AMBASSADOR'S APRIL 8 MEETING WITH PRIVATIZATION

C O N F I D E N T I A L SECTION 01 OF 03 KABUL 001008

SIPDIS

NSC FOR ZKHALILZAD, JDWORKEN, HMANN, RHANSON, DSEDNEY
DEPT FOR SA/PAB, SA/AR
MANILA PLEASE PASS AMB PSPELTZ
USDOC FOR DAS/TD MURPHY AND AFGHAN RECON TASK FORCE
STATE PASS USAID FOR JPRYOR
STATE PASS TDA FOR DSTEIN AND JSUSSMAN
STATE PASS TREASURY FOR U/S TAYLOR, LMCDONALD
STATE PASS OPIC FOR RCONNELLY AND DZAHNHEISER

E.O. 12958: DECL: 04/17/2013
TAGS: PREL PGOV ECON EFIN AF
SUBJECT: AMBASSADOR'S APRIL 8 MEETING WITH PRIVATIZATION
COMMISSION CHAIRMAN KHALIQ FAZAL

Classified By: AMBASSADOR ROBERT P. FINN FOR REASONS
1.5 (B) AND (D)


1. (C) On April 8, Ambassador met with Privatization
Commission Chairman and former Minister of Public Works,
Khaliq Fazal. Fazal,s comments focused on deteriorating
security conditions around Kandahar, infiltration of
Pakistanis in the south, political demands on President
Karzai, and the regrettably stalled work to assess
Afghanistan,s state-owned enterprises. End summary.


2. (C) Fazal told Ambassador that many Afghans maintained to
him during his visit to Kandahar the previous week that the
Taliban were gradually restoring power bases in the south and
alleged that elements of the local military (governor
Sherzai,s forces) were &somehow involved.8 Locals were
unwilling to make their concerns too public out of fear that
the central government would be unable to protect them.
Fazal added that Pakistanis were &everywhere8, working as
engineers and construction labor, and questioned why these
jobs were not made available to local Afghans. Fazal told
Ambassador that he had urged President Karzai upon his return
to Kabul to reinforce border security and appoint qualified
leaders to replace the wayward leadership.


3. (C) Karzai, Fazal claimed, agreed, but did not indicate
any action he might take. Fazal said that Karzai needed to
take strong action to avoid losing popular support. Fazal
added that Karzai,s loss of support would also erode popular
support for the U.S., which was already strained by the war
in Iraq. Ambassador agreed that the Afghan people needed to
see results to maintain the Karzai administration,s
standing. Ambassador affirmed that the U.S. remained strongly
behind Afghanistan, noting that both CENTCOM General Franks
and SE Khalilzad were coming to Kabul to reaffirm this
commitment later in the week.


4. (C) Fazal turned the conversation to the next year,s
election, noting that supporters had asked him to form a
pro-democracy party. He felt it was too early for this, as
the elections law was still incomplete, but asked the
Ambassador his view. The Ambassador replied that it was not
necessary to wait for the final election law to be completed
before forming political parties. Ambassador added that he
hoped parties would be formed and that NDI and IRI were
helping in this regard.


5. (C) Fazal then noted that resentment was building towards
expatriate Afghans, like himself, who had returned to
Afghanistan after long residence abroad. The Ambassador said
that while he was impressed by the dedication of those
Afghans who remained in their country, all Afghans were now
working to help rebuild their homeland. Fazal said that the
resentment towards &carpetbaggers8 was understandable, as
even the Cabinet had not been paid in ten months. Fazal
noted that the expat-Afghans would &be finished if Americans
leave8 and that the destruction and possible division of
Afghanistan could follow. Ambassador expressed his
conviction that the fundamentalists and others resisting
political and economic progress in Afghanistan would not
prevail. Fazal stressed that building economic capacity was
critical to this, and that he should hear for himself from
local Afghan entrepreneurs and traders what the challenges
were. Ambassador agreed and a readout of this later meeting
will be reported septel.


6. (C) Fazal concluded by reporting that his commission had
completed their assessment of 85 percent of Afghanistan,s
176 state-owned enterprises. Fazal would like to receive
technical assistance to complete this assessment and act upon
its findings, but repeated an earlier contention that Finance
Minister Ghani had told USAID not to assist him in this
regard. The Ambassador assured Fazal that USAID did want to
help and agreed to turn his attention to this matter. (Note:
USAID Kabul Economic Governance Program Officer confirmed
that Ghani has indeed advised them not to proceed with
privatization technical assistance efforts generally,
although no specific instructions were given not to work with
Fazal. According to USAID Kabul, Ghani,s position may be
based inter alia on distrust of Fazal and on Ghani,s desire
to personally control the process. Endnote.)
FINN