Signing of USDA Food for Progress Agreement

UNCLAS KABUL 001732 DEPT FOR SRAP, SCA/FO, SCA/RA, AND SCA/A DEPT PASS FOR AID/ANE DEPT PASS USTR FOR DELANEY AND DEANGELIS DEPT PASS OPIC DEPT PASS FOR TDA FOR STEIN AND GREENIP USOECD FOR ENERGY ATTACHE CENTCOM FOR CSTC-A NSC FOR JWOOD TREASURY FOR JCASAL, ABAUKOL, AWELLER, AND MNUGENT COMMERCE FOR HAMROCK-MANN, DEES, AND FONOVICH SENSITIVE SIPDIS E.O. 12958 N/A TAGS: ECON EAGR EAID EFIN AF SUBJECT: Signing of USDA Food for Progress Agreement COORDINATING DIRECTOR FOR DEVELOPMENT, ASSISTANCE AND ECONOMIC AFFAIRS (CDEDA) MEETS FINANCE MINISTER ZAKHILWAL ¶1. (SBU) On June 30 with Afghan Minister of Finance Zakhilwal and Ambassador Wayne, Coordinating Director for Economic and Development Affairs signed a USDA-sponsored program agreement (PL 480) for the monetization of soybean oil. Deputy Agriculture Minister Kunduzi was also in attendance. Totaling some USD 17.5 million, implementation of the agreement should assist GIRoA in capacity-building efforts at a critical time. ¶2. (SBU) In a pre-signing conversation, Minister Zakhilwal expressed his thanks for the USDA donation, and noted how the capacity of traders had been increased by the auctions of previous PL 480 programs, as well as the fact that the U.S. soy introduced a higher quality cooking oil into Afghan markets and gave the Agriculture Ministry more money for its development budget. Zakhilwal said that the economic activity generated not only provides a boost to capacity building efforts in Afghanistan versus Pakistan, but also creates the possibility of expanding GIRoA's ability to deliver services. He said that current efforts of GIRoA, understandably, are focused on simply expanding governance. However, the delivery of services and development at the sub-national level are also important. ¶3. (SBU) Ambassador Wayne acknowledged the need for good governance. He also raise the wage issue as it related to capacity building efforts, noting that some of Afghanistan's best and brightest get donor-funded training to assist GIRoA, but then are hired away at salaries the government cannot begin to match. Zakhilwal agreed and said that capacity building efforts will fail unless the salary issue is dealt with. He noted that even harmonizing government salaries has been difficult, with disparities creating incentives for corruption. ¶4. (SBU) Zakhilwal also mentioned efforts by donors, notably BMTF, to modernize customs facilities at border ports, and emphasized a particular need to revamp facilities at Zaranj, where a planned Iranian railhead will connect with the sea port of Char Bahar. He noted the new facilities at the ports of Torkham and Islam Qala as great examples of the USG's support for his ministry. PRESS CONFERENCE ON AG DONATION ¶5. (U) Following the meeting, Ambassador Wayne and Minister Zakhilwal signed the Food for Progress agreement. At a press conference following the signing, Ambassador Wayne noted that since 2003, the United States has donated over USD 200 million in bilateral food assistance to Afghanistan and additional aid through multilateral organs. He said that this latest USD 17.5 million contribution would provide agricultural products to Afghanistan and allow the Ministry of Finance and the Ministry of Agriculture to work together to strengthen the agricultural capacities of Afghanistan. Ambassador Wayne added that this agreement was just part of a broader effort to strengthen the rural economic and agricultural sectors. This effort would also include education, building of infrastructure, and training. We would also work to strengthen market linkages so that Afghan farmers could produce better products and have better access to markets. Ambassador Wayne concluded by saying "our mutual goal will be to create more jobs, better jobs, and a better life for the people of Afghanistan." EIKENBERRY