This record is a partial extract of the original cable. The full text of the original cable is not available.

C O N F I D E N T I A L SECTION 01 OF 04 KABUL 005245 
 
SIPDIS 
 
STATE FOR SA/FO, SA/A 
NSC FOR THARRIMAN, KAMEND 
TREASURY FOR APARAMESWARAN 
COMMERCE FOR AADLER 
 
E.O. 12958: DECL: 08/11/2010 
TAGS: EAGR EAID ECON EFIN ETRD AF
SUBJECT: HOW THE WEST ISN'T DONE: AMBASSADOR VISITS HERAT 
 
REF: KABUL 5185 
 
Classified By: AMBASSADOR RONALD NEUMANN. REASONS 1.4 (B,D) 
 
------------------------ 
Summary and Introduction 
------------------------ 
 
¶1. (C)  During a December 11-12 visit to Herat, Ambassador 
observed many of the problems which threaten commercial 
investment, provincial stability, and rule of law.  Although 
rightly proud of their accomplishments, Herati industrialists 
face an almost insurmountable task if they are to survive. 
Proactive GOA engagement is needed to reverse the poor 
investment climate.  Governor Anwari made a pitch for more 
assistance projects for Heart, although the USG, and 
particularly USAID, have already assisted Herat Province 
significantly.  Meanwhile, the Governor expressed his belief 
that DIAG cannot work in Herat unless Herat,s largest 
warlords are dealt with by Kabul.  While ISAF is committed to 
its Mission, ISAF assets currently are not robust enough to 
keep Herat pacified.  The Border Police are doing good work 
but need Kabul help.  Herat customs, on the other hand, are 
doing terrible work and require a housecleaning.  The bottom 
line: the West isn,t done, just yet.   End Summary 
 
¶2. (SBU)  During December 11-12 visit to Herat, Ambassador 
received local feedback on the commercial, political, and 
security situation in this important city and province.  A 
city of approximately one million inhabitants, Herat is 
essentially the capital of western Afghanistan, the 
country,s most commercially buoyant location, the gateway 
for most imports and smuggled goods (and an important transit 
for illicit opium,) and a key Phase One DIAG (Disarming 
Illegally Armed Groups) site.  Interlocutors with the 
Ambassador included Herati businessmen; Provincial Governor 
Anwari and senior local GOA officials; ANA 207 Corps 
Commander and U.S. embedded ANA trainers; PRT, RAC and FSB 
commanders; members of the assistance and development 
community, and USG officials stationed in Herat. 
 
------------------------------ 
Plight of Herati Manufacturers 
------------------------------ 
 
¶3. (SBU)  On the surface, business in Herat is booming, led 
by a flood of (often poppy-financed) imported goods from 
Iran.  Budding Herati industrialists however ) and almost 
100 manufacturing firms operate in Herat,s Industrial Zone 
alone ) fear they could face extinction as they are undercut 
by predatory Iranian trade policies, pervasive smuggling from 
Iran, excessively high domestic costs of production, and 
misguided GOA policies.  Official GOA efforts to control, or 
at least collect duty on, the flood of goods entering western 
Afghanistan, the industrialists told the Ambassador, are both 
inept and corrupt.  A visit to the Herat customs house showed 
that most potential revenue collections for the GOA escape 
appropriate customs gleaning. 
 
¶4. (SBU)  Businessmen explained there are immediate steps the 
GOA can take to ameliorate the uneven, unfair playing field 
on which they are forced to compete.  First and foremost, 
they urged, is for the GOA to take control over cross border 
trade and reinvigorate Afghan customs rules and tariffs. 
Factory owners spoke strongly against corrupt Afghan customs 
officials who, for bribes, freely allow competing, and often 
allegedly inferior, Iranian products to flood Herat,s 
markets.  Iranian companies with the overt support of the 
GOI, the manufacturers alleged, are seeking the eradication 
of Afghan competition.  They argued that the GOA must be firm 
in its dealings with the GOI, not only in targeting GOI 
subsidies and dumping practices, but also in forcing Iran to 
open its market to Afghan products that might, conceivably, 
be exported once the playing field was level. 
 
¶5. (SBU)  Herat manufacturers highlighted high electricity 
costs as a major cost to operations. (Unlike most of 
Afghanistan, Herat enjoys a power grid.  Electricity is 
imported from Iran at $.01-$.02 KWH while the Herat 
municipality turns around and charges a flat $0.11 KWH to 
residential and industrial users alike ) the profit margin, 
supposedly, reinvested in power infrastructure.) 
Manufacturers with whom the Ambassador spoke wholeheartedly 
favored the idea of a multi-tier tariff structure that would 
offer lower rates to industrial users, perhaps at low peak 
hours.  (Note: Even at one-half the current tariff, Herat 
municipality would still generate much revenue.)  Factory 
owners also pointed to security concerns in the Herat 
Industrial Zone and at nascent factories throughout the 
metropolitan area.  Many claimed police protection is not 
being provided by provincial authorities; instead, it is 
purchased through payments to the police.  Access to capital, 
or any banking services, is non-existent.  Finally, a number 
of manufacturers admitted their lack of business expertise, 
particularly marketing skills, and sought guidance as to 
where to turn. 
 
--------------------------------- 
Governor Focused on Stabilization 
--------------------------------- 
 
¶6. (C) In various face-to-face events with the Ambassador, 
Governor Sayed Hossein Anwari pointed to Herat,s unique 
dynamics, strengths, and challenges.  Most Heratis, including 
the province,s religious leaders, the Governor noted, 
respect and support Afghanistan,s central government. 
Anwari attributed occasional violence in the province to 
personal and &traditional8 conflicts.  Yet, the Governor 
acknowledged there are security problems that defy easy 
solution.  While he stated his commitment to DIAG and other 
GOA-supported measures aimed at stabilizing his province, he 
is frustrated by the grip still held in Herat by armed 
supporters of Ismael Khan (IK - current GOA Minister of 
Energy) and other Herat warlords, most specifically IK rival 
and counterweight, Amanullah Khan. Without Kabul engagement 
in bring these two warlords to book, Anwari explained, the 
DIAG process in Herat was doomed to failure. 
 
¶7. (SBU)  The Governor expressed his appreciation for the 
lage mount of USG assistance to date to his province and 
participated with the Ambassador in a CFC-A and a USAID 
dedication. As might be expected, the Governor presented the 
Ambassador with a wish list of additional projects for USG 
support, including a new campus for Herat University (a 
project many Heratis believe was &promised8 by the previous 
US Ambassador to then Governor Ismael Khan.) The request also 
included more secondary district roads and an additional 250 
school buildings in the province due to a &desperate8 
shortage of educational infrastructure, expansion of Herat,s 
airport (note: the most immediate need is a new runway,) and 
water projects in Herat,s outlying districts. 
 
¶8. (SBU) The Ambassador presented the Governor with a list of 
all U.S.-sponsored projects and programs recently completed 
or currently being programmed in Herat.  Additional U.S. 
funding, if approved by Congress, will focus on basic 
infrastructure (roads, electricity and rural agricultural 
development) that are key building blocks and enablers of 
self-sustaining economic growth.  U.S. support for Afghan 
education will continue to target primary education and 
teacher training programs below the university level. 
Finally, the Ambassador noted specific joint GOA and 
international donor community development targets being 
negotiated in the post-Bonn Afghanistan Compact that will 
address many of the Governor,s development priorities. 
 
¶9. (SBU)  The Governor admitted &failings8 in Herat,s 
judicial system, but claimed one of his administration,s 
priorities was to address and correct systemic flaws.  A part 
of the problem, he explained, can be traced to inadequate 
staffing of Herat,s police force due to inadequate salary 
levels. Only 600 of 2,600 authorized police officer positions 
have been filled due to a salary cap of Af 800/month (US$ 
16/month). &People simply won,t work for such wages,8 he 
said.  While PRT/ISAF support for the chief of police has 
been strong, Anwari continued, additional U.S. and 
international community assistance is needed to bolster 
Herat,s law enforcement capabilities. 
 
¶10. (SBU)  Herat supports the GOA,s counter-narcotics drive, 
Anwari continued, but local farmers need additional help to 
adjust to a poppy-free culture.  He noted that Afghan farmers 
in other provinces receive USAID (Alternative Livelihoods 
Program) support and Herat,s farmers need and deserve more. 
Finally, the Governor asked the Ambassador to &tell8 US 
companies to follow the lead of Iranian and Pakistani firms 
and to invest in Herat. 
 
¶11. (SBU)  Ambassador described his visits earlier to 
struggling Afghan industrialists. He explained that American 
investors seek a welcoming investment climate and suggested 
there is much that Governor Anwari could do to make Herat a 
more attractive destination for foreign and domestic 
investment, such as lowering electricity tariffs for 
industrial wholesale users, educating the local business 
community on investment incentives incorporated into 
Afghanistan,s new tax code (including provisions allowing 
accelerated depreciation on investment in new capital 
equipment), ensuring that competitive products imported from 
Iran are properly valued and pay customs duties, and 
enhancing security in Herat,s industrial zone. 
 
----------------------------------- 
Italy ) Focus on &Hearts and Minds8 
----------------------------------- 
 
¶12. (SBU)  The western region of Afghanistan is under ISAF 
control, although there are some U.S. military assets in 
Herat.  The Ambassador met with the Herat Italian PRT 
commander, the Regional Area Coordinator, and the Spanish 
commander of the Herat Forward Supply Base (FSB), as well as 
U.S. National Guard ANA embedded trainers stationed at nearby 
Camp Victory. General Rossi, the Regional Area Coordinator ) 
West (RAC ) West), described Italian development efforts in 
the province which focus on school construction, medical 
equipment for hospitals, and water well drilling.  Italy, 
Rossi said, will shortly send a dedicated justice sector 
reform export to be based at the PRT. The PRT Commander noted 
that the Herat PRT currently had just one platoon for force 
protection, severely limiting PRT stability projection 
capabilities.  It was hoped that this force would be 
augmented in the future.  The Colonel also noted that USG 
staff at the PRT (DOS, USAID) were &very active8 and thus 
placed a high level of demand on PRT force protection assets. 
 
¶13. (C)  A visit to the ANA 207 Corps training center (Camp 
Victory) demonstrated that much progress had been made in 
preparing an effective Afghan army.  However, senior U.S. 
officers warned that training the Afghan soldiers, including 
running joint missions, is not a fast process, and there are 
many skill sets particularly above the company level that 
have not yet been inculcated. There also remains much room 
for cooperation with Border Police who control the frontier 
with Iran (Note: the ANA is proscribed from operating within 
50 kilometers of the Iranian border. End Note).  According to 
the U.S. Commander, all Highway Police encountered in their 
patrols are extorting money from travelers. 
 
-------------------------- 
Border Police Left Hanging 
-------------------------- 
 
¶14. (CU)  The Afghan Border Police's (ABP's) embedded CFC-A 
trainer explained that under the leadership of Colonel Ayub, 
the ABP 6 Brigade was becoming a professional force. 
However, unless financial and logistical support was 
continued beyond this month, the ABP could easily and rapidly 
backslide.  Simple actions must be pressed such as delivery 
of sufficient boots, coats, and uniforms still warehoused by 
MOI in Kabul.  Adequate fuel and food to maintain operations 
must be delivered.  And most importantly, promised pay and 
stipends (USD 2/day per soldier) had to be provided (MOI had 
delivered proper salary payments on only two of the last 
eight months.) For more on Border Management Initiative, see 
reftel.) 
 
--------------------------- 
While Customs Is a Disaster 
--------------------------- 
 
¶15. (SBU)  Gleaning customs revenue for the GOA commensurate 
with the rising flood of imports depends largely on moving 
GOA customs collection to the Islam Qalah border crossing 
point and eliminating opportunities for &baksheesh.8 (Note: 
Herat, where most customs activities are conducted, is 120 
kilometers from the Iranian border.)  Herat Provincial 
Customs Director Abdul Azim Rahimi told Ambassador that 
although he desired to move some operations to the border, 
infrastructure there was inadequate (new USG-constructed 
buildings for customs at Islam Qalah remain unoccupied) and 
the &corrupt8 Border Police at Islam Qala prevented customs 
from doing their job (ABP and customs officials at IQ 
maintain consistently to USG officials that ties between the 
two agencies there are cordial.) 
 
¶16. (SBU)  The Ambassador emphasized the need for the GOA to 
generate substantial additional customs revenues in order to 
cover a greater share of its operating budget. Unthinkingly, 
Rahimi commented that Herat customs was close to meeting the 
Af 4 billion (USD 80 million) current year customs collection 
target set by the Finance Ministry in Kabul. (Note: Various 
projections suggest that substantial additional revenues 
could/should be collected in Herat customs.)  The Ambassador 
asked Rahimi why Bearing Point-trained female customs data 
input clerks had not been paid in many months and challenged 
the Customs Director to explain the lethargy in moving 
operations to Islam Qalah when all evidence indicates only 
lack of will, and corruption, prevent the move.  (FYI:  In 
subsequent conversation between Finance Minister Ahadi and 
the Ambassador, Ahadi promised to see that the data entry 
clerks are paid. End FYI). 
 
¶17. (C)  Rahimi deflected the Ambassador,s sharp questions 
with an ill-advised request for additional USG support to 
provide the Herat customs facility with a fire station, a 
vehicle weight scale, a material testing laboratory, and new 
office facilities at Torugundi on the Turkmenistan border. 
The Ambassador suggested the first requirement was an honest 
customs director. 
 
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Comment 
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¶18. (C)  The issues in the West speak for themselves. As 
noted, some industrial investment has already taken place. 
But if industry is allowed to wither in Herat, prospects for 
similar investment anywhere in Afghanistan are bleak.  The 
Governor admits he is walking a tightrope on DIAG and other 
issues.  If Kabul ignores his plea for decisive Kabul action 
with Herat,s warlords, the DIAG process could fail in Herat, 
a bad omen for the program nationally.  Obviously, DIAG is 
something we will be focused on intensely in the new year. 
As backfill for the Coalition, ISAF admittedly is unable to 
project security throughout Herat as well as it would like. 
And a dysfunctional, corrupt customs in Herat is preventing 
the GOA from collecting needed tariff revenues, thus, the 
Embassy,s urgent request for the Border Management 
Initiative (reftel) The West is not done, and is certainly 
not yet won. 
NEUMANN