Chairman of Economic Committee of Afghanistan's Parliament

UNCLAS KABUL 002109 DEPT FOR SCA/FO, SCA/RA, AND SCA/A DEPT PASS AID/ANE DEPT PASS USTR FOR GERBER AND KLEIN DEPT PASS OPIC FOR ZAHNISER DEPT PASS TDA FOR STEIN AND GREENIP NSC FOR JWOOD TREASURY FOR LMCDONALD, ABAUKOL, BDAHL, AND MNUGENT COMMERCE FOR DEES, CHOPPIN, AND FONOVICH E.O. 12958 N/A TAGS: EAID ECON PREL PHUM ENRG EAIR AF SUBJECT: Chairman of Economic Committee of Afghanistan's Parliament Downbeat on Passage of Pending Commercial Laws ¶1. Not for Internet Distribution. ¶2. [SBU] Summary. Officers of the Economic Section met July 30 with Mohammad Daoud Sultanzoi, Chairman of the Economic Committee of Afghanistan's Parliament. Sultanzoi, who emigrated from Afghanistan to the United States and worked for 22 years as a United Airlines pilot, talks free-market talk, but the Economic Committee has not been noticeably apparent as a defender of the market system. EconCouns urged passage of the many commercial laws pending in Parliament, but Sultanzoi gave little hope for progress and said his main goal in the pre-election period was "damage limitation." (See status report on commercial laws para 10.) Sultanzoi blamed "entrenched ideologues" trained within the Communist system, "mediocre bureaucrats," and the "Mujaheddin fundamentalists" of the post-Soviet withdrawal, and said defenders of the market system - such as himself - are few. He stated that "Mafias" had "hijacked democracy and the market economy" in Afghanistan, and warned that the Communists "got a black eye" here, and that "democracy should not be allowed to get a black eye" here, as well. Sultanzoi, who is working with the Independent Republican Institute and others, urged the USG to make our opinions known directly, citing the active efforts of other governments here. End summary. ¶3. [U] EconCouns, accompanied by Deputy EconCouns and Econ Assistant, met July 30 with the Chairman of the Economic Committee of the Afghan Parliament, Mohammad Daoud Sultanzoi. A self-declared defender of the market economy, Sultanzoi noted that he and only a few others of his 11-member Economic Committee were free marketeers. He said that there were many - in government, Parliament, and the public - who grew up in the Soviet era or who were trained in the former Communist bloc, who neither understood nor were inclined to be in favor of either democracy or the free market. He labeled these retrograde elements as "entrenched ideologues" of the Communist era; he also cited "mediocre bureaucrats" and "Mujaheddin fundamentalists" of the post-Soviet era as blocking the road to 
free-market economic reform in Afghanistan. Sultanzoi warned that Communism "got a black eye" in Afghanistan, and that "democracy should not be allowed" to be defeated here, as well. ¶4. [SBU] The Economic Committee chairman noted that in order to overcome this resistance to democracy and markets, the USG and the Embassy should be much more open to lobbying for change, rather than allowing governmental and Parliamentary leaders to set the pace for change. He noted that Russia and Iran "spend a lot of money in this Parliament" including funding several radio and television stations and newspapers. ¶5. [U] Sultanzoi, who said he had been a strong supporter of President Karzai, stated that because of corruption and the concomitant loss of credibility of the government in the eyes of the people, there was resistance to proposals for change coming from the government. This resistance would also apply to proposals for market reforms, no matter how beneficial those would be for job creation or other goals. EconCouns urged the Economic Committee to work for early passage of the many commercial laws pending in Parliament, describing these as the building blocks of a sound market economy. Unfortunately, Sultanzoi offered little hope for early passage and said his focus during the coming 12 months, prior to the fall 2009 elections, would be on "damage limitation." ¶6. [U] EconCouns stressed the importance of Afghanistan's continued compliance with its IMF program and briefed Sultanzoi on the IMF's requirement that the Parliament pass a law imposing the business receipts tax on imports. Sultanzoi took note and promised to follow up on this important issue. ¶7. [U] Sultanzoi lamented his, and his Committee's, lack of resources, especially , staff with good English, research and Internet skills. Noting that "people in this country respect authority," he has started a "Business Caucus" within the Parliament, encompassing those committees and Parliamentarians interested in the national economy, agriculture, rural development, and NGOs, and asked for our assistance in his outreach efforts (we agreed to try to be of assistance on a case-by-case basis). He noted that there are perhaps 50-80 "mainstream" Parliamentarians, but no democratic bloc that he can count on - yet - in pushing a reform agenda. This "Business Caucus" would be the first attempt to develop such a voting bloc. ¶8. [U] Sultanzoi also expounded on the current state of difficult relations between the Executive and the Parliament, noting that the President has vetoed important laws, such as the land lease law, because the Parliament wanted to be able to review any lease valued at over USD 5 million over the length of the lease term. In Sultanzoi's view, the Parliament sought legitimate oversight of the Exective branch on contracts - especially those related to the privatization of state-owned enterprises - but the President objected. ¶9. [U] Recalling Sultanzoi's history as a pilot for Ariana Afghan Airways, EconCouns argued for privatization of the state-owned loss-maker and sought his views. Sultanzoi noted that transportation, and especially civil aviation in this land-locked country, is key to Afghanistan's development. He noted that airlines are used for smuggling and money laundering, and alleged that they are also used to take aerial photographs of U.S. installations in Afghanistan. He said that in late 2001, he had presented a privatization plan for Ariana that would have garnered USD 250 million for the government, but the sale was rejected. ¶9. [U] Biographic note: Mohammad Daoud Sultanzoi represents Ghazni province. He had been a pilot for Ariana Afghan Airways, and left Afghanistan in a DC-10 bound to Iran that he diverted to Germany (with its passengers) just after the Soviet invasion. Sultanzoi was actively involved in demonstrations against the Soviet invasion, and rturned to Afghanistan to fight in the resistanc, despite being granted political asylum by both Germany and the United States. He finally settled in the United States, working for 22 years as a pilot for United Airlines, settling in Malibu, California. Since returning to Afghanistan and being elected to Parliament, he has been a leader of the so-called Group e-Mustaqel (Independent Group). ¶10. STATUS REPORT ON PENDING COMMERCIAL LAWS A legislative advisor to Parliament (a USG-funded contractor) has provided the following update on the status of key commercial legislation: -- Law on Secured Transactions for Immovable Collateral (Mortgage Law): The Ministry of Parliamentary Affairs sent the draft law to Parliament on 21 April 2008; this bill is currently under review by the Economic Committee; -- Law on Secured Transactions for Movable Collateral: same as above; -- Law on Negotiable Instruments: the law-drafting office of the Ministry of Justice (the 'Taqnin') has completed the first of three rounds of the required Ministry of Justice review. The bill remains under review according to the Taqnin's legislative calendar; -- Law on Leasing: A fourth draft of the law is in process. The Taqnin has agreed to review the law "as time allows," perhaps completing work in August 2008. -- Law on Contracts: The Civil Law Department of the Taqnin has reviewed and will send to the Taqnin Executive Committee for review and final approval. The Executive Committee of Taqnin is scheduled to finalize during this year according to the Taqnin's legislative calendar, and send it to the Office of Administrative Affairs to transmit to the Council of Ministers; -- Law on Agency: Same as above; -- Law on Trademarks: Same as above; -- Law on Copyright: Same as above; -- Law on Protection of Patent Rights: Same as above; -- Law on Standards: Same as above. Wood