VZCZCXRO3651
RR RUEHBC RUEHDE RUEHIK RUEHKUK RUEHYG
DE RUEHBUL #4916/01 2830254
ZNR UUUUU ZZH
R 100254Z OCT 06
FM AMEMBASSY KABUL
TO RUEHC/SECSTATE WASHDC 3381
RUEATRS/DEPT OF TREASURY WASH DC
INFO RHEHAAA/NSC WASHINGTON DC
RUEKJCS/SECDEF WASHINGTON DC
RUEKJCS/OSD WASHINGTON DC
RHMFISS/JOINT STAFF WASHINGTON DC
RUCPDC/USDOC WASHDC
RUEAORC/US CUSTOMS AND BORDER PROTECTION WASHINGTON DC
RUCNAFG/AFGHANISTAN COLLECTIVE
RUCNIRA/IRAN COLLECTIVE
RUEHZG/NATO EU COLLECTIVE
RHMFIUU/HQ USCENTCOM MACDILL AFB FL
RUEAIIA/CIA WASHINGTON DC
RHEFDIA/DIA WASHINGTON DC

UNCLAS SECTION 01 OF 02 KABUL 004916 
 
SIPDIS 
 
SENSITIVE, SIPDIS 
 
DEPT FOR SCA FRONT OFFICE (DAS GASTRIGHT) AND SCA/A 
DEPT FOR ISN/ECC:JCOLLINS 
DEPT PASS AID/ANE, USTR, AND OMB:PCALBOS 
TREASURY FOR LMCDONALD, JCIORCIARI, AND ABAUKOL 
NSC FOR AHARRIMAN 
OSD FOR BRZEZINSKI 
 
E.O. 12958:N/A 
TAGS: EFIN ECON PGOV PINS MOPS AF
SUBJECT:  AFGHAN CUSTOMS REVENUE DECLINING 
 
REF:  KABUL 4447 
 
KABUL 00004916  001.2 OF 002 
 
 
(U) This message contains SENSITIVE BUT UNCLASSIFIED INFORMATION. 
Please protect accordingly. Not for internet distribution. 
 
1.(SBU) SUMMARY: Afghan Customs revenue collection fell 1.1% for the 
period July-August-September from the previous quarter.  The decline 
was largest in the South, reflecting security problems there. 
Building new customs posts closer to the border could increase 
customs collections, but security must also be increased to protect 
customs posts and personnel.  The Mission, through the Border 
Management Initiative (BMI), is working with the Afghans to build 
new border posts.  The Western region, especially Herat Governorate, 
produces over 40% of customs revenue.   END SUMMARY. 
 
2.(SBU) According to data supplied by Afghanistan's Ministry of 
Finance, customs receipts for the period April-September 2006 were 
$139 million.  Revenue rose rapidly from April through June ($19 
million to $26 million).  However, collections have fallen in each 
subsequent month (July - $24 million, August - $23 million, 
September - $21 million).  Grouping the data by quarters (April, 
May, June and July, August, September), customs revenue declined 
1.1% over the summer months. 
 
3.(SBU) Subdividing the data by region (Kabul, north, east, south, 
and west), the western region, particularly Herat Governorate, 
produced 41% of all customs revenue during this period.  The 
proportion of revenue collected in the other four regions was - 
Kabul: 7%, North: 17%, East: 19%, and South: 16%.  Quarterly customs 
revenue growth occurred in the Eastern (10.2%) and Western (1.6%) 
regions, but declined in the Kabul (-2.6%), Northern (-0.8%), and 
Southern (-18.3%) regions. 
 
4.(SBU) Director General for Customs Jalil Ahmed told Acting ECON 
Counselor and EXBS advisor recently that security for customs posts 
remains the key to increasing customs revenue.  He related that his 
customs inspectors at the Spin Boldak border crossing (in Kandahar 
province) are afraid to find weapons or other contraband during 
searches.  He added that three inspectors had recently been 
kidnapped on the road from Kandahar to Spin Boldak.  In another 
southern province, insurgents captured seven customs officers, 
killed four, and took three across the border into Pakistan.  Ahmed 
said tribal leaders went to Pakistan and threatened the insurgents 
with war if the three kidnapped officials were not released.  He 
noted that all three were released immediately.  Ahmed appealed for 
increasing the numbers of Afghan National Army (ANA) or Afghan 
National Police (ANP) personnel to be increased to guard his customs 
facilities and officers. 
 
5.(SBU) Ahmed also cited the need to move key customs clearance 
buildings next to the actual border crossing points.  In Spin 
Boldak, for instance, the customs post is 5 km from the border. 
Smugglers, he said, have established a virtual customs free zone, 
with warehouses, shops, etc., between the border and customs. 
Hundreds of people visit this "outlet mall" daily to buy duty free 
goods.  Because the "free zone" operators are heavily armed, no one 
dares intervene in the area, he commented.  EXBS Advisor and Ahmed 
discussed building a new customs post at the border crossing so 
incoming traffic could not divert to the "free zone" before reaching 
the current customs post.  However, Ahmed stressed that such a move 
would necessitate a strong security presence by the Afghan Border 
and Customs Police supported by an appropriate ISAF presence.  The 
EXBS Advisor is scheduling a meeting with the Director General and 
an ISAF representative to discuss this move. 
 
6.(SBU) The Director General is also experiencing problems on the 
southwest border with Iran at the Zaranj customs post in Nimruz 
province.  Customs officials are essentially locked-out of the 
border customs post because of the security problems being 
experienced in that region. 
 
7.(SBU) COMMENT:  The decline in customs revenue is disturbing given 
the strict revenue growth targets established by the IMF and the 
 
KABUL 00004916  002.2 OF 002 
 
 
increasing demand for Afghan revenue to cover operational 
expenditures, especially if the ANA and ANP continue to grow.. 
Through the Border Management Initiative, the Mission is working 
aggressively to provide new border facilities and train customs 
officers.  Western-educated and goal-oriented, Customs DG Ahmed 
seems to be the right man in the right job.  However, he needs more 
security support, especially in the south, to get his job done.  END 
COMMENT. 
 
NORLAND