PARIS SUPPORT CONFERENCE ON AFGHANISTAN: DONORS

UNCLAS SECTION 01 OF 04 PARIS 001203 SENSITIVE SIPDIS SCA/A:TWILDER A/COO:SPIERCE EUR/WE:CPALMER P:TWEST(INFO) D:EWITTENSTEIN(INFO) EEB:NWEBER S/P:WWOLMAN(INFO) S:CQUADE(INFO) E.O. 12958: N/A TAGS: EAID EFIN PREL PGOV AORC FR AF XB XF XG XR XD, ZK, CA, MK, UNDP SUBJECT: PARIS SUPPORT CONFERENCE ON AFGHANISTAN: DONORS SUPPORT SRSG EIDE AND ANDS, CITE NEED FOR ANTI-CORRUPTION STEPS, AND PLEDGE OVER $20 BILLION FOR ASSISTANCE REF: A. A) KABUL 1150 ¶B. B) KABUL 1314 ¶C. C) KABUL 1410 ¶1. (U) Sensitive but Unclassified - not for internet distribution. ¶2. (SBU) SUMMARY: International pledges totaled more than $20 billion at the Paris Support Conference for Afghanistan on June 12. This amount doubled the pledge total achieved at the 2006 London Conference and demonstrated the international community's long-term commitment to Afghanistan. Donors committed to supporting an Afghan-led development strategy and putting money behind the plan. First Lady Laura Bush and Secretary Rice announce the US. pledge of $10.2 billion over the next two years, clarifying that $7.1 billion of the pledge is still awaiting Congressional approval. President Sarkozy, President Karzai, and UN Secretary Ban Ki-moon opened the conference, announcing key themes that resonated in each delegation's interventions throughout the day. These themes included: -Align international community support with the priorities identified by the Afghans in the new five-year Afghanistan National Development Strategy (institution building, agriculture, energy and rule of law); -Support UN Special Representative Kai Eide as the lead in donor coordination; provide resources for successful 2009 and 2010 presidential and parliamentary elections, the next test of Afghanistan's nascent democracy; -Commit to a joint civilian-military approach to developing a secure and stable Afghanistan; -Pledge to improve aid effectiveness and increase Afghan ownership of development; -And support the Government of Afghanistan to take concrete steps to fight corruption and improve accountability. Although President Karzai did not announce concrete steps to fight corruption, the Afghan Government did present its development priorities and listed key action items to support a market-based economy. END SUMMARY. -------------- POLITICAL COMMITMENTS -------------- ¶2. (SBU) THE AFGHAN GOVERNMENT: President Hamid Karzai expressed the Afghan Government's gratitude to the international community for its generosity, noting that Afghanistan would not be where it is today if it were not for the sacrifices of Afghanistan's partners. He estimated the cost of Afghanistan's war- only that which could be measured in money- conservatively at $500 billion. He stated that with the approved Afghanistan National Development Strategy (ANDS),the Afghan Government came to the conference with a development strategy for the international community to support, a key US. objective for the conference. ¶3. (U) Karzai said Afghanistan was entering a new phase of consolidation and sustainable development, and the main threat remained regional and international terrorism. Karzai committed the Afghan Government to pursuing regional cooperation, acceleration of the development of the Afghan National Security Forces, reconciliation with those who put down their arms and backed the Afghan Government and its constitution, fighting the narcotics scourge through a meaningful commitment to alternative development, and investing in agriculture to improve food security. ¶4. (SBU) On corruption, Karzai said a Commission would address corruption, and that his government would follow through on its recommendations. (NOTE: In their statements, UN Secretary General Ban Ki-moon and other donors pushed the government for a clearer commitment to fight corruption. END NOTE.) Karzai assured the international community that the 2009 and 2010 elections would be successful and that the Afghan Independent Election Commission seeks assistance. PARIS 00001203 002 OF 004 President Karzai Minister Ahadi, and Economic Advisor Naderi all said that the international community channel more money through the Afghanistan Reconstruction Trust Fund and the Afghan budget in order to improve aid effectiveness and increase Afghan ownership of development. Minister Ahadi claimed the Afghan Government is able to absorb more resources and deliver services, contrary to what many donors believe. ¶5. (U) Minister Ahadi also announced the Afghan Government's prioritization of development needs and its commitment to economic reform, revenue generation, and progress towards fulfilling the International Monetary Fund's requirements. He highlighted building and reforming state institutions to serve the Afghan people as the number one priority. In economic development, Ahadi prioritized agriculture and energy, then roads and education. He said the Ring Road would be completed by 2009 and a focus on connecting districts to markets was critical. Ahadi also committed the Afghan Government to a long list of economic reforms, including development a credit-investment bureau and a bank training institute, maintaining macro economic stability and a moderate monetary policy, increasing supervision of the banking sector, raising the percentage of revenue to gross domestic product to ten percent by 2013 (currently seven percent),working with the National Assembly on the stalled tax bill, reducing the losses in customs duties, asking parliament to raise the cost of government services, reforming the energy sector, privatizing state owned enterprises, and disengaging from the provision of goods and services that the private sector can provide. He noted that the government had already executed two of the three IMF prior actions (related to correcting for the Afghan government's missing a 2008 IMF program revenue target) and was making progress on the third. ¶6. (U) Afghan National Security Advisor Rassoul discussed the Afghan Government's commitment to improving governance, public administration and human rights, noting they were key factors to meeting economic development goals. He said the Afghanistan National Development Strategy was built through significant participatory consultation, and highlighted the steady progress of the National Justice Program in creating the human resources necessary to provide stable and predictable justice. He committed the Afghan Government to embarking on increased specialization and diversification of justice, reform of public administration, implementing the National Action Plan for Women, providing a definite mechanism to provide for participation of private sector, NGOs, women, and youth in governance, and creating a disaster preparedness and response system. Rassoul highlighted the creation of the Independent Directorate of Local Governance (IDLG) as a key vehicle to delivering good governance at the local level. He said the Afghan Government's main objective is to create an accountable state that can respond to their needs is the goal of the Afghan people. -------------- UNITED STATES -------------- ¶7. (U) FIRST LADY LAURA BUSH: In her opening remarks, the First Lady announced the USG's $10.2 billion pledge to support the five-year Afghanistan National Development Strategy. Mrs. Bush made a compelling case for robust continuing international support, particularly for the education of Afghanistan's women and children. She also noted the progress that previous donations have made in the lives of the Afghan people, drawing on examples from her visits to Afghanistan and her meetings with Afghans visiting the United States. ¶8. (U) SECRETARY RICE: Secretary Rice specified that the United States is committing $10.2 billion to reconstruction and security assistance over the next two years, $7.1 billion of which is awaiting Congressional approval. She noted that the pledge included $201 million for the 2008 and 2009 elections. The Secretary highlighted the tremendous progress Afghanistan has made since the Taliban were removed from power- its nascent and emerging local governance, strong security forces, and stable currency - and explained how these successes are a clear sign of political will to PARIS 00001203 003 OF 004 develop. She also warned that many challenges remain, and the US. pledge is meant to put money behind an Afghan-led strategy to address these challenges. -------------- INTERNATIONAL COMMUNITY -------------- ¶9. (U) UN SPECIAL REPRESENTATIVE KAI EIDE: After listing the remarkable successes the international community and Afghan Government had already achieved, he noted that challenges remain: corruption undermines the success of governance and the international community has not invested as much as it should have in energy and agriculture. Where success has happened, Eide created strong political leadership had been strong. He described his vision for an enhanced partnership, which he called the "New Deal" between Afghan Government and the international community, with five main goals, namely: -1- The Afghanistan National Development Strategy must be a common road map for Afghanistan and donors, and the Afghan Government must take full responsibility for implementation; -2- The international community must align its commitments to the strategy and make the Afghan Government's priorities its priorities; -3- The international community must deliver aid more effectively and channel as much as possible through the Afghan Government in order to improve its capacity; -4- The Afghan Government must improve administration and combat corruption; and -5- The international community must improve its communication with the Afghan Government by ensuring that it speaks with one voice when providing advice. Eide observed that every province needs to see the benefits of working with the international community, not just those where the international community has a security interests (e.g., poppy-producing provinces). ¶10. (U) INTERNATIONAL FINANCIAL INSTITUTIONS: The World Bank and International Monetary Fund followed Eide, commending the Afghanistan National Development Strategy and the participatory consultation that went into it. They highlighted the need for financial management improvements (budget and procurement),better public sectors, and creations of better linkages to poverty reduction. The Bank and the Fund both pushed the Afghan Government to focus on revenue collection. Rio Portugal of the Fun stated that Afghanistan's Poverty Reduction and Growth Facility would continue until March 2009, paving the way for debt relief under the Heavily Indebted Poor Country Initiative. ¶11. (U) CIVIL SOCIETY AND PRIVATE SECTOR REPRESENTATIVES: Members of civil society and private sector reported on the outcomes of the May 24 civil society forum chaired by French Foreign Minister Bernard Kouchner. The civil society representative underlined the need for an improved enabling environment for civil society, noting that authorities must see a vibrant civil society as an aim unto itself and need to allocate funds along those lines. The private sector representative said corruption and insecurity were hindering private sector partnerships as key to economic growth and improved aid effectiveness. A member of the human rights commission also pressed upon the Afghan Government and the international community the need to maintain respect of human rights and full participation of women at the center of every policy for peace to be achieved. ¶12. (U) DONOR SENTIMENT: Donors generally spoke with a united voice, noting the tremendous progress made since 2001 and the many challenges that remain. In announcing pledges, donors described how their funds would back the Afghan-led strategy. Several speakers highlighted the 2009 and 2010 elections as the next benchmarks for Afghanistan's nascent democracy and the need to support their success. All interventions expressed support for the leadership of Kai Eide and a commitment to improving aid effectiveness, while pressuring PARIS 00001203 004 OF 004 the Afghan Government to improve accountability and take concrete steps to fight corruption. Many agreed to the Afghan request for more funding channeled through the Afghan budget. -------------- FINANCIAL COMMITMENTS -------------- ¶13. (U) US. PLEDGE: In the remarks described above, the First Lady and Secretary Rice announced the US. $10.2 billion pledge to support the five-year Afghanistan National Development Strategy. Secretary Rice specified that the United States was committing $10.2 billion to reconstruction and security assistance over the next 2 years ,$7,1 billion of which is awaiting congressional approval. She noted that the pledge included $201 million for the 2009 and 2010 elections. ¶14. (SBU) INTERNATIONAL PLEDGES: Donors far exceed expectations by tallying another $10 billion in pledges to support the Afghanistan National Development Strategy on top of the US. pledge. Pledges included commitments made since the 2006 London Conference and beyond, ranging in length from one to five years. Some of the major contributions included the World Bank at $1.1 billion, the Asian Development Bank at $1.3 billion, Canada at $1.9 billion, the UK and the European Commission at over $1 billion, Norway at $775 million, Germany at $650 million, and Japan at $550 million. A notable contribution to rural development came from France, Spain, the United Arab Emirates and Poland, who banded together to fund a "Marshall Plan for Agriculture." The United Arab Emirates pledge of $250 million while Saudi Arabia pledged $148 million. Several new donors, e.g., Malta and Brazil, made pledges while many of the largest donors increased their assistance levels. ¶15. (U) THE FRENCH CONTRIBUTION: President Sarkozy announced French financial aid would be "more than doubled," with priority given to agriculture and health, bringing its assistance up to $165 million over the next two years. The objective of the aid, Sarkozy said, was "to rid Afghanistan of terrorists and of drugs." Sarkozy said that "the future of an Islam of peace and an Islam of tolerance (which) goes beyond the question of Afghanistan" was at stake. FM Kouchner stated that the Conference had exceeded the GOF's expectations, noting that it was "a success because we were expecting in our dreams 17 billion dollars" noting that more than 80 countries and international organizations attended the Conference. ¶16. (SBU) COMMENT: The 2008 International Support Conference sent a clear signal of the international community's long-term commitment to Afghanistan, notably by doubling the financial contributions achieved at the London Conference. While President Karzai's failure to deliver a strong, concrete plan to tackle corruption was disappointing, the Afghan Government successfully presented a strategy for the international community to support, announced its development priorities (institution building, agriculture, energy),and made clear commitments to economic reform. ¶17. Deputy Assistant Secretary and Coordinator for Afghanistan Patrick S. Moon reviewed this cable. 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