VZCZCXRO5095
PP RUEHDBU RUEHIK RUEHYG
DE RUEHBUL #5556/01 3251202
ZNR UUUUU ZZH
P 211202Z NOV 06
FM AMEMBASSY KABUL
TO RUEHC/SECSTATE WASHDC PRIORITY 4191
INFO RUCNAFG/AFGHANISTAN COLLECTIVE
RUEHZG/NATO EU COLLECTIVE
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC
RUEKJCS/SECDEF WASHINGTON DC
RUEKJCS/OSD WASHINGTON DC
RUEKJCS/JOINT STAFF WASHINGTON DC
RHMFIUU/HQ USCENTCOM MACDILL AFB FL
RUEAIIA/CIA WASHINGTON DC
RHEFDIA/DIA WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC 0231
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC

UNCLAS SECTION 01 OF 04 KABUL 005556 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR SCA FRONT OFFICE (DAS GASTRIGHT),SCA/A, AND EB 
DEPT FOR ISN/ECC:JCOLLINS 
DEPT PASS AID/ANE, USTR, AND OMB:PCALBOS 
TREASURY FOR LMCDONALD, JCIORCIARI, AND ABAUKOL 
NSC FOR AHARRIMAN 
CENTCOM FOR CG CFC-A 
 
E.O. 12958: N/A 
TAGS: EAID ECON EFIN PREL PGOV SNAR KCRM AF
SUBJECT: AFGHANISTAN COMPACT:   THIRD JCMB SESSION TAKES A HARD LOOK 
AT AFGHAN PROGRESS AND THE WAY FORWARD 
 
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SUMMARY 
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¶1.  The third session of the Afghanistan Joint Coordination and 
Monitoring Board (JCMB) was held in the presence of a visiting UN 
Security Council delegation on November 12.  UNAMA and Afghan 
co-chairs reported that the Afghanistan Compact process is taking 
hold and actively helping to shape Afghan government 
priority-setting, strategies, and accountability.  Marking six 
months since its inauguration in late April, the full JCMB endorsed 
a refreshingly candid, first Biannual JCMB Report, reflecting input 
from Afghan line ministries and international donors.  (Post has 
transmitted to SCA/A the final adopted text of the JCMB-III Biannual 
Report.  The text is also available at the following website: 
WWW.ANDS.GOV.AF.)  Key GoA leaders responsible for 
counter-insurgency, counter-narcotics, and anti-corruption outlined 
efforts to address these critical challenges, and proposed increased 
donor engagement.   Both GoA speakers and donors echoed key themes 
of the London Conference, including the need to invigorate capacity 
building and strengthen weak institutions, and pointed to budget 
constraints, including bottlenecks in aid disbursement and 
sustainability issues, as impediments to progress.  Ambassador 
Neumann commended UNAMA and the GoA for producing a constructive 
first Report, and urged vigorous follow-on to sustain broad 
international and Afghan support.  The Ambassador welcomed 
recommendations for improving AID effectiveness; emphasized that 
security and development be pursued in tandem, and called on donors 
to work in partnership to strengthen capacity building in key 
ministries and provinces.   The JCMB approved a request from Norway, 
Denmark, Sweden, and Finland to add a rotating joint Nordic seat to 
the JCMB.   END SUMMARY. 
 
¶2.   The Joint Coordination and Monitoring Board (JCMB) on November 
12 held its third semi-annual session, in the presence of a visiting 
delegation of the UN Security Council.   The JCMB oversees 
implementation of the Afghanistan Compact signed in February 2006 at 
the London Conference on Afghanistan.  Marking six months since the 
JCMB inauguration in late April, discussion focused on a first 
Biannual JCMB Report, which was endorsed at the end of the session 
by the full JCMB body.  The report will be published by UNAMA, and 
updated on a six-month basis. 
 
------------------------------ 
MOVING FROM COMPACT TO IMPACT 
------------------------------ 
 
¶3.   Opening remarks by Foreign Minister Spanta and Afghan Vice 
President Ahmed Zia Massoud highlighted the distance that 
Afghanistan has covered in five years.  Contrary to the negative 
perceptions in media and international circles recently, both 
pointed to the country's achievements since the Bonn Conference -- 
citing especially human rights, education, and institution building. 
 Spanta acknowledged, nonetheless, less success in demonstrating 
tangible benefits to the Afghan population. Keying off of the first 
sentence of the JCMB Report, Massoud and later other GoA speakers, 
recited the phrase "moving from compact to impact" as a key theme 
for JCMB III, and insisted that success will come only when the 
Afghan people believe they are seeing more positive change in their 
daily lives.  The opening speakers each avowed that such success 
would hinge on sustaining a vigorous partnership with the 
international community. 
 
¶4.  VP Massoud welcomed the visiting delegation of UNSC Ambassadors 
as a helpful manifestation of international commitment to Afghan 
political stability and economic prosperity.  He underscored that 
the GoA remains steadfast to its Bonn and London commitments, and is 
making steady progress.  While the London Compact benchmarks are 
helpful guideposts, Massoud said it is the overriding goals of 
stability, security, and economic development that are critical to 
solidifying Afghanistan's future.  Like Spanta, Massoud said that he 
did not want to minimize the very serious challenges confronting the 
Government, and urged participants to focus on key steps to address 
these priorities: 
 
KABUL 00005556  002 OF 004 
 
 
 
Q Ensuring security backed by vigorous efforts to reform Afghan 
security forces, particularly the police. 
Q Strengthening delivery of basic Government services, and taking on 
the scourge of corruption that undermines GoA performance. 
Q Countering poppy production, including support for alternative 
livelihoods and a harmonized international stance on eradication. 
Q Redoubling efforts to meet key London Benchmarks. 
 
¶5.  Afghan co-chair and Presidential Economic Adviser Ishaq Nadiri 
then began JCMB deliberations with a recitation of Afghanistan's 
shared interests with the international community, stressing that 
the terrorists had lost their base, but not disappeared, and that 
the Taliban is still exploiting GoA weakness.  Because isolation had 
fueled dislocation and instability - including migration, political 
violence and terrorism - he described continued political and 
economic integration with its surrounding regions as the only viable 
strategic vision for success in Afghanistan.  The upcoming Regional 
Economic Cooperation Conference (RECC) in Delhi would, in his view, 
help to further this goal.  Nadiri maintained that the JCMB process 
is taking hold and actively helping to advance Government 
strategies, capacity, and accountability.  He stressed that the JCMB 
report, in this spirit, reflected the input of key government 
leaders and their ministries, and does not minimize the difficulties 
facing Afghanistan.  In addition to repeating the problems 
highlighted by Massoud and Spanta, Nadiri stressed the debilitating 
impact of pervasive unemployment, particularly in rural areas such 
as the South.  To address the other three major concerns articulated 
in the Biannual Report, he invited presentations by the key Afghan 
figures responsible for security, anti-narcotics and anti-corruption 
policy. 
 
--------------------------------------------- ---- 
FOCUSING ON SECURITY, ANTI-NARCOTICS AND ANTI-CORRUPTION 
--------------------------------------------- ---- 
 
¶6.   Afghan Chief Justice Abdul Salaam Azimi briefed participants on 
GoA efforts to combat corruption, which he repeatedly described as a 
virus that all Afghans must fight.  Azimi, who chairs President 
Karzai's Anti-Corruption Commission, reported that he had already 
held 18 sessions and had adopted a framework for comprehensive 
analysis of government practices and rules that enable corruption. 
Part of this effort has been calling each Minister directly before 
the Commission for review of specific ministry responsibilities and 
structures.  Key problem areas that he identified include 
non-transparent contracting and procurement and serious deficiencies 
in collection of customs revenue.  Countering these deficiencies, 
Azimi stated, would require urgent technical and financial 
assistance from the country's international partners. 
 
¶7.  Counter-Narcotics Minister Habibullah Qadiri described narcotics 
as a plague, interlinked with both corruption and security, that 
impeded every area of national development.   He briefly laid out 
the GoA's response, as encapsulated in its new Counter-Narcotics 
Implementation Plan, a cabinet-approved roadmap to combating poppy 
production and opium trade.  Qadiri asked for explicit JCMB 
endorsement of the Plan as the foundation for GoA efforts.  Noting 
that implementation will depend on generous funding of the 
Counter-Narcotics Trust Fund (CNTF), Qadiri expressed appreciation 
for pledges to date of USD 83.6 million, of which some USD 40 
million in assistance has been received to date.  The ministry is 
now intensifying its work with line ministries to develop specific 
projects to advance the plan.  Twelve projects with total funding of 
USD 16 million have already been approved. 
 
¶8.  A final government presentation made by National Security 
Adviser Zalmai Rasoul accentuated focus on the linkage between 
security and development.  Rasoul outlined the key elements of the 
GoA's five-year security assessment as the need to accelerate army 
and police reform; fight corruption and drugs; and improve 
coordination of international and foreign forces.  Formation of the 
Policy Action Group (PAG) to focus security efforts and extension of 
government in the South had been a key development.   In conjunction 
with the PAG's efforts, Rasoul believed that the Afghan Development 
 
KABUL 00005556  003 OF 004 
 
 
Zone strategy linking security to development efforts could play a 
role in helping to counter the insurgency in these four 
PAG-designated southern provinces.  Alongside these efforts, he 
averred the Government's determination to press for Ministry of 
Interior reform and deliver on effective implementation of its plan 
for auxiliary police. 
 
------------------------------------------ 
DONORS TO STEP UP CAPACITY AND INSTITUTION BUILDING 
------------------------------------------ 
 
¶9.   In framing the ensuing discussion, co-chairs Nadiri and UNAMA 
Special Representative Tom Koenigs echoed key themes of the London 
Conference, including the need to invigorate capacity building and 
strengthen fledgling institutions. Nadiri again called for more 
assistance to be funneled through the GoA's budget, arguing that 
government capacity can not be built through parallel foreign 
assistance structures.  He mentioned Afghan interest in attracting 
returnees from its diaspora, and added that engaging expertise from 
nearby countries is preferable to current dependence on high-paid 
foreign consultants.  Minister of Finance Ahady echoed this GoA call 
for moving donor funds through the core government budget, terming 
it a key determinant of AID effectiveness.  Moving more funds 
through the GoA, he claimed, would help strengthen government 
capacity, increase Afghan "ownership," and ease the task of 
prioritization.  Just as important, in Ahady's view, is ensuring 
that assistance-related funds are spent to the maximum extent in 
Afghanistan and employ Afghan workers.  Along these lines, Ahady 
praised the U.S. military's program to buy from local Afghan 
producers (i.e., the "Afghan First Program"), noting that the value 
of CFC-A's Afghan purchases has risen from 34 percent to 54 percent 
of its commercial supplies. 
 
¶10.   In this connection, Ahady claimed progress in executing the 
GoA's core budget, noting that disbursement figures are improving, 
though he acknowledged that a large gap still remains between the 
government's initial obligation or "contracting" of funds, and 
actual spending/disbursement.  Part of this, he maintained, is the 
result of strict national and donor procurement requirements needed 
for transparency and as a guard against corruption.  This also 
means, according to Ahady, that the GoA has little flexibility to 
re-allocate unspent assistance funds to critical-need areas in the 
South, though he currently is working to shift the limited amount of 
funds deemed possible, in connection with priorities established 
through the Policy Action Group (PAG). Note: The GOA counts money 
when it is assigned to a project, a kind of general obligation to 
fund a particular item, and when the money is used to pay bills, 
that is, actually disbursed.  It has no procedure for recording the 
intermediate phase of obligating money to a specific contract. 
 
¶11.  Ultimately, Ahady averred, the government's viability would be 
measured by its ability to fund its own budgets.  Ahady pointed to 
initial successes this year, stating that GoA revenues will exceed 
its target of $520 million, while referencing the requirement of 
"maximum fiscal discipline" under the PRGF program with the IMF. 
The GoA had recently completed its mid-year financial review and is 
preparing for presentation of next year's (Afghan Year 1386) budget 
in February.  He expressed optimism that the GoA could double 
current revenues in the next three years, but described the 
country's fiscal environment as unpredictable, contending that the 
GoA would benefit from greater budget flexibility. 
 
--------------------------------------------- ---- 
SUSTAINING BROAD INTERNATIONAL AND AFGHAN SUPPORT 
--------------------------------------------- ---- 
 
¶12.  Following the government presentations, co-chair Koenig opened 
the floor to donor interventions and solicited any requests for 
changes in the proposed JCMB Bi-annual Report.  The Iranian 
Ambassador opened the discussion by praising Afghanistan's 
"significant progress on democracy, human rights, and the economy." 
He credited Iran with providing significant assistance, including on 
roads and power infrastructure, and noted that increased opium 
cultivation and a slowing return of Afghan refugees pose particular 
 
KABUL 00005556  004 OF 004 
 
 
concerns for Iran.  The Indian Ambassador also highlighted his 
country's assistance efforts, including hosting of the upcoming 
November 18-19 RECC in Delhi, but said that insurgency is impeding 
implementation of important projects in affected areas. 
 
¶13.  Ambassador Neumann commended both UNAMA and the GoA for 
producing a JCMB report that focused discussion on key issues and 
actions needing high-priority attention.  Noting the number of 
articles recently in the international media suggesting that the 
situation here is deteriorating, Ambassador Neumann argued that 
Afghans and donors needed to move aggressively together to sustain 
support from the broad international community and the Afghan 
people.  He welcomed recommendations in the JCMB report for 
improving AID effectiveness, and signaled that the USG has begun a 
round of consultations with other donors on ways to step up capacity 
building in key ministries and provinces.  Priority also needs to be 
given, he pronounced, to increasing GoA revenues, including through 
the multi-donor Border Management Initiative.  This was important, 
in light of recognition in the JCMB Report of the longer-term 
recurrent cost implications of development spending under the ANDS. 
 
 
¶14.  The Ambassador endorsed the call for more vigorous action on 
Rule of Law, corruption, and narcotics; reiterated strong USG 
support for Police reform, and urged donors to expand funding 
through the Law and Order Trust Fund (LOTFA).  Referencing progress 
on Phase II Police reform and GoA implementation of its proposal for 
Auxiliary Police, the Ambassador emphasized that the changes in the 
security situation since London compel both the GoA and 
international community to take an approach that firmly, but also 
flexibly, deploys in tandem both security and development tools. 
 
¶15.   The UK Ambassador focused his intervention on 
counter-narcotics, noting that the London Compact's five long-term 
benchmarks on this scourge would be particularly difficult to meet. 
The UK view is that Qaderi has developed a good strategy, but now 
needed to pull in key GoA ministries, including Public Health, 
Education, Rural Development, and the MFA.  This effort needed to be 
matched by increased donor contributions to the CNTF.  Donors would 
not be convinced, he warned, until they see major drug arrests, 
including of GoA officials. 
 
¶16.  World Bank Regional Director Alistair McKechnie honed in on 
budget reform, including the need for greater donor support for the 
government's budgeting, project development, and procurement 
capacities.  McKechnie cautioned the GoA to maintain fiscal 
discipline and budget transparency, noting that the Bank and other 
donors could consider committing additional technical support to 
improve disbursements for priority development projects. 
 
¶17.    The last segment of the program, in which UNAMA's Koenigs 
invited any further comments or proposed revisions to the draft 
Biannual Report, turned out to be uneventful.  Initial Pakistani 
protestations for deletion of draft language calling for Pakistan to 
cooperate more actively to combat the cross-border insurgency were 
addressed through an innocuous textual revision (note: second 
sentence of Para 15 of the Report).  With a few other minor drafting 
changes, all participants agreed to endorse the JCMB Biannual 
Report, which had been shared and commented on prior to the session. 
 As another order of business, Nadiri and Koenigs put forward a 
request from Norway, Denmark, Sweden, and Finland to add a rotating 
joint Nordic seat to the JCMB.  With no objections forthcoming, 
Koenigs moved to seat the Norwegian Ambassador as the current Nordic 
representative.  Post has transmitted to SCA/A the final adopted 
text of the JCMB-III Biannual Report.  The text is also available at 
the following website: WWW.ANDS.GOV.AF. 
 
NEUMANN