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Cablegate: Strategic Partnership: Proactive Afghan Government

VZCZCXRO1549
OO RUEHDBU RUEHIK RUEHPW RUEHYG
DE RUEHBUL #2554/01 2170657
ZNR UUUUU ZZH
O 050657Z AUG 07
FM AMEMBASSY KABUL
TO RUEHC/SECSTATE WASHDC IMMEDIATE 9517
INFO RUCNAFG/AFGHANISTAN COLLECTIVE PRIORITY
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC PRIORITY
RUEAIIA/CIA WASHINGTON DC PRIORITY
RHEFDIA/DIA WASHINGTON DC PRIORITY
RUEKJCS/OSD WASHINGTON DC PRIORITY
RUEKJCS/SECDEF WASHINGTON DC PRIORITY
RUEKJCS/JOINT STAFF WASHINGTON DC PRIORITY
RHMFIUU/HQ USCENTCOM MACDILL AFB FL PRIORITY

UNCLAS SECTION 01 OF 02 KABUL 002554

SIPDIS

SIPDIS

STATE FOR SCA/FO, SCA/A, S/CRS
STATE PASS TO USAID FOR AID/ANE, AID/DCHA/DG
NSC FOR AHARRIMAN
OSD FOR SHIVERS
CG CJTF-82, POLAD, JICCENT
RELEASABLE TO NATO/ISAF

E.O. 12958: N/A
TAGS: EAID KDEM PGOV AF
SUBJECT: STRATEGIC PARTNERSHIP: PROACTIVE AFGHAN GOVERNMENT
HOSTS QUARTERLY UPDATE ON GOVERNANCE AND PROSPERITY

REF: KABUL 1017

SUMMARY
-------

1. (SBU) The Afghan Government held a Strategic Partnership
Quarterly Update meeting on Prosperity and Governance with
Embassy counterparts on July 21. Organized by the Ministry
of Finance and co-Chaired by Deputy Minister Shahrani, Afghan
representatives reported progress on most Prosperity and
Governance commitments made during the bilateral Strategic
Partnership meetings held in Kabul in March (ref). The
Governance session also highlighted continuing challenges on
anti-corruption, Ministry of Interior reform, and the Senior
Appointments Board. The Prosperity session revealed the
Afghan Government's concern about electricity generation,
road maintenance, and obstacles to privatization. DM
Shahrani committed to organizing additional Quarterly Updates
in advance of Bilateral meetings due in Washington early next
year. Participants expressed satisfaction at the utility of
the quarterly update process as a tool for advancing the
Strategic Partnership. END SUMMARY.

PROACTIVE, PROFESSIONAL MOF CONVENES REVIEW SESSION
--------------------------------------------- ------

2. (SBU) The Afghan Government was keen to hold the Strategic
Partnership Quarterly Update meeting before President
Karzai's trip to Camp David, and actively encouraged the
event. Deputy Finance Minister Wahidullah Shahrani
co-chaired and organized the Governance and Prosperity
sessions on behalf of the Afghan Government, which showed an
increased capacity for collaboration across ministries. The
MFA, which has nominal responsibility as the Afghan
"secretariat" for the Strategic Partnership, was not involved
in the event.

GOVERNANCE: CORRUPTION, MOI REFORM, SR APPOINTMENTS BOARD
--------------------------------------------- ------------

3. (SBU) The Governance Working Group was co-chaired by the
Embassy Political Counselor and Deputy Finance Minister
Shahrani with representation from the Ministries of Justice
and Finance, Civil Service Commission, Anti-Corruption
Commission, Human Rights Commission, and Senior Appointments
Board. The session showed progress on most issues. In a
candid aside, Ministry of Justice Advisor Kawun Kakar told
Pol Counselor that while he sees genuine effort to advance
the Strategic Partnership in most areas, he hoped the U.S.
would pay particular attention to three issues: corruption,
MOI reform, and the Senior Appointments Board.

4. (SBU) The Afghan Government has made progress on
commitments toward transparency and accountability, standards
for use of donor funds, and provincial and programmatic
budgeting. The Ministry of Finance described plans to
increase the accountability of provincial governors by
implementing the $6 million Governors' Outreach Fund for
communication, travel, and hospitality in lieu of the
operational funds some governors previously received for
security-related expenses. (NOTE: The U.S. has pledged
$500,000 through the ARTF for this purpose. END NOTE.)
Shahrani noted the high fiduciary ratings the MOF has
received from the IMF and asked that donors consider direct
budget support, with the ARTF as a second-best option. The
Afghan Government continues to expand programmatic and
provincial budgeting, covering seven ministries and 10
provinces in FY 1387, and estimating coverage of all
ministries and provinces in three to five years.

5. (SBU) Shahrani, a member of Supreme Court Chief Justice
Azimi's anti-corruption commission, said that the commission
plans to complete its report and submit it to President
Karzai "within two weeks," or by the first week in August.
President Karzai will decide how to implement the
recommendations. Ministry of Justice advisor Kawun Kakar
said that the UN Convention Against Corruption (UNCAC) has

KABUL 00002554 002 OF 002


been translated and submitted to the Assembly for the third
time, and is near the top of the agenda for the Assembly's
current session. The Human Rights Commission representative
Farid Hamidi, one of the five members of the Senior
Appointments Board, said the Board had considered only five
candidates since it began meeting ten months ago. He said
President Karzai has not yet signed the Terms of Reference
for the Board. They text submitted to the President eight
months ago were recently reviewed by the Cabinet and returned
to the and the MOJ for further consideration and likely
revision.

6. (SBU) The group discussed a variety of other issues.
Shahrani expressed the hope that there would be expanded
opportunities for high level bureaucrats to participate in
exchange and training programs. He said the Afghan
Government was prepared to establish criteria for the
selection of nominees. A representative of the Independent
Election Commission was not present, so Shahrani promised an
elections update at the next Quarterly Update. Pol Counselor
emphasized our interest supporting a feasible, affordable,
sustainable electoral system. The Ministry of Interior has
established a liaison department with PRTs, and the Tashkil
at the MOI includes 34 liaison officers -- one for each
province, and four at the ministry itself.

PROSPERITY: CONCERNS WITH ENERGY, ROADS, PRIVATIZATION
--------------------------------------------- ---------

7. (SBU) The Prosperity Working Group was co-chaired by the
in-coming USAID Mission Director and Deputy Finance
Minister Shahrani, with representatives from the Ministries
of Finance, Commerce and Industry, and Public Works and the
Central Bank. The participants reviewed progress on eight
action items from the March Plenary, and focused on the Kabul
Generator Sets, the development of a master plan for road
maintenance, and impediments to privatization.

8. (SBU) The discussion revealed the need for a policy and
institutional approach for budgeting and mobilizing funds for
the fuel, operations, and maintenance costs associated with
the planned Kabul Generator Sets. The Afghan Government is
working with donors to develop a consensus on energy sector
funding gaps that will be presented at the Inter-Ministerial
Commission on Energy (ICE) in August. The Afghan
representatives also acknowledged the magnitude of the road
maintenance challenge and inadequacy of the funds budgeted
for this purpose. Embassy complimented the Afghans on their
proposal to outsource road maintenance and expressed interest
in continuing to work with them on these challenges.

9. (SBU) The group discussed the need for a long-term customs
strategy and a tax regime that meets the Afghanistan Compact
benchmarks. USG participants expressed concern that
commissions are not being established to review proposals for
privatization of state-owned enterprises, stifling the
privatization process at a critical stage. DM Shahrani
candidly explained the chilling effect of investigations by
the Attorney General, suggesting that any procedural misstep
might lead to prosecution. However, he described IRoA
interest in finding ways to mitigate this risk, perhaps by
expanding the number of participants appointed to the
commissions, and thereby get the privatization process back
on track.
DELL

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