P 101046Z AUG 08
FM AMEMBASSY KABUL
TO SECSTATE WASHDC PRIORITY 5064
INFO DEPT OF TREASURY WASHINGTON DC 0657
AFGHANISTAN COLLECTIVE
NATIONAL SECURITY COUNCIL WASHINGTON DC
CIA WASHINGTON DC
DIA WASHINGTON DC
DEPT OF COMMERCE WASHINGTON DC

UNCLAS KABUL 002109 
 
 
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E.O. 12958 N/A 
TAGS: EAID ECON PREL PHUM ENRG EAIR AF
SUBJECT:  Chairman of Economic Committee of Afghanistan's Parliament 
Downbeat on Passage of Pending Commercial Laws 
 
¶1.  Not for Internet Distribution. 
 
¶2.  [SBU]  Summary.  Officers of the Economic Section met July 30 
with Mohammad Daoud Sultanzoi, Chairman of the Economic Committee of 
Afghanistan's Parliament.  Sultanzoi, who emigrated from Afghanistan 
to the United States and worked for 22 years as a United Airlines 
pilot, talks free-market talk, but the Economic Committee has not 
been noticeably apparent as a defender of the market system. 
EconCouns urged passage of the many commercial laws pending in 
Parliament, but Sultanzoi gave little hope for progress and said his 
main goal in the pre-election period was "damage limitation."  (See 
status report on commercial laws para 10.)  Sultanzoi blamed 
"entrenched ideologues" trained within the Communist system, 
"mediocre bureaucrats," and the "Mujaheddin fundamentalists" of the 
post-Soviet withdrawal, and said defenders of the market system - 
such as himself - are few.  He stated that "Mafias" had "hijacked 
democracy and the market economy" in Afghanistan, and warned that 
the Communists "got a black eye" here, and that "democracy should 
not be allowed to get a black eye" here, as well.  Sultanzoi, who is 
working with the Independent Republican Institute and others, urged 
the USG to make our opinions known directly, citing the active 
efforts of other governments here.  End summary. 
 
¶3.  [U]  EconCouns, accompanied by Deputy EconCouns and Econ 
Assistant, met July 30 with the Chairman of the Economic Committee 
of the Afghan Parliament, Mohammad Daoud Sultanzoi.  A self-declared 
defender of the market economy, Sultanzoi noted that he and only a 
few others of his 11-member Economic Committee were free marketeers. 
 He said that there were many - in government, Parliament, and the 
public - who grew up in the Soviet era or who were trained in the 
former Communist bloc, who neither understood nor were inclined to 
be in favor of either democracy or the free market.  He labeled 
these retrograde elements as "entrenched ideologues" of the 
Communist era; he also cited "mediocre bureaucrats" and "Mujaheddin 
fundamentalists" of the post-Soviet era as blocking the road to 
free-market economic reform in Afghanistan.  Sultanzoi warned that 
Communism "got a black eye" in Afghanistan, and that "democracy 
should not be allowed" to be defeated here, as well. 
 
¶4.  [SBU]  The Economic Committee chairman noted that in order to 
overcome this resistance to democracy and markets, the USG and the 
Embassy should be much more open to lobbying for change, rather than 
allowing governmental and Parliamentary leaders to set the pace for 
change.  He noted that Russia and Iran "spend a lot of money in this 
Parliament" including funding several radio and television stations 
and newspapers. 
 
¶5.  [U]  Sultanzoi, who said he had been a strong supporter of 
President Karzai, stated that because of corruption and the 
concomitant loss of credibility of the government in the eyes of the 
people, there was resistance to proposals for change coming from the 
government.  This resistance would also apply to proposals for 
market reforms, no matter how beneficial those would be for job 
creation or other goals.  EconCouns urged the Economic Committee to 
work for early passage of the many commercial laws pending in 
Parliament, describing these as the building blocks of a sound 
market economy.  Unfortunately, Sultanzoi offered little hope for 
early passage and said his focus during the coming 12 months, prior 
to the fall 2009 elections, would be on "damage limitation." 
 
¶6.  [U]  EconCouns stressed the importance of Afghanistan's 
continued compliance with its IMF program and briefed Sultanzoi on 
the IMF's requirement that the Parliament pass a law imposing the 
business receipts tax on imports.  Sultanzoi took note and promised 
to follow up on this important issue. 
 
¶7.  [U]  Sultanzoi lamented his, and his Committee's, lack of 
resources, especially , staff with good English, research and 
Internet skills.  Noting that "people in this country respect 
authority," he has started a "Business Caucus" within the 
Parliament, encompassing those committees and Parliamentarians 
interested in the national economy, agriculture, rural development, 
and NGOs, and asked for our assistance in his outreach efforts (we 
agreed to try to be of assistance on a case-by-case basis).  He 
noted that there are perhaps 50-80 "mainstream" Parliamentarians, 
but no democratic bloc that he can count on - yet - in pushing a 
reform agenda.  This "Business Caucus" would be the first attempt to 
develop such a voting bloc. 
 
 
¶8.  [U]  Sultanzoi also expounded on the current state of difficult 
relations between the Executive and the Parliament, noting that the 
President has vetoed important laws, such as the land lease law, 
because the Parliament wanted to be able to review any lease valued 
at over USD 5 million over the length of the lease term.  In 
Sultanzoi's view, the Parliament sought legitimate oversight of the 
Exective branch on contracts - especially those related to the 
privatization of state-owned enterprises - but the President 
objected. 
 
¶9.  [U]  Recalling Sultanzoi's  history as a pilot for Ariana Afghan 
Airways, EconCouns argued for privatization of the state-owned 
loss-maker and sought his views.  Sultanzoi noted that 
transportation, and especially civil aviation in this land-locked 
country, is key to Afghanistan's development.  He noted that 
airlines are used for smuggling and money laundering, and alleged 
that they are also used to take aerial photographs of U.S. 
installations in Afghanistan.  He said that in late 2001, he had 
presented a privatization plan for Ariana that would have garnered 
USD 250 million for the government, but the sale was rejected. 
 
¶9.  [U]  Biographic note:  Mohammad Daoud Sultanzoi represents 
Ghazni province.  He had been a pilot for Ariana Afghan Airways, and 
left Afghanistan in a DC-10 bound to Iran that he diverted to 
Germany (with its passengers) just after the Soviet invasion. 
Sultanzoi was actively involved in demonstrations against the Soviet 
invasion, and rturned to Afghanistan to fight in the resistanc, 
despite being granted political asylum by both Germany and the 
United States.  He finally settled in the United States, working for 
22 years as a pilot for United Airlines, settling in Malibu, 
California.  Since returning to Afghanistan and being elected to 
Parliament, he has been a leader of the so-called Group e-Mustaqel 
(Independent Group). 
 
¶10.  STATUS REPORT ON PENDING COMMERCIAL LAWS 
 
A legislative advisor to Parliament (a USG-funded contractor) has 
provided the following update on the status of key commercial 
legislation: 
 
-- Law on Secured Transactions for Immovable Collateral (Mortgage 
Law): The Ministry of Parliamentary Affairs sent the draft law to 
Parliament on 21 April 2008; this bill is currently under review by 
the Economic Committee; 
 
-- Law on Secured Transactions for Movable Collateral: same as 
above; 
 
-- Law on Negotiable Instruments: the law-drafting office of the 
Ministry of Justice (the 'Taqnin') has completed the first of three 
rounds of the required Ministry of Justice review.  The bill remains 
under review according to the Taqnin's legislative calendar; 
 
--  Law on Leasing: A fourth draft of the law is in process.  The 
Taqnin has agreed to review the law "as time allows," perhaps 
completing work in August 2008. 
 
-- Law on Contracts: The Civil Law Department of the Taqnin has 
reviewed and will send to the Taqnin Executive Committee for review 
and final approval.  The Executive Committee of Taqnin is scheduled 
to finalize during this year according to the Taqnin's legislative 
calendar, and send it to the Office of Administrative Affairs to 
transmit to the Council of Ministers; 
 
-- Law on Agency: Same as above; 
 
-- Law on Trademarks: Same as above; 
 
-- Law on Copyright: Same as above; 
 
-- Law on Protection of Patent Rights: Same as above; 
 
-- Law on Standards: Same as above. 
 
 
Wood