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Cablegate: Chairman of Economic Committee of Afghanistan's Parliament

P 101046Z AUG 08
FM AMEMBASSY KABUL
TO SECSTATE WASHDC PRIORITY 5064
INFO DEPT OF TREASURY WASHINGTON DC 0657
AFGHANISTAN COLLECTIVE
NATIONAL SECURITY COUNCIL WASHINGTON DC
CIA WASHINGTON DC
DIA WASHINGTON DC
DEPT OF COMMERCE WASHINGTON DC

UNCLAS KABUL 002109


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
NSC FOR JWOOD
TREASURY FOR LMCDONALD, ABAUKOL, BDAHL, AND MNUGENT
COMMERCE FOR DEES, CHOPPIN, AND FONOVICH

E.O. 12958 N/A
TAGS: EAID ECON PREL PHUM ENRG EAIR AF
SUBJECT: Chairman of Economic Committee of Afghanistan's Parliament
Downbeat on Passage of Pending Commercial Laws

1. Not for Internet Distribution.

2. [SBU] Summary. Officers of the Economic Section met July 30
with Mohammad Daoud Sultanzoi, Chairman of the Economic Committee of
Afghanistan's Parliament. Sultanzoi, who emigrated from Afghanistan
to the United States and worked for 22 years as a United Airlines
pilot, talks free-market talk, but the Economic Committee has not
been noticeably apparent as a defender of the market system.
EconCouns urged passage of the many commercial laws pending in
Parliament, but Sultanzoi gave little hope for progress and said his
main goal in the pre-election period was "damage limitation." (See
status report on commercial laws para 10.) Sultanzoi blamed
"entrenched ideologues" trained within the Communist system,
"mediocre bureaucrats," and the "Mujaheddin fundamentalists" of the
post-Soviet withdrawal, and said defenders of the market system -
such as himself - are few. He stated that "Mafias" had "hijacked
democracy and the market economy" in Afghanistan, and warned that
the Communists "got a black eye" here, and that "democracy should
not be allowed to get a black eye" here, as well. Sultanzoi, who is
working with the Independent Republican Institute and others, urged
the USG to make our opinions known directly, citing the active
efforts of other governments here. End summary.

3. [U] EconCouns, accompanied by Deputy EconCouns and Econ
Assistant, met July 30 with the Chairman of the Economic Committee
of the Afghan Parliament, Mohammad Daoud Sultanzoi. A self-declared
defender of the market economy, Sultanzoi noted that he and only a
few others of his 11-member Economic Committee were free marketeers.
He said that there were many - in government, Parliament, and the
public - who grew up in the Soviet era or who were trained in the
former Communist bloc, who neither understood nor were inclined to
be in favor of either democracy or the free market. He labeled
these retrograde elements as "entrenched ideologues" of the
Communist era; he also cited "mediocre bureaucrats" and "Mujaheddin
fundamentalists" of the post-Soviet era as blocking the road to
free-market economic reform in Afghanistan. Sultanzoi warned that
Communism "got a black eye" in Afghanistan, and that "democracy
should not be allowed" to be defeated here, as well.

4. [SBU] The Economic Committee chairman noted that in order to
overcome this resistance to democracy and markets, the USG and the
Embassy should be much more open to lobbying for change, rather than
allowing governmental and Parliamentary leaders to set the pace for
change. He noted that Russia and Iran "spend a lot of money in this
Parliament" including funding several radio and television stations
and newspapers.

5. [U] Sultanzoi, who said he had been a strong supporter of
President Karzai, stated that because of corruption and the
concomitant loss of credibility of the government in the eyes of the
people, there was resistance to proposals for change coming from the
government. This resistance would also apply to proposals for
market reforms, no matter how beneficial those would be for job
creation or other goals. EconCouns urged the Economic Committee to
work for early passage of the many commercial laws pending in
Parliament, describing these as the building blocks of a sound
market economy. Unfortunately, Sultanzoi offered little hope for
early passage and said his focus during the coming 12 months, prior
to the fall 2009 elections, would be on "damage limitation."

6. [U] EconCouns stressed the importance of Afghanistan's
continued compliance with its IMF program and briefed Sultanzoi on
the IMF's requirement that the Parliament pass a law imposing the
business receipts tax on imports. Sultanzoi took note and promised
to follow up on this important issue.

7. [U] Sultanzoi lamented his, and his Committee's, lack of
resources, especially , staff with good English, research and
Internet skills. Noting that "people in this country respect
authority," he has started a "Business Caucus" within the
Parliament, encompassing those committees and Parliamentarians
interested in the national economy, agriculture, rural development,
and NGOs, and asked for our assistance in his outreach efforts (we
agreed to try to be of assistance on a case-by-case basis). He
noted that there are perhaps 50-80 "mainstream" Parliamentarians,
but no democratic bloc that he can count on - yet - in pushing a
reform agenda. This "Business Caucus" would be the first attempt to
develop such a voting bloc.


8. [U] Sultanzoi also expounded on the current state of difficult
relations between the Executive and the Parliament, noting that the
President has vetoed important laws, such as the land lease law,
because the Parliament wanted to be able to review any lease valued
at over USD 5 million over the length of the lease term. In
Sultanzoi's view, the Parliament sought legitimate oversight of the
Exective branch on contracts - especially those related to the
privatization of state-owned enterprises - but the President
objected.

9. [U] Recalling Sultanzoi's history as a pilot for Ariana Afghan
Airways, EconCouns argued for privatization of the state-owned
loss-maker and sought his views. Sultanzoi noted that
transportation, and especially civil aviation in this land-locked
country, is key to Afghanistan's development. He noted that
airlines are used for smuggling and money laundering, and alleged
that they are also used to take aerial photographs of U.S.
installations in Afghanistan. He said that in late 2001, he had
presented a privatization plan for Ariana that would have garnered
USD 250 million for the government, but the sale was rejected.

9. [U] Biographic note: Mohammad Daoud Sultanzoi represents
Ghazni province. He had been a pilot for Ariana Afghan Airways, and
left Afghanistan in a DC-10 bound to Iran that he diverted to
Germany (with its passengers) just after the Soviet invasion.
Sultanzoi was actively involved in demonstrations against the Soviet
invasion, and rturned to Afghanistan to fight in the resistanc,
despite being granted political asylum by both Germany and the
United States. He finally settled in the United States, working for
22 years as a pilot for United Airlines, settling in Malibu,
California. Since returning to Afghanistan and being elected to
Parliament, he has been a leader of the so-called Group e-Mustaqel
(Independent Group).

10. STATUS REPORT ON PENDING COMMERCIAL LAWS

A legislative advisor to Parliament (a USG-funded contractor) has
provided the following update on the status of key commercial
legislation:

-- Law on Secured Transactions for Immovable Collateral (Mortgage
Law): The Ministry of Parliamentary Affairs sent the draft law to
Parliament on 21 April 2008; this bill is currently under review by
the Economic Committee;

-- Law on Secured Transactions for Movable Collateral: same as
above;

-- Law on Negotiable Instruments: the law-drafting office of the
Ministry of Justice (the 'Taqnin') has completed the first of three
rounds of the required Ministry of Justice review. The bill remains
under review according to the Taqnin's legislative calendar;

-- Law on Leasing: A fourth draft of the law is in process. The
Taqnin has agreed to review the law "as time allows," perhaps
completing work in August 2008.

-- Law on Contracts: The Civil Law Department of the Taqnin has
reviewed and will send to the Taqnin Executive Committee for review
and final approval. The Executive Committee of Taqnin is scheduled
to finalize during this year according to the Taqnin's legislative
calendar, and send it to the Office of Administrative Affairs to
transmit to the Council of Ministers;

-- Law on Agency: Same as above;

-- Law on Trademarks: Same as above;

-- Law on Copyright: Same as above;

-- Law on Protection of Patent Rights: Same as above;

-- Law on Standards: Same as above.


Wood

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