VZCZCXRO4640
PP RUEHIK RUEHPOD RUEHPW RUEHYG
DE RUEHBUL #0064/01 0121236
ZNR UUUUU ZZH
P 121236Z JAN 09
FM AMEMBASSY KABUL
TO RUEHC/SECSTATE WASHDC PRIORITY 6674
INFO RUEATRS/DEPT OF TREASURY WASHINGTON DC 0714
RUCNAFG/AFGHANISTAN COLLECTIVE
RUEHZG/NATO EU COLLECTIVE
RUEABND/DEA HQS WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC

UNCLAS SECTION 01 OF 02 KABUL 000064 
 
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SENSITIVE 
 
SIPDIS 
 
E.O. 12958 N/A 
TAGS: ECON EFIN EAID ETRD ENRG WTO AF PK
SUBJECT: NEW AFGHAN COMMERCE MINISTER TAKES THE HELM 
 
REF: A) KABUL 3290 
 B) KABUL 3277 
 C) KABUL 3211 
 
SUMMARY 
 
¶1. (SBU) Seven days into his new job, Minister of Commerce and 
Industries (MOCI) Wahidullah Shahrani January 6 described to the 
Ambassador an ambitious, market-oriented work program.  Shahrani 
said he will limit MOCI to policy and regulatory work, continue 
efforts to enact pending commercial laws, craft transparent rules 
and policies to promote business investment, and seek donor support 
to build needed capacity at the ministry.  He aims to commercialize 
or corporatize the state-owned fuel importer whose corruption 
contributed to his predecessor's impeachment.  Shahrani hopes to 
visit the U.S. in February or March for TIFA follow-up, and said 
Afghanistan has accepted Pakistan's proposal to hold the next 
Regional Economic Cooperation Conference April 3-4 in Islamabad. 
The Ambassador welcomed Shahrani's energetic work plan and 
private-sector orientation and said the USG will positively consider 
technical support for his efforts.  End Summary 
 
¶2. (U) The Ambassador, accompanied by acting USAID Mission Director 
and EconCouns, called January 6 on the new Minister of Commerce and 
Industries, Wahidullah Shahrani.  Formerly Deputy Finance Minister, 
Shahrani assumed his new duties on December 28. 
 
ROLE OF THE COMMERCE MINISTRY 
 
¶3. (SBU) Shahrani said MOCI had lost momentum in recent years. 
(Note: The unenergetic former Minister Farhang was abruptly 
impeached by the National Assembly in late December over allegations 
of corruption in fuel imports.)  Shahrani said there are two schools 
of thought in MOCI regarding its proper mission.  Many officials 
adhere to the old, statist view that MOCI should not just regulate 
commerce but also own and run productive assets.  But he supports a 
more limited mission and intends to restrict the ministry's role to 
setting policy and regulatory work. 
 
¶4. (SBU) Shahrani agreed with the Ambassador that the private sector 
must be the engine of Afghan growth and prosperity and said he will 
to work to craft transparent and predictable rules and policies to 
promote business investment.  He noted that the WTO is politically 
controversial in Afghanistan and that the government needs technical 
support from donors to prepare for eventual membership. 
 
¶5. (SBU) Shahrani described the capacity weaknesses at MOCI and said 
he needs donor support to create a new Project Management Unit. 
While at the Finance Ministry he drew on the UK-supported 
Afghanistan Investment Climate Facility to hire professional staff, 
and he hopes to do so at MOCI too.  Young professionals would 
gradually move into ministry management positions. 
 
CORRUPTION IN FUEL IMPORTS 
 
¶6. (SBU) Noting tensions with the IMF over the Fuel and Liquid Gas 
Enterprise (FLGE, the state-owned fuel importer under MOCI - see Ref 
B), Shahrani said that within 3-4 months he will develop a plan to 
commercialize or corporatize FLGE.  The reformed entity will not be 
under any government ministry and will not enjoy any advantages over 
other (commercial) importers.  MOCI has hired a foreign auditing 
firm to review FLGE, and its report, due soon, will inform future 
action.  FLGE's responsibility for regulating the quality of 
imported fuel, which represents a serious conflict of interest and 
opportunity for corruption, will be transferred to the Afghan 
National Standards Authority, initially at the northern border port 
of Hairatan, locus of regular allegations of malfeasance by FLGE. 
 
¶7. (SBU) Noting the broader connection between infrastructure and 
revenue generation, Shahrani said much of MOCI's border-crossing 
facilities date from the 1960's and 1970's and badly need updating. 
He said MOCI will develop a plan based on international best 
practices that will identify the respective roles of the ministry 
and the private sector in border management. 
 
 
KABUL 00000064  002 OF 002 
 
 
¶8. (SBU) Comment: In trying to reform FLGE, Shahrani will need to 
wrestle with its corrupt but powerful director, Engineer Rozi. 
Shahrani's deputy told us recently (Ref C) that the foreign auditing 
firm the minister mentioned had given up trying to conduct a decent 
review after FLGE refused to open its books.  End Comment 
 
COMMERCIAL-LEGAL FRAMEWORK 
 
¶9. (SBU) Shahrani said that six of ten key commercial laws have now 
been enacted.  Four others are under review at the Ministry of 
Justice, three of which will be debated by the Cabinet's legal 
committee on January 11.  MOCI will also draft implementing 
regulations for the commercial laws and will focus on simplifying 
procedures for business.  Shahrani also said Afghanistan needs to 
develop its commercial courts and needs technical assistance in this 
effort. 
 
USG READY TO SUPPORT THE NEW MINISTER 
 
¶10. (SBU) The Ambassador welcomed Shahrani's energetic work plan and 
private-sector orientation and said the USG will positively consider 
technical support for his efforts.  He noted Afghanistan's vibrant 
trading culture and traditional role as a regional crossroads.  He 
stressed the importance of a transparent and predictable legal 
environment, including effective dispute resolution mechanisms, to 
promoting trade and investment, and said U.S. legal experts might be 
able to help develop Afghan commercial courts.  The Ambassador urged 
the GIRoA to improve relations with Parliament, which would aid 
efforts to pass commercial laws.  Citing concerns over declining 
Customs revenues, the Ambassador welcomed plans to reform FLGE and 
improve border management at Hairatan, where the U.S. has a 
particular interest because of fuel imports for the military effort. 
 He said the USG is also willing to help Afghanistan prepare for WTO 
membership. 
 
REGIONAL ECONOMIC COOPERATION 
 
¶11. (SBU) Shahrani said Foreign Minister Spanta has agreed to the 
Pakistani proposal to hold the third Regional Economic Cooperation 
Conference (RECC) April 3-4 in Islamabad.  This topic, among other 
things, would be discussed during President Zardari's current visit 
to Kabul, though no public statement on RECC was likely.  EconCouns 
urged early convening of separate, bilateral negotiations on a new 
Afghanistan-Pakistan Transit Trade Agreement.  Shahrani agreed but 
did not indicate any date had yet been set. 
 
BILATERAL COOPERATION 
 
¶12. (SBU) Shahrani expressed appreciation for U.S. assistance to 
Afghanistan and hope that high aid levels will continue under the 
new Administration.  U.S. Mission officials will be invited to a 
meeting with other donors on January 21 to discuss MOCI's needs. 
Shahrani stressed that any assistance requested would be based on 
mutual commitment.  He also reiterated Afghan support for the 
Reconstruction Opportunity Zone initiative and said Afghan 
investments in future ROZs will focus on products where the country 
has a comparative advantage.  The Ambassador expressed confidence 
that the new Congress will approve ROZ legislation and urged Afghan 
cooperation with future ROZs in Pakistani border areas as well. 
Shahrani said he hopes to visit the U.S. in February or March, to 
discuss follow up to Trade and Investment Framework Council talks 
here in October. 
 
¶13. (SBU) Comment.  Shahrani is young, hard-working, and 
market-oriented and has considerable experience dealing with foreign 
donors.  But he faces big challenges.  His plan to take on FLGE will 
be the first big test of his reformist commitments. 
 
WOOD