VZCZCXRO6552
OO RUEHDBU RUEHIK RUEHPOD RUEHPW RUEHYG
DE RUEHBUL #0463/01 0611109
ZNR UUUUU ZZH
O 021109Z MAR 09
FM AMEMBASSY KABUL
TO RUEHC/SECSTATE WASHDC IMMEDIATE 7567
INFO RUCNAFG/AFGHANISTAN COLLECTIVE
RUEHZG/NATO EU COLLECTIVE

UNCLAS SECTION 01 OF 03 KABUL 000463 
 
DEPT FOR SCA/FO, SCA/RA, SCA/A, AND L 
DEPT PASS AID/ANE 
CENTCOM FOR CSTC-A 
 
SENSITIVE 
 
SIPDIS 
 
E.O. 12958 N/A 
TAGS: PGOV ASEC EIND EAID AF
SUBJECT: New Regulations for Private Security Companies are 
Problematic 
 
REF: Kabul 00106 
 
¶1. (SBU) Summary: The Government of Afghanistan (GoIRA) has issued 
new private security company (PSC) regulations that, if enforced, 
could jeopardize the ability of the USG, the U.S. military, and the 
international community to operate in Afghanistan.  Under the new 
regulations, PSCs are limited to 500 weapons-carrying employees. 
Companies with larger numbers of armed personnel can receive 
permanent licenses and fulfill and extend current contracts but 
cannot sign new contracts until their numbers of armed staff drop to 
500 or less.  Clients seeking protective services - including the 
USG - could be required to either hire a smaller (and generally less 
reliable) PSC or use the Ministry of Interior's (MoI) new protective 
force, which is not yet viable.  In addition, the licensing fees are 
excessive, discriminatory, and possibly in violation of bilateral 
agreements.  We have proposed bilateral consultations to resolve 
these issues as soon as possible and request the Department's 
guidance on the legal implications of the proposed fees. (See 
paragraph 6 for guidance request.) 
 
NEW REGULATIONS COMPROMISE SECURITY, ARE DISCRIMINATORY, AND MAY 
VIOLATE BILATERAL AGREEMENTS 
 
¶2. (SBU) On February 2, the Afghan cabinet agreed to license the 39 
private security companies that had completed their applications by 
the May 2008 deadline.  The cabinet also approved a set of 
regulations governing PSC operations and a schedule of fees.  The 
Embassy had encouraged the GoIRA to finalize the registration and 
regulations to ensure the bona fides of PSCs operating in 
Afghanistan and to give legal protections to legitimate companies. 
(The uncertain legal status of PSCs left them vulnerable to 
arbitrary searches and seizures, which by January had escalated to 
dangerous levels.  See reftel.) Here are the key elements of the 
regulations: 
 
Personnel Cap 
------------- 
In general, PSCs may employ no more than 500 armed personnel. 
Companies exceeding that number may receive permanent licenses but 
may not increase their current armed staffing level.  They may 
fulfill and extend current contracts, provided this does not entail 
increasing armed staff, but may not sign new contracts until the 
number of armed staff drops to 500 or below.  When clients seek new 
business from a PSC with more than 500 armed staff, the PSC may 
either "pass a contract" to a PSC with fewer than 500 staff or guide 
the prospective client to fee-based security services to be offered 
by MOI's nascent "Public Guard Force," which is not subject to the 
500-man cap. 
 
Fees 
---- 
      Afghan PSC International PSC 
 
License (annual)  USD 60,000 USD 120,000 
Weapons registration USD 150  USD 250 
 (annual, per weapon) 
Vehicles    USD 400  USD 600 
  (annual, per vehicle) 
 
Other fees are to be determined for ballistics testing, biometric 
testing, and for vehicles with tinted windows. 
 
¶3. (SBU) In their current form, these regulations are seriously 
flawed and would hinder the ability of the USG and U.S. military - 
and other international actors - from carrying out core activities, 
including assistance programs that benefit the GoIRA.  The 
employment cap limits the freedom to select the private security 
provider that best meets U.S. quality standards for force protection 
and timeliness of service provision.  The MoI's Public Guard Force 
is still in its infancy and is not ready to meet demand for quality 
protective services.  The MOI's Public Guard Force is unlikely to be 
vetted to the degree that the USG can reliably entrust them to 
provide protective security to USG agents and contractors.  Without 
sufficient numbers of vetted, well-trained and disciplined security 
personnel, many programs could be forced to stop work. 
 
¶4. (SBU) The differential fees charged to foreign and Afghan PSCs 
are discriminatory and at best weakly associated with any service 
provided by the GoIRA.  They appear primarily aimed at revenue 
generation - a cost that would ultimately be passed on to the USG. 
In addition to revenue generation, the regulations seem to have the 
protectionist aim of forcing business toward a state-owned security 
company that potentially will not meet the minimum standards 
required to provide USG protective services.  Preliminary 
examination suggests that the fees violate bilateral agreements 
 
KABUL 00000463  002 OF 003 
 
 
governing DOD assistance and possibly INL's as well.  The USAID 
Legal Advisor at Post together with the USAID Office of General 
Counsel reviewed the USAID Strategic Objective Grant Agreements with 
the GoIRA and determined that there is no wording specifically 
exempting contractors from professional licensing fees (or fees 
generally).  Therefore, the only agreement-based recourse may be to 
argue that the fees above a certain level effectively constitute a 
tax either directly or indirectly since the fees cannot be justified 
as reasonable based on specific services rendered. 
 
THE WAY FORWARD 
 
¶5. (SBU) We have informed the GoIRA of our concerns and have 
requested consultations as soon as possible.  The text of the 
Charge's letter of February 26 to Interior Minister Atmar is copied 
in para 7 below.  We intend to oppose the fees and the personnel cap 
as onerous, unreasonable, and incompatible with our security 
requirements.  We will seek agreement with the GoIRA on ways to 
implement the PSC regulations that meet our mutual needs.  We will 
cite bilateral agreements where useful, since the fees are an 
unreasonable amount and therefore effectively a tax.  U.S. companies 
active in Afghanistan -- both PSCs and others that hire them - have 
raised concrns about the regulations and broadly support the 
Mission's course described here. 
 
GUIDANCE REQUEST 
 
¶6. (U) We request the Department's legal guidance on whether the 
proposed fees for licensing of the PSCs and their weapons and 
vehicles violate existing bilateral agreements with the Department 
of Defense, USAID, and INL.  We anticipate bilateral talks will 
begin within the next 10 days and request the Department's advice as 
soon as possible. 
 
¶7. (SBU) Text of Charge Dell's February 26 letter to Interior 
Minister Atmar follows: 
 
His Excellency 
Mohammad Hanif Atmar 
Minister of Interior Affairs 
Islamic Republic of Afghanistan 
 
Dear Minister Atmar, 
 
I am writing in regard to the Cabinet decision of February 2, 2009, 
concerning licensing of private security contractors (PSCs) and the 
related regulations you have issued. 
 
As you know, the U.S. government has long sought greater clarity in 
the regulatory nvironment in which PSCs operate.  In that respect, 
we welcome the Cabinet's decision to allow the permanent licensing 
of 39 PSCs, several of which provide vital security services to the 
U.S. Mission, the U.S. military, and U.S.-funded assistance 
projects.  At the same time, the content of some of the regulations 
presents serious difficulties for the safe and effective 
continuation of the activities for which these companies provide 
security. 
 
For example, the bar on future growth of armed staff of PSCs that 
currently employ more than 500 armed staf represents a severe 
constraint on these firs' ability to provide security according to 
te quality standards U.S. government and military clients require. 
U.S. government clients cannot contract with any security firm whose 
guards have not met acceptable vetting processes, experience 
requirements, and training levels.  The bar would therefore 
constrain our ability to secure the U.S. Mission and to implement 
numerous assistance programs that benefit the government of 
Afghanistan, including programs now being planned to provide 
election security.  The attached list includes just a few examples 
of projects now being competed that would entail significant staff 
increases for the successful contractors.  Implementation of the 
Cabinet decision and regulations would make it impossible to execute 
these and other projects. 
 
In addition, the various fees to be charged to permanently licensed 
PSCs appear excessive, discriminatory, and at best weakly related to 
the provision of any service to them.  Such fees certainly violate 
the principle that foreign assistance funding should only be used 
for the purposes for which it was intended, and may well violate one 
or more bilateral agreements granting exemption from taxes and/or 
fees to U.S. assistance programs. 
 
In view of these concerns, I would like to propose that our 
governments commence bilateral consultations with the aim of 
agreeing on ways to implement the new PSC regulations that meet our 
 
KABUL 00000463  003 OF 003 
 
 
mutual interest in both a sound regulatory framework for PSC 
operations and effective continuation of the various programs PSC 
services make possible.  If you support this proposal, the U.S. 
Mission will designate experts to consult with their Afghan 
counterparts at your side's earliest convenience. 
 
The U.S. goal in such consultations would be to reach agreement with 
your government on mutually acceptable terms for permanent licensing 
as soon as possible.  Pending such agreement, I understand that the 
PSCs approved to receive permanent licenses retain valid temporary 
licenses that should allow them to continue to conduct their 
business without hindrance.  Depending on the progress of our 
consultations, extension of the temporary licenses may be necessary. 
 Given that the fees mandated by the regulations should be a topic 
for our consultations, I would respectfully request that your 
government suspend the assessment of fees on PSCs with which the 
U.S. government and military contract, pending the outcome of those 
consultations. 
 
Thank you for your consideration of this proposal.  I look forward 
to hearing from you. 
 
Sincerely, 
 
Ambassador Christopher W. Dell 
Charg d'affaires a.i. 
 
Attachment: Pending project contracts 
 
cc:  Mr. Mohammad Masoom Stanekzai, Advisor to the President 
DELL