VZCZCXRO4052
PP RUEHDBU RUEHIK RUEHYG
DE RUEHBUL #0459/01 0411114
ZNR UUUUU ZZH
P 101114Z FEB 07
FM AMEMBASSY KABUL
TO RUEHC/SECSTATE WASHDC PRIORITY 6070
INFO RUCNAFG/AFGHANISTAN COLLECTIVE
RUEHZG/NATO EU COLLECTIVE
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC
RUEAIIA/CIA WASHINGTON DC
RHEFDIA/DIA WASHINGTON DC
RUEKJCS/OSD WASHINGTON DC
RUEKJCS/SECDEF WASHINGTON DC
RUEKJCS/JOINT STAFF WASHINGTON DC
RHMFIUU/HQ USCENTCOM MACDILL AFB FL
RUMICEA/JICCENT MACDILL AFB FL
RHMFIUU/COMSOCCENT MACDILL AFB FL
RUCNDT/USMISSION USUN NEW YORK 3641
RUEHNO/USMISSION USNATO 3453

UNCLAS SECTION 01 OF 03 KABUL 000459 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR SCA/FO DAS GASTRIGHT, SCA/A, S/CRS, S/CT, 
EUR/RPM, INL/CIVPOL 
STATE PASS TO USAID FOR AID/ANE, AID/DCHA/DG, 
NSC FOR AHARRIMAN 
OSD FOR KIMMITT 
CENTCOM FOR CFC-A, CG CJTF-76, POLAD 
 
E.O. 12958: N/A 
TAGS: PGOV ASEC KFIN SNAR PTER AF
SUBJECT: SECURITY NEEDS AND GOVERNORS' DISCRETIONARY FUND 
 
REF: A) KABUL 359 B) KABUL 371 
 
¶1. (SBU) Summary:  Governors in a number of provinces 
slated to receive payments out of the Governors, 
Discretionary Fund have recently begun complaining 
that suspension of the Fund for the fourth quarter of 
the Afghan fiscal year has negatively impacted their 
ability to counter the security threat (reftels).  The 
Fund, which was created in early 2005 in response to a 
perceived security threat in mostly Southern and 
Eastern provinces, was intended to supplement money 
received by governors out of their normal operating 
budget, development funds, and normal line ministry 
payments.  The money was in principle earmarked for 
security-related expenses, but lack of accountability 
as well as a gradually more capable Afghan National 
Police have led to a GOA review of the Fund as part of 
the budget review process for the new fiscal year. 
Inquiries to the Ministries of Finance and Interior 
have provided some clarity as to the nature of the 
Discretionary Fund, its status, and the serious issues 
that have led to the MOF,s recommendation that the 
Fund be cut from next year,s GOA budget.  In general, 
we support the move to greater transparency but we 
must be careful that short term security is not 
menaced.  End summary. 
 
What Is the Fund, Who Gets It, and How Much? 
-------------------------------------------- 
 
¶2. (U) The Governor,s Discretionary Fund was created 
by Presidential Decree in Afghan fiscal year 1384 (Mar 
2005-Mar 2006).  For Fiscal Year 1385 (Mar 2006-Mar 
2007) it was a line item in the MOI budget and as such 
approved by Parliament.  It was intended to fund 
supplementary security activities in those provinces 
with an immediate need.  The total amount of money 
available for FY 1385 was 800 million afghanis, 
approximately USD 16 million.  The following provinces 
received monthly disbursements for the first eight 
months of the fiscal year approximately as follows 
(note: actual numbers vary, as discussed para 3): 
 
Ghazni: 5.221 million afghanis (USD 104,420) per month 
Paktika:  8.15M (USD 163K) 
Uruzgan: 13 M (USD 260K) 
Zabul: 12.5M (USD 250K) 
Helmand: 10M (USD 200K) 
Kandahar: 15M (USD 300K) 
Kunar: 4.760M (USD 95K) 
Nuristan: 1.71M (USD 34.2K) 
Khost: 3.555M (USD 71.1K) 
Nangarhar:  5M (USD 100K) 
Balkh: 3M (USD 60K) 
Center: 15M (USD 300K) 
 
¶3. (U) Exceptions:  Paktia received 200,000 afghanis 
(USD 4,000) and Badghis 1 million afghanis (USD 
20,000) in the Afghan month of Qaws (Nov/Dec).   Farah 
received a total of 4 million afghanis (USD 80,000) 
only in the four months from July/Aug to Oct/Nov; 
Herat received 1 million afghanis (USD 20,000) in Qaws 
(Nov/Dec) only; the center (Kabul) received varying 
amounts that averaged about 15 million per month; and 
other amounts varied with payments having been either 
front- or backloaded.  Overall, however, almost 778 
million afghanis (USD 50.56 million) had been fully 
expended by the beginning of the Afghan month of Qaws, 
which began Nov. 21, and the account was fully 
depleted by the end of that month (Dec. 20).  Only a 
few provinces and the center received payment in Qaws. 
 
 
KABUL 00000459  002 OF 003 
 
 
How is the Fund Used? 
--------------------- 
 
¶4. (SBU) The original purpose of the Discretionary 
Fund was to allow governors to pay expenses that were 
not easily covered in the MOI recurring operational 
budget, for example paying for informants or other 
temporary security measures.  While anecdotal 
reporting suggests that the Fund has been used for 
diverse purposes, its primary purpose appears to have 
been to pay for governor,s militias and/or to top off 
salaries of Afghan National Police (ANP) patrolmen. 
Regarding governor,s militias:  In many provinces 
President Karzai authorized the governors to recruit 
militias last summer to counter what was perceived to 
be a critical security threat.  As money began to run 
low in the fall and the auxiliary police concept began 
to be implemented, it was thought that these militia 
members would be folded into the Afghan National 
Auxiliary Police (ANAP) and paid through that 
mechanism.  Since the PAG only recently authorized 
expansion of the ANAP to the Eastern provinces, 
however, there are a number of individuals who now do 
not receive payment from either the Discretionary Fund 
or normal MOI police channels.  As the ANAP program 
expands, this issue will gradually be resolved and the 
need for governor,s militias will be mitigated. 
 
¶5. (SBU) On the issue of topping off salaries:  At 
present, patrolmen who have not gone through training 
at the Regional Training Centers receive 800 afghanis 
or USD 16/month.  In high threat areas such as 
Kandahar, the governors have argued that even post- 
reform salaries of 3,500 afghanis or USD 70/mo are not 
enough to retain ANP personnel.  However, if the GOA 
and international community agree to a raise in the 
base pay of all GOA patrolmen to USD 100/mo (whether 
RTC-trained or not) - a proposal that will be 
considered by a JCMB Working Group this spring - that 
should make less compelling the governors, arguments 
that they need to top off salaries. 
 
No Accountability 
----------------- 
 
¶6. (SBU) Since the government did not establish a 
reporting requirement for the use of money disbursed 
through this fund, opportunities for the misuse (and 
appearance of misuse) of the Fund abound.   According 
to Deputy Finance Minister Shahrani, NDS Director 
Saleh has told the GOA leadership that most or all 
governors have pocketed at least half of the their 
payments.  Stories circulate about the former Kabul 
Police Chief - who, for reasons not entirely clear, 
had access to the Discretionary Fund disbursements for 
the Central region - handing out sheaves of hundred 
dollar bills to his officers to assure their personal 
loyalty.  Some governors are alleged to have put 
family members on Discretionary Fund payrolls, to keep 
the money "in house."  Others have allegedly used 
their militias to extort illegal "taxes" to increase 
their private incomes.  One governor was alleged to 
have financed his children,s education in Australia 
through money from the Discretionary Fund.  Due to the 
regularization of funding for and improvement of the 
ANP, to include an MOI Criminal Investigation Division 
and other specialized forces, as well as the 
tremendous potential for misuse of this Fund, the 
Ministry of Finance has recommended that the line item 
be cut from the 1386 budget that is now being 
negotiated.  The Minister of Interior reportedly 
supports the MOF proposal. 
 
KABUL 00000459  003 OF 003 
 
 
 
Comment 
------- 
 
¶7. (SBU) No final decisions have been made, and 
governors in the dozen or so affected provinces do not 
yet seem to realize that their Discretionary Fund 
payments are about to be permanently zeroed out. 
(Note: This will not affect the governors, operating 
budget, which is the normal source of funding for all 
provincial governors, or other programmatic funds 
available to them.  End note.)  According to NSA 
Rassoul in the February 7 PAG, President Karzai and 
his ministers are debating the issue as part of the 
budget review process.  The MoF is proposing in place 
of the Fund a monthly allocation of USD 3,000-5000 to 
each of the 34 provincial governors to cover costs of 
small governor-hosted events.   Given the number of 
complaints raised by governors since December about 
the difficulty of tiding over their operations until 
the new fiscal year, their response to a proposed 
permanent elimination of the Fund would likely be 
sharp, swift, and directed to the top.  Indeed, 
according to Rassoul they are already raising 
vociferous complaints about the temporary depletion of 
the Fund for FY 1385. 
 
¶7. (SBU) Whether President Karzai supports the prudent 
fiscal position of his line ministers or bends to the 
demands of his governors - who are certain to argue 
that eliminating the fund will jeopardize the security 
situation in their provinces - will become clearer over 
the next month.  In general, the Embassy will press the 
government to follow the MOF,s recommendation to 
regularize funding to the governors by phasing out the 
Discretionary Fund.  This is consistent with our 
overall objective of moving toward normal, transparent, 
and sustainable funding for all key government 
functions.  We will also encourage other donors to 
support the MOF position while recognizing that there 
needs to be enough flexibility in the budget for the 
governors to respond to pressing needs.  However, we 
are receiving reports of local police walking off the 
job and leaving checkpoints unmanned, for example in 
Konar Province.  We will have to assess if there are 
short term, critical security gaps that need some 
attention more immediate than the long term transition 
plan provides. 
NEUMANN