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Cablegate: Revised Afghanistan Compact for Washington Review

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 14 KABUL 005024

SIPDIS

DEPARTMENT FOR SA/FO, SA/A
TREASURY FOR PARAMESWARAN
NSC FOR AHARRIMAN, KAMEND
CJTF-76 FOR POLAD, CENTCOM FOR CG CFC-A
COMMERCE FOR AADLER

SENSITIVE

E.O.12958: N/A
TAGS: ECON EFIN EAID PREL PGOV AF
SUBJECT: REVISED AFGHANISTAN COMPACT FOR WASHINGTON REVIEW

Ref: (A) Kabul 4939
(B) State 219188
(C) State 203877
(D) State 203877
(E) State 203820
(F) Kabul 4797
(G) Kabul 4634

------------------------
Summary and Introduction
------------------------

1. (SBU) This cable includes the full text of the December
11 revised Afghanistan Compact and three Annexes for
Washington review. This final revision reflects the bulk of
consensus recommendations reached at a series of December 2-
5 PrepCom meetings held on the margins of the Kabul Regional
Economic Cooperation Conference (Ref A) as well as stylistic
changes that tighten the text and clarify its message by
creating a preamble, and "Purpose" and "Principles of
Cooperation" introductory sections. In the paragraphs below
we highlight key final modifications to the Compact text.

2. (SBU) Beyond areas of critical policy concern we believe
it is time to stop dealing with issues of language and form.
We have some of what we want. So do others. We need to
close on the compact, particularly on the benchmarks, and
start working on other donors to fund the large projects
necessary for victory in Afghanistan. Ultimately this
compact is about hard political reforms and audacious
development. We need to get on with it and only reclama on
major substantive issues. The GoA and UNAMA request final
comments NLT December 15. They request also that all
comments come through ambassadors and not/not via the
conference call, in which the GoA no longer intends to
participate (See para 11). End Summary.

-----------------------------------
Compact Chapeau: Key Modifications
-----------------------------------

3. (SBU) This section is rewritten in a form to add punch.
It now has complete GoA buy-in. The substance is what we
agreed to except for issues noted below:

4. (SBU) The introduction to the "Purpose" section removes
earlier references to the GoA "seeking the support of the
international community for the implementation of the Afghan
National Development Strategy (ANDS)." PrepCom participants
thought this language inappropriate given that the ANDS is a
wholly GoA driven strategy and, in any case, premature given
that a Final ANDS has yet to be released by the GoA. The
current version of the compact chapeau also removed an
earlier statement that "The mechanism for implementing the
commitments under this compact will be the ANDS"because a
later statement in the final paragraph of the Compact
chapeau names the joint coordination and monitoring
mechanism as the Compact's implementing vehicle.

5. (SBU) In the "Principles of Cooperation" section, a new
point has been added: "Recognize the importance of gender in
all policies and programs." In the "Security" section,
language has been modified to recognize the contribution of
"partner nations" to security sector reform in addition to
OEF and NATO/ISAF forces. In the "Governance, Rule of Law
and Human Rights" section, language has been added on
promoting justice and building a fiscally sustainable
administration for future elections. In the "Economic and
Social Development" section, the introduction to the five
basic priorities has been changed to a declarative "Public
investment will be structured around five basic priorities
of the ANDS" and objective language has been added to expand
employment generation and enterprise creation.

6. (SBU) In the chapeau's "Counter-Narcotics - a
Crosscutting Priority" section, a notable omission is the
absence of eradication from a CN strategy list that includes
interdiction, law enforcement, judicial capacity building,
enhanced regional cooperation, alternative livelihoods and
institution building. In a December 10 UNAMA meeting with G-
8 ambassadors, Ambassador Neumann flagged this omission and
strongly called for its inclusion as a statement that both
donors and the GoA accept both the legitimacy and practical
necessity of eradication as one of the tools to fight
Afghanistan's narcotics scourge. Subsequently, language in
the Annex I counter-narcotics Security Benchmark was
strengthened considerably to read "The government will
strengthen its law enforcement capacity at both central and
provincial levels, resulting in a substantial annual
increase in the amounts of drugs seized or destroyed." We
are inclined to push back once more on the language in the
cover document but accept this compromise. UK support for a
push to include the word eradication would be helpful. We
await Washington's guidance.

---------------------------------------
Annex I: Benchmarks - Key Modifications
---------------------------------------

7. (SBU) The extended benchmark (BM) section adds a small
chapeau committing the GoA, with the support of the
international community to achieving all BMs within the 5-
year timeframe of the Compact. In the "Security" section
reference to the size of ANA forces, disagreement remains
over whether to modify the 70,000 target by including our
proposed language of the phrase "up to", now retained in
brackets before the 70,000 figure. "Up to" language is
also bracketed before the police manning figure but the
police language will follow whatever is agreed to on the ANA
language. Given the cross-cutting priorities associated
with counter-narcotics efforts, the BM's text is now divided
between the Security, Governance, Agriculture and Rural
Development, and Social Protection sections. The Gender
section has been strengthened with language added requiring
the National Action Plan for Women in Afghanistan to be
fully implemented. The Agriculture and Livestock BM has been
strengthened, with language mandating a 30 percent increase
in public investment in agriculture (vice a 30 percent
increase in investment in creating an "enabling environment
for agriculture.")

8. (SBU) In the Economic Governance and Private Sector
Development section, controversial Financial Management BM
language detailing specific targets for the share of donor
assistance flowing through the GoA's Core Budget was
softened at the request of the US, Germany and Japan to read
".donors will make every effort to increase the share of
total external assistance to Afghanistan that goes to the
core Budget." In extended discussion on the also
controversial Domestic Revenues BM, a GoA/IFI/US/UK working
group has revised the measurement of the GoA's core budget
expenses to include World Bank estimates of previously off-
budget recurring costs associated with the ANA, ANP,
education and health care, as well as projected recurring
parliamentary and election expenses. The benchmark now
details an increasing share of domestic revenues as a
percentage of this revised budget, models budget revenues as
a percentage of GDP and refers to a "continuing need, in
accordance with the principles in Annex II, for (1) external
assistance to the core budget and (2) increasing cost
effectiveness of assistance that funds recurrent expenditure
through the external development budget." We suggest
accepting this language. Finally, a new BM on Regional
Cooperation was added, referring to working initiatives
agreed upon at the December Regional Economic Cooperation
Conference.

--------------------------------------------- --
Annex II: AID Effectiveness - Key Modifications
--------------------------------------------- --

9. (SBU) Annex II adds a welcome point calling on the GoA
to improve its ability to generate domestic revenues through
customs duties and taxes and to achieve cost recovery
through public utilities and transportation. On donor
commitments, language on multi-year commitments is modified
to read "Increasingly provide more predictable and multi-
year funding commitments or indications of multi-year
support.". Language is added asking donors to "avoid
activities that undermine national institution building and
limit the use of top-ups which will not be sustainable in
the medium term."

--------------------------------------------- ----------
Annex III: Coordination/Monitoring - Key Modifications
--------------------------------------------- ----------

10. (SBU) In Annex III, language was added to clarify that
".the Board supplements existing consultative mechanisms
between the GoA and the international community." It also
clarifies that the Board will be "supported by technical
experts and financial assistance, as needed." This section
caused a great deal of discussion with the GoA and the IFIs,
both of whom were concerned about setting up parallel
monitoring bureaucracies. We believe we have enough eyes on
the ground to know when things are going wrong. We have
what we need and recommend accepting this Annex without
further change.

---------------------------------
Final Comments Due by December 15
---------------------------------

11. At this same December 10 meeting, UNAMA Deputy SRSG Haq
emphasized the need for final comments from G-8 + capitals
by December 15 in order to meet the timelines agreed to at
the December 2-5 PrepCom sessions. The GoA requested all
changes be received through Ambassadors. They feel the G-8
conference call mechanism sets of confusing dual tracks.
The GoA has decided no longer to participate in those calls.
(Comment: The GoA is firm. While we did not prompt this
decision, we endorse it, as the use of a conference call in
which many Ambassadors here did not participate was causing
increasing policy confusion. End Comment)

----------------------------------
12. December 11 Compact Draft Text
----------------------------------

FYI: Post is also e-mailing copies of the text to key
Washington addressees for readability. End FYI


THE AFGHANISTAN COMPACT BETWEEN THE ISLAMIC REPUBLIC OF
AFGHANISTAN AND THE INTERNATIONAL COMMUNITY

THE ISLAMIC REPUBLIC OF AFGHANISTAN AND THE INTERNATIONAL
COMMUNITY:

DETERMINED TO STRENGTHEN THEIR PARTNERSHIP TO IMPROVE THE
LIVES OF AFGHAN PEOPLE, AND TO CONTRIBUTE TO NATIONAL,
REGIONAL, AND GLOBAL PEACE AND SECURITY;

AFFIRMING THEIR SHARED COMMITMENTS TO CONTINUE, IN THE
SPIRIT OF THE BONN, TOKYO, AND BERLIN CONFERENCES, TO WORK
TOWARD A STABLE AND PROSPEROUS AFGHANISTAN, WITH GOOD
GOVERNANCE AND HUMAN RIGHTS PROTECTION FOR ALL UNDER THE
RULE OF LAW AND MAINTAIN THAT COMMITMENT OVER THE TERM OF
THIS COMPACT AND BEYOND;

RECOGNIZING THE COURAGE AND DETERMINATION OF AFGHANS WHO, BY
DEFYING VIOLENT EXTREMISM AND HARDSHIP, HAVE LAID THE
FOUNDATIONS FOR A PEACEFUL, PLURALISTIC AND PROSPEROUS STATE
EMBRACING THE PRINCIPLES OF ISLAM AND DEMOCRACY;

NOTING THE FULL IMPLEMENTATION OF THE BONN AGREEMENT THROUGH
THE ADOPTION OF A NEW CONSTITUTION IN JANUARY 2004 AND THE
HOLDING OF PRESIDENTIAL ELECTIONS IN OCTOBER 2004 AND
NATIONAL ASSEMBLY AND PROVINCIAL COUNCIL ELECTIONS IN
SEPTEMBER 2005, WHICH HAVE ENABLED AFGHANISTAN TO REGAIN ITS
RIGHTFUL PLACE IN THE INTERNATIONAL COMMUNITY;

MINDFUL THAT AFGHANISTAN'S TRANSITION TO PEACE AND STABILITY
IS NOT YET ASSURED, AND THAT STRONG INTERNATIONAL ENGAGEMENT
WILL CONTINUE TO BE REQUIRED TO ADDRESS REMAINING
CHALLENGES;

RESOLVED TO OVERCOME THE LEGACY OF CONFLICT IN AFGHANISTAN
BY SETTING CONDITIONS FOR SUSTAINABLE ECONOMIC GROWTH AND
DEVELOPMENT; STRENGTHENING STATE INSTITUTIONS AND CIVIL
SOCIETY; REMOVING REMAINING TERRORIST THREATS; MEETING THE
CHALLENGE OF COUNTER-NARCOTICS; REBUILDING CAPACITY AND
INFRASTRUCTURE; REDUCING POVERTY; AND MEETING BASIC HUMAN
NEEDS;

HAVE AGREED TO THIS AFGHANISTAN COMPACT.

PURPOSE

THE AFGHAN GOVERNMENT HAS ARTICULATED ITS OVERARCHING GOALS
FOR THE WELL BEING OF ITS PEOPLE IN THE AFGHANISTAN
MILLENNIUM DEVELOPMENT GOALS REPORT 2005. CONSISTENT WITH
THOSE GOALS, THIS COMPACT IDENTIFIES THREE CRITICAL AND
INTERDEPENDENT AREAS OR "PILLARS" OF ACTIVITY FOR THE FIVE
YEARS FROM THE ADOPTION OF THIS COMPACT:

1. SECURITY;

2. GOVERNANCE, RULE OF LAW, AND HUMAN RIGHTS; AND

3. SUSTAINABLE ECONOMIC AND SOCIAL DEVELOPMENT.
A FURTHER VITAL AND CROSSCUTTING AREA OF WORK IS ELIMINATING
THE NARCOTICS INDUSTRY, WHICH REMAINS A FORMIDABLE THREAT TO
THE PEOPLE AND STATE OF AFGHANISTAN, THE REGION, AND BEYOND.

THE AFGHAN GOVERNMENT HEREBY COMMITS ITSELF TO REALIZING
THIS SHARED VISION OF THE FUTURE; THE INTERNATIONAL
COMMUNITY RECIPROCALLY COMMITS ITSELF TO PROVIDE THE
RESOURCES AND SUPPORT TO REALIZE THAT VISION. ANNEX I SETS
OUT DETAILED OUTCOMES, BENCHMARKS, AND TIMELINES FOR
DELIVERY, CONSISTENT WITH THE HIGH-LEVEL GOALS SET BY THE
ANDS. THE GOVERNMENT AND INTERNATIONAL COMMUNITY ALSO
COMMIT THEMSELVES TO IMPROVE THE EFFECTIVENESS AND
ACCOUNTABILITY OF INTERNATIONAL ASSISTANCE AS SET FORTH IN
ANNEX 2.

PRINCIPLES OF COOPERATION

AS THE AFGHAN GOVERNMENT AND THE INTERNATIONAL COMMUNITY
EMBARK ON THE IMPLEMENTATION OF THIS COMPACT, THEY WILL:

1. WORK ON THE BASIS OF PARTNERSHIP BETWEEN THE AFGHAN
GOVERNMENT, WITH ITS SOVEREIGN RESPONSIBILITIES, AND THE
INTERNATIONAL COMMUNITY, WITH A CENTRAL AND IMPARTIAL
COORDINATING ROLE FOR THE UNITED NATIONS;

2. RESPECT THE CULTURE, VALUES AND HISTORY OF AFGHANISTAN,
BASED ON ISLAM;

3. ENLIST FURTHER THE DEEP-SEATED CULTURE OF PARTICIPATION
AND ASPIRATION TO OWNERSHIP OF THE AFGHAN PEOPLE;

4. PURSUE FISCAL, INSTITUTIONAL, AND ENVIRONMENTAL
SUSTAINABILITY;

5. BUILD LASTING NATIONAL CAPACITY AND EFFECTIVE STATE AND
CIVIL SOCIETY INSTITUTIONS, WITH PARTICULAR EMPHASIS ON
BUILDING UP AFGHAN HUMAN CAPACITIES, OF MEN AND WOMEN AND
BOYS AND GIRLS ALIKE;
6. ENSURE BALANCED AND FAIR ALLOCATION OF DOMESTIC AND
INTERNATIONAL RESOURCES THROUGHOUT THE COUNTRY IN ORDER TO
OFFER ALL AFGHANS TANGIBLE PROSPECTS OF WELL-BEING IN AN
EQUITABLE MANNER;
7. RECOGNIZE THE IMPORTANCE OF GENDER IN ALL POLICIES AND
PROGRAMS;

8. PROMOTE REGIONAL COOPERATION; AND

9. COMBAT CORRUPTION AND ENSURE PUBLIC TRANSPARENCY AND
ACCOUNTABILITY IN RESOURCE ALLOCATION AND PROGRAM
IMPLEMENTATION.
SECURITY

GENUINE SECURITY REMAINS A FUNDAMENTAL PREREQUISITE FOR
ACHIEVING STABILITY AND DEVELOPMENT IN AFGHANISTAN.
SECURITY CANNOT BE PROVIDED BY MILITARY MEANS ALONE. IT
REQUIRES GOOD GOVERNANCE, JUSTICE, AND THE RULE OF LAW,
REINFORCED BY RECONSTRUCTION AND DEVELOPMENT. THE AFGHAN
GOVERNMENT AND THE INTERNATIONAL COMMUNITY WILL CREATE A
SECURE ENVIRONMENT BY DISBANDING ALL ILLEGAL ARMED GROUPS
AND ENABLING AFGHAN INSTITUTIONS TO MEET THE SECURITY NEEDS
OF THE COUNTRY IN A FISCALLY SUSTAINABLE MANNER.

TO THAT END, THE NATO-LED INTERNATIONAL SECURITY ASSISTANCE
FORCE (ISAF), THE US-LED OPERATION ENDURING FREEDOM (OEF),
AND PARTNER NATIONS INVOLVED IN SECURITY SECTOR REFORM WILL
CONTINUE TO PROVIDE STRONG SUPPORT TO THE AFGHAN GOVERNMENT
IN ESTABLISHING AND SUSTAINING SECURITY AND STABILITY IN
AFGHANISTAN. THEY WILL CONTINUE TO STRENGTHEN AND DEVELOP
THE CAPACITY OF THE NATIONAL SECURITY FORCES TO ENSURE THAT
THEY BECOME FULLY FUNCTIONAL. OEF FORCES WILL CONTINUE TO
CONDUCT COUNTER-TERRORISM OPERATIONS IN CLOSE COORDINATION
WITH THE AFGHAN GOVERNMENT AND ISAF. ISAF WILL CONTINUE TO
EXPAND ITS PRESENCE THROUGHOUT AFGHANISTAN PRIMARILY THROUGH
PROVINCIAL RECONSTRUCTION TEAMS (PRTS) AND WILL CONTINUE TO
PROMOTE STABILITY AND SUPPORT SECURITY SECTOR REFORMS IN ITS
AREAS OF OPERATION.

FULL RESPECT FOR AFGHANISTAN'S SOVEREIGNTY AND
STRENGTHENING DIALOGUE AND COOPERATION BETWEEN AFGHANISTAN
AND ITS NEIGHBORS CONSTITUTES AN ESSENTIAL GUARANTEE OF
STABILITY IN AFGHANISTAN AND THE REGION. THE INTERNATIONAL
COMMUNITY WILL SUPPORT CONCRETE MEASURES TO THIS END.

GOVERNANCE, RULE OF LAW, AND HUMAN RIGHTS

THE AFGHAN GOVERNMENT WILL RAPIDLY EXPAND ITS CAPACITY TO
PROVIDE BASIC SERVICES TO THE POPULATION THROUGHOUT THE
COUNTRY. IT WILL RECRUIT COMPETENT AND CREDIBLE
PROFESSIONALS TO PUBLIC SERVICE ON THE BASIS OF MERIT;
ESTABLISH A MORE EFFECTIVE, ACCOUNTABLE, AND TRANSPARENT
ADMINISTRATION AT ALL LEVELS OF GOVERNMENT; AND IMPLEMENT
MEASURABLE IMPROVEMENTS IN FIGHTING CORRUPTION, PROMOTING
JUSTICE AND THE RULE OF LAW, AND PROTECTING THE HUMAN RIGHTS
OF ALL AFGHANS.

THE AFGHAN GOVERNMENT WILL GIVE PRIORITY TO THE COORDINATED
ESTABLISHMENT IN EACH PROVINCE OF FUNCTIONAL INSTITUTIONS -
INCLUDING CIVIL ADMINISTRATION, POLICE, AND JUDICIARY.
THESE INSTITUTIONS WILL HAVE APPROPRIATE LEGAL FRAMEWORKS
AND APPOINTMENT PROCEDURES; TRAINED STAFF; AND ADEQUATE
REMUNERATION, INFRASTRUCTURE, AND AUDITING CAPACITY. THE
GOVERNMENT WILL ESTABLISH A FISCALLY AND INSTITUTIONALLY
SUSTAINABLE ADMINISTRATION FOR FUTURE ELECTIONS UNDER THE
SUPERVISION OF THE AFGHANISTAN INDEPENDENT ELECTORAL
COMMISSION.

REFORMING THE JUSTICE SYSTEM WILL BE A PRIORITY FOR THE
AFGHAN GOVERNMENT AND INTERNATIONAL COMMUNITY. THE AIM WILL
BE TO ENSURE TO ALL AFGHANS EQUAL, FAIR AND TRANSPARENT
ACCESS TO JUSTICE BASED UPON WRITTEN CODES WITH FAIR TRIALS
AND ENFORCEABLE VERDICTS. MEASURES WILL INCLUDE COMPLETING
LEGISLATIVE REFORMS FOR THE PUBLIC AS WELL AS THE PRIVATE
SECTOR; BUILDING THE CAPACITY OF JUDICIAL INSTITUTIONS AND
PERSONNEL; PROMOTING HUMAN RIGHTS AND LEGAL AWARENESS AND
REHABILITATING JUDICIAL INFRASTRUCTURE.
THE AFGHAN GOVERNMENT AND THE INTERNATIONAL COMMUNITY
REAFFIRM THEIR COMMITMENT TO THE PROTECTION AND PROMOTION OF
RIGHTS PROVIDED FOR IN THE AFGHAN CONSTITUTION AND THE
INTERNATIONAL HUMAN RIGHTS COVENANTS AND OTHER INSTRUMENTS
TO WHICH AFGHANISTAN IS PARTY. WITH A VIEW TO REBUILDING
TRUST AMONG THOSE WHOSE LIVES WERE SHATTERED BY WAR,
REINFORCING A SHARED SENSE OF CITIZENSHIP AND A CULTURE OF
TOLERANCE, PLURALISM, AND OBSERVANCE OF THE RULE OF LAW, THE
AFGHAN GOVERNMENT WITH THE SUPPORT OF THE INTERNATIONAL
COMMUNITY WILL IMPLEMENT [THE TRANSITIONAL JUSTICE ACTION
PLAN FOR PEACE, JUSTICE AND RECONCILIATION] [A TRANSITIONAL
JUSTICE ACTION PLAN].

ECONOMIC AND SOCIAL DEVELOPMENT

THE AFGHAN GOVERNMENT WITH THE SUPPORT OF THE INTERNATIONAL
COMMUNITY WILL PURSUE HIGH RATES OF SUSTAINABLE ECONOMIC
GROWTH WITH THE AIM OF REDUCING HUNGER, POVERTY, AND
UNEMPLOYMENT TO ADDRESS THE ROOTS OF VIOLENT CONFLICT. IT
WILL PROMOTE THE ROLE AND POTENTIAL OF THE PRIVATE SECTOR,
ALONGSIDE THOSE OF THE PUBLIC AND NON-PROFIT SECTORS; CURB
THE NARCOTICS INDUSTRY; ENSURE MACROECONOMIC STABILITY;
RESTORE AND PROMOTE THE DEVELOPMENT OF THE COUNTRY'S HUMAN,
SOCIAL, AND PHYSICAL CAPITAL, THEREBY ESTABLISHING A SOUND
BASIS FOR A NEW GENERATION OF LEADERS AND PROFESSIONALS;
STRENGTHEN CIVIL SOCIETY; AND COMPLETE THE REINTEGRATION OF
RETURNEES, INTERNALLY DISPLACED PERSONS AND EX-COMBATANTS.

PUBLIC INVESTMENTS WILL BE STRUCTURED AROUND FIVE BASIC
PRIORITIES OF THE AFGHANISTAN NATIONAL DEVELOPMENT STRATEGY:

1. AGRICULTURE AND RURAL DEVELOPMENT;

2. PHYSICAL INFRASTRUCTURE;

3. HUMAN CAPITAL, INCLUDING HEALTH AND EDUCATION;

4. SOCIAL PROTECTION; AND
5. ECONOMIC GOVERNANCE AND PRIVATE SECTOR DEVELOPMENT.

IN EACH OF THESE AREAS, THE OBJECTIVE WILL BE TO ACHIEVE
MEASURABLE RESULTS TOWARDS THE GOAL OF EQUITABLE ECONOMIC
GROWTH THAT REDUCES POVERTY, EXPANDS EMPLOYMENT AND
ENTERPRISE CREATION, ENHANCES OPPORTUNITIES IN THE REGION,
AND IMPROVES THE WELL-BEING OF ALL AFGHANS.

COUNTER-NARCOTICS - A CROSSCUTTING PRIORITY

MEETING THE THREAT THAT THE NARCOTICS INDUSTRY POSES TO
NATIONAL, REGIONAL AND INTERNATIONAL SECURITY AS WELL AS THE
DEVELOPMENT AND GOVERNANCE OF THE COUNTRY AND THE WELL-BEING
OF AFGHANS WILL BE A PRIORITY FOR THE GOVERNMENT AND THE
INTERNATIONAL COMMUNITY. THE AIM WILL BE TO ACHIEVE A
SUSTAINED AND SIGNIFICANT REDUCTION IN THE PRODUCTION AND
TRAFFICKING OF NARCOTICS WITH A VIEW TO COMPLETE
ELIMINATION. ESSENTIAL ELEMENTS INCLUDE IMPROVED
INTERDICTION, LAW ENFORCEMENT, AND JUDICIAL CAPACITY
BUILDING; ENHANCED COOPERATION AMONG AFGHANISTAN,
NEIGHBORING COUNTRIES, AND THE INTERNATIONAL COMMUNITY ON
DISRUPTING THE DRUGS TRADE; WIDER PROVISION OF ECONOMIC
ALTERNATIVES FOR FARMERS AND LABORERS; AND BUILDING NATIONAL
AND PROVINCIAL COUNTER-NARCOTICS INSTITUTIONS. IT WILL ALSO
BE CRUCIAL TO ENFORCE A ZERO-TOLERANCE POLICY TOWARDS
OFFICIAL CORRUPTION; TO REINFORCE THE MESSAGE THAT PRODUCING
OR TRADING OPIATES IS BOTH IMMORAL AND A VIOLATION OF
ISLAMIC LAW; AND TO REDUCE THE DEMAND FOR THE ILLICIT USE OF
OPIATES WHILE PROVIDING USERS WITH MEDICAL SUPPORT.


COORDINATION AND MONITORING MECHANISMS

THE AFGHAN GOVERNMENT AND THE INTERNATIONAL COMMUNITY WILL
ESTABLISH A JOINT COORDINATION AND MONITORING MECHANISM FOR
THE IMPLEMENTATION OF THIS COMPACT. AS DETAILED IN ANNEX 3,
THIS MECHANISM WILL BE CO-CHAIRED BY THE AFGHAN GOVERNMENT
AND THE UNITED NATIONS AND WILL BE SUPPORTED BY A
SECRETARIAT. IT WILL ENSURE GREATER COHERENCE OF EFFORTS BY

SIPDIS
THE AFGHAN GOVERNMENT AND INTERNATIONAL COMMUNITY TO
IMPLEMENT THE COMPACT AND PROVIDE REGULAR AND TIMELY REPORTS
ON ITS EXECUTION TO THE PRESIDENT, NATIONAL ASSEMBLY, AFGHAN
PUBLIC, AND INTERNATIONAL COMMUNITY.

--------------------------------
ANNEX: 1 BENCHMARKS AND TIMELINES
---------------------------------

THE AFGHAN GOVERNMENT, WITH THE SUPPORT OF THE INTERNATIONAL
COMMUNITY, IS COMMITTED TO ACHIEVING THE FOLLOWING
BENCHMARKS IN ACCORDANCE WITH THE CORRESPONDING TIMELINES
WITHIN THE FIVE-YEAR TIME FRAME OF THIS COMPACT.

SECURITY

INTERNATIONAL SECURITY FORCES
THERE WILL BE CONTINUED REQUISITE LEVEL OF SUPPORT FOR THE
NATO-LED INTERNATIONAL SECURITY FORCE (ISAF), OPERATION
ENDURING FREEDOM (OEF) AND THEIR RESPECTIVE PROVINCIAL
RECONSTRUCTION TEAMS (PRTS) TO ENSURE INCREASED SECURITY AND
STABILITY IN ALL REGIONS OF AFGHANISTAN.

AFGHAN NATIONAL ARMY
A FULLY CONSTITUTED, PROFESSIONAL, FUNCTIONAL AND ETHNICALLY
BALANCED AFGHAN NATIONAL ARMY OF [UP TO] 70,000 WILL BE ABLE
TO EFFECTIVELY MEET THE SECURITY NEEDS OF THE COUNTRY AND
WILL BE INCREASINGLY FISCALLY SUSTAINABLE.

AFGHAN NATIONAL POLICE
A FULLY CONSTITUTED, PROFESSIONAL, FUNCTIONAL AND ETHNICALLY
BALANCED AFGHAN NATIONAL POLICE OF [UP TO] 62,000 WILL BE
ABLE TO EFFECTIVELY MEET THE SECURITY NEEDS OF THE COUNTRY
AND WILL BE INCREASINGLY FISCALLY SUSTAINABLE.

DISBANDMENT OF ILLEGAL ARMED GROUPS
ALL ILLEGAL ARMED GROUPS WILL BE DISBANDED BY END-2007 IN
ALL PROVINCES.

COUNTER NARCOTICS
THE GOVERNMENT WILL STRENGTHEN ITS LAW ENFORCEMENT CAPACITY
AT BOTH CENTRAL AND PROVINCIAL LEVELS, RESULTING IN A
SUBSTANTIAL ANNUAL INCREASE IN THE AMOUNT OF DRUGS SEIZED OR
DESTROYED, AND PROCESSING FACILITIES DESTROYED, AND
EFFECTIVE MEASURES TOWARD ELIMINATION OF POPPY CULTIVATION.

THE GOVERNMENT WILL WORK WITH NEIGHBORING AND REGIONAL
GOVERNMENTS TO INCREASE COORDINATION AND INTELLIGENCE
SHARING, WITH THE GOAL OF AN INCREASE IN THE SEIZURE AND
DESTRUCTION OF DRUGS BEING SMUGGLED ACROSS AFGHANISTAN'S
BORDERS, AND EFFECTIVE ACTION AGAINST DRUG TRAFFICKERS.


MINE ACTION
IN SUPPORT OF AFGHANISTAN'S MDGS, THE LAND AREA CONTAMINATED
BY MINES AND UNEXPLODED ORDINANCE WILL BE REDUCED BY 70% BY
2010. [TO BE MADE CONSISTENT WITH MDG INDICATOR]

GOVERNANCE, RULE OF LAW AND HUMAN RIGHTS

PUBLIC ADMINISTRATIVE REFORM
A CLEAR AND TRANSPARENT APPOINTMENTS MECHANISM WILL BE
ESTABLISHED WITHIN 6 MONTHS, APPLIED WITHIN 12 MONTHS, AND
FULLY IMPLEMENTED WITHIN 24 MONTHS FOR ALL SENIOR LEVEL
APPOINTMENTS TO THE CENTRAL GOVERNMENT, THE JUDICIARY,
PROVINCIAL GOVERNORS, CHIEFS OF POLICE, DISTRICT
ADMINISTRATORS AND PROVINCIAL HEADS OF SECURITY.

A REVIEW BY END-2006 OF THE NUMBER OF ADMINISTRATIVE UNITS
AND THEIR BOUNDARIES WILL BE UNDERTAKEN TOWARDS CONTRIBUTING
TO FISCAL SUSTAINABILITY.

MERIT-BASED APPOINTMENTS AND PERFORMANCE-BASED REVIEWS WILL
BE UNDERTAKEN AT ALL LEVELS OF GOVERNMENT, INCLUDING CENTRAL
GOVERNMENT, THE JUDICIARY AND POLICE, AND REQUISITE SUPPORT
IS PROVIDED TO BUILD THE CAPACITY OF THE CIVIL SERVICE TO
FUNCTION EFFECTIVELY. ANNUAL PERFORMANCE-BASED REVIEWS WILL
BE UNDERTAKEN FOR ALL SENIOR STAFF (GRADE 2 AND ABOVE)
APPOINTED STARTING BY END-2007.

GOVERNMENT MACHINERY (INCLUDING THE NUMBER OF MINISTRIES)
WILL BE RESTRUCTURED AND RATIONALIZED TO ENSURE A FISCALLY
SUSTAINABLE PUBLIC ADMINISTRATION; THE CIVIL SERVICE
COMMISSION WILL BE STRENGTHENED; AND CIVIL SERVICE FUNCTIONS
WILL BE REFORMED TO REFLECT CORE FUNCTIONS AND
RESPONSIBILITIES CLEARLY.

THE CENSUS
THE CENSUS ENUMERATION WILL BE COMPLETED BY END-2008.

NATIONAL ASSEMBLY
THE NATIONAL ASSEMBLY WILL BE PROVIDED WITH TECHNICAL AND
ADMINISTRATIVE SUPPORT BY MID-2006 TO EFFECTIVELY FULFILL
ITS CONSTITUTIONALLY MANDATED ROLES.

ELECTIONS
THE AFGHANISTAN INDEPENDENT ELECTORAL COMMISSION WILL HAVE
THE HIGH INTEGRITY, CAPACITY AND RESOURCES TO UNDERTAKE
ELECTIONS IN AN INCREASINGLY FISCALLY SUSTAINABLE MANNER BY
END-2008, WITH THE GOVERNMENT OF AFGHANISTAN CONTRIBUTING TO
THE COST OF FUTURE ELECTIONS FROM ITS OWN RESOURCES. A
PERMANENT CIVIL AND VOTER REGISTRY WITH A SINGLE NATIONAL
IDENTITY DOCUMENT WILL BE ESTABLISHED BY END-2009.

GENDER
THE NATIONAL ACTION PLAN FOR WOMEN IN AFGHANISTAN WILL BE
FULLY IMPLEMENTED. IN LINE WITH AFGHANISTAN'S MDGS, FEMALE
PARTICIPATION IN ELECTED AND APPOINTED BODIES AND THE CIVIL
SERVICE WILL BE STRENGTHENED.

RULE OF LAW
THE LEGAL FRAMEWORK REQUIRED UNDER THE CONSTITUTION,
INCLUDING CIVIL, CRIMINAL, AND COMMERCIAL LAW, WILL BE PUT
IN PLACE, DISTRIBUTED TO ALL JUDICIAL AND LEGISLATIVE
INSTITUTIONS, AND BE MADE AVAILABLE TO THE PUBLIC.

FUNCTIONING INSTITUTIONS OF JUSTICE WILL BE FULLY
OPERATIONAL IN EACH PROVINCE OF AFGHANISTAN. THE AVERAGE
TIME TO RESOLVE CONTRACT DISPUTES WILL BE REDUCED FROM 400
TO 300 DAYS.

A REVIEW AND REFORM OF OVERSIGHT PROCEDURES RELATING TO
CORRUPTION, LACK OF DUE PROCESS AND MISCARRIAGE OF JUSTICE
WILL BE INITIATED BY END-2006 AND FULLY IMPLEMENTED BY END-
2008; REFORMS WILL STRENGTHEN THE PROFESSIONALISM,
CREDIBILITY AND INTEGRITY OF KEY INSTITUTIONS OF THE JUSTICE
SYSTEM (THE MINISTRY OF JUSTICE, THE JUDICIARY, THE ATTORNEY-
GENERAL'S OFFICE, THE MINISTRY OF INTERIOR AND NDS).

JUSTICE INFRASTRUCTURE WILL BE REHABILITATED; PRISONS WILL
HAVE SEPARATE FACILITIES FOR WOMEN AND JUVENILES.

LAND REGISTRATION
THE PROCESS FOR REGISTRATION OF LAND IN ALL ADMINISTRATIVE
UNITS AND THE REGISTRATION OF TITLES THROUGHOUT WILL BE
STARTED FOR ALL MAJOR URBAN AREAS BY END-2006 WITH A VIEW TO
COMPLETION BY END-2008. A FAIR SYSTEM FOR SETTLEMENT OF
LAND DISPUTES WILL BE IN PLACE BY END-2007. REGISTRATION FOR
RURAL LAND WILL BE UNDER WAY BY END-2007.

COUNTER NARCOTICS
THE GOVERNMENT WILL INCREASE THE NUMBER OF ARRESTS AND
PROSECUTIONS OF TRAFFICKERS AND CORRUPT OFFICIALS, AND WILL
IMPROVE ITS INFORMATION BASE CONCERNING THOSE INVOLVED IN
THE DRUGS TRADE, WITH A VIEW TO ENHANCING THE SELECTION
SYSTEM FOR NATIONAL AND SUB-NATIONAL PUBLIC APPOINTMENTS, AS
PART OF THE APPOINTMENTS MECHANISM MENTIONED EARLIER IN THIS
SECTION.


HUMAN RIGHTS
GOVERNMENT'S CAPACITY TO COMPLY WITH AND REPORT ON ITS HUMAN
RIGHTS TREATY OBLIGATIONS WILL BE STRENGTHENED; STATE
SECURITY AGENCIES WILL ADOPT CODES OF CONDUCT AND PROCEDURES
AIMED AT PREVENTING ARBITRARY ARREST, TORTURE, EXTORTION AND
ILLEGAL EXPROPRIATION OF PROPERTY WITH A VIEW TO THE
ELIMINATION OF THESE PRACTICES; MEDIA FREEDOM WILL BE
STRENGTHENED; HUMAN RIGHTS AWARENESS WILL BE INCLUDED IN THE
EDUCATION CURRICULA, AND PROMOTED AMONG LEGISLATORS,
JUDICIAL PERSONNEL AND OTHER STATE AGENCIES AND THE PUBLIC;
INDEPENDENT HUMAN RIGHTS MONITORING CARRIED OUT JOINTLY BY
THE AIHRC AND THE UN TRACKS THE EFFECTIVENESS OF MEASURES
AIMED AT THE PROTECTION OF HUMAN RIGHTS. THE AFGHAN
INDEPENDENT HUMAN RIGHTS COMMISSION WILL BE SUPPORTED IN THE
FULFILLMENT OF ITS OBJECTIVES WITH REGARD TO MONITORING,
INVESTIGATION, PROTECTION AND PROMOTION OF HUMAN RIGHTS.

THE IMPLEMENTATION OF A TRANSITIONAL JUSTICE ACTION PLAN
WILL BE COMPLETED BY END-2008.

ECONOMIC AND SOCIAL DEVELOPMENT

AGRICULTURE AND RURAL DEVELOPMENT

AGRICULTURE & LIVESTOCK
THE NECESSARY INSTITUTIONAL, REGULATORY AND INCENTIVE
FRAMEWORK TO INCREASE PRODUCTION AND PRODUCTIVITY WILL BE
ESTABLISHED TO CREATE AN ENABLING ENVIRONMENT FOR LICIT
AGRICULTURE AND AGRICULTURE BASED RURAL INDUSTRIES, AND
PUBLIC INVESTMENT IN AGRICULTURE WILL INCREASE BY 30
PERCENT. PARTICULAR CONSIDERATION WILL BE GIVEN TO PERENNIAL
HORTICULTURE, ANIMAL HEALTH AND FOOD SECURITY BY INSTITUTING
SPECIALIZED SUPPORT AGENCIES AND FINANCIAL SERVICE DELIVERY
MECHANISMS, SUPPORTING FARMERS' ASSOCIATIONS, BRANDING
NATIONAL PRODUCTS, DISSEMINATING TIMELY PRICE AND WEATHER-
RELATED INFORMATION AND STATISTICS, PROVIDING STRATEGIC
RESEARCH AND TECHNICAL ASSISTANCE, AND SECURING ACCESS TO
IRRIGATION AND WATER MANAGEMENT SYSTEMS.

COMPREHENSIVE RURAL DEVELOPMENT
RURAL DEVELOPMENT WILL BE ENHANCED COMPREHENSIVELY FOR THE
BENEFIT OF 19 MILLION PEOPLE IN OVER 38,000 VILLAGES. THIS
OCCURS THROUGH THE ELECTION OF AT LEAST A FURTHER 14,000
VOLUNTARY COMMUNITY DEVELOPMENT COUNCILS IN ALL REMAINING
VILLAGES, PROMOTING LOCAL GOVERNANCE AND COMMUNITY
EMPOWERMENT. ACCESS TO SAFE DRINKING WATER WILL BE EXTENDED
TO 90% OF VILLAGES AND SANITATION TO 50%. ROAD CONNECTIVITY
WILL REACH 40% OF ALL VILLAGES, INCREASING ACCESS TO
MARKETS, EMPLOYMENT AND SOCIAL SERVICES. 47% OF VILLAGES
WILL BENEFIT FROM SMALL-SCALE IRRIGATION. 800,000
HOUSEHOLDS (22% OF ALL AFGHANISTAN'S HOUSEHOLDS) WILL
BENEFIT FROM FINANCIAL SERVICES. LIVELIHOODS OF AT LEAST
15% OF RURAL POPULATION WILL BE SUPPORTED THROUGH THE
PROVISION OF 91 MILLION LABOR DAYS.

COUNTER NARCOTICS
GOVERNMENT WILL DESIGN PROGRAMS TO ACHIEVE A SUSTAINED
ANNUAL REDUCTION IN THE AMOUNT OF LAND UNDER POPPY AND OTHER
DRUG CULTIVATION, BY THE STRENGTHENING AND DIVERSIFICATION
OF LICIT LIVELIHOODS AND OTHER COUNTER NARCOTICS MEASURES,
AS PART OF THE GOVERNMENTS OVERALL GOAL OF A DECREASE IN THE
ABSOLUTE AND RELATIVE SIZE OF THE DRUGS ECONOMY IN LINE WITH
THE GOVERNMENT'S MDG TARGET.

INFRASTRUCTURE

ROADS
AFGHANISTAN WILL HAVE A FULLY UPGRADED AND MAINTAINED RING
ROAD AND ROADS CONNECTING THE RING ROAD TO NEIGHBORING
COUNTRIES BY 2008, AND A FISCALLY SUSTAINABLE SYSTEM FOR
ROAD MAINTENANCE BY END-2007.

AIR TRANSPORT
KABUL INTERNATIONAL AIRPORT AND HERAT AIRPORT WILL ACHIEVE
FULL INTERNATIONAL CIVIL AVIATION ORGANIZATION COMPLIANCE.
MAZAR, JALALABAD AND KANDAHAR WILL BE UPGRADED WITH RUNWAY
REPAIRS, AIR NAVIGATION, FIRE AND RESCUE AND COMMUNICATIONS
EQUIPMENT; AND 7 OTHER DOMESTIC AIRPORTS WILL BE UPGRADED TO
FACILITATE DOMESTIC AIR TRANSPORTATION. AIR TRANSPORT
SERVICES AND COSTS WILL BE INCREASINGLY COMPETITIVE WITH
INTERNATIONAL MARKET STANDARDS AND RATES.

ENERGY
ELECTRICITY WILL REACH AT LEAST 65% OF HOUSEHOLDS AND 90% OF
NON-RESIDENTIAL ESTABLISHMENTS IN MAJOR URBAN AREAS, AND AT
LEAST 25% OF HOUSEHOLDS IN RURAL AREAS. COST RECOVERY WILL
COVER 75% FOR THOSE USERS CONNECTED TO THE NATIONAL POWER
GRID.

MINING AND NATURAL RESOURCES
AN ENABLING REGULATORY ENVIRONMENT WILL BE CREATED BY END-
2006 AND THE INVESTMENT AND INFRASTRUCTURAL ENVIRONMENT WILL
BE ENHANCED IN ORDER TO ATTRACT DOMESTIC AND FOREIGN DIRECT
INVESTMENT IN THIS AREA.

WATER RESOURCE MANAGEMENT
WATER RESOURCE MANAGEMENT STRATEGIES AND PLANS, COVERING
IRRIGATION AND DRINKING WATER SUPPLY, WILL BE DEVELOPED BY
END-2006 AND IRRIGATION INVESTMENTS RESULT IN AT LEAST 30%
OF WATER COMING FROM LARGE WATERWORKS.

URBAN DEVELOPMENT
MUNICIPAL GOVERNMENTS WILL HAVE STRENGTHENED CAPACITY TO
MANAGE URBAN DEVELOPMENT AND TO ENSURE THAT MUNICIPAL
SERVICES ARE DELIVERED EFFECTIVELY, EFFICIENTLY AND
TRANSPARENTLY. IN LINE WITH AFGHANISTAN'S MDGS, INVESTMENT
IN WATER SUPPLY AND SANITATION WILL ENSURE THAT 50% OF
HOUSEHOLDS IN KABUL AND 30% OF HOUSEHOLDS IN OTHER MAJOR
URBAN AREAS WILL HAVE ACCESS TO PIPED WATER.

ENVIRONMENT
IN LINE WITH AFGHANISTAN'S MILLENIUM DEVELOPMENT
GOALS, ENVIRONNEMENTAL REGULATORY FRAMEWORKS AND MANAGEMENT
SERVICES WILL BE ESTABLISHED FOR THE PROTECTION OF AIR AND
WATER QUALITY, WASTE MANAGEMENT AND POLLUTION CONTROL, AND
NATURAL RESOURCE POLICIES WILL BE DEVELOPED AND
IMPLEMENTATION STARTED AT ALL LEVELS OF GOVERNMENT AS WELL
AS THE COMMUNITY LEVEL, BY END-2007.

HUMAN CAPITAL

HEALTH AND NUTRITION
IN LINE WITH AFGHANISTAN'S MDGS, THE BASIC PACKAGE OF HEALTH
SERVICES WILL BE EXTENDED TO COVER AT LEAST 90% OF THE
POPULATION, MATERNAL MORTALITY WILL BE REDUCED BY 10%, AND
FULL IMMUNIZATION COVERAGE FOR INFANTS UNDER-5 FOR VACCINE
PREVENTABLE DISEASES WILL BE ACHIEVED AND THEIR MORTALITY
RATES REDUCED BY 20%.

PRIMARY AND SECONDARY EDUCATION
IN LINE WITH AFGHANISTAN'S MDGS, NET ENROLLMENT IN PRIMARY
SCHOOL FOR GIRLS AND BOYS WILL BE AT LEAST 60% AND 75%
RESPECTIVELY; A NEW CURRICULUM WILL BE OPERATIONAL IN ALL
SECONDARY SCHOOLS, FEMALE TEACHERS WILL BE INCREASED BY 50%;
70% OF AFGHANISTAN'S TEACHERS WILL HAVE PASSED A COMPETENCY
TEST, AND A SYSTEM FOR ASSESSING LEARNING ACHIEVEMENT SUCH
AS A NATIONAL TESTING SYSTEM FOR STUDENTS WILL BE IN PLACE.

HIGHER EDUCATION
ENROLLMENT OF STUDENTS TO UNIVERSITIES WILL BE 100,000 WITH
AT LEAST 35% FEMALE STUDENTS. CURRICULUM IN AFGHANISTAN'S
PUBLIC UNIVERSITIES IS REVISED WITH A VIEW TO THE
DEVELOPMENT NEEDS OF THE COUNTRY AND PRIVATE SECTOR GROWTH.

SKILLS DEVELOPMENT
A HUMAN RESOURCE STUDY WILL BE COMPLETED BY END-2006, AND
150,000 MEN AND WOMEN ARE TRAINED IN MARKETABLE SKILLS
THROUGH PUBLIC AND PRIVATE MEANS.

SOCIAL PROTECTION

POVERTY REDUCTION
IN LINE WITH AFGHANISTAN'S MDGS, THE PROPORTION OF PEOPLE
WHOSE INCOME WILL BE LESS THAN US$1 A DAY DECREASES BY 3%
PER YEAR AND THE PROPORTION OF PEOPLE WHO SUFFER FROM HUNGER
DECREASES BY 5% PER YEAR.

HUMANITARIAN AND DISASTER RESPONSE

AN EFFECTIVE SYSTEM OF DISASTER PREPAREDNESS AND RESPONSE
WILL BE IN PLACE.


DISABLED
INCREASED ASSISTANCE WILL BE PROVIDED TO MEET THE SPECIAL
NEEDS OF ALL DISABLED PEOPLE, INCLUDING THEIR INTEGRATION IN
SOCIETY THROUGH OPPORTUNITIES FOR EDUCATION AND GAINFUL
EMPLOYMENT.

EMPLOYMENT OF YOUTH AND DEMOBILIZED SOLDIERS
EMPLOYMENT OPPORTUNITIES FOR YOUTH AND DEMOBILIZED SOLDIERS
ARE INCREASED THROUGH SPECIAL PROGRAMS.


REFUGEES AND IDPS

ALL REFUGEES OPTING TO RETURN AND INTERNALLY DISPLACED
PERSONS WILL BE PROVIDED ASSISTANCE FOR REHABILITATION AND
INTEGRATION IN THEIR LOCAL COMMUNITIES.

VULNERABLE WOMEN
THE NUMBER OF FEMALE HEADED HOUSEHOLDS THAT ARE CHRONICALLY
POOR WILL BE REDUCED BY 20%, AND THEIR EMPLOYMENT RATES WILL
BE INCREASED BY 20%.

COUNTER NARCOTICS
THE GOVERNMENT WILL IMPLEMENT PROGRAMS TO REDUCE THE DEMAND
FOR NARCOTICS AND PROVIDE IMPROVED TREATMENT FOR DRUG USERS.
ECONOMIC GOVERNANCE AND PRIVATE SECTOR DEVELOPMENT


FINANCIAL MANAGEMENT
BY END-2007, THE GOVERNMENT ENSURES IMPROVED TRANSPARENT
FINANCIAL MANAGEMENT AT THE CENTRAL AND PROVINCIAL LEVELS
THROUGH ESTABLISHING AND MEETING BENCHMARKS FOR FINANCIAL
MANAGEMENT AGREED WITH AND MONITORED BY THE INTERNATIONAL
COMMUNITY, INCLUDING THOSE IN THE ENVISAGED POVERTY
REDUCTION GROWTH FACILITY. IN TURN, DONORS WILL MAKE EVERY
EFFORT TO INCREASE THE SHARE OF TOTAL EXTERNAL ASSISTANCE TO
AFGHANISTAN THAT GOES TO THE CORE BUDGET.

DOMESTIC REVENUES
AFGHANISTAN'S TOTAL DOMESTIC BUDGETARY REVENUE - EQUIVALENT
TO 4.5% OF ESTIMATED LICIT GDP IN 1383 (2004/05) - WILL
STEADILY INCREASE AND REACH 8% OF GDP BY 1389 (2010/11).
THE RATIO OF REVENUE TO ESTIMATED TOTAL RECURRENT
EXPENDITURES INCLUDING ESTIMATED RECURRENT EXPENDITURES IN
THE CORE AND EXTERNAL DEVELOPMENT BUDGETS) IS PROJECTED TO
RISE FROM 28% IN 1383 (2004/05) TO AN ESTIMATED 58% IN 1389,
ENSURING A CONTINUING NEED, IN ACCORD WITH THE PRINCIPLES IN
ANNEX 2, FOR (1) EXTERNAL ASSISTANCE TO THE CORE BUDGET AND
(2) INCREASING COST-EFFECTIVENESS OF ASSISTANCE THAT FUNDS
RECURRENT EXPENDITURE THOUGH THE EXTERNAL DEVELOPMENT
BUDGET.
PRIVATE SECTOR DEVELOPMENT AND TRADE
ALL LEGISLATION, REGULATIONS AND PROCEDURES RELATED TO
INVESTMENT WILL BE REVIEWED IN ORDER TO SIMPLIFY AND
HARMONIZE THEM BY END-2006. NEW INVESTMENT LAWS AND
BUSINESS ORGANIZATIONS LAWS TABLED BEFORE THE NATIONAL
ASSEMBLY BY END-2006. THE GOVERNMENT'S STRATEGY FOR
DIVESTMENT OF STATE OWNED ENTERPRISE WILL BE COMPLETED BY
END-2008.

FINANCIAL SERVICES AND MARKETS
INTERNATIONALLY ACCEPTED PRUDENTIAL REGULATIONS WILL BE
DEVELOPED FOR ALL CORE SECTORS OF BANKING AND NON-BANK
FINANCIAL INSTITUTIONS BY END-2007. THE BANKING SUPERVISION
FUNCTION OF DA AFGHANISTAN BANK IS FURTHER STRENGTHENED BY
END-2007. RE-LICENSING OF STATE-OWNED COMMERCIAL BANKS WILL
BE COMPLETE BY END-2006. STATE-OWNED BANKS THAT HAVE NOT
BEEN RE-LICENSED ARE LIQUIDATED BY END-2006.

REGIONAL COOPERATION

AFGHANISTAN AND ITS NEIGHBOURS WILL ACHIEVE LOWER TRANSIT
TIMES THROUGH AFGHANISTAN BY MEANS OF COOPERATIVE BORDER
MANAGEMENT AND OTHER MULTI-LATERAL OR BILATERAL TRADE AND
TRANSIT AGREEMENTS. AFGHANISTAN WILL INCREASE THE AMOUNT OF
ELECTRICITY AVAILABLE THROUGH BILATERAL POWER PURCHASE AND
CROSS BORDER HYDRO PROJECTS. AFGHANISTAN WILL INCREASE THE
AMOUNT OF WATER AVAILABLE FOR IRRIGATION THROUGH AGREEMENTS
WITH RIPARIANS OF ITS MAJOR RIVER SYSTEMS. AFGHANISTAN AND
ITS NEIGHBOURS WILL REACH AGREEMENTS TO ENABLE AFGHANISTAN
TO IMPORT SKILLED LABOUR FROM ITS NEIGHBOURS AND TO ENABLE
AFGHANS TO SEEK WORK IN THE REGION AND SEND REMITTANCES
HOME.

--------------------------------------------- ---------
ANNEX 2: IMPROVING EFFECTIVENESS OF AID TO AFGHANISTAN
--------------------------------------------- ---------

THE INTERNATIONAL COMMUNITY HAS MADE A SIGNIFICANT
INVESTMENT IN THE FUTURE OF A DEMOCRATIC STATE OF
AFGHANISTAN SINCE DECEMBER 2001. THIS COMPACT IS AN
AFFIRMATION OF THAT COMMITMENT. THE AFGHAN GOVERNMENT AND
THE INTERNATIONAL COMMUNITY ARE FURTHER COMMITTED TO
IMPROVING THE EFFECTIVENESS OF THE AID BEING PROVIDED TO
AFGHANISTAN IN ACCORDANCE WITH THE `PARIS DECLARATION ON AID
EFFECTIVENESS' RECOGNIZING THE SPECIAL SECURITY SITUATION IN
AFGHANISTAN AND ITS IMPLICATIONS FOR DONOR SUPPORT.

CONSISTENT WITH THE PARIS DECLARATION AND THE PRINCIPLES OF
COOPERATION OF THIS COMPACT, THE GOVERNMENT AND THE
INTERNATIONAL COMMUNITY PROVIDING ASSISTANCE TO AFGHANISTAN
AGREE THAT THE PRINCIPLES FOR IMPROVING THE EFFECTIVENESS OF
AID TO AFGHANISTAN UNDER THIS COMPACT ARE:

LEADERSHIP OF THE AFGHAN GOVERNMENT IN SETTING ITS
DEVELOPMENT PRIORITIES AND STRATEGIES AND WITHIN THEM THE
SUPPORT NEEDS OF THE COUNTRY AND THE COORDINATION OF DONOR
ASSISTANCE;

TRANSPARENCY AND ACCOUNTABILITY ON THE PART OF BOTH THE
GOVERNMENT AND THE DONORS OF THE INTERNATIONAL ASSISTANCE
BEING PROVIDED TO AFGHANISTAN;

UNDER THESE PRINCIPLES AND TOWARDS THE GOAL OF IMPROVING THE
EFFECTIVENESS OF AID TO AFGHANISTAN, THE GOVERNMENT WILL:

PROVIDE A PRIORITIZED AND DETAILED AFGHANISTAN NATIONAL
DEVELOPMENT STRATEGY WITH INDICATORS FOR MONITORING RESULTS,
INCLUDING THOSE FOR THE AFGHANISTAN MILLENNIUM DEVE

IMPROVE ITS ABILITY TO GENERATE DOMESTIC REVENUES THROUGH,
INTER ALIA, CUSTOMS DUTIES, TAXES; AND TO ACHIEVE COST
RECOVERY FROM PUBLIC UTILITIES AND TRANSPORTATION;

AGREE WITH THE DONORS, INTERNATIONAL FINANCIAL INSTITUTIONS
AND UNITED NATIONS AGENCIES ON THE BENCHMARKS FOR
UTILIZATION OF AID CHANNELED THROUGH THE GOVERNMENT BUDGET
AND MONITOR PERFORMANCE AGAINST THOSE BENCHMARKS;
PROVIDE REGULAR REPORTING ON THE USE OF DONOR ASSISTANCE AND
PERFORMANCE AGAINST THE BENCHMARKS OF THIS COMPACT TO THE
NATIONAL ASSEMBLY, THE DONOR COMMUNITY THROUGH THE
AFGHANISTAN DEVELOPMENT FORUM, AND THE PUBLIC AT LARGE;

THE DONORS WILL:

PROVIDE ASSISTANCE WITHIN THE FRAMEWORK OF THE AFGHANISTAN
NATIONAL DEVELOPMENT STRATEGY. PROGRAMS AND PROJECTS WILL
BE AGREED WITH GOVERNMENT IN ORDER TO ELIMINATE DUPLICATION
AND RATIONALIZE DONOR ACTIVITIES TO MAXIMIZE COST-
EFFECTIVENESS;

INCREASINGLY PROVIDE MORE PREDICTABLE AND MULTI-YEAR FUNDING
COMMITMENTS OR INDICATIONS OF MULTI-YEAR SUPPORT TO
AFGHANISTAN TO ENABLE THE GOVERNMENT TO PLAN BETTER THE
IMPLEMENTATION OF ITS NATIONAL DEVELOPMENT STRATEGY;

INCREASE THE PROPORTION OF DONOR ASSISTANCE CHANNELED
DIRECTLY THROUGH THE AFGHANISTAN CORE BUDGET, AS AGREED BI-
LATERALLY BETWEEN THE GOVERNMENT AND EACH DONOR, AND EXPLORE
INCREASED FUNDING THROUGH OTHER MORE PREDICTABLE CORE BUDGET
FUNDING MODALITIES IN WHICH THE AFGHAN GOVERNMENT
PARTICIPATES SUCH AS THE AFGHANISTAN RECONSTRUCTION TRUST
FUND (ARTF), THE LAW AND ORDER TRUST FUND FOR AFGHANISTAN
(LOTFA) AND THE COUNTER-NARCOTICS TRUST FUND (CNTF);

PROVIDE ASSISTANCE FOR THE DEVELOPMENT OF PUBLIC EXPENDITURE
MANAGEMENT SYSTEMS WHICH ARE ESSENTIAL FOR IMPROVING THE
TRANSPARENCY AND ACCOUNTABILITY IN THE UTILIZATION OF DONOR
RESOURCES AND COUNTERING CORRUPTION;

RECOGNIZE THAT BECAUSE OF THE NEED TO BUILD AFGHAN CAPACITY,
DONOR ASSISTANCE PROVIDED THROUGH THE EXTERNAL BUDGET WILL
BE DESIGNED IN SUCH A MANNER AS TO BUILD THIS CAPACITY IN
THE GOVERNMENT AS WELL AS THE PRIVATE SECTOR;

ENSURE THAT DEVELOPMENT POLICIES, INCLUDING SALARY POLICIES,
STRENGTHEN NATIONAL INSTITUTIONS THAT ARE SUSTAINABLE IN THE
MEDIUM TO LONG-TERM FOR DELIVERY OF PROGRAMS BY THE
GOVERNMENT.

FOR AID NOT CHANNELED THROUGH THE CORE BUDGET ENDEAVOR TO:

REDUCE THE EXTERNAL MANAGEMENT AND OVERHEAD COSTS OF
PROJECTS BY PROMOTING THE AFGHAN PRIVATE SECTOR IN THEIR
MANAGEMENT AND DELIVERY;

INCREASINGLY USE AFGHAN NATIONAL IMPLEMENTATION PARTNERS AND
EQUALLY QUALIFIED LOCAL AND EXPATRIATE AFGHANS;

INCREASE THE PROCUREMENT WITHIN AFGHANISTAN OF SUPPLIES FOR
CIVILIAN AND MILITARY ACTIVITIES;

USE AFGHAN MATERIALS WHERE FEASIBLE IN THE IMPLEMENTATION OF
PROJECTS, IN PARTICULAR FOR INFRASTRUCTURE;

WITHIN THE PRINCIPLES OF INTERNATIONAL COMPETITIVE BIDDING,
PROMOTE THE PARTICIPATION IN THE BIDDING PROCESS OF THE
AFGHAN PRIVATE SECTOR AND SOUTH-SOUTH COOPERATION IN ORDER
TO OVERCOME CAPACITY CONSTRAINTS AND TO LOWER COSTS OF
DELIVERY;

PROVIDE TIMELY, TRANSPARENT AND COMPREHENSIVE INFORMATION ON
FOREIGN AID FLOWS, INCLUDING LEVELS OF PLEDGES, COMMITMENTS
AND DISBURSEMENTS IN A FORMAT THAT WILL ENABLE THE AFGHAN
GOVERNMENT TO PLAN ITS OWN ACTIVITIES AND PRESENT
COMPREHENSIVE BUDGET REPORTS TO THE NATIONAL ASSEMBLY. THIS
COVERS THE NATURE AND AMOUNT OF ASSISTANCE BEING PROVIDED TO
AFGHANISTAN THROUGH THE CORE AND EXTERNAL BUDGETS.

FOR EXTERNAL BUDGET ASSISTANCE, ALSO REPORT TO THE
GOVERNMENT ON THE UTILIZATION OF FUNDS; ITS EFFICIENCY,
QUALITY AND EFFECTIVENESS, AND THE RESULTS ACHIEVED.


THESE MUTUAL COMMITMENTS ARE INTENDED TO ENSURE THAT THE
DONOR ASSISTANCE BEING PROVIDED TO AFGHANISTAN IS USED
EFFICIENTLY AND EFFECTIVELY, THAT THERE IS INCREASED
TRANSPARENCY AND ACCOUNTABILITY, AND THAT BOTH AFGHANS AND
THE TAXPAYERS IN DONOR COUNTRIES ARE RECEIVING VALUE FOR
MONEY.


------------------------------------
ANNEX 3: COORDINATION AND MONITORING
------------------------------------

THE ISLAMIC REPUBLIC OF AFGHANISTAN AND THE INTERNATIONAL
COMMUNITY RECOGNIZE THAT THE SUCCESS OF THE AFGHANISTAN
COMPACT REQUIRES STRONG POLITICAL, SECURITY AND FINANCIAL
COMMITMENT TO ACHIEVE THE BENCHMARKS WITHIN THE AGREED
TIMELINES. EQUALLY, THE SUCCESS OF THE COMPACT RELIES ON AN
EFFECTIVE COORDINATION AND MONITORING MECHANISM.

TO ENSURE COMPREHENSIVE AND TIMELY IMPLEMENTATION OF THIS
COMPACT THE AFGHAN GOVERNMENT AND THE INTERNATIONAL
COMMUNITY WILL ESTABLISH A JOINT CO-ORDINATION AND
MONITORING BOARD WITH THE PARTICIPATION OF SENIOR AFGHAN
GOVERNMENT OFFICIALS APPOINTED BY THE PRESIDENT AND
REPRESENTATIVES OF THE INTERNATIONAL COMMUNITY. A SENIOR
AFGHAN GOVERNMENT OFFICIAL APPOINTED BY THE PRESIDENT AND
THE SPECIAL REPRESENTATIVE OF THE UN SECRETARY-GENERAL FOR
AFGHANISTAN WILL CO-CHAIR THE COORDINATION BOARD. THE
COORDINATION AND MONITORING BOARD SUPPLEMENTS EXISTING
CONSULTATIVE MECHANISMS BETWEEN THE GOVERNMENT AND THE
INTERNATIONAL COMMUNITY.

THE BOARD WILL HAVE A SECRETARIAT STAFFED BY THE AFGHAN
GOVERNMENT AND THE UNITED NATIONS. IT WILL BE SUPPORTED BY
TECHNICAL EXPERTS AND FINANCIAL ASSISTANCE, AS NEEDED. THE
BOARD WILL HOLD PERIODIC MEETINGS AND SPECIAL SESSIONS AS
REQUIRED TO REVIEW THE IMPLEMENTATION OF THE COMPACT AND
SUGGEST CORRECTIVE ACTION, AS APPROPRIATE, TO ENSURE ITS
FULL IMPLEMENTATION.

AFGHAN STATE INSTITUTIONS INVOLVED IN THE IMPLEMENTATION OF
THE AFGHANISTAN NATIONAL DEVELOPMENT STRATEGY (ANDS) WILL
PROVIDE INPUTS TO THE BOARD WITH REGARD TO THE
IMPLEMENTATION OF THE COMPACT. IN ADDITION, IN CARRYING
OUT ITS ASSESSMENTS, THE BOARD WILL CONSIDER INPUTS FROM THE
INTERNATIONAL COMMUNITY INCLUDING, UNITED NATIONS AGENCIES,
INTERNATIONAL FINANCIAL INSTITUTIONS, DONOR AGENCIES,
INTERNATIONAL SECURITY FORCES, AND RELEVANT NON-GOVERNMENTAL
ORGANIZATIONS AND CIVIL SOCIET REPRESENTATIVES.

PERIODIC PROGRESS REPORTS ON THE IMPLEMENTATION OF THE
COMPACT PREPARED BY THE COORDINATION AND MONITORING BOARD
WILL BE MADE TO THE PRESIDENT, THE NATIONAL ASSEMBLY AND THE
PUBLIC, AS APPROPRIATE.

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