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Cablegate: Afghanistan: Ambassador Wood's Meeting with the Afghan

VZCZCXRO2568
PP RUEHIK RUEHPOD RUEHPW RUEHYG
DE RUEHBUL #3088/01 3360423
ZNR UUUUU ZZH
P 010423Z DEC 08
FM AMEMBASSY KABUL
TO RUEHC/SECSTATE WASHDC PRIORITY 6262
INFO RUEATRS/DEPT OF TREASURY WASHINGTON DC 0694
RUCNAFG/AFGHANISTAN COLLECTIVE
RUEHZG/NATO EU COLLECTIVE
RUEKJCS/OSD WASHINGTON DC
RUEKJCS/JOINT STAFF WASHINGTON DC
RUEKJCS/SECDEF WASHINGTON DC
RUEABND/DEA HQS WASHINGTON DC
RHMFIUU/HQ USCENTCOM MACDILL AFB FL
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC
RUEAIIA/CIA WASHINGTON DC
RHEFDIA/DIA WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC

UNCLAS SECTION 01 OF 02 KABUL 003088

DEPT FOR SCA/FO, SCA/RA, AND SCA/A
DEPT PASS AID/ANE
DEPT PASS USTR FOR GERBER AND KLEIN
DEPT PASS OPIC FOR ZAHNISER
DEPT PASS TDA FOR STEIN AND GREENIP
USOECD FOR ENERGY ATTACHE
CENTCOM FOR CSTC-A
NSC FOR JWOOD
TREASURY FOR LMCDONALD, ABAUKOL, BDAHL, AND MNUGENT
OSD FOR SHIVERS
COMMERCE FOR DEES, CHOPPIN, AND FONOVICH

SENSITIVE

SIPDIS

E.O. 12958 N/A
TAGS: EIND AF
SUBJECT: AFGHANISTAN: AMBASSADOR WOOD'S MEETING WITH THE AFGHAN
CHAMBER OF COMMERCE AND INDUSTRIES

1. (U) Summary: Ambassador Wood met November 23 with leaders of the
Afghan Chamber of Commerce and Industries (ACCI) for the first time
since its reorganization. He underscored the central role
Afghanistan's private sector must play in long-term, sustainable
development and urged ACCI to become a unified voice for Afghan
business. While noting progress and the supportive role of the
U.S., both sides agreed that much work remains ahead, particularly
in energy, finance, anti-corruption, taxation, and commercial and
financial law. ACCI members complained about their treatment by the
GIRoA and criticized the international community for insufficient
consultation with Afghans on foreign assistance. They also
requested the Embassy's help in obtaining business visas and greater
access to foreign contracts for Afghan business. End summary.


2. (U) On 11/23/08, Ambassador Wood met for the first time since
their election with the Board of Directors of the reconstituted
Afghan Chamber of Commerce and Industries (ACCI) at the request of
Mahmood Karzai, ACCI vice-chair and younger brother of President
Hamid Karzai. The new ACCI is the result of the recent merger
between the Afghanistan International Chamber of Commerce and the
former ACCI, which had been headed by Mahmood Karzai and Kabul Bank
chief Sherkhan Farnood. The first election of the Board of
Directors of the merged chamber took place last summer, electing 21
members by region and Farnood and Karzai again to positions of
leadership, as chairman and first vice-chairman, respectively.

3. (U) In an exchange of views with the entire board, Ambassador
Wood emphasized that the private sector, not the international
community, will ultimately assure long-term economic growth and
development in Afghanistan. Effective anti-corruption measures,
affordable credit, reasonable taxes and fees, and good dispute
settlement mechanisms, are key elements to a business-friendly
environment, he said. The ACCI must lobby hard for greater
transparency and predictability to attract greater foreign
investment. The pending commercial and financial laws are crucial
underpinnings to private sector development, and he urged the ACCI
to help make their rapid enactment a priority. He pledged the
Embassy's continued advocacy efforts with Parliament and the
administration regarding these laws.

4. (U) Ambassador Wood noted the many positive signs of democracy
and a revitalizing economy he had seen across the country: working
street lights and bustling traffic in Kabul; prosperous rice farms
in Kunduz; a women's shura in Badakhshan. He cited the billions of
dollars the U.S. has contributed so far to Afghan reconstruction and
expressed optimism in particular about impending improvements in the
energy sector. The third turbine recently delivered to the Kajaki
hydropower plant and additional supplements over the next 12 months
promise to provide an additional 50 megawats of power to the
southern region and decrease reliance on inefficient and expensive
diesel-powered generators.

5. (U) Board members acknowledged the key role the U.S. has played
in progress to date but stressed the continuing drag that
insecurity, corruption, high taxes, poor access to credit, and, in
particular, power shortages place on the private sector. They
complained of the bureaucratic complexity of registering a business
in Afghanistan and pointedly criticized the Afghan government for
what they called a Soviet-style distrust of the private sector and
desire to control the economy from above. (Note: Last month USAID
launched a Central Business Registry reform, which consolidates 5-6
stops into one at the Ministry of Commerce for registering a
business.)

6. (U) The Chamber's CEO, a non-elected executive, complained at

KABUL 00003088 002 OF 002


length about the government's lack of "respect" for the ACCI and
asked for the Embassy's intercession in an ongoing property dispute
between the GoIRA and the ACCI dating from the time when ACCI was a
quasi-governmental entity. He also complained about a lack of
coordination among international donors and argued that some of
their aid was ineffective because Afghans had not been consulted
beforehand, and he offered ACCI's help to head off such problems in
the future. He and other Board members asked for the Embassy's help
in gaining greater access to foreign contracts, both for income
generation and capacity building. In addition, they asked for the
Embassy's help in obtaining visas for Afghan businessmen. To
applause, the Ambassador reported that the Embassy would begin
accepting business visa applications in February.

7. (U) In closing, the Ambassador noted that despite the very real
obstacles facing Afghan business, for the first time in Afghan
history the free market is enshrined in the constitution, a
remarkable and lasting achievement. Greater cooperation with
regional partners, Pakistan in particular, remains a key goal, and
all should be encouraged by Pakistan's growing acknowledgment of the
importance of a safe and open passage between Jalalabad and
Peshawar. If Pakistan and Afghanistan continue to cooperate
economically, they can realize their potential to be the gateway
between South and Central Asia. Finally, Ambassador Wood urged the
ACCI to seize the opportunity provided by their merger to become a
strong and united voice for Afghan business. They must work every
day to make their voice heard and to prove their voice is worth
listening to by being serious and law-abiding corporate citizens.
They need to lobby the government and parliament for their common
interests and find an advocate within the government who will take
their part without trying to make business decisions.

8. (SBU) Comment: ACCI talks a good game, but has shown few signs
so far of moving beyond the narrow interests of its leadership. The
Embassy has continued to urge the ACCI to lobby for market-oriented
reforms, in particular the passage of pending financial and
commercial laws key to private sector development. While there has
been progress on some of these laws -- most recently the Mortgage
Law, passed by the lower house of the National Assembly on November
15 - ACCI has not to our knowledge played an active role. For the
moment, ACCI appears less interested in what it can do for
Afghanistan than in what the government and donors can do for it.
The Embassy, including USAID, will continue to work with ACCI and
prod it toward greater professionalism. Progress, however, is
likely to be incremental, and the ACCI, sadly, provides a fairly
good mirror of local attitudes with respect to private initiative.


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