VZCZCXRO2592
PP RUEHDBU RUEHIK RUEHYG
DE RUEHBUL #3532/01 2191240
ZNR UUUUU ZZH
P 071240Z AUG 06
FM AMEMBASSY KABUL
TO RUEHC/SECSTATE WASHDC PRIORITY 1808
INFO RUEATRS/DEPT OF TREASURY WASH DC PRIORITY
RUCNAFG/AFGHANISTAN COLLECTIVE
RUEKJCS/OSD WASHINGTON DC
RUEKJCS/JOINT STAFF WASHDC
RHMFISS/HQ USCENTCOM MACDILL AFB FL
RHEHAAA/NSC WASHDC
RUEAIIA/CIA WASHINGTON DC
RHEFDIA/DIA WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHDC
RHMFIUU/DEPT OF ENERGY WASHDC

UNCLAS SECTION 01 OF 03 KABUL 003532 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPARTMENT FOR SCA/FO, SCA/A, EB 
NSC FOR AHARRIMAN 
CENTCOM FOR CG CFC-A 
TREASURY PASS TO ANDY BAUKOL 
 
E.O. 12958: N/A 
TAGS: ECON EAID EFIN PGOV USAID
SUBJECT: AFGHANISTAN COMPACT: PROGRESS ON LONDON CONFERENCE 
BENCHMARKS GETS MIXED REVIEW AT SECOND JOINT COORDINATION 
AND MONITORING BOARD MEETING 
 
REF: KABUL 3349 AND PREVIOUS 
 
¶1.  (SBU) Summary:  Donor representatives used the second 
Meeting of the Afghan Compact's Joint Coordination and 
Monitoring Board (JCMB) to press for government action in 
key areas including energy reform, anti-corruption, and rule 
of law.  GoA interventions highlighted the need for 
emergency fuel assistance to head off a winter electricity 
crisis, and promised initial steps on longer-term energy 
reform. The Afghans also sought donor support for their 
Policy Action Group initiative to step up assistance in the 
South.  The session briefly touched on the GoA's recent 
appeal for food assistance, and condemned the razing of 
schools by the insurgency. Co-chairs Koenigs and Nadiri 
asserted that the JCMB is proving its worth, citing the 
informal donor efforts to advance police reform and more 
recently to engage the Afghans on energy strategy. 
Participants agreed that an expanded progress report on the 
London Conference benchmarks would be prepared for the next 
full JCMB session, tentatively scheduled for November 5. 
End Summary. 
 
¶2. (SBU) GOA senior economic advisor and Joint Coordination 
and Monitoring Board (JCMB) co-chair Israq Nadiri and his 
UNAMA counterpart, SGSR Tom Koenigs, convened the second 
formal meeting of the JCMB on July 30.  First Vice President 
Ahmed Zia Massoud's opening remarks highlighted GoA concerns 
about deteriorating security in the South, as well as the 
need for additional donor assistance in the energy sector. 
GoA co-chair Nadiri echoed that security and reconstruction 
needs confronting the government are increasingly urgent, as 
well as interdependent. Reviewing recent steps to create an 
inter-ministerial Energy Board chaired by Senior Minister 
Arsala, Nadiri warned that inadequate electricity this 
winter would likely feed popular dissatisfaction. 
 
¶3. (SBU) Through its role in integrating development and 
financial planning, Nadiri saw the JCMB as central to 
addressing these challenges.  UNAMA SGSR Koenigs 
acknowledged that the challenges confronting the GoA are 
sizeable.  He said that the JCMB had already proved its 
worth in some areas, citing funding for changes in police 
reform and more recently energy strategy as areas where 
informal exchanges have helped to get policy more on track. 
He had serious concerns, though, in other areas such as lack 
of progress in tackling corruption and judicial reform, and 
the need for additional work on private sector development. 
 
¶4. (SBU) Interventions by Minister of Foreign Affairs Spanta 
and National Security Adviser Rasoul accentuated the 
meeting's focus on linkage between security and development. 
Rasoul sought donor support for the GoA's Policy Action 
Group (PAG) initiative to integrate security, intelligence, 
reconstruction, and public communication efforts in Southern 
Afghanistan.  Key challenges to security included lack of 
control of Afghan borders, drug trafficking by insurgents, 
and inability to deliver basic government services in the 
provinces.  Education Minister Atmar recounted increased 
targeting of schools by insurgents, citing 202 attacks 
already in 2006 against schools in 27 Afghan provinces.  In 
six Southern provinces, 208 schools had closed, denying 
education to some 100,000 children.  The GoA was taking 
measures to address this, including setting up school 
protection teams under the direction of provincial 
governors, and would welcome donor support to rehabilitate 
and reopen schools. 
 
¶5. (SBU) Finance Minister Ahady reviewed efforts to improve 
the budget process and enhance aid effectiveness.  His 
ministry is trying to link spending to Afghan National 
Development Strategy (ANDS) priorities.  By September he 
anticipates setting budget ceilings for each ministry. He 
identified key ANDS priorities as: 
A) Infrastructure; 
B) Police and Security; 
 
KABUL 00003532  002 OF 003 
 
 
C) Governance and public sector management; and 
D) Human resources and education. 
Ahady also raised the GoA's recent appeal for food 
assistance through the World Food Program, in response to 
the return to drought conditions in much of the country. 
 
¶6. (SBU) On energy needs, Ahady appealed for fuel support to 
meet short and medium-term electricity requirements, noting 
that it takes several years to bring new power generation 
and transmission on stream.  Estimating diesel requirements 
for the coming winter at about $60 million, Ahady identified 
three financing options: a) getting external financial 
support from a new donor; b) finding a donor willing to 
provide diesel fuel directly; or C) reallocating funds from 
existing sources, such as the World Bank's Afghan trust fund 
(ARTF). 
 
¶7. (SBU) Energy and Power Minister Ishmael Khan said that 
the GoA's energy strategy includes introducing new billing 
systems and future privatization of the main power plant in 
Kabul. Senior Minister Arsala, named to head the new inter- 
ministerial energy board, said the GoA understands that 
continued donor support in this sector will be conditioned 
on reform.  He described the key elements of the GoA's plan: 
1) restructuring of the national energy authority; 
2) establishing a cost recovery system for electricity; 
3) legal reforms to facilitate private energy investment; 
4) building staff capacity, including salary reform, and 
5) promoting alternative sources and rural electrification. 
 
¶8. (SBU) World Bank Country Director Alistair McKechnie 
welcomed the GoA's commitment to develop an energy strategy. 
He downplayed, however, any possibility of dipping into the 
ARTF to subsidize short-term needs, saying this would likely 
violate conditions set by donors.  In lieu of ARTF, he 
encouraged the GoA to seek support from friendly oil 
producing countries.  Alternatively, he offered, it may be 
possible to tap into Asian Development Bank energy sector 
funding. 
 
¶9. (SBU) The JCMB co-chairs circulated for discussion a 
revised progress report on the most immediate Afghan Compact 
benchmarks (NOTE: The report addresses only those eleven 
benchmarks with deadlines targeted by March 2007. The self- 
assessments by sectoral Working Groups use a tri-color 
scheme -- green, yellow, red -- to grade GoA progress.  A 
copy has been provided to the SCA Afghan desk. END NOTE.) 
Based on donor characterization of an earlier draft as far 
too sanguine (see reftel), the revised report now identifies 
four benchmarks as falling into the yellow warning zone: 
a) the senior appointments benchmark for establishing a 
transparent mechanism for filling key Government posts; 
b) review of administrative boundaries; 
c) establishing a legal framework for mining and natural 
resource development; and 
d) enactment of legal protections for private sector 
development and trade. 
 
¶10. (SBU) Ambassador called for steadfast international 
engagement to help the GoA, and for the GoA to match this 
with actions.  He pointed to the GoA's energy difficulties 
to emphasize the cost of avoiding tough decisions.  The EU, 
U.K., and Japanese Ambassadors agreed that the JCMB must 
focus on results.  Donors cited benchmarks on anti- 
corruption; rule of law; the justice sector, and DIAG as 
among those requiring urgent action. An obvious shortcoming 
of the report, pointed out by several donors, is its failure 
to address the many benchmarks with deadlines beyond the 
report's initial 12 month timeframe. 
 
¶11. (SBU) SRG Koenigs agreed that an expanded progress 
report, looking out beyond twelve months, should be prepared 
for the next full session of the JCMB, tentatively scheduled 
for November 5.  He appealed for greater donor engagement 
with the GoA in monitoring the benchmarks and asked that 
 
KABUL 00003532  003 OF 003 
 
 
donors be more assertive in raising specific concerns 
through the JCMB process. 
 
NEUMANN