Identifier
Created
Classification
Origin
09KABUL253
2009-02-03 13:41:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Kabul
Cable title:  

DONORS CONSIDER AFGHAN COMMERCE MINISTER'S AID REQUEST

Tags:  EAID ETRD EINV ECON ENRG EFIN AF 
pdf how-to read a cable
VZCZCXRO1755
PP RUEHIK RUEHPOD RUEHPW RUEHYG
DE RUEHBUL #0253/01 0341341
ZNR UUUUU ZZH
P 031341Z FEB 09
FM AMEMBASSY KABUL
TO RUEHC/SECSTATE WASHDC PRIORITY 7123
INFO RUEATRS/DEPT OF TREASURY WASHINGTON DC 0723
RUCNAFG/AFGHANISTAN COLLECTIVE
RUEHZG/NATO EU COLLECTIVE
RUEABND/DEA HQS WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
UNCLAS SECTION 01 OF 02 KABUL 000253 

DEPT FOR SCA/FO, SCA/RA, AND SCA/A
DEPT PASS AID/ANE
DEPT PASS USTR FOR DELANEY AND DEANGELIS
DEPT PASS OPIC FOR ALDONAS
DEPT PASS TDA FOR STEIN AND GREENIP
USOECD FOR ENERGY ATTACHE
CENTCOM FOR CSTC-A
NSC FOR JWOOD
TREASURY FOR MHIRSON, ABAUKOL, BDAHL, AND MNUGENT
OSD FOR SHIVERS
COMMERCE FOR HAMROCK, DEES, CHOPPIN, AND FONOVICH

SENSITIVE

SIPDIS

E.O. 12958 N/A
TAGS: EAID ETRD EINV ECON ENRG EFIN AF
SUBJECT: DONORS CONSIDER AFGHAN COMMERCE MINISTER'S AID REQUEST

REF: KABUL 64

UNCLAS SECTION 01 OF 02 KABUL 000253

DEPT FOR SCA/FO, SCA/RA, AND SCA/A
DEPT PASS AID/ANE
DEPT PASS USTR FOR DELANEY AND DEANGELIS
DEPT PASS OPIC FOR ALDONAS
DEPT PASS TDA FOR STEIN AND GREENIP
USOECD FOR ENERGY ATTACHE
CENTCOM FOR CSTC-A
NSC FOR JWOOD
TREASURY FOR MHIRSON, ABAUKOL, BDAHL, AND MNUGENT
OSD FOR SHIVERS
COMMERCE FOR HAMROCK, DEES, CHOPPIN, AND FONOVICH

SENSITIVE

SIPDIS

E.O. 12958 N/A
TAGS: EAID ETRD EINV ECON ENRG EFIN AF
SUBJECT: DONORS CONSIDER AFGHAN COMMERCE MINISTER'S AID REQUEST

REF: KABUL 64


1. (SBU) Summary. Afghan Commerce Minister Shahrani January 27
briefed donor reps on his policy vision and requests for assistance.
Shahrani said his highest priorities are trade facilitation,
corporatizing the state-owned fuel importer FLGE, building capacity
in his ministry, including a new Policy Analysis Unit, and
establishing an independent Industrial Parks Authority. Donors
broadly welcomed Shahrani's reform agenda. They subsequently
discussed a joint response regarding their plans to support it and
held an initial follow-up meeting with the minister, including on
ways to coordinate support. Initial indications suggest greater
donor interest in supporting his trade-related agenda and less for
his administrative reform plans. In a very positive development,
Shahrani also announced the firing of Engineer Rozi, the reputedly
very corrupt director of FLGE. End Summary


2. (U) Minister of Commerce and Industries Wahidullah Shahrani
January 27 presented Kabul-based donor representatives his policy
vision and requests to donors for assistance to help him achieve it.
The USG was represented by USAID Mission Director, EconCouns and
Assistant Finatt. Shahrani's vision comprises three broad themes:
trade policy, private sector development (PSD),and administrative
reform and capacity building at MOCI. (Note: Post has forwarded
Shahrani's Power Point presentation to Washington agencies so this
cable will not describe it in detail.) The minister reiterated that
the private sector must be the primary engine of Afghanistan's
economic growth and that he seeks to limit MOCI's role to policy and
regulatory matters.

FLGE PRESIDENT DISMISSED


3. (SBU) Shahrani cited as evidence of his commitment to implement

reform, fight corruption, and take political risks the firing
January 25 of Engineer Rozi, the reputedly very corrupt director of
the Fuel and Liquid Gas Enterprise (FLGE),the state-owned fuel
importer under MOCI. Shahrani said President Karzai approved the
dismissal. The new head of FLGE is Engineer Noor Mohammad Wafa,
most recently advisor at the Afghan National Standards Authority and
FLGE director in 1990-91.


4. (SBU) Shahrani said the level of corruption at FLGE was "beyond
imagination" and that several other officials have also been fired
and placed on the Interior Ministry's exit-control list to enable
further investigation. He said an external audit of FLGE will be
completed that would produce a report likely to be "explosive."
Shahrani aims to restructure and corporatize FLGE within six months.
(Comment: Most privatization experts believe that this timeframe
is very ambitious). MOCI involvement in FLGE had contributed to
worsening operations at FLGE; in the future MOCI would not be
involved in FLGE operations.


5. (SBU) Donors welcomed efforts to clean up FLGE. The U.S. and
several others cited the importance of full implementation of the
MOU between the Finance and Commerce ministries on Customs access to
FLGE operations, an agreed "prior action" for IMF Board
consideration of the fifth review of the PRGF program. Shahrani
said he was committed to the IMF program and that Customs officials
would have the access they require at border posts. He also stated
that the MOCI would be very aggressive in implementing an audit of
the FLGE. However, he alluded vaguely to misunderstandings about
fuel-import operations, and Post has separately learned that he may
want to renegotiate the MOU. GIRoA discussions with the IMF on this
issue concluded February 2 and will be reported septel.

AN AMBITIOUS REFORM PROGRAM


6. (SBU) Shahrani admitted that his reform program is ambitious. In
response to a donor's question, he said his highest priorities are
trade facilitation, corporatizing FLGE, building capacity in MOCI,
and establishing an independent Industrial Parks Authority. He also
said creating a Policy Analysis Unit in MOCI is an urgent priority.
Regarding the deadlines for various commitments given in the
presentation, he clarified that the clock will start ticking when
donors mobilize the related technical assistance for each measure.

KABUL 00000253 002 OF 002


Shahrani said he hopes for a collective response from donors to his
appeal for assistance.


7. (SBU) On trade policy, Shahrani said the GIRoA has failed to
brief Parliament on the benefits of WTO membership and other
ministries on Afghan obligations under SAFTA. Now MOCI will take
the lead. He stated that the delayed Memorandum of Foreign Trade
Regime will be submitted to the WTO in February. He also noted that
he would travel soon to Islamabad and would raise the need to start
bilateral negotiations on a new Pak-Afghan Transit Trade agreement.
On the need for administrative reform, he described MOCI's current
capacity as "very disappointing." He aims to attach 1-2 young
Afghan counterparts, probably recent graduates trained at Indian
universities, to each foreign consultant to build ministry capacity.
This new cadre will grow into the professional core of MOCI.

DONORS BEGIN DISCUSSING A RESPONSE


8. (SBU) At the January 27 meeting, donors welcomed Shahrani's
appointment and expressed broad support for his reform agenda. In a
follow-up meeting chaired by the World Bank January 29, donor reps
began discussing specific elements of the proposal and types of
support each might be able to extend. USAID reps expressed interest
in a U.S. lead role on trade issues and said ongoing and forthcoming
programs would address both the trade and PSD elements and include
capacity building as a cross-cutting theme. Several other donors
also said they would be active on trade. Fewer showed interest in
Shahrani's administrative reform agenda, though the UK undertook
quickly to deploy 2-4 experts to develop a "business plan" for
reform of MOCI that could be the first step in this process. This
effort could inform possible follow-up, including on Shahrani's
goals of establishing Policy Analysis and Project Implementation
units within MOCI. Donors reps also agreed to continue efforts to
coordinate their activities.


9. (SBU) Donor reps met again with Minister Shahrani February 2 and
presented their joint response to his request for technical
assistance. Donors mainly described how existing or planned
programs would support his priorities, but also how the UK-supported
business plan could guide additional cooperation. Regarding donor
coordination, Shahrani expressed preference for assigning one "lead
donor" to manage all donor assistance provided to each of the
affected MOCI departments, e.g. Trade, PSD, etc. Donors explained
that this would be difficult as several donors hope to contribute to
each of these areas and because many of the areas are
interconnected. The donors looked to Shahrani to lead all donor
efforts in order to avoid duplication and maximize resources, and he
agreed to take responsibility. He suggested monthly meetings at
technical level, quarterly monitoring and progress meetings, and
semi-annual meetings at mission-director level to iron out any
issues. Donors also urged a streamlining of the many GIRoA bodies
involved in PSD. Shahrani reiterated his appeal for temporary
salary support for Afghan mentees as part of all TA programs. He
also said MOCI would agree to specific policy reform benchmarks
under donor-funded TA programs.

COMMENT


10. (SBU) With good reason, donors are excited about the energetic
and reformist approach the new Commerce Minister is taking. That
said, experienced observers have advised against letting
expectations get too high. Similar reform agendas have been
launched by past Commerce Ministers with scant result. As one
veteran Afghan hand noted, Shahrani starts not with a tabula rasa
but a very unreformed ministry in MOCI. Donors too have a ways to
go to achieve the degree of coordination of their advice and
assistance that Shahrani seeks, especially on trade issues.
Shahrani has made a promising, ambitious start. The USG should
support his efforts, while recognizing that even the best intentions
on his and his international partners' parts may not be able to
fully achieve the MOCI's ambitious agenda in the short term.

WOOD