AFGHANISTAN (WITH UK HELP) LEADS BABY STEPS TOWARD

UNCLAS SECTION 01 OF 03 KABUL 005032

SIPDIS

SENSITIVE

STATE FOR SA/FO, SA/A, EB
NSC FOR KAMEND
TREASURY FOR APARAMESWARAN
COMMERCE FOR AADLER

E.O.12958: N/A
TAGS: ECON ETRD PREL KPWR EAID PGOV AF
SUBJECT: AFGHANISTAN (WITH UK HELP) LEADS BABY STEPS TOWARD
REGIONAL ECONOMIC COOPERATION (EXPANDED DISTRUBTION)

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Summary
--------------


1. (SBU) The joint GoA and UK-hosted Regional Economic
Cooperation Conference was held in Kabul December 4 and 5.
The event featured an opening address by President Karzai,
and speeches by GoA economic ministers and regional
delegates, who were primarily at the ministerial and vice-
ministerial level. Four separate working groups were
formed to examine areas of potential cooperation. While
the resulting Kabul Declaration offered little in the way
of concrete steps forward, the GoAs initiative in putting
this conference together allowed Afghanistan to showcase
its role as an emerging regional player. End Summary

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Speeches, Speeches, Speeches
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2. (U) President Karzai opened the Regional Economic
Cooperation Conference, held in Kabul December 4-5, stating
that Afghanistan has emerged from decades of violence and
is now able to make a positive economic contribution to the
region. The legacy of the countrys troubled past, he
said, has contributed to the region as a whole not
realizing its full economic potential.


3. (U) The conference was co-chaired by GoA Minister of
of
Foreign Affairs Abdullah Abdullah and UK Minister of State
Kim Holmes. Attendees included regional delegations, led
primarily at the ministerial and vice-ministerial level,
from Russia, Iran, the Central Asian states (except for
Kyrgyzstan, which failed to show),Pakistan, India, China,
Turkey and the UAE. Delegations from G-8 countries,
international financial institutions and private industry
representatives also attended. The U.S. delegation
included Ambassador Maureen Quinn, SA DAS John Gastright,
NSC Afghanistan Director Anthony Harriman and USTDA Eurasia
Director Dan Stein.


4. (U) Three-quarters of the first day was devoted to
opening speeches from the heads of each regional delegation
and presentations by six separate GoA economic line
ministries, all of which outlined their Goals and
priorities for the conference. Points ranged from the
suggestion that countries should move forward to promote
investment despite festering disputes (Minister of
f
Economic Cooperation, Pakistan) to a pitch for the quality
of Tajik building materials (Deputy Minister of Industry,
Tajikistan) to details on measures being taken to protect
the region from Avian Flu (Minister of Health,
Afghanistan).

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Working Groups Come Up Short
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5. (U) The afternoon session was spent in working group
meetings. Heads of regional delegations attended a
ministerial-level session entitled Strengthening Regional
Cooperation Mechanisms, while remaining delegates
participated in one of three working groups (WGs) on the
following topics: Electricity Trade and Energy Development;
Trade Facilitation and Transport; and Trade, Investment and
Business Climate. The WGs were asked to develop short
lists of specific recommendations on impediments to
regional economic cooperation in these areas.

6. (U) The first two WGs produced 2-3 page papers with
recommendations for consideration by the heads of
f
delegations. The Electricity Trade and Energy Development
WG focused on the importance of power purchase agreements,
large-scale transmission projects, security for
transmission lines, and the necessity of developing
bilateral and multilateral agreements on hydropower
resources. The Trade Facilitation and Transport WG
highlighted trucking industry reform, maintenance of
existing transport infrastructure, and better border
management.


7. (SBU) The Trade, Investment and Business Climate WG did
not produce a paper, held back by heated discussions on
issues such as dumping, Pakistani customs, corruption and
business visa facilitation. It agreed only that these
issues required further dialogue and solutions. (Comment:
Consensus among Mission delegates was that all WG
discussions were general, Afghanistan-focused, and lacking
in active participation by representatives from regional
countries. End comment.)

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Kabul Declaration
--------------


8. (SBU) Day two began with a report on the discussions
that took place in each WG and the ministerial session.
The plenary then broke to allow for final deliberation on
the text of the conference paper. The resulting Kabul
Declaration is a three and a half page document with an
introduction affirming participants basic commitment to
mutually beneficial regional economic cooperation and
sections containing Noted, Urged and Decided points,
summarized below:

--Noted--

-- Trading power through Power Purchase Agreements and
accelerating construction of transmission infrastructure is
of mutual benefit and merits urgent consideration. Steps
should be taken to efficiently use the regions hydropower.

-- Opportunities for improved cooperation and management of
regional water resources exist.

-- Countries should examine ways to create, develop and
maintain inter-continental transit routes, selecting the
most promising and prioritizing investments accordingly.

rdingly.

-- Countries will encourage and facilitate regional
transportation of energy resources.

-- Countries will seek to bring together systems and
procedures to facilitate cross border movements of goods
and services and strengthen border management.

--Urged--

-- That regional organizations avoid overlap and
duplication of effort in their programs through improved
coordination.

--Decided--

-- The short term focus for cooperation should be on
practical projects in the fields of energy, transport and
trade for which there is high-level political commitment.

-- Bilateral WGs with Pakistan and Iran will be established
for the Kabul and Hari Rood/Helmand water systems and a
multilateral WG with the Central Asian countries for the
Panj-Amu Darya systems.

-- Participant countries will pursue improved mechanisms to
combat narcotics within regional organizations.

-- Participant countries are encouraged to prepare concrete
proposals on improved border management for the upcoming
Doha II Conference.

-- Participant countries will meet again in nine months to
review progress on these discussions, with the GOA taking
the lead for follow-up.

-- In preparation, national focal points will be created to
help identify, evaluate and implement regional initiatives.

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Comment
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9. (SBU) The conference, while short on substance, did
reaffirm participant countries overwhelming support for
the basic principles of regional economic cooperation and
set the stage for more specific negotiations during
upcoming conferences. That the GoA chose not to include
conference participants from outside the region (except the
British),itself leading the conference discussions of the
Kabul Declaration, allowed Afghanistan to emerge somewhat
as an independent regional player in its own right.


10. (SBU) The GoA has expressed its commitment to take
concrete steps that will facilitate improved regional
economic cooperation, as outlined in the Interim Afghan
Development Strategy. Furthermore, simply co-hosting this
event was a worthwhile capacity building exercise for the
GoA and Kabuls ability to organize such a high-level
conference on relatively short notice is, in and of itself,
a sign of this citys economic progress. The Embassy will
follow up on conference outcomes, most notably proposals to
transport power from Kyrgyzstan through Tajikistan to
Afghanistan.

Neumann
n