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RUEHC/DEPT OF LABOR WASHDC
RHEBAAA/DEPT OF ENERGY WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
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RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC
RHEHNSC/NSC WASHINGTON DC
RUEHNE/AMEMBASSY NEW DELHI 2591
RUEHLH/AMCONSUL LAHORE 4497
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RUEHPW/AMCONSUL PESHAWAR 3132

UNCLAS SECTION 01 OF 03 ISLAMABAD 000036 
 
SIPDIS 
 
SIPDIS 
SENSITIVE BUT UNCLASSIFIED 
 
DEPT ALSO FOR USAID, OPIC 
DEPT PLEASE PASS USTR, USTDA 
 
E.O. 12958: N/A 
TAGS: ECON PGOV PK ETRD EAID PREL AF
SUBJECT: IMPLEMENTATION OF RECONSTRUCTION OPPORTUNITY ZONES REQUIRES 
IMMEDIATE COORDINATED INTER-AGENCY ACTION 
 
¶1. (SBU) SUMMARY: Reconstruction Opportunity Zones (ROZs) will be an 
important tool for economic development in Afghanistan and the 
border areas of Pakistan.  Embassy Islamabad has developed a 
description of initiatives which will be essential for the 
implementation of the ROZs.  Many, such as improved labor standards 
in Pakistan and customs enforcement, will also be legally required 
if the legislation is approved as drafted.  Similarly, the 
redrafting of the Afghan transit treaty will be necessary for the 
ROZs to be a success.  Embassy Islamabad and Embassy Kabul request 
that greater interagency coordination and planning commence to 
prevent delays in implementation.  Embassy Islamabad requests TDY 
assistance in the trade field from USDOC and USDOL to engage in an 
extended dialogue with the government on implementation of the ROZs 
and the transit trade issues. 
 
¶2. (SBU) Embassy Islamabad has sent a chart via unclassified email 
suggesting supporting initiatives for the ROZs to principals and 
staff in Washington agencies.  These supporting initiatives include 
1) Customs enforcement and harmonization; 2)Transit trade, including 
assistance from technical experts;  3) Investment incentives 
including political risk insurance; 4) Labor, including technical 
experts to assist with increased compliance and inspections; 5) 
Financing, including incentives for small and medium enterprises; 
6) Infrastructure upgrades at existing industrial parks; 
7)Vocational training and Institutional development; 8) Market 
outreach and trade promotion and 9) Agriculture, including technical 
experts for women's empowerment and best agricultural practices. 
 
¶3. (SBU) Implementation of the ROZs will be critical in the FATA 
strategy.  As instructed by Principals on December 28, this cable 
outlines proposals to enhance and expedite development projects for 
Pakistan's FATA and adjacent Pakistan-Afghanistan border areas. END 
SUMMARY. 
 
------------------------------------- 
ACTION NEEDED BY WASHINGTON AGENCIES 
------------------------------------- 
 
¶4. (SBU) Afghanistan and the border regions of Pakistan are critical 
fronts in the struggle against violent extremism.  These areas hold 
few options for legitimate employment, and the resulting poverty and 
hopelessness are exploited by terrorists and drug traffickers.  The 
governments of Afghanistan and Pakistan have pledged sustained 
commitment in the global war on terrorism, and for this effort to be 
successful we must eliminate the conditions in which violence and 
lawlessness thrive.  The Administration is advancing a three-pronged 
strategy to counter extremism that leverages political, military, 
and economic tools.  Reconstruction Opportunity Zones (ROZs), which 
the President first announced in March 2006 in Pakistan, are a 
critical part of the economic component of the USG strategy and 
offer a vital opportunity to improve livelihoods, promote good 
governance and extend and strengthen the hands of the Afghan and 
Pakistani governments. 
 
¶5. (SBU) In anticipation that legislation to enact the 
Reconstruction Opportunity Zones will soon be introduced in the U.S 
Congress, Embassy Islamabad has compiled information on some 
supporting initiatives that are essential to ensure success of this 
critical economic tool. The ROZs are an integral part of the 
strategy for the global war on terror in Afghanistan and Pakistan. 
It is critical to begin planning the implementation phase of the 
ROZs now so that the governments of Pakistan and Afghanistan as well 
as potential investors can readily avail themselves of the 
opportunities in the ROZs.  Action is needed in the short term in 
order to respond to on the ground realities which necessitate 
economic development quickly. 
 
--------------------------------------------- ---- 
COORDINATING SUPPORTING INITIATIVES ESSENTIAL FOR IMPLEMENTATION 
--------------------------------------------- ----- 
 
¶4. (SBU) Colleagues are requested to enact speedy inter-agency 
coordination and draw on developed expertise and best practices for 
swift implementation.  The nine suggested supporting initiatives for 
the ROZs include (in no particular order as each will be essential): 
 
 
ISLAMABAD 00000036  002 OF 003 
 
 
 
¶5. (SBU) Customs Enforcement and Harmonization.  Recommendations 
include capacity building, cross border coordination, measures to 
combat illegal transshipment, modernization and harmonization of the 
customs for Pakistan and Afghanistan. 
 
¶6. (SBU) Transit Trade. Recommendations include USG support to 
update the bilateral 1965 Afghan Transit Trade Treaty which governs 
the movement of goods between Afghanistan and Pakistan.  TDY experts 
are requested to coordinate and develop a mutually acceptable 
working draft. 
 
¶7. (SBU) Labor. Recommendations include improvements in labor 
inspections, labor standards, and best practices for companies on 
both sides of the border. TDY technical experts are requested to 
assist in training and reestablishing labor inspections. 
 
¶8. (SBU) Investment Incentives. Recommendations include working with 
the Governments of Afghanistan and Pakistan to develop their 
internal incentives to lure investment to the targeted ROZ 
locations. 
 
¶9. (SBU) Financing. Recommendations include development of creative 
financial incentives and structures which will allow multinational 
corporations and smaller local business to operate in these 
difficult areas. 
 
¶10. (SBU) Infrastructure Upgrades. Existing industrial parks in 
Afghanistan and in the border areas of Pakistan will make ideal 
locations to designate as the initial ROZ sights, however some 
infrastructure upgrades will be necessary to meet safety codes and 
ensure attractiveness to international companies. 
 
¶11. (SBU) Training and Institutional Development. Vocational and 
skills training targeted specifically to the product sectors which 
will receive duty free preferences has the potential to transform 
the region by employing the scores of youth seeking a positive 
focus. 
 
¶12. (SBU) Market Outreach and Trade Promotion.  Duty free 
preferences are not successful if not included as part of a 
coordinated plan to help move goods to awaiting markets.  Capacity 
building for local producers and buyers will open doors and connect 
these isolated regions to the world economy. 
 
¶13. (SBU) Agriculture and Forestry. Recommendations include capacity 
building for agricultural development of best practices, improved 
production, safety standards and livelihood empowerment of women and 
youth. TDY technical experts are requested to assist in assessing 
the current agricultural situations and determining areas where USG 
assistance would be most effective in the ROZs. 
 
¶14. (SBU) Embassy Islamabad would also request that the SCA bureau 
lead the efforts for outreach to the Afghan and Pakistani Embassies 
in Washington.  Close coordination with Afghan and Pakistani 
counterparts in Washington will be essential not only for 
Congressional approval but also for reinforcing the implementation 
coordination taking place with Ministries in Islamabad and Kabul. 
 
¶15. (SBU) This message and the supporting initiatives chart has been 
coordinated with Embassy Kabul.  The supporting initiatives chart 
has been sent via unclassified email to the following people in 
Washington: 
 
For the Department of State: Richard Boucher; Caitlin Hayden; Don 
Camp; Allysa Aries; John Fox; Edward Wittenstein; Daniel Sullivan; 
Bill Craft; Christian DeAngelis; Colin Guest; Edwin Sagurton; Alfred 
Anzaldua; Mark Mittlehauser; Leo Gallagher; Jack Spillsbury; Neil 
Kromash; Shamila Chaudhary; Michael O'Malley; Richard Sacks; Rozina 
Damanwala 
 
For USTR: Claudio Lillenfeld; Scott Quesenberry, Lewis Karesh, James 
Murphy; Aaron Rosenberg 
 
For Commerce: Susan Hamrock, Awinash Bawle 
 
 
ISLAMABAD 00000036  003 OF 003 
 
 
For Treasury: Stephaine Segal, Gordona Earp, Timothy Skud, Andrew 
Bauckol, 
 
For OPIC: Dolce Zahnister, Kevin Callahan 
 
For US Agriculture: Mark Keenum, Ellen Terpstra, Michael Yost, 
Constance Jackson, Kirk Miller, Pat Sheikh, Chuck Alexander, Frank 
Lee, Ross Kreamer, James Dever 
 
For AID: Mark Ward, Lisa Chiles, Kay Freeman, Nitin Madhav, James 
Walker, William Butterfield, 
 
For NSC: Elizabeth Millard, Patricia Mahoney, John Herrmann, 
 
For Labor: Charlotte M. Ponticelli, Lawrence W. Casey, Rachel 
Rigby, 
 
For Department of Homeland Security: Marisa Lino, Karen Marmaud, 
Michael Feinberg, Jamie Zuieback, Mark Mullen, Luke Bellocchi, Janet 
Labuda, Brian Fennessy 
 
 
PATTERSON