Cablegate: Senior Economic Advisor to President Karzai Shares Vision

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E.O. 12958: N/A
TAGS: EAID ETRD PGOV PBTS EINV EIND AF
SUBJECT: SENIOR ECONOMIC ADVISOR TO PRESIDENT KARZAI SHARES VISION
WITH USAID DIRECTOR FREJ

REF: KABUL 512

1. (SBU) Summary: Senior Economic Advisor to President Karzai Dr.
Anwarul Haq Ahadi told USAID Mission Director Bill Frej on February
11 that he planned to set up a functioning structure to advise
President Karzai on economic affairs and to carry out
inter-ministerial coordination on economic issues. He asked for
donors to provide administrative, management, and advisory
assistance to set up the new structure. Frej noted the importance
of the National Economic Advisor role and proposed assistance
through the Ministry of Finance's Civilian Technical Assistance
Program (CTAP, which is supported by the United States and other
donors) or the U.S. Economic Growth and Governance Initiative
(EGGI). Ahadi and Frej agreed to identify assistance with clear
objectives and an end date. Frej also offered Embassy support to
facilitate contact with the White House National Economic Advisor's
office as a model for the new structure. Ahadi envisions his role
as economic policy coordinator for GIRoA, and wants to share
development planning and donor coordination work with the Ministry
of Finance (MoF). (NB: We do not know that the Finance Minister
supports this plan.) End Summary.

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VISION FOR THE NATIONAL ECONOMIC ADVISOR
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2. (SBU) In a February 11 meeting, USAID Mission Director Frej met
with newly-appointed Senior Economic Advisor to President Karzai,
Dr. Anwarul Haq Ahadi. This was a follow up meeting to CDDEA
Wayne's visit on Sunday, February 7 [reftel]. Ahadi began the
meeting noting that the Office of the National Economic Advisor
suffered a loss of personnel and capacity when then Advisor
Zakhilwal took most of the staff to the Ministry of Finance upon his
appointment as Minister. With this move, most functions that were
previously coordinated by the National Economic Advisor shifted to
the MoF, including Afghan National Development Strategy (ANDS) work;
donor coordination; and chairmanship of the Joint Monitoring and
Coordination Board (JCMB), the donor forum for Kabul-based foreign
missions. Ahadi pointed out that the role of donor and ANDS
coordination is not well thought out, nor is there a written policy
that appoints MoF as the coordinating entity. He noted the Ministry
of Economy would normally play this role but is unable to do so due
to weak leadership and limited capacity. Ahadi said he believes
that the Office of the National Economic Advisor should take the
lead and perform oversight and policy coordination, with the
Ministry of Finance leading budgetary reform. In addition, Ahadi
claimed that President Karzai had asked him to chair the JCMB and
the cabinet-level economic committee.

3. (SBU) Ahadi planned to meet President Karzai February 13 or 14 to
discuss his responsibilities and personnel requirements. (Comment:
at this time there is no readout on that meeting. End Comment.)
Ahadi told Frej he would propose to Karzai an organizational
structure for the Office of the National Economic Advisor, seek
salary and budget commitments, discuss the role of economic policy
analysis, and possibly propose his idea for an improved approach to
regional and sectoral donor coordination.

4. (SBU) Ahadi is looking for advisory assistance to set up a
functioning structure to advise President Karzai on economic affairs
and carry out inter-ministerial coordination. Frej noted the
importance of the National Economic Advisor role and proposed
assistance in identifying advisors through the MoF Civilian
Technical Assistance Program (CTAP) or USAID's Economic Growth and
Governance Initiative (EGGI). Ahadi and Frej agreed to identify
assistance that is demand driven with clear objectives and an end
date. Frej also suggested that Ahadi speak with the White House
National Economic Advisor office about the U.S. model and how it
might inform Afghanistan's structure at this juncture. He said the
Embassy could facilitate this exchange. After his meeting with
Karzai, Ahadi said he will define his responsibilities and outline
his advisory needs to USAID, clearly articulating how the needs
would be complemented by CTAP personnel and other assistance.

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SALARY REFORM
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5. (SBU) Ahadi attributed the lack of Afghan capacity and progress
in governance to insufficient government salaries. He noted that
current salaries of $200 a month do not attract qualified staff.
While salaries of $500 might result in successful recruitment in
Kabul, more would be needed to attract staff in many districts,
especially remote and insecure locations (he referenced a figure of
$1,000). Ahadi is nevertheless concerned that while donor salary

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support might attract qualified employees, when the government takes
funding responsibility after five years, it will not be able to meet
the payroll, noting "not even India and Pakistan, middle-income
countries, pay that much. How will we?" (NB: USAID is currently
consolidating its salary support to all ministries of the GIRoA into
one direct support mechanism with the Ministry of Finance (MoF).
This will provide GIRoA with the control and oversight necessary to
gradually rationalize government salaries to a more sustainable
level and to determine where donor assistance may be required.)

6. (SBU) Regarding hiring at the district level, Ahadi expressed
concern the GIRoA will not find qualified and committed employees.
Frej said donors will help the GIRoA address this (including through
the District Delivery Program), but ultimately the GIRoA must pick
up the responsibility.

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CONCERN FOR CLUSTERS AND ANDS COORDINATION
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7. (SBU) As in his meeting with Ambassador Wayne, Ahadi voiced
arguments against the "clusters" concept presented at the London
Conference. To counter the potential backlash, Ahadi proposes to
manage the ANDS and maintain participation by each ministry in
overall development planning and implementation.

8. (SBU) Regarding ANDS implementation, Ahadi said that there are
too many sub-committees, thus making effective coordination
difficult for the MoF and donors. He suggested a more sectoral
approach with only three to five sub-committees, but did not
indicate which. Ahadi added that the role of budgeting should stay
with MoF, but monitoring and evaluation and policy should fall under
the Office of the National Economic Advisor. (Comment: Ahadi noted
that, realistically, monitoring and evaluation should fall under the
Ministry of Economy, but due to the lack of capacity and leadership
this function should be transferred to his office. End Comment.)
Additionally, he suggested that ANDS implementation should give
greater attention to linking policy and development assistance by
improving economic analysis and communications with the MoF.

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COMMENT
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9. (SBU) Ahadi is highly capable of articulating various flaws
within GIRoA. He is also clearly uncomfortable with Parliament's
rejection of his nomination as Minister of Economy, intent on his
competition with Zakhilwal, and focused on identifying a
constructive role for himself. It remains to be seen whether over
the short-term this role evolves into a function which facilitates
GIRoA decision making and execution or simply delays improved GIRoA
organization on economic and development assistance. Embassy Kabul
will seek opportunities to direct Ahadi and other Afghan officials
in a more productive direction.

EIKENBERRY

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