VZCZCXRO8696
PP RUEHDBU RUEHIK RUEHLN RUEHVK RUEHYG
DE RUEHBUL #0243/01 0241248
ZNR UUUUU ZZH
P 241248Z JAN 07 ZDK
FM AMEMBASSY KABUL
TO RUEHC/SECSTATE WASHDC PRIORITY 5666
INFO RUCNAFG/AFGHANISTAN COLLECTIVE
RUCNCIS/CIS COLLECTIVE
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC
RUEKJCS/JOINT STAFF WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC 0302
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RHMFIUU/DEPT OF ENERGY WASHINGTON DC
RUEHML/AMEMBASSY MANILA 1541

UNCLAS SECTION 01 OF 02 KABUL 000243 
 
SIPDIS 
 
STATE FOR SCA/A, SCA/FO (A/S BOUCHER, GASTRIGHT, DEUTSCH) 
STATE PASS USTDA FOR DSTEIN/SGREENIP 
STATE PASS OPIC FOR MOSBACHER AND ZAHNISER 
STATE PASS USTR FOR KLEIN AND GERBER 
NSC FOR AHARRIMAN 
USAID/AA/ANE FOR JKUNDER 
TREASURY FOR ABAUKOL 
MANILA PASS ADB/ED 
 
SIPDIS 
 
E.O.12958: N/A 
TAGS: EINV ECON ETRD EAID PGOV AF
SUBJECT:  JCMB SUCCESS - PRESIDENT KARZAI ISSUES FOUR COMMERCIAL 
LAWS BY DECREE 
 
REF:  06 KABUL 5238 
 
KABUL 00000243  001.2 OF 002 
 
 
¶1.  SUMMARY:  On January 17, President Karzai signed decrees 
enacting laws on partnerships, corporations, arbitration, and 
mediation.  The laws went into effect immediately, but are subject 
to parliamentary ratification.  Their enactment results from active 
USG engagement through the JCMB process to set deadlines for 
achieving the Afghan National Compact (London Agreement) goal of 
streamlining investment laws and regulations and of keeping the GOA 
focused on achieving this critical goal for sustaining economic 
growth and creating new jobs.  These four laws, which set guidelines 
for opening modern business organizations and establish alternative 
dispute settlement mechanisms, are important steps to improving the 
investment climate in Afghanistan and boosting economic growth.  The 
progress to date derives from the Embassy's coordination with UNAMA, 
donors, and the GOA through the JCMB process.  END SUMMARY. 
 
¶2. On January 15, the cabinet approved decree laws on partnerships, 
corporations, arbitration and mediation.  President Karzai signed 
the decrees on January 17.  According to Article 79 of the 
constitution, the decrees became law immediately because parliament 
was in recess.  The laws on partnership and corporations will be 
submitted to parliament for ratification after it reconvenes on 
January 21.  Parliament may approve, disapprove, or amend the laws. 
The laws on arbitration and mediation will be submitted before the 
end of March. 
 
¶3. These are the first four of ten measures to simplify and 
harmonize investment-related legislation.  The others are laws on 
contracts, standards, copyrights, patents, trademarks, and agencies. 
 The Contracts Law is the final stages of legal review by the 
Ministry of Justice, and it is expected to be submitted to 
parliament before the end of March.  The standards law is being 
edited by the Ministry of Commerce and is scheduled to be submitted 
in February to the Ministry of Justice for legal review.  The final 
four laws are expected to be submitted to the Justice Ministry by 
the end of March.  All ten laws are scheduled to be enacted by the 
end of calendar year 2007.  USAID's Economic Governance Initiative 
has been instrumental in the drafting of all ten laws. 
 
¶4. Enactment of these ten laws will be the first major step towards 
completion of the Afghan National Compact benchmark 8.3 that "All 
legislation, regulations and procedures related to investment will 
be simplified and harmonized ..."  The progress to date derives from 
the Embassy's coordination with donors and the GOA through the JCMB 
process.  Post took the lead, using UNAMA's JCMB mantle, to prepare 
a donor-endorsed white paper that outlined the way forward to 
enacting and implementing the laws based on agreed deadlines.  When 
the GOA advised in an October Consultative Group meeting that it 
could not move the laws according to schedule, Acting Econ Counselor 
and UNAMA Deputy Special Representative Ul-Haq stressed the 
importance of establishing the commercial legal framework to sustain 
economic growth and create jobs.  Washington agencies responded to 
reftel by delivering the same message to Commerce Minister Farhang. 
Post followed up these interventions by editing the draft text of 
the JCMB semi-annual report to state that the GOA would speed "up 
the process for reviewing and simplifying laws, and regulations and 
procedures related to investment."  Ambassador and Econ Counselor 
spoke on this and assured that the November 12 JCMB meeting endorsed 
this objective. 
 
¶5. The GOA, supported by USAID's Economic Governance Initiative, has 
begun drafting the regulations and procedures to implement the new 
and draft laws.  According to the JCMB benchmark, they should be 
implemented by March 2008.  In the January 20 meeting of the 
Consultative Group meeting on Economic Governance, the GOA asked the 
Consultative Group to recommend that the JCMB endorse an extension 
of the deadline for achieving this objective.  ECON Counselor and 
UNAMA Deputy Special Representative Alexander strongly recommended 
that the GOA report its successful progress towards the benchmark in 
Berlin, but that any reassessment of deadlines should be discussed 
with a view towards a formal review at the April JCMB meeting in 
Kabul. 
 
¶6. COMMENT:  Progress towards establishing a legal framework that 
 
KABUL 00000243  002.2 OF 002 
 
 
facilitates private sector investment in Afghanistan is critical to 
sustaining the high rates of economic growth needed to absorb 
Afghanistan's high numbers of unemployed workers.  The JCMB process 
of coordination through donor white papers, consultative group 
meetings, and formal JCMB meetings has set realistic deadlines for 
performance, assisted donors to identify priority tasks, and kept 
the GOA on course towards this key objective.  The enactment of laws 
on modern business organizations and alternative dispute settlement 
methodologies are important steps to make the business climate in 
Afghanistan more attractive to foreign and domestic investors alike. 
 
END COMMENT. 
 
NEUMANN