AN UNDEFINED MISSION AT THE MINISTRY OF ECONOMY

UNCLAS KABUL 000593

SENSITIVE
SIPDIS

DEPT PASS AID/W FOR TYLER HOLT, MARK KARNS, AND DIANE RAY
COMMERCE FOR DEES, CHOPPIN, AND FONOVICH

E.O. 12958: N/A
TAGS: ECON EAID ETRD PGOV EINV EIND AF
SUBJECT: AN UNDEFINED MISSION AT THE MINISTRY OF ECONOMY


1. (SBU) Summary: In a January 24 meeting, newly-appointed Minister
of Economy Abdul Hadi Arghandewal discussed his plans for the
Ministry with Ambassador Eikenberry and Coordinating Director for
Development and Economic Affairs Ambassador Wayne. Minister
Arghandewal indicated that he would develop an economic plan for the
future, install an updated database, and compile statistical
information for individuals and entities interested in investing in
Afghanistan. He appears well intentioned, but evinced a limited
grasp of the Ministry's responsibilities and struggled to articulate
a vision for his institution. End Summary.


2. (U) Ambassadors Eikenberry and Wayne visited newly-confirmed
Minister of Economy Abdul Hadi Arghandewal on January 24 to
congratulate him and to seek his vision for the ministry's future.
Arghandewal highlighted the need for improved design and monitoring
of development projects, adding that his Ministry should "clear"
development projects. The Ministry should increase its capacity to
analyze projects and collect baseline data and statistics and also
have a "department for making projects." Another priority was to
better evaluate development projects implemented by donors. The
Ministry of Economy, he continued, has one advisor who is working on
the Afghan National Development Strategy. To achieve his goals, he
sought donor assistance to develop modern databases.


3. (U) The Minister attempted to articulate the role of the
Ministry, which was downgraded in July 2009 when it lost authority
over development budget allotments to the Ministry of Finance.
(Note: This resulted after Finance Minister Zakhilwal protested to
President Karzai that Economy was ineffective in this area. End
Note.) Arghandewal noted, however, that the Ministry of Economy
retains responsibility for monitoring and evaluating development
projects, although Ministry of Finance responsibility for auditing
development projects dilutes even this limited role to the physical
monitoring of projects. The Minister noted that he has 950
employees, 250 of whom are based in the provinces. He did not
expand on how the 700 employees in Kabul are being utilized, but
stressed that he would focus the Ministry's efforts on reducing
poverty in the country.


4. (U) Aside from project oversight, Arghandewal said the Ministry
Economy's other major function is registering and supervising
charities and NGOs. He lamented the fact that over 1,400 NGOs and
charities are registered in Afghanistan and receive support from
donors but that the Ministry has little idea of what they are doing
or accomplishing.


5. (U) Ambassador Eikenberry asked Arghandewal about the
possibility of reintegrating Taliban and other insurgents into
Afghan society, a policy the minister has been supporting.
Responding that while he was moderately optimistic, he was less
sanguine about Gulbuddin Hekmatyar (whom he once served as finance
chief). Arghandewal expressed hope that Saudi Arabia would play an
important role in the reintegration process, given Afghan trust in
its leadership.


6. (SBU) COMMENT: Minister Arghandewal appears well intentioned,
but he evinced a limited grasp of the Ministry's responsibilities
and struggled to articulate a vision for his institution. We have
serious concerns about the Ministry of Economy's ability to oversee
an effective NGO and charity regime, as an ineffective oversight
regime presents a money laundering and terrorist financing
vulnerability. The Embassy will therefore continue to engage with
the Minister and encourage him to take a more active role in helping
to prioritize ANDS objectives and to implement effective NGO and
donor oversight mechanisms. End Comment.

EIKENBERRY