AFGHANISTAN COMPACT: THIRD JCMB SESSION TAKES A HARD LOOK

UNCLAS SECTION 01 OF 04 KABUL 005556

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TAGS: EAID ECON EFIN PREL PGOV SNAR KCRM AF
SUBJECT: AFGHANISTAN COMPACT: THIRD JCMB SESSION TAKES A HARD LOOK
AT AFGHAN PROGRESS AND THE WAY FORWARD

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SUMMARY
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1. The third session of the Afghanistan Joint Coordination and
Monitoring Board (JCMB) was held in the presence of a visiting UN
Security Council delegation on November 12. UNAMA and Afghan
co-chairs reported that the Afghanistan Compact process is taking
hold and actively helping to shape Afghan government
priority-setting, strategies, and accountability. Marking six
months since its inauguration in late April, the full JCMB endorsed
a refreshingly candid, first Biannual JCMB Report, reflecting input
from Afghan line ministries and international donors. (Post has
transmitted to SCA/A the final adopted text of the JCMB-III Biannual
Report. The text is also available at the following website:
WWW.ANDS.GOV.AF.) Key GoA leaders responsible for
counter-insurgency, counter-narcotics, and anti-corruption outlined
efforts to address these critical challenges, and proposed increased
donor engagement. Both GoA speakers and donors echoed key themes
of the London Conference, including the need to invigorate capacity
building and strengthen weak institutions, and pointed to budget
constraints, including bottlenecks in aid disbursement and
sustainability issues, as impediments to progress. Ambassador
Neumann commended UNAMA and the GoA for producing a constructive
first Report, and urged vigorous follow-on to sustain broad
international and Afghan support. The Ambassador welcomed
recommendations for improving AID effectiveness; emphasized that
security and development be pursued in tandem, and called on donors
to work in partnership to strengthen capacity building in key
ministries and provinces. The JCMB approved a request from Norway,
Denmark, Sweden, and Finland to add a rotating joint Nordic seat to
the JCMB. END SUMMARY.


2. The Joint Coordination and Monitoring Board (JCMB) on November
12 held its third semi-annual session, in the presence of a visiting
delegation of the UN Security Council. The JCMB oversees
implementation of the Afghanistan Compact signed in February 2006 at
the London Conference on Afghanistan. Marking six months since the
JCMB inauguration in late April, discussion focused on a first
Biannual JCMB Report, which was endorsed at the end of the session
by the full JCMB body. The report will be published by UNAMA, and
updated on a six-month basis.

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MOVING FROM COMPACT TO IMPACT
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3. Opening remarks by Foreign Minister Spanta and Afghan Vice
President Ahmed Zia Massoud highlighted the distance that
Afghanistan has covered in five years. Contrary to the negative
perceptions in media and international circles recently, both
pointed to the country's achievements since the Bonn Conference --
citing especially human rights, education, and institution building.
Spanta acknowledged, nonetheless, less success in demonstrating
tangible benefits to the Afghan population. Keying off of the first
sentence of the JCMB Report, Massoud and later other GoA speakers,
recited the phrase "moving from compact to impact" as a key theme
for JCMB III, and insisted that success will come only when the
Afghan people believe they are seeing more positive change in their
daily lives. The opening speakers each avowed that such success
would hinge on sustaining a vigorous partnership with the
international community.


4. VP Massoud welcomed the visiting delegation of UNSC Ambassadors
as a helpful manifestation of international commitment to Afghan
political stability and economic prosperity. He underscored that
the GoA remains steadfast to its Bonn and London commitments, and is
making steady progress. While the London Compact benchmarks are
helpful guideposts, Massoud said it is the overriding goals of
stability, security, and economic development that are critical to
solidifying Afghanistan's future. Like Spanta, Massoud said that he
did not want to minimize the very serious challenges confronting the
Government, and urged participants to focus on key steps to address
these priorities:

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Q Ensuring security backed by vigorous efforts to reform Afghan
security forces, particularly the police.
Q Strengthening delivery of basic Government services, and taking on
the scourge of corruption that undermines GoA performance.
Q Countering poppy production, including support for alternative
livelihoods and a harmonized international stance on eradication.
Q Redoubling efforts to meet key London Benchmarks.


5. Afghan co-chair and Presidential Economic Adviser Ishaq Nadiri
then began JCMB deliberations with a recitation of Afghanistan's
shared interests with the international community, stressing that
the terrorists had lost their base, but not disappeared, and that
the Taliban is still exploiting GoA weakness. Because isolation had
fueled dislocation and instability - including migration, political
violence and terrorism - he described continued political and
economic integration with its surrounding regions as the only viable
strategic vision for success in Afghanistan. The upcoming Regional
Economic Cooperation Conference (RECC) in Delhi would, in his view,
help to further this goal. Nadiri maintained that the JCMB process
is taking hold and actively helping to advance Government
strategies, capacity, and accountability. He stressed that the JCMB
report, in this spirit, reflected the input of key government
leaders and their ministries, and does not minimize the difficulties
facing Afghanistan. In addition to repeating the problems
highlighted by Massoud and Spanta, Nadiri stressed the debilitating
impact of pervasive unemployment, particularly in rural areas such
as the South. To address the other three major concerns articulated
in the Biannual Report, he invited presentations by the key Afghan
figures responsible for security, anti-narcotics and anti-corruption
policy.

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FOCUSING ON SECURITY, ANTI-NARCOTICS AND ANTI-CORRUPTION
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6. Afghan Chief Justice Abdul Salaam Azimi briefed participants on
GoA efforts to combat corruption, which he repeatedly described as a
virus that all Afghans must fight. Azimi, who chairs President
Karzai's Anti-Corruption Commission, reported that he had already
held 18 sessions and had adopted a framework for comprehensive
analysis of government practices and rules that enable corruption.
Part of this effort has been calling each Minister directly before
the Commission for review of specific ministry responsibilities and
structures. Key problem areas that he identified include
non-transparent contracting and procurement and serious deficiencies
in collection of customs revenue. Countering these deficiencies,
Azimi stated, would require urgent technical and financial
assistance from the country's international partners.


7. Counter-Narcotics Minister Habibullah Qadiri described narcotics
as a plague, interlinked with both corruption and security, that
impeded every area of national development. He briefly laid out
the GoA's response, as encapsulated in its new Counter-Narcotics
Implementation Plan, a cabinet-approved roadmap to combating poppy
production and opium trade. Qadiri asked for explicit JCMB
endorsement of the Plan as the foundation for GoA efforts. Noting
that implementation will depend on generous funding of the
Counter-Narcotics Trust Fund (CNTF),Qadiri expressed appreciation
for pledges to date of USD 83.6 million, of which some USD 40
million in assistance has been received to date. The ministry is
now intensifying its work with line ministries to develop specific
projects to advance the plan. Twelve projects with total funding of
USD 16 million have already been approved.


8. A final government presentation made by National Security
Adviser Zalmai Rasoul accentuated focus on the linkage between
security and development. Rasoul outlined the key elements of the
GoA's five-year security assessment as the need to accelerate army
and police reform; fight corruption and drugs; and improve
coordination of international and foreign forces. Formation of the
Policy Action Group (PAG) to focus security efforts and extension of
government in the South had been a key development. In conjunction
with the PAG's efforts, Rasoul believed that the Afghan Development

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Zone strategy linking security to development efforts could play a
role in helping to counter the insurgency in these four
PAG-designated southern provinces. Alongside these efforts, he
averred the Government's determination to press for Ministry of
Interior reform and deliver on effective implementation of its plan
for auxiliary police.

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DONORS TO STEP UP CAPACITY AND INSTITUTION BUILDING
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9. In framing the ensuing discussion, co-chairs Nadiri and UNAMA
Special Representative Tom Koenigs echoed key themes of the London
Conference, including the need to invigorate capacity building and
strengthen fledgling institutions. Nadiri again called for more
assistance to be funneled through the GoA's budget, arguing that
government capacity can not be built through parallel foreign
assistance structures. He mentioned Afghan interest in attracting
returnees from its diaspora, and added that engaging expertise from
nearby countries is preferable to current dependence on high-paid
foreign consultants. Minister of Finance Ahady echoed this GoA call
for moving donor funds through the core government budget, terming
it a key determinant of AID effectiveness. Moving more funds
through the GoA, he claimed, would help strengthen government
capacity, increase Afghan "ownership," and ease the task of
prioritization. Just as important, in Ahady's view, is ensuring
that assistance-related funds are spent to the maximum extent in
Afghanistan and employ Afghan workers. Along these lines, Ahady
praised the U.S. military's program to buy from local Afghan
producers (i.e., the "Afghan First Program"),noting that the value
of CFC-A's Afghan purchases has risen from 34 percent to 54 percent
of its commercial supplies.


10. In this connection, Ahady claimed progress in executing the
GoA's core budget, noting that disbursement figures are improving,
though he acknowledged that a large gap still remains between the
government's initial obligation or "contracting" of funds, and
actual spending/disbursement. Part of this, he maintained, is the
result of strict national and donor procurement requirements needed
for transparency and as a guard against corruption. This also
means, according to Ahady, that the GoA has little flexibility to
re-allocate unspent assistance funds to critical-need areas in the
South, though he currently is working to shift the limited amount of
funds deemed possible, in connection with priorities established
through the Policy Action Group (PAG). Note: The GOA counts money
when it is assigned to a project, a kind of general obligation to
fund a particular item, and when the money is used to pay bills,
that is, actually disbursed. It has no procedure for recording the
intermediate phase of obligating money to a specific contract.


11. Ultimately, Ahady averred, the government's viability would be
measured by its ability to fund its own budgets. Ahady pointed to
initial successes this year, stating that GoA revenues will exceed
its target of $520 million, while referencing the requirement of
"maximum fiscal discipline" under the PRGF program with the IMF.
The GoA had recently completed its mid-year financial review and is
preparing for presentation of next year's (Afghan Year 1386) budget
in February. He expressed optimism that the GoA could double
current revenues in the next three years, but described the
country's fiscal environment as unpredictable, contending that the
GoA would benefit from greater budget flexibility.

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SUSTAINING BROAD INTERNATIONAL AND AFGHAN SUPPORT
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12. Following the government presentations, co-chair Koenig opened
the floor to donor interventions and solicited any requests for
changes in the proposed JCMB Bi-annual Report. The Iranian
Ambassador opened the discussion by praising Afghanistan's
"significant progress on democracy, human rights, and the economy."
He credited Iran with providing significant assistance, including on
roads and power infrastructure, and noted that increased opium
cultivation and a slowing return of Afghan refugees pose particular

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concerns for Iran. The Indian Ambassador also highlighted his
country's assistance efforts, including hosting of the upcoming
November 18-19 RECC in Delhi, but said that insurgency is impeding
implementation of important projects in affected areas.


13. Ambassador Neumann commended both UNAMA and the GoA for
producing a JCMB report that focused discussion on key issues and
actions needing high-priority attention. Noting the number of
articles recently in the international media suggesting that the
situation here is deteriorating, Ambassador Neumann argued that
Afghans and donors needed to move aggressively together to sustain
support from the broad international community and the Afghan
people. He welcomed recommendations in the JCMB report for
improving AID effectiveness, and signaled that the USG has begun a
round of consultations with other donors on ways to step up capacity
building in key ministries and provinces. Priority also needs to be
given, he pronounced, to increasing GoA revenues, including through
the multi-donor Border Management Initiative. This was important,
in light of recognition in the JCMB Report of the longer-term
recurrent cost implications of development spending under the ANDS.



14. The Ambassador endorsed the call for more vigorous action on
Rule of Law, corruption, and narcotics; reiterated strong USG
support for Police reform, and urged donors to expand funding
through the Law and Order Trust Fund (LOTFA). Referencing progress
on Phase II Police reform and GoA implementation of its proposal for
Auxiliary Police, the Ambassador emphasized that the changes in the
security situation since London compel both the GoA and
international community to take an approach that firmly, but also
flexibly, deploys in tandem both security and development tools.


15. The UK Ambassador focused his intervention on
counter-narcotics, noting that the London Compact's five long-term
benchmarks on this scourge would be particularly difficult to meet.
The UK view is that Qaderi has developed a good strategy, but now
needed to pull in key GoA ministries, including Public Health,
Education, Rural Development, and the MFA. This effort needed to be
matched by increased donor contributions to the CNTF. Donors would
not be convinced, he warned, until they see major drug arrests,
including of GoA officials.


16. World Bank Regional Director Alistair McKechnie honed in on
budget reform, including the need for greater donor support for the
government's budgeting, project development, and procurement
capacities. McKechnie cautioned the GoA to maintain fiscal
discipline and budget transparency, noting that the Bank and other
donors could consider committing additional technical support to
improve disbursements for priority development projects.


17. The last segment of the program, in which UNAMA's Koenigs
invited any further comments or proposed revisions to the draft
Biannual Report, turned out to be uneventful. Initial Pakistani
protestations for deletion of draft language calling for Pakistan to
cooperate more actively to combat the cross-border insurgency were
addressed through an innocuous textual revision (note: second
sentence of Para 15 of the Report). With a few other minor drafting
changes, all participants agreed to endorse the JCMB Biannual
Report, which had been shared and commented on prior to the session.
As another order of business, Nadiri and Koenigs put forward a
request from Norway, Denmark, Sweden, and Finland to add a rotating
joint Nordic seat to the JCMB. With no objections forthcoming,
Koenigs moved to seat the Norwegian Ambassador as the current Nordic
representative. Post has transmitted to SCA/A the final adopted
text of the JCMB-III Biannual Report. The text is also available at
the following website: WWW.ANDS.GOV.AF.

NEUMANN