VZCZCXRO5092
RR RUEHDBU RUEHIK RUEHYG
DE RUEHBUL #3570/01 2211130
ZNR UUUUU ZZH
R 091130Z AUG 06
FM AMEMBASSY KABUL
TO RUEHC/SECSTATE WASHDC 1861
INFO RUCNAFG/AFGHANISTAN COLLECTIVE
RUEKJCS/OSD WASHINGTON DC
RUEKJCS/JOINT STAFF WASHDC
RHMFIUU/HQ USCENTCOM MACDILL AFB FL
RHEHNSC/NSC WASHINGTON DC
RUEAIIA/CIA WASHINGTON DC
RHEFDIA/DIA WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS SECTION 01 OF 03 KABUL 003570 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPARTMENT FOR SCA/FO, SCA/A 
NSC FOR AHARRIMAN 
CENTCOM FOR CG CFC-A 
 
E.O. 12958: N/A 
TAGS: SENV ECON AF
SUBJECT: PRT KUNAR: SOVIET-STYLE SALE OF EAST AFGHAN TIMBER 
STOCKPILE 
 
Summary 
------- 
 
¶1.  (SBU) Cracking down on illegal timber cutting and 
smuggling has been one of Kunar's outgoing governor's most 
important achievements.  He strictly enforces Karzai's 
decrees on that matter.  According to his interpretation, 
however, no individual can transport wood without the GoA's 
express permission.  Tens or hundreds of millions of dollars 
of wood, mostly cedar, now lie in the timber yards of Kunar 
province in eastern Afghanistan.  The GOA has a Soviet-style 
plan to buy up all the wood, at a price to be determined by 
Kabul, and then sell the timber to the highest bidder, most 
likely international wood concerns.  The potential for graft 
and corruption is high.  Many local government and tribal 
leaders do not support this plan.  Some advocate allowing 
market forces to work their magic, while others desire the 
GOA to donate the logs for construction of housing for poor 
Afghans.  Karzai's government must make smart choices on 
what to do with Kunar's, and Nuristan's, lumber and devise, 
in coordination with international partners, a long-term 
reforestation and tree-harvesting program for a sustainable 
lumber industry.  End Summary. 
 
Timber:  Possible engine for economic growth? 
--------------------------------------------- 
 
¶2.  (U) The main economic activity in Kunar province 
currently is subsistence farming, the means of livelihood 
for over ninety percent of the population.  But the trees of 
Kunar, particularly its nakhtar cedars, may be a potential 
source for economic development in the long term.  Other 
potential economic opportunities are gemstone mining and 
electricity production from the two main rivers, the Pech 
and the Kunar.  Locals hope the GOA will be able to harness 
these rivers to produce power for half the country. 
 
¶3.  (U) Sixty percent of Afghanistan's forests lie in the 
eastern region of the country, primarily in Kunar and 
Nuristan with limited forests in Nangarhar and Laghman 
provinces.  Nakhtar cedar trees, prized for use in 
construction and furniture-making in Afghanistan and 
Pakistan, are found at higher elevations in both Kunar and 
Nuristan.  Other trees growing naturally in Kunar include 
walnut, eucalyptus, and various citrus and other fruit 
trees.  Depending on quality and species, wood merchants 
today sell Kunari cedar in downtown Asadabad, the provincial 
capital, for $4 to $20 per cubic foot. 
 
Illegal harvesting of trees 
--------------------------- 
 
¶4.  (SBU) Before the civil war of the early 1990s, under 
Afghan law, the Ministry of Agriculture monitored the 
harvesting of trees and required that new saplings replace 
the felled timber.  This system collapsed during the civil 
war.  The current Director of Economy for Kunar and others 
state that rich Pakistanis, then and now, are behind the 
timber smuggling business throughout the province.  Others 
spread the blame a bit more broadly, pointing the finger at 
merchants from Paktiya, Kandahar, Nangarhar, and elsewhere, 
including some Kunaris. 
 
¶5.  (SBU) After the fall of the Taliban, Karzai banned 
lumber harvesting in Afghanistan, though in Kunar this was 
not enforced by the first two post-Taliban governors, 
warlord Jahn Dod and the Afghan-American Sayid Fazil Akbar. 
Akbar took a laissez faire approach, allowing wood to flow 
relatively freely within the province as long as individuals 
paid the appropriate taxes, which helped fund the building 
of a new mosque in downtown Asadabad, enriched warlords and 
local officials.  It is unclear if any connection existed 
between enemy forces and the illegal timber trade. 
 
Governor Wafa's (mostly successful) crackdown 
--------------------------------------------- 
 
¶6.  (SBU) When Governor Wafa came to Kunar in February 2005, 
 
KABUL 00003570  002 OF 003 
 
 
he cracked down on the illegal harvesting of trees in Kunar 
and strictly enforced the ban on the transport of lumber, 
stifling a means of livelihood for many inhabitants of this 
province, particularly in the unstable Korengal Valley and 
the northeastern districts.  This had a drastic effect on 
the local economy, according to the provincial Finance 
Director, with Kunar's total revenues sent to Kabul dropping 
from $5 million two years ago to only $300,000 last year. 
(In comparison, last year's total provincial budget was $7 
million, with approximately 70% of that going to salaries of 
government employees.) 
 
¶7.  (SBU) Nevertheless, smuggling on a lower scale 
continues.  Kunari warlords who served in government 
positions before the arrival of Governor Wafa in February 
2005 - Afghan Militia Force (AMF) commander Malik Zarin, 
border brigade commander and former governor Jahn Dod, and 
to a lesser extent ANP chief Matiollah Khan - and who all 
still have close ties to Karzai played key roles in the 
exploitation of Kunar's (and Nuristan's) woodlands.  They 
are all presumably still involved in timber smuggling, and 
may be lobbying hard for the solution to the timber issue 
that would leave the most money in their coffers. 
 
Kabul's Soviet-style plan for Kunar's timber 
-------------------------------------------- 
 
¶8.  (SBU) In late December 2005, Karzai's government issued 
a decree spelling out what to do with the millions of feet 
of wood piled up in Kunar and Nuristan.  A commission made 
up of various ministries from Kabul spent weeks earlier this 
year cataloguing the timber in Kunari lumberyards.  The 
Economy Director criticized the commission's accounting 
methods.  He says their figure of around 10 million cubic 
feet understates the amount of lumber by approximately 5 
million.  Going with an extremely conservative estimate of 
200 afghani ($4)/foot, the going rate for low quality cedar, 
the woodlots of Kunar contain at least $40 million worth of 
timber.  The actual market value is likely in the hundreds 
of millions of dollars. 
 
¶9.  (SBU) The commission in Kabul (including the heads of 
some of the Ministries of Finance, Agriculture, and 
Interior) plans to take a very Soviet-like approach to solve 
the timber problem, determining the appropriate price to pay 
the dealers for their product, buying up and collecting all 
of Kunar's (and Nuristan's) timber, and finally - with a 
belated nod to Adam Smith and the market system - selling 
the wood at a mark up of perhaps, according to the Finance 
Director, thirty percent.  (A Dutch firm apparently made 
inquiries into purchasing $3 million of timber back in 
February.) 
 
¶10.  (SBU) Kunar's Economy Director, Deputy Governor for 
Administration, Agriculture Director and other officials 
have all advised Kabul against this plan, but the central 
government will proceed anyway.  These local officials would 
have preferred allowing market forces to determine prices 
and buyers.  Kunar's elders and members of Parliament, on 
the other hand, claim that the wood sitting in the woodlots 
of this province should be used to build homes and other 
buildings for the poor citizens of Afghanistan.  It is 
unlikely, however, that Kunar's timber yard owners, 
including some powerful local figures and at least one 
member of parliament, would have allowed this sort of 
giveaway. 
 
Comment 
------- 
 
¶11.  (SBU) It remains to be seen whether this arrangement, 
rife with opportunities for corruption and insider deals, 
will be able to set the province's timber industry in motion 
and generate some decent income for the GoA.  The GoA has 
been wrestling with the question of what to do with Kunar's 
timber since Karzai's first decree on the subject when he 
first took office.  If the GoA doesn't act soon, the wood, 
ostensibly chopped down some time before Wafa's arrival 
 
KABUL 00003570  003 OF 003 
 
 
almost eighteen months ago, may begin to rot.  Presuming the 
wood is sold off in the near future, which is not a sure bet 
by any means, there is still no plan for the development of 
the timber sector.  GOA and NGO efforts at reforestation 
thus far have been on an extremely small scale.  The dream 
of Kunar's cedars becoming an engine for economic growth is 
decades away. 
NEUMANN