trade Center in New York City and the Pentagon in northern Virginia near Washington.

The Taliban hosted the terror group and its leader, Osama bin Laden, at the time of the attacks. The US killed bin Laden in Pakistan in 2011.

US sanctions prohibit business with the Taliban.

rs, ar/sms (AFP, AP, Reuters)