REVISED AFGHANISTAN COMPACT

UNCLAS SECTION 01 OF 15 KABUL 005256

SIPDIS

DEPARTMENT FOR SA/FO, SA/A
TREASURY FOR PARAMESWARAN
NSC FOR AHARRIMAN, KAMEND
CJTF-76 FOR POLAD, CENTCOM FOR CG CFC-A
COMMERCE FOR AADLER

SENSITIVE

E.O.12958: N/A
TAGS: ECON EFIN EAID PREL PGOV AF
SUBJECT: REVISED AFGHANISTAN COMPACT

Ref: (A) Kabul 5024
(B) Kabul 4939
(C) State 219188
(D) State 203877
(E) State 203877
(F) State 203820
(G) Kabul 4797
(H) Kabul 4634

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Summary
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1. (SBU) The GoA pushed back strongly against Washington's
undercutting the reciprocal balance of the Afghanistan
Compact but accepted most of our other points. In a
December 24 meeting, Senior Economic Advisor to the
President Naderi and UNAMA Deputy SRSG Haq reviewed with
Ambassador the latest version of the Afghanistan Compact and
its three Annexes. The text was approved by GoA line
economy and foreign affairs ministers in a December 23
meeting of the Afghanistan Compact Oversight Committee.
This cable includes the full text of the December 24 version
of the Compact, with revisions that reflects consensus
recommendations reached at a series of Kabul December 2-5
PrepCom meetings as well as subsequent guidance from donor
nation capitals, IFI headquarters and Kabul-based G-8
ambassadors. We have gained much of what we wanted in this
latest revision, notably including specific references to
counter-narcotics program "eradication" efforts in both the
Chapeau and Annex I benchmark text. Compromise language has
been suggested by the GoA to address concerns expressed by
State/L as to whether our signing the Compact reflects a
political statement of intent or an open-ended international
commitment to fund the achievement of all benchmark targets.
Naderi emphasized the importance of coming to closure soon
on the makeup of the Annex III coordinating and monitoring
board, with smaller donors agitating for a formalized role
and the GoA feeling "caught in the crossfire." UNAMA's Haq
suggested that a final resolution of coordinating board
composition will likely combine a core group of key
international donor and IFIs representatives, supplemented
by additional donor and international agency participation
as both the SRSG and senior GoA representative deem
appropriate. The GOA and UNAMA request comments on this
latest Compact draft NLT January 4. All comments need to
come through the Embassy. Ambassador Neumann told Naderi he
should disregard any/any comment received directly from any
individual bureau or agency in Washington. End Summary.

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Compact Chapeau: Key Modifications
--------------


2. (SBU) Strong concern had been expressed the U.S, U.K.
and Germany on text in the last paragraph of the "Purpose"
section that could be interpreted to imply an open-ended
international donor commitment to fund the achievement of
all Compact benchmark targets. In this latest version, the
GoA proposes language that would remove the (here bracketed)
article "the" from this paragraph to read: "The Government
of Afghanistan hereby commits itself to realizing this
shared vision of the future; the international community
reciprocally commits itself to provide [the] resources and
support to realize that vision." Post supports this
compromise language.


3. (SBU) Naderi explained the importance that the Compact
Oversight Committee (chaired by Naderi and including the
Ministers of Finance, Foreign Affairs, Commerce and Economy)
attaches to keeping both the document title "Compact" and
the above "the international community reciprocally commits
itself" language to maintain the central notion and spirit
of compact in the document. UNAMA informed Ambassador that
the UK supports this GoA compromise text. (Comment: The GoA
proposal removes the implication that the international
community has an open-ended commitment to pay for
everything. That said, it is essential that the basic
commitment of the United States to see success in
Afghanistan be clear as it has been in the past. End
Comment).


4. (SBU) In the third sentence of the first paragraph of
the "Security" section, the GoA has reclamaed donor requests
that "with the support of the international community"
language be added to text referring to the creation of a
secure environment to pursue the DIAG process. The GoA
proposes the following compromise language that splits the
sentence into two parts: "The Government of Afghanistan and
the international community will create a secure environment
by strengthening Afghan institutions to meet the security
needs of the country in a fiscally sustainable manner. With
the support of the international community, the Afghan
Government will consolidate peace by disbanding all illegal
armed groups."


5. (SBU) Finally, in the Chapeau's "Counter-Narcotics, a
Cross Cutting Priority," eradication language has been added
at our request: "It will also be crucial to enforce a zero-
tolerance policy towards official corruption; to pursue
eradication as appropriate; to reinforce the message that
producing or trading opiates is both immoral and a violation
of Islamic law; and to reduce the demand for the illicit use
of opiates."

--------------
Annex I: Benchmarks - Key Modifications
--------------


6. (SBU) Key text on ANA and ANP force size in the
"Security" section of the benchmark Annex remains bracketed.
Basic service extension goals cited in the Economic
Development Section's Comprehensive Rural Development
benchmark have now been vetted and confirmed by Rural
Development Minister Atmar. A number of edits have been made
to Annex I benchmarks, including:

-- Bracketed eradication text has been added to the Security
section Counter-Narcotics benchmark: "The Government will
strengthen its law enforcement capacity at both central and
provincial levels, resulting in a substantial annual
increase in the amount of drugs seized or destroyed and
processing facilities dismantled, and in effective measures
toward the elimination [and eradication] of poppy
cultivation.";
-- An anti-corruption benchmark was added to the "Governance
and Rule of Law" section mandating ratification of the UN
Convention Against Corruption by end 2006;
-- Statistics data collection language was added to the
"Governance and Rule of Law" Census benchmark;
-- Protection of media freedom language was added to the
"Governance and Rule of Law" Human rights benchmark;
-- Language on renewable energy was added to the Economic
Development section's energy benchmark at the request of
Germany. Energy cost recovery language remains bracketed;
-- A bracketed Afghan Cultural Heritage benchmark was added
to the Human Capital section at the request of France;
-- At the direct request of State/PRM, text was added to
the Social Protection section's Refugee and IDP benchmark
stating that refugees and IDP ".integration will be
supported by national development programs, particularly in
key areas of return." (Note: Naderi reiterated the GoA's
earlier (Ref A) request that all/all suggested edits be
received through Kabul-based ambassadors and we told him in
the future to disregard any comments not received through
the Embassy);

-- At the UK's request, language was added to the Economic
Governance section's Financial Management benchmark
requiring Afghanistan to "achieve and maintain external debt-
sustainability by end-2007."

-------------- --
Annex II: AID Effectiveness - Key Modifications
-------------- --


7. (SBU) Annex II adds language requested donor provide
untied aid when possible. It also adds language committing
donors to harmonize the delivery of technical assistance to
reduce duplication and costs.
-------------- --------------
Annex III: Coordination/Monitoring - Key Modifications
-------------- --------------


8. (SBU) Finally, in Annex III, language was added at the
request of the UK and Canada to specify that a "small"
secretariat will be staffed by the GoA and UN.

SIPDIS


9. (SBU) Naderi emphasized the importance of coming to
closure soon on the makeup of the Annex III coordinating and
monitoring board. Smaller donors excluded from the Compact
formulation process are "venting," he noted, and the GoA
feels "caught in the crossfire." UNAMA's Haq suggested that
a final resolution of the board composition will likely
combine a core group of key international donor and IFIs
representatives, supplemented by additional participants as
both the SRSG and senior GoA representative deem
appropriate.

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Final Comments Due by January 4
--------------


10. At this December 24 meeting, UNAMA Deputy SRSG Haq
emphasized the need for final comments from G-8 donors by
January 4 to ensure orderly preparation for the January 31 -
February 1 London conference.

--------------

11. December 24 Compact Draft Text
--------------

FYI: Post is also e-mailing copies of the text to key
Washington addressees for readability. End FYI

THE AFGHANISTAN COMPACT

The Islamic Republic of Afghanistan and the International
Community:

Determined to strengthen their partnership to improve the
lives of Afghan people, and to contribute to national,
regional, and global peace and security;

Affirming their shared commitments to continue, in the
spirit of the Bonn, Tokyo, and Berlin conferences, to work
toward a stable and prosperous Afghanistan, with good
governance and human rights protection for all under the
rule of law and to maintain and strengthen that commitment
over the term of this Compact and beyond;

Recognizing the courage and determination of Afghans who, by
defying violent extremism and hardship, have laid the
foundations for a democratic, peaceful, pluralistic and
prosperous state embracing the principles of Islam;

Noting the full implementation of the Bonn Agreement through
the adoption of a new constitution in January 2004 and the
holding of presidential elections in October 2004 and
National Assembly and Provincial Council elections in
September 2005, which have enabled Afghanistan to regain its
rightful place in the international community;

Mindful that Afghanistan's transition to peace and stability
is not yet assured, and that strong international engagement
will continue to be required to address remaining
challenges;

Resolved to overcome the legacy of conflict in Afghanistan
by setting conditions for sustainable economic growth and
development; strengthening state institutions and civil
society; removing remaining terrorist threats; meeting the
challenge of counter-narcotics; rebuilding capacity and
infrastructure; reducing poverty; and meeting basic human
needs;

Have agreed to this Afghanistan Compact.

Purpose

The Afghan Government has articulated its overarching
goals for the well-being of its people in the Afghanistan
Millennium Development Goals Report 2005. Consistent with
those goals, this Compact identifies three critical and
interdependent areas or "pillars" of activity for the five
years from the adoption of this Compact:


1. Security;


2. Governance, rule of law, and human rights; and


3. Sustainable economic and social development.

A further vital and cross-cutting area of work is
eliminating the narcotics industry, which remains a
formidable threat to the people and state of Afghanistan,
the region, and beyond.

The Government of Afghanistan hereby commits itself to
realizing this shared vision of the future; the
international community reciprocally commits itself to
provide [the] resources and support to realize that vision.
Annex I of this Compact sets out detailed outcomes,
benchmarks, and timelines for delivery, consistent with the
high-level goals set by the Afghanistan National Development
Strategy (ANDS). The Government and international community
also commit themselves to improve the effectiveness and
accountability of international assistance as set forth in
Annex II.

Principles of Cooperation

As the Afghan Government and the international
community embark on the implementation of this Compact, they
will:


1. Respect the pluralistic culture, values and history of
Afghanistan, based on Islam;


2. Work on the basis of partnership between the Afghan
Government, with its sovereign responsibilities, and the
international community, with a central and impartial
coordinating role for the United Nations;


3. Engage further the deep-seated traditions of
participation and aspiration to ownership of the Afghan
people;


4. Pursue fiscal, institutional, and environmental
sustainability;


5. Build lasting Afghan capacity and effective state and
civil society institutions, with particular emphasis on
building up human capacities, of men and women and boys and
girls alike;


6. Ensure balanced and fair allocation of domestic and
international resources in order to offer all parts of the
country tangible prospects of well-being;


7. Recognize in all policies and programs that men and
women have equal rights and duties;


8. Promote regional cooperation; and


9. Combat corruption and ensure public transparency and
accountability.
Security

Genuine security remains a fundamental prerequisite for
achieving stability and development in Afghanistan.
Security cannot be provided by military means alone. It
requires good governance, justice, and the rule of law,
reinforced by reconstruction and development. The
Government of Afghanistan and the international community
will create a secure environment by strengthening Afghan
institutions to meet the security needs of the country in a
fiscally sustainable manner. With the support of the
international community, the Afghan Government will
consolidate peace by disbanding all illegal armed groups.

To that end, the NATO-led International Security
Assistance Force (ISAF),the US-led Operation Enduring
Freedom (OEF),and partner nations involved in security
sector reform will continue to provide strong support to the
Afghan Government in establishing and sustaining security
and stability in Afghanistan. They will continue to
strengthen and develop the capacity of the national security
forces to ensure that they become fully functional. OEF
forces will continue to conduct counter-terrorism operations
in close coordination with the Afghan Government and ISAF.
ISAF will continue to expand its presence throughout
Afghanistan, including through Provincial Reconstruction
Teams (PRTs),and will continue to promote stability and
support security sector reforms in its areas of operation.

Full respect for Afghanistan's sovereignty and
strengthening dialogue and cooperation between Afghanistan
and its neighbors constitute an essential guarantee of
stability in Afghanistan and the region. The international
community will support concrete confidence-building measures
to this end.

Governance, Rule of Law, and Human Rights

Democratic governance and the protection of human
rights constitute the cornerstone of sustainable political
progress in Afghanistan. The Afghan Government will rapidly
expand its capacity to provide basic services to the
population throughout the country. It will recruit
competent and credible professionals to public service on
the basis of merit; establish a more effective, accountable,
and transparent administration at all levels of Government;
and implement measurable improvements in fighting
corruption, upholding justice and the rule of law, and
promoting respect for the human rights of all Afghans.

The Afghan Government will give priority to the
coordinated establishment in each province of functional
institutions - including civil administration, police,
prisons and judiciary. These institutions will have
appropriate legal frameworks and appointment procedures;
trained staff; and adequate remuneration, infrastructure,
and auditing capacity. The Government will establish a
fiscally and institutionally sustainable administration for
future elections under the supervision of the Afghanistan
Independent Electoral Commission.

Reforming the justice system will be a priority for the
Afghan Government and the international community. The aim
will be to ensure to all Afghans equal, fair and transparent
access to justice for all based upon written codes with fair
trials and enforceable verdicts. Measures will include
completing legislative reforms for the public as well as the
private sector; building the capacity of judicial
institutions and personnel; promoting human rights and legal
awareness; and rehabilitating judicial infrastructure.

The Afghan Government and the international community
reaffirm their commitment to the protection and promotion of
rights provided for in the Afghan constitution and under
international law, including the international human rights
covenants and other instruments to which Afghanistan is
party. With a view to rebuilding trust among those whose
lives were shattered by war, reinforcing a shared sense of
citizenship and a culture of tolerance, pluralism, and
observance of the rule of law, the Afghan Government with
the support of the international community will implement
the Action Plan on Peace, Justice and Reconciliation.

Economic and Social Development

The Afghan Government with the support of the
international community will pursue high rates of
sustainable economic growth with the aim of reducing hunger,
poverty, and unemployment. It will promote the role and
potential of the private sector, alongside those of the
public and non-profit sectors; curb the narcotics industry;
ensure macroeconomic stability; restore and promote the
development of the country's human, social, and physical
capital, thereby establishing a sound basis for a new
generation of leaders and professionals; strengthen civil
society; and complete the reintegration of returnees,
internally displaced persons and ex-combatants.

Public investments will be structured around the six
basic priorities of the Afghanistan National Development
Strategy:


1. Agriculture and rural development;


2. Physical infrastructure;


3. Human capital, including health and education;


4. Social protection;


5. Economic governance; and


6. Private sector development.

In each of these areas, the objective will be to
achieve measurable results towards the goal of equitable
economic growth that reduces poverty, expands employment and
enterprise creation, enhances opportunities in the region,
and improves the well-being of all Afghans.

Counter-Narcotics - A Cross-Cutting Priority

Meeting the threat that the narcotics industry poses to
national, regional and international security as well as the
development and governance of the country and the well-being
of Afghans will be a priority for the Government and the
international community. The aim will be to achieve a
sustained and significant reduction in the production and
trafficking of narcotics with a view to complete
elimination. Essential elements include improved
interdiction, law enforcement, and judicial capacity
building; enhanced cooperation among Afghanistan,
neighboring countries, and the international community on
disrupting the drugs trade; wider provision of economic
alternatives for farmers and laborers in the context of
comprehensive rural development; and building national and
provincial counter-narcotics institutions. It will also be
crucial to enforce a zero-tolerance policy towards official
corruption; to pursue eradication as appropriate; to
reinforce the message that producing or trading opiates is
both immoral and a violation of Islamic law; and to reduce
the demand for the illicit use of opiates.

Coordination and Monitoring

The Afghan Government and the international community
are establishing a joint Coordination and Monitoring Board
for the implementation of this Compact. As detailed in
Annex 3, this Board will be co-chaired by the Afghan
Government and the United Nations and will be supported by a
small secretariat. It will ensure greater coherence of
efforts by the Afghan Government and international community
to implement the Compact and provide regular and timely
reports on its execution to the President, National
Assembly, Afghan public, international community, and to the
UN Security Council through the UN Mission.


ANNEX 1: BENCHMARKS AND TIMELINES

The Afghan Government, with the support of the international
community, is committed to achieving the following
benchmarks in accordance with the timelines specified or
within the five-year timeframe of this Compact.

Security

International Security Forces
With the support of and in close cooperation with the Afghan
authorities, the NATO-led International Security Assistance
Force (ISAF),Operation Enduring Freedom (OEF) and their
respective Provincial Reconstruction Teams (PRTs) will
ensure increased security and stability in all regions of
Afghanistan, including by strengthening Afghan capabilities.

Afghan National Army
A fully constituted, professional, functional and ethnically
balanced Afghan National Army of [up to 70,000] will be able
to meet the security needs of the country effectively and
will be increasingly fiscally sustainable.

Afghan National Police
A fully constituted, professional, functional and ethnically
balanced Afghan National Police and Afghan Border Police
with a combined force of [up to 62,000] will be able to meet
the security needs of the country effectively and will be
increasingly fiscally sustainable.

Disbandment of Illegal Armed Groups
All illegal armed groups will be disbanded by end-2007 in
all provinces.

Counter-Narcotics
The Government will strengthen its law enforcement capacity
at both central and provincial levels, resulting in a
substantial annual increase in the amount of drugs seized or
destroyed and processing facilities dismantled, and in
effective measures toward the elimination [and eradication]
of poppy cultivation.

The Government will work with neighboring and regional
governments to increase coordination and intelligence
sharing, with the goal of an increase in the seizure and
destruction of drugs being smuggled across Afghanistan's
borders, and effective action against drug traffickers.

Mine Action and Ammunition
In line with the Millennium Development Goals (MDGs) and
Afghanistan's Ottawa Convention obligations, by 2010 the
land area contaminated by mines and unexploded ordnance will
be reduced by 70%; all stockpiled anti-personnel mines will
be located and destroyed by end-2007; and all unsafe,
unserviceable, and surplus ammunition will be destroyed.

Governance, Rule of law and human rights

Public Administrative Reform

Government machinery (including the number of ministries)
will be restructured and rationalized to ensure a fiscally
sustainable public administration; the Civil Service
Commission will be strengthened; and civil service functions
will be reformed to reflect core functions and
responsibilities.

A clear and transparent appointments mechanism will be
established within 6 months, applied within 12 months, and
fully implemented within 24 months for all senior level
appointments to the central government and the judiciary, as
well as for provincial governors, chiefs of police, district
administrators and provincial heads of security.

By end-2006 a review of the number of administrative units
and their boundaries will be undertaken with the aim of
contributing to fiscal sustainability.

Merit-based appointments, vetting procedures and performance-
based reviews will be undertaken at all levels of
government, including central government, the judiciary and
police, and requisite support will be provided to build the
capacity of the civil service to function effectively.
Annual performance-based reviews will be undertaken for all
senior staff (Grade 2 and above) starting by end-2007.

Anti-Corruption
The UN Convention against Corruption will be ratified by end-
2006, national legislation adapted accordingly by end-2007
and a monitoring mechanism to oversee implementation will be
in place by end-2008.

The Census and Statistics
The census enumeration will be completed by end-2008 and the
complete results published.

Reliable statistical baselines will be established for all
quantitative benchmarks by mid-2007 and statistical capacity
built to track progress against them.

National Assembly
The National Assembly will be provided with technical and
administrative support by mid-2006 to fulfill effectively
its constitutionally mandated roles.

Elections
The Afghanistan Independent Electoral Commission will have
the high integrity, capacity and resources to undertake
elections in an increasingly fiscally sustainable manner by
end-2008, with the Government of Afghanistan contributing to
the cost of future elections from its own resources. A
permanent civil and voter registry with a single national
identity document will be established by end-2009.

Gender
The National Action Plan for Women in Afghanistan will be
fully implemented. In line with Afghanistan's MDGs, female
participation in all Afghan governance institutions,
including elected and appointed bodies and the civil
service, will be strengthened.

Rule of Law
The legal framework required under the constitution,
including civil, criminal, and commercial law, will be put
in place, distributed to all judicial and legislative
institutions, and made available to the public.

Functioning institutions of justice will be fully
operational in each province of Afghanistan. The average
time to resolve contract disputes will be reduced from 400
to 300 days.

A review and reform of oversight procedures relating to
corruption, lack of due process and miscarriage of justice
will be initiated by end-2006 and fully implemented by end-
2008; reforms will strengthen the professionalism,
credibility and integrity of key institutions of the justice
system (the Ministry of Justice, the Judiciary, the Attorney-
General's office, the Ministry of Interior and National
Directorate of Security).

Justice infrastructure will be rehabilitated; prisons will
have separate facilities for women and juveniles.

Land Registration
A process for registration of land in all administrative
units and the registration of titles will be started for all
major urban areas by end-2006 with a view to completion by
end-2008. A fair system for settlement of land disputes
will be in place by end-2007. Registration for rural land
will be under way by end-2007.

Counter-Narcotics
The Government will increase the number of arrests and
prosecutions of traffickers and corrupt officials, and will
improve its information base concerning those involved in
the drugs trade, with a view to enhancing the selection
system for national and sub-national public appointments, as
part of the appointments mechanism mentioned earlier in this
annex.

Human Rights
The Government's capacity to comply with and report on its
human rights treaty obligations will be strengthened; state
security agencies will adopt codes of conduct and procedures
aimed at preventing arbitrary arrest, torture, extortion and
illegal expropriation of property with a view to the
elimination of these practices; media freedom will be
protected; human rights awareness will be included in
education curricula, and promoted among legislators,
judicial personnel and other state agencies and the public;
independent human rights monitoring carried out by the
Afghan Independent Human Rights Commission (AIHRC) and the
UN will track the effectiveness of measures aimed at the
protection of human rights. The AIHRC will be supported in
the fulfillment of its objectives with regard to monitoring,
investigation, protection and promotion of human rights.

The implementation of the Action Plan on Peace, Justice and
Reconciliation will be completed by end-2008.


Economic and Social Development

Agriculture and rural development

Agriculture and Livestock
The necessary institutional, regulatory and incentive
framework to increase production and productivity will be
established to create an enabling environment for legal
agriculture and agriculture-based rural industries, and
public investment in agriculture will increase by 30
percent. Particular consideration will be given to perennial
horticulture, animal health and food security by instituting
specialized support agencies and financial service delivery
mechanisms, supporting farmers' associations, branding
national products, disseminating timely price and weather-
related information and statistics, providing strategic
research and technical assistance, and securing access to
irrigation and water management systems.

Comprehensive Rural Development
Rural development will be enhanced comprehensively for the
benefit of 19 million people in over 38,000 villages. This
will be achieved through the election of at least a further
14,000 voluntary community development councils in all
remaining villages, promoting local governance and community
empowerment. Access to safe drinking water will be extended
to 90% of villages and sanitation to 50%. Road connectivity
will reach 40% of all villages, increasing access to
markets, employment and social services. 47% of villages
will benefit from small-scale irrigation. 800,000
households (22% of all Afghanistan's households) will
benefit from improved access to financial services.
Livelihoods of at least 15% of the rural population will be
supported through the provision of 91 million labor days.

Counter-Narcotics
The Government will design and implement programs to achieve
a sustained annual reduction in the amount of land under
poppy and other drug cultivation, by the strengthening and
diversification of licit livelihoods and other counter-
narcotics measures, as part of the Government's overall goal
of a decrease in the absolute and relative size of the drug
economy in line with the Government's MDG target.

Infrastructure

Roads
Afghanistan will have a fully upgraded and maintained ring
road, as well as roads connecting the ring road to
neighboring countries by 2008, and a fiscally sustainable
system for road maintenance by end-2007.

Air Transport
Kabul International Airport and Herat Airport will achieve
full International Civil Aviation Organization compliance.
Mazar, Jalalabad and Kandahar will be upgraded with runway
repairs, air navigation, fire and rescue and communications
equipment; and seven other domestic airports will be
upgraded to facilitate domestic air transportation. Air
transport services and costs will be increasingly
competitive with international market standards and rates.

Energy
Electricity will reach at least 65% of households and 90% of
non-residential establishments in major urban areas, and at
least 25% of households in rural areas. [Costs will be
recovered from at least 75% of users.] A strategy for the
development and the use of renewable energies will be
developed by end-2007.

Mining and Natural Resources
An enabling regulatory environment will be created by end-
2006 and the investment environment and infrastructure will
be enhanced in order to attract domestic and foreign direct
investment in this area.

Water Resource Management
Sustainable water resource management strategies and plans,
covering irrigation and drinking water supply, will be
developed by end-2006 and irrigation investments will result
in at least 30% of water coming from large waterworks.

Urban Development
Municipal governments will have strengthened capacity to
manage urban development and to ensure that municipal
services are delivered effectively, efficiently and
transparently. In line with Afghanistan's MDGs, investment
in water supply and sanitation will ensure that 50% of
households in Kabul and 30% of households in other major
urban areas will have access to piped water.

Environment
In line with Afghanistan's MDGs, environmental regulatory
frameworks and management services will be established for
the protection of air and water quality, waste management
and pollution control, and natural resource policies will be
developed and implementation started at all levels of
government as well as the community level, by end-2007.
Human capital

Health and Nutrition
In line with Afghanistan's MDGs, the Basic Package of Health
Services will be extended to cover at least 90% of the
population, maternal mortality will be reduced by 15%, and
full immunization coverage for infants under-5 for vaccine
preventable diseases will be achieved and their mortality
rates reduced by 20%.

Primary and Secondary Education
In line with Afghanistan's MDGs, net enrolment in primary
school for girls and boys will be at least 60% and 75%
respectively; a new curriculum will be operational in all
secondary schools, female teachers will be increased by 50%;
70% of Afghanistan's teachers will have passed a competency
test, and a system for assessing learning achievement such
as a national testing system for students will be in place.

Higher Education
Enrolment of students to universities will be 100,000 with
at least 35% female students. The curriculum in
Afghanistan's public universities will be revised to meet
the development needs of the country and private sector
growth.

Skills Development
A human resource study will be completed by end-2006, and
150,000 men and women will be trained in marketable skills
through public and private means.

Afghan Cultural Heritage

A comprehensive inventory of Afghan cultural treasures will
be compiled by end-2007. Measures will be taken to stop the
trafficking of antiques and to restore damaged monuments and
artifacts.

Social Protection

Poverty Reduction
In line with Afghanistan's MDGs, the proportion of people
living on less than US$1 a day will decrease by 3% per year
and the proportion of people who suffer from hunger will
decrease by 5% per year.

Humanitarian and Disaster Response

An effective system of disaster preparedness and response
will be in place.

Disabled
Increased assistance will be provided to meet the special
needs of all disabled people, including their integration in
society through opportunities for education and gainful
employment.

Employment of Youth and Demobilized Soldiers
Employment opportunities for youth and demobilized soldiers
will be increased through special programs.


Refugees and IDPs
All refugees opting to return and internally displaced
persons will be provided assistance for rehabilitation and
integration in their local communities. Their integration
will be supported by national development programs,
particularly in key areas of return.

Vulnerable Women
The number of female-headed households that are chronically
poor will be reduced by 20%, and their employment rates will
be increased by 20%.
Counter-Narcotics
The Government will implement programs to reduce the demand
for narcotics and provide improved treatment for drug users.

Economic Governance and Private Sector Development

Financial Management
By end-2007, the Government will ensure improved transparent
financial management at the central and provincial levels
through establishing and meeting benchmarks for financial
management agreed with and monitored by the international
community, including those in the anticipated Poverty
Reduction Growth Facility (PRGF). In turn and in line with
improved government accountability, donors will make every
effort to increase the share of total external assistance to
Afghanistan that goes to the Core Budget.

Afghanistan will achieve, and then maintain, external debt
sustainability by end-2007.

Domestic Revenues
Afghanistan's total domestic budgetary revenue - equivalent
to 4.5% of estimated legal GDP in 1383 (2004/05) - will
steadily increase and reach 8% of GDP by 1389 (2010/11).
The ratio of revenue to estimated total recurrent
expenditures, including estimated recurrent expenditures in
the core and external development budgets, is projected to
rise from 28% in 1383 (2004/05) to an estimated 58% in 1389,
resulting in a continuing need, in accord with the
principles in Annex 2, for (1) external assistance to the
core budget and (2) increasing cost-effectiveness of
assistance that funds recurrent expenditure though the
external development budget.

Private Sector Development and Trade
All legislation, regulations and procedures related to
investment will be simplified and harmonized by end-2006 and
implemented by end-2007. New business organization laws
will be tabled in the National Assembly by end-2006. The
Government's strategy for divestment of State-Owned
Enterprises will be completed by end-2008.

Financial Services and Markets
Internationally accepted prudential regulations will be
developed for all core sectors of banking and non-bank
financial institutions by end-2007. The banking supervision
function of Da Afghanistan Bank will be further strengthened
by end-2007. Re-licensing of state-owned commercial banks
will be complete by end-2006. State-owned banks that have
not been re-licensed are liquidated by end-2006.

Regional Cooperation

Afghanistan and it neighbours will achieve lower transit
times through Afghanistan by means of cooperative border
management and other multi-lateral or bilateral trade and
transit agreements. Afghanistan will increase the amount of
electricity available through bilateral power purchase and
cross border hydro projects. Afghanistan will increase the
amount of water available for irrigation through agreements
with riparians of its major river systems. Afghanistan and
its neighbours will reach agreements to enable Afghanistan
to import skilled labour from its neighbours and to enable
Afghans to seek work in the region and send remittances
home.

Annex 2: Improving The Effectiveness of Aid to Afghanistan

The international community has made a significant
investment in the future of a democratic state of
Afghanistan since December 2001. This Compact is an
affirmation of that commitment. The Afghan Government and
the international community are further committed to
improving the effectiveness of the aid being provided to
Afghanistan in accordance with the `Paris Declaration on Aid
Effectiveness' recognizing the special needs of Afghanistan
and their implications for donor support.

Consistent with the Paris Declaration and the
Principles of Cooperation of this Compact, the Government
and the international community providing assistance to
Afghanistan agree that the principles for improving the
effectiveness of aid to Afghanistan under this Compact are:

a) Leadership of the Afghan Government in setting its
development priorities and strategies and within them the
support needs of the country and the coordination of donor
assistance;

b) Transparency and accountability on the part of both the
Government and the donors of the international assistance
being provided to Afghanistan;

Under these principles and towards the goal of improving the
effectiveness of aid to Afghanistan, the Government will:

-- Provide a prioritized and detailed Afghanistan National
Development Strategy (ANDS) with indicators for monitoring
results, including those for the Afghanistan Millennium
Development Goals (MDGs);

-- Improve its ability to generate domestic revenues
through, inter alia, customs duties and taxes; and to
achieve cost recovery from public utilities and
transportation;

-- Agree with the donors, international financial
institutions and United Nations agencies on the benchmarks
for channeling aid through the Government's core budget and
for the utilization of such aid; monitor performance against
those benchmarks;

-- Provide regular reporting on the use of donor assistance
and performance against the benchmarks of this compact to
the National Assembly, the donor community through the
Afghanistan Development Forum, and the public at large;

The donors will:

-- Provide assistance within the framework of the
Afghanistan National Development Strategy. Programs and
projects will be agreed with Government in order to focus on
priorities, eliminate duplication and rationalize donor
activities to maximize cost-effectiveness;

-- Increasingly provide more predictable and multi-year
funding commitments or indications of multi-year support to
Afghanistan to enable the Government to plan better the
implementation of its National Development Strategy, and
provide untied aid whenever possible;

-- Increase the proportion of donor assistance channeled
directly through the Afghanistan Core Budget, as agreed bi-
laterally between the Government and each donor, and as well
as through other more predictable Core Budget funding
modalities in which the Afghan Government participates such
as the Afghanistan Reconstruction Trust Fund (ARTF),the Law
and Order Trust Fund for Afghanistan (LOTFA) and the Counter-
Narcotics Trust Fund (CNTF);

-- Provide assistance for the development of public
expenditure management systems which are essential for
improving transparency and accountability in the utilization
of donor resources and countering corruption;

-- Recognize that because of the need to build Afghan
capacity, donor assistance provided through the external
budget will be designed in such a manner as to build this
capacity in the Government as well as the private sector and
non-profit sector;
-- Ensure that development policies, including salary
policies, strengthen national institutions that are
sustainable in the medium to long-term for delivery of
programs by the Government;

For aid not channeled through the Core Budget endeavor to:

-- harmonise the delivery of technical assistance in line
with Government needs, to focus on priority areas and reduce
duplication and transaction costs;

-- reduce the external management and overhead costs of
projects by promoting the Afghan private sector in their
management and delivery;

-- increasingly use Afghan national implementation partners
and equally qualified local and expatriate Afghans;

-- increase the procurement within Afghanistan of supplies
for civilian and military activities; and

-- use Afghan materials in the implementation of projects,
in particular for infrastructure;





-- Within the principles of international competitive
bidding, promote the participation in the bidding process of
the Afghan private sector and South-South cooperation in
order to overcome capacity constraints and to lower costs of
delivery;

-- Provide timely, transparent and comprehensive information
on foreign aid flows, including levels of pledges,
commitments and disbursements in a format that will enable
the Afghan Government to plan its own activities and present
comprehensive budget reports to the National Assembly. This
covers the nature and amount of assistance being provided to
Afghanistan through the core and external budgets; and

-- For external budget assistance, also report to the
Government on the utilization of funds; its efficiency,
quality and effectiveness; and the results achieved.


These mutual commitments are intended to ensure that
the donor assistance being provided to Afghanistan is used
efficiently and effectively, that there is increased
transparency and accountability, and that both Afghans and
the taxpayers in donor countries are receiving value for
money.


Annex 3: Coordination and Monitoring

The Islamic Republic of Afghanistan and the international
community recognize that the success of the Afghanistan
Compact requires strong political, security and financial
commitment to achieve the benchmarks within the agreed
timelines. Equally, the success of the Compact relies on an
effective coordination and monitoring mechanism.

To ensure comprehensive and timely implementation of this
Compact the Afghan Government and the international
community are establishing a joint Coordination and
Monitoring Board with the participation of senior Afghan
Government officials appointed by the President and
representatives of the international community. The Board
will be co-chaired by a senior Afghan Government official
appointed by the President and the Special Representative of
the UN Secretary-General for Afghanitan. The Coordination
and Monitoring Board, in addition to existing sectoral
coordination mechanisms, will provide overall coordination
for the implementation of the Compact.
The Board will have a small secretariat staffed by the
Afghan Government and the United Nations. It will be
supported by technical experts, as needed. The Board will
hold periodic meetings and special sessions as required to
review the implementation of the Compact and suggest
corrective action, as appropriate.
Afghan state institutions and sectoral coordination
mechanisms involved in the implementation of the Afghanistan
National Development Strategy (ANDS) will provide inputs to
the Board with regard to the implementation of the Compact.
In addition, in carrying out its assessments, the Board will
consider inputs from the international community including
United Nations agencies, International Financial
Institutions, donor agencies, international security forces,
and relevant non-governmental organizations and civil
society representatives.
Periodic progress reports on the implementation of the
Compact prepared by the Coordination and Monitoring Board
will be made to the President, the National Assembly,
public, the international community and the UN Security
Council through the UN Mission.