VZCZCXRO3567
PP RUEHDBU RUEHIK RUEHLN RUEHPW RUEHVK RUEHYG
DE RUEHBUL #1593/01 1331232
ZNR UUUUU ZZH
P 131232Z MAY 07
FM AMEMBASSY KABUL
TO RUEHC/SECSTATE WASHDC PRIORITY 7995
INFO RUCNAFG/AFGHANISTAN COLLECTIVE
RUCNCIS/CIS COLLECTIVE
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC 0462
RUEKJCS/SECDEF WASHINGTON DC
RUEHML/AMEMBASSY MANILA 1579

UNCLAS SECTION 01 OF 04 KABUL 001593 
 
SIPDIS 
 
STATE FOR SCA/A, SCA/FO (A/S BOUCHER, GASTRIGHT 
DEUTSCH 
NSC FOR AHARRIMAN 
USAID/ADA/AID FOR JKUNDER; DAA/ANE MWARD 
TREASURY FOR ABAUKOL 
OSD FOR SHIVERS 
MANILA PASS ADB/ED 
 
SIPDIS 
 
E.O.12958: N/A 
TAGS: EINV ECON ETRD EAID PGOV AF
SUBJECT: 2007 AFGHANISTAN DEVELOPMENT FORM READ OUT 
 
¶1. SUMMARY: The 2007 Afghanistan Development Forum 
(ADF) was well attended and more coherently 
structured than its predecessor in 2005.    The 
plenary Q working group Q plenary structure led to 
vigorous debate and helped to shape an emerging 
consensus on critical issues including aid 
effectiveness, provincial planning and development 
and capacity development writ large.  President 
Karzai, while warm, self-deprecating and generous, 
pointed out several areas where the donor 
Government of Afghanistan (GoA) partnership could 
improve.  Karzai was seconded by Energy and Water 
Minister Khan in citing electricity as AfghanistanQs 
highest donor priority.  Ambassador Wood, making his 
first public presentation, complimented the Afghans 
for their leadership and progress and reaffirmed the 
US commitment to Afghanistan for the long term.  End 
Summary 
 
¶2. The Afghanistan Development Forum (ADF) is 
emerging as the GoAQs signature forum for dialogue 
and exploration with the international community on 
strategic development issues, both short and long 
term.  Held roughly every two years, it complements 
the Joint Coordination and Monitoring Board (JCMB) 
mechanism, the joint donor-GoA body charged with 
setting overall strategic direction and monitoring 
progress on the Afghanistan Compact and the ANDS. 
The ADF was timed to feed into the May 1 JCMB 
meeting, which included a read out of the ADFQs 
results.  The 2007 ADF Q QTowards a National 
Development Strategy for a Prosperous AfghanistanQ - 
was held April 29 and 30 in the Marble Hall of the 
Ministry of Foreign Affairs.  In attendance were 
upwards of fifty embassies and other donors and 25 
GoA ministries and institutions.  Minister of 
Finance Anwar-ul-Haq Ahadi opened a packed agenda by 
focusing on a major ADF theme Q repeated thanks for 
the donor efforts to date followed by a strong plea 
for improving aid effectiveness, principally by 
directing more aid flows through the GoA budget. 
 
¶3. President Karzai was warm and captivating, 
noting with satisfaction that, over the past two 
years, 80,000 more Afghan infants are now alive who 
would not be, were it not for GoA-donor efforts in 
maternal and child health.  He chided his own 
government for failing to deliver the National 
Capacity Development Strategy that had been promised 
for the ADF.  He conceded that corruption exists, 
Qin the GoA, NGOQs and international organizations, 
and noted that he was still reviewing pay and grade 
reform due to questions he has about its 
sustainability after donors leave.  He urged donors 
to reduce the cost side of assistance by hiring 
experts from the region, coordinating assistance 
efforts better and building Afghan capacity to plan 
and manage the work directly, which he agreed they 
could not yet really do on their own.  He also 
called for greater international coordination in the 
fight against poppy and asked donors to give 
additional attention to AfghanistanQs energy sector 
needs. 
¶4. Speeches by Senior Economic Advisor Nadiri, 
World Bank Vice President Patel and UNAMA Special 
Representative of the Secretary General Koenigs 
generally addressed the themes of leadership and aid 
effectiveness.  The German Development Minister and 
EU representative highlighted the importance of 
upcoming IDA-15 replenishment negotiations for 
sustaining international financial institution 
assistance levels for at least five years. 
 
¶5. Ambassador Wood, in his first speech since 
arriving in Afghanistan, emphasized the strong 
Afghan leadership he was seeing through this ADF, 
the breadth of the Afghanistan National Development 
Strategy (ANDS) and the growing effectiveness of the 
Joint Coordination and Monitoring Board (JCMB) 
 
KABUL 00001593  002 OF 004 
 
 
process that governs it, and our high opinion of the 
education and health sector strategies that the ANDS 
process has spawned.  He reaffirmed the U.S. 
commitment to remain for the long term and meet our 
pledges in the Afghanistan Compact.   He cited the 
recently mobilized Afghans Building Capacity (ABC) 
contract as a tangible statement of our commitment 
to capacity development and noted that one of its 
key goals is to increase the amount of Afghan goods 
and services we use to deliver development 
assistance. He reinforced the need to continue to 
focus on energy services and the creation of an 
enabling environment that will foster private sector 
growth in all directions.  Ambassador Wood commented 
on the pernicious challenge of poppy production and 
trafficking, and the threat they represent to all 
efforts and investments made by the Afghans and 
donors alike.  He closed by stating his optimism 
that the Afghans were clearly up to the tasks ahead, 
based on the progress seen over the past twelve 
months. 
 
¶6. The Working Groups Q Aid Effectiveness, 
Provincial Planning and Development and Capacity 
Development Q formed a substantive and very positive 
component of this ADF.  Although they were based on 
hurried consultations concluding just days before 
the ADF, they ultimately produced cohesive 
discussion papers, vigorous debates and an emerging 
consensus on key issues. 
 
¶7. The Aid Effectiveness Working Group resulted in 
a narrowing of the gap in the GoA and USG views, 
although differences remain.  The plenary 
discussions were repetitions of a common GoA refrain 
Q foreign assistance costs are too high for results 
achieved and the solution is more funding directly 
through the GoA budget.  USAID Mission Director 
Waskin, in his remarks, made it clear that the only 
true measure of aid effectiveness is the improvement 
in the lives of Afghans.  As the second largest 
donor to the ARTF ($275 million through FY 2006) we 
are fully committed to investing directly through 
the GoA budget.  Further, USAID has activities under 
way with pilot ministries to directly disburse funds 
and develop the capacity to effectively and safely 
manage those funds. 
 
¶8. In contrast, the three-hour Working Group 
discussion that followed was marked by pragmatism 
and moderation, with the GoA and other donors 
agreeing that current GoA capacity to manage 
significant new resources is lacking.  Finance 
Minister Ahadi requested a GoA-donor effort to 
establish a common set of acceptable fiduciary 
performance standards based on international norms, 
identify the breakdowns in the current system that 
retard timely execution of GoA budget resources and 
expedite capacity building efforts that will enable 
the GoA to move funds and projects more quickly 
through to completion. 
 
¶9. The Working Group on Provincial Planning and 
Development revealed its own share of concerns and 
competing interests.  The Working Group opened with 
a discussion of the need to dramatically strengthen 
the delivery of services to communities at the 
provincial level, if Afghanistan is to successfully 
transform itself into a stable and growing state. 
The GoA described the intense interest on the part 
of the Parliament in knowing - and influencing - the 
amount of funds going into each province.  In 
parallel, the governors in attendance decried the 
shortage of development funds in general and their 
frequent frustration at the distribution of the 
development activities within their provinces. 
Other participants expressed their fear that PRTQs 
would be programming in a unilateral way, 
undermining the attempts to plan and budget more 
 
KABUL 00001593  003 OF 004 
 
 
strategically. 
 
¶10. The GoA described two significant efforts - 
improving the Provincial Development Planning (PDP) 
process and linking it with the ANDS, and expanding 
the Ministry of Finance program to develop a 
meaningful provincial budget that would reflect 
those plans.  ISAF/NATO representatives noted that 
PRT donor funds are linked to development programs 
and processes of the NATO member countries and thus 
cannot be allocated to other provinces.  USAID 
Deputy Director Carl Abdou Rahmaan indicated that 
PRTQs are strong supporters of the PDP and 
provincial budgeting processes and will be providing 
extensive technical and operational assistance to 
governors and others to refine the existing PDPQs. 
Note:  The theme of ISAFQs upcoming May PRT 
Conference will be coordinating PRT activities with 
the ANDS.  End Note. 
 
¶11. At JCMB IV in Berlin, the GoA had committed to 
prepare a broad-spectrum national capacity 
development strategy, for presentation at this ADF. 
During the spring, substantial progress was made in 
the Public Service QpillarQ of that strategy, but no 
movement was detected on a broader framework dealing 
with the private sector, NGOQs and public at large. 
Participants were pleasantly surprised when Economy 
Minister Shams opened the Working Group by 
announcing the GoAQs intention to establish an 
inter-ministerial commission (similar to the 
commission on Energy) with a broad mandate to 
coordinate all capacity development programs. 
Although the accompanying discussion paper has its 
rough edges (e.g., ceding final approval on all 
capacity building programs to the commission, 
mandating that all technical assistance contracts 
devote at least 25 percent of the resources to 
capacity building and requiring that donors 
dramatically increase their benefits packages for 
diaspora Afghans being recruited to take on 
technical and managerial assignments), the donors 
were unanimous in applauding the GoA leadership that 
this proposal represents.  Most donor comments 
focused on the need to start slowly while capacity 
was developed within the Ministry of Economy to play 
the role envisioned for it as the day-to-day 
facilitator of this commission. 
 
¶12. Sector Strategies:  Ministers of Education 
Atmar and Public Health Fatimie presented positive, 
well thought out strategies for strengthening 
education and health care.  Atmar presented a Qhigh 
costQ strategy, developed through extensive 
consultations with stakeholders in and out of 
government.  It calls for $2.56 billion over four 
years and would meet the ANDS benchmarks.  Minister 
Fatimie proposed a continuation of his successful 
current strategy, which is built around 
establishment of national performance standards and 
out-sourcing service delivery to NGOQs.  This has 
brought basic health care within the reach of more 
than 80 percent of the people, and lead to the 
80,000 additional Afghan infants annually noted by 
President Karzai.  Opinions differ regarding the 
best way to continue to expand access but most 
observers use his strategy as an example of the way 
to expand GoA service delivery in the face of very 
limited capacity. 
 
¶13. Minister of Energy and Water Ismail Khan noted 
in his remarks that reliable and affordable 
electricity is essential for economic growth, 
investment, poverty alleviation and political 
stability and is a fundamental test for the GOA.  He 
touched all the right buttons on the need for reform 
in the power sector: distribution sector reform; 
commercialization of the electricity utility so that 
it is transparent and accountable; cost recovery and 
 
KABUL 00001593  004 OF 004 
 
 
the need for tariff increases; regulatory reform; 
renewable energy and strengthening of capacity.  He 
was appreciative of the USG initiative to place 100 
MW of generation capacity in Kabul by the end of 
2008, and echoed President Karzai in referring to it 
as the countryQs most urgent need. Khan spoke of the 
need to manage the countryQs water resources, 
lamenting that Afghanistan was unable to harness its 
water and providing a wish list of power projects, 
but without addressing the funding constraints. 
While Khan said all the right things, his remarks 
were not consistent with the draft Power Sector 
Strategy he released.  The strategy paper contains 
some misrepresentation of policy, has flawed data is 
several places, does not link power to the broader 
macro-economic and social goals, and provides only a 
cursory treatment of capacity building. (NOTE: Dr. 
Nadiri also underscored the urgency of addressing 
the supply of electricity. END NOTE) 
 
¶14. The ADF closed with discussions devoted to 
anti-corruption, rural and urban development, 
counter-narcotics and refugees.   This is the first 
time that refugee issues have been included on the 
ADF agenda, marking a realization that the return of 
5,000,000 refugees represents not only a 
humanitarian concern, but a significant development 
issue.   Minister of Refugees and Repatriation Usted 
Mohammad Akbar [Note: who lost a Parliamentary vote 
of no-confidence on May 10] and UNHCR Country Rep 
Salvatore Lombardo sought to highlight a number of 
issues.  Principal among these was the precarious 
situation of the 4.8 million refugees who have 
returned since 2002 and the need to build GOA 
capacity to deal with the reintegration needs these 
returnees. 
 
¶15. Comment: The 2007 ADF demonstrated strong 
Afghan leadership in critical areas and served to 
highlight the enormous amount of hard work 
accomplished since the 2005 ADF.  The 2007 ADF, on 
balance, showed a more mature donor-GoA partnership, 
confronting problems without easy solutions in a 
serious, pragmatic and thoughtful way.  This ADF had 
the salutary effect of forcing divergent interests 
within the GoA to reach consensus, notably in areas 
of provincial planning and capacity development. 
The challenge going forward will be to sustain the 
momentum in these critical areas as summer arrives 
and other activities begin to distract the 
overstretched GoA principals. End Comment 
 
WOOD