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Cablegate: Afghan Finance, Foreign Ministries Say Recc Still "Tbd"

VZCZCXRO5504
PP RUEHIK RUEHPOD RUEHPW RUEHYG
DE RUEHBUL #3290/01 3631036
ZNR UUUUU ZZH
P 281036Z DEC 08
FM AMEMBASSY KABUL
TO RUEHC/SECSTATE WASHDC PRIORITY 6540
INFO RUEATRS/DEPT OF TREASURY WASHINGTON DC 0712
RUCNAFG/AFGHANISTAN COLLECTIVE
RUEHZG/NATO EU COLLECTIVE
RUEKJCS/SECDEF WASHINGTON DC
RUEABND/DEA HQS WASHINGTON DC
RHMFIUU/HQ USCENTCOM MACDILL AFB FL
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC

UNCLAS SECTION 01 OF 02 KABUL 003290

DEPT FOR SCA/FO, SCA/RA, AND SCA/A
DEPT PASS AID/ANE
DEPT PASS USTR FOR DELANEY AND DEANGELLIS
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, HAMROCK, AND FONOVICH

SENSITIVE

SIPDIS

REF: (A) December 20th Micaller-Birdsey, et. al Email
(B) KABUL 3277

E.O. 12958 N/A
TAGS: ETRD ECON EAID EFIN AF
SUBJECT: AFGHAN FINANCE, FOREIGN MINISTRIES SAY RECC STILL "TBD"

SUMMARY

1. (SBU) Deputy Finance Minister Wahidullah Sharani (and now acting
Minister of Commerce and Industry) said dates are "still under
consideration" for the Regional Economic Cooperation Conference
(RECC), and the jury is out on just when Kabul might commit to a
specific time or venue. Sharani's response to our non-paper (ref A)
on the RECC focused mainly on problems within the Ministry of
Commerce and Industry (MOCI), whose Minister, Amin Farhang, is now
out of a job after being impeached by the Parliament on December 20.
Sharani promised a written response to the demarche within the
first week of the new year, but we do not expect a firm commitment
to RECC dates in that answer. Meanwhile, Ministry of Foreign
Affairs (MFA) Director General Enatullah Nabil suggests that it is
security, not bureaucratic wrangling, that is delaying an Islamabad
RECC. End Summary.

COMMERCE MINISTRY WOES CONTRIBUTE TO RECC DELAYS

2. (SBU) On December 23, Deputy Econ Counselor delivered the
non-paper on the RECC to Sharani and stressed USG interest in a firm
date for the third RECC. Sharani said that MOCI is responsible for
major items that will appear on the agenda (notably, transit trade).
Unfortunately, MOCI is in the throes of a major reorganization,
with Minister Farhang removed from office by a parliamentary no
confidence measure that was one vote shy of unanimous. Sharani said
the lack of capacity in MOCI to handle its brief is a major obstacle
making progress on important economic issues.

3. (SBU) Unprompted, Sharani went into detail about the impeachment
proceedings against Farhang and the reasons for his ouster. He
noted that the corruption associated with the Commerce Ministry's
Fuel and Liquid Gas Enterprise (FLGE) had Parliament outraged, but
that no one in the Ministry appeared to have the political will to
dismiss the head of FLGE, Engineer Rozi (ref B). We now know that
President Karzai tapped Sharani to be acting Minister of Commerce
and Industry on December 27, and rumors are the President may
introduce him to the Parliament as Minister soon.

4. (SBU) Our impression is that the Afghan government may be
reluctant to settle on RECC dates until the dust settles once and
for all at MOCI. Sharani said Farhang is optimistic about the
possibility of being reinstated as Minister, pending an
investigation of the constitutionality of Parliament's impeachment
proceeding. It is not clear how long that investigation will take,
but in response to our mention of an early April RECC in either
Islamabad or Lahore, Sharani remained noncommittal.

5. (SBU) We also discussed substance of the non-paper with the MFA's
DG Nabil, who said that the issue for Kabul is security in
Islamabad, and not internal Afghan politics. Nabil, fresh out of a
meeting with Pakistan's DCM in Kabul, said he hinted strongly to the
Pakistanis that a venue other than Islamabad may be better for the
RECC. He stressed, like Sharani (see para 6), the "new chapter" in
Afghan-Pakistani relations and a desire not to insult Islamabad.
That said, he told Pakistani DCM Durrani that Kazakhstan may be
prepared to host a third RECC, and that Pakistan could then host the
fourth. He also said that the Ministries of Finance and Foreign
Affairs both may sign invitations to the RECC and that Presidents
Karzai and Zardari may be present at opening ceremonies. It remains
unclear as to which Ministry will ultimately "lead" on the RECC;
indications from the Minister's office at Finance are that MFA has
the chair, while the MFA's Nabil implies it is Karzai himself.

SUBSTANCE FOR THE RECC, WHENEVER. . .

6. (SBU) Sharani did mention several specific items of interest in
general possibly ripe for the RECC. Specifically, he noted energy,
roads, and customs "diversion."

KABUL 00003290 002 OF 002

- Energy: He noted disappointment with the Uzbek position on a
longer term power purchasing agreement (PPA). He said GIRoA has
paid three quarters of the almost USD 20 million owed to Tashkent
for energy infrastructure on the Uzbek side of the border. Sharani
said that Afghanistan would like commitments extending past 2010,
which appear not to be forthcoming from the Uzbeks. Sharani also
expressed concern with the lack of movement on the
Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline. We
promised to provide an update on that issue.

- Roads: Sharani said Afghanistan was pleased with the Indian road
project near Zaranj and Pakistan's latest commitment of USD 20
million for infrastructure development. He specifically mentioned
Pakistan's Torkham-Jalalabad road project as a model of
Afghan-Pakistani cooperation. His take on the Zardari government in
general was very positive, and he said the Pakistani president will
likely visit Kabul in early January.

- Customs Diversion: Due largely to the success of BMTF-sponsored
mentorship at Islam Qala, Sharani said that there are "large
engineered leakages" taking place at the border crossing in Nimroz
province near Zaranj.

OFFICIAL RESPONSE FORTHCOMING

7. (SBU) We look forward to receiving an official GIRoA response to
our non-paper in early January. At the same time, at least until
significant Afghan cabinet positions related to the RECC are firmed
up, we do not expect any commitment on dates for this
often-postponed meeting. Nabil's comments regarding security in
Pakistan as a reason for delaying the RECC add a new twist, although
the suggestion for a change of venue may hold some promise for
getting the ball rolling.
WOOD

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