VZCZCXRO5820
PP RUEHDBU RUEHPW
DE RUEHBUL #0899/01 1010252
ZNR UUUUU ZZH
P 110252Z APR 09
FM AMEMBASSY KABUL
TO RUEHC/SECSTATE WASHDC PRIORITY 8326
INFO RULSDMK/DEPT OF TRANSPORTATION WASHINGTON DC 0139
RUEATRS/DEPT OF TREASURY WASHINGTON DC 0777
RUCNAFG/AFGHANISTAN COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC

UNCLAS SECTION 01 OF 03 KABUL 000899 
 
DEPT FOR SRAP, SCA/FO, SCA/RA, AND SCA/A 
DEPT PASS FOR AID/ANE 
DEPT PASS USTR FOR DELANEY AND DEANGELIS 
DEPT PASS OPIC 
DEPT PASS FOR TDA FOR STEIN AND GREENIP 
CENTCOM FOR CSTC-A 
NSC FOR JWOOD 
TREASURY FOR MHIRSON, ABAUKOL, AWELLER, AND MNUGENT 
COMMERCE FOR DEES, CHOPPIN, AND FONOVICH 
 
SENSITIVE 
SIPDIS 
 
E.O.  12958 N/A 
TAGS: EINV EAID ELTN ETRD ECON PGOV AF
SUBJECT: AFGHANISTAN LAND TRANSPORT SECTOR PART 2: 
Economic Impact of Road Development and Security Challenges 
 
REF: A) Kabul 839  B) Kabul 782 
 
¶1. (SBU) Summary: Development of the Ring Road and its links to the 
borders has led to decreased travel times, increased commercial 
activity, and increased government revenue.  However, Afghan 
business leaders complain that road quality and maintenance, police 
and Customs corruption, and burdensome taxes diminish the potential 
economic benefits of the growing transportation network.  Afghan 
officials, business people, and foreign donors all agree that the 
lack of highway security inhibits road construction projects and 
impedes Afghanistan from reaching its full potential as a transit 
trade link for Central Asia.  The Ministry of Interior offers a 
politically difficult plan to address highway security while 
countering that police corruption is under control.  This is the 
second in a three-part series on land transport issues.  End 
Summary. 
 
****************************** 
Economic and Commercial Impact 
Of Road Development 
****************************** 
 
¶2. (SBU) On March 17 Deputy Minister of Public Works Rasooli told 
Econoff that Ring Road (RR) development has reduced travel time by 
six to seven times.  For example, before 2001, it took seven days to 
travel between Islam Qala at the Iran border and Torkham at the 
Pakistan border.  Rasooli estimates that it now only takes one day. 
Rasooli said that road usage has increased dramatically with the 
near completion of the RR.  Rasooli said that traffic is now 
estimated at up to 12,000 trucks per day from the northeastern 
provinces to Torkham.  Rasooli also said that investment in roads 
has led to increased road safety.  He noted that before 2001 there 
were four to five accidents per day on the busy Kabul to Torkham 
road.  Now, Rasooli said, the number of accidents has fallen by 
60-70 percent.  In a March 28 meeting with Econoff, Indian Poloff JP 
Singh said that the 215 km road from Zaranj on the Iran border to 
the RR at Delaram completed in September represents a boon for 
Nimroz province.  Singh said that travel time to the Iranian border 
has decreased from 12-14 hours to 2 hours and now more than 50 
trucks transit this road daily, up from five before the road was 
constructed. 
 
¶3. (SBU) Deputy Minister Rasooli estimated that the government 
receives up to USD 300 million per year in revenue from road 
development through tolls and indirect benefits including increased 
fuel sales spurring revenue from fuel taxes.  Rasooli said that fuel 
costs have decreased 60 percent for all vehicles traveling on Afghan 
roads as a direct result of investment in road infrastructure. 
Rasooli noted that since 97 percent of freight travels by road (the 
remaining 3 percent by air), road development will remain an 
important economic development priority for Afghanistan. 
 
******************* 
Highway Security: 
An Enduring Concern 
******************* 
 
¶4. (SBU) In recent meetings with Econoff, Chinese, Indian, German, 
Japanese, Asian Development Bank, and Afghan officials, and Afghan 
business leaders all noted that highway security problems inhibit 
road construction projects and impede Afghanistan from reaching its 
full potential as a transit trade link for Central Asia.  On March 
25, Japanese officials told Econoff that the Japanese 114 km RR 
construction project from Kandahar to Lashkar Gah has endured almost 
daily insurgent attacks and requires a 600-person private security 
contingent.  Chinese officials are concerned about insurgent attacks 
on Chinese contractors building roads and the insecurity of supply 
routes from Pakistan into Afghanistan (Ref B).  Indian Poloff noted 
that during the construction of the Zaranj-to-Delaram link, 11 
Indian nationals and 129 Afghan local hires were killed as a result 
of insurgent activity.  ISAF reports that after Indian construction 
companies left the site, insurgents stole equipment and set up 
checkpoints. 
 
¶5. (SBU) It is difficult to find complete estimates of the number of 
insurgent attacks on trucks and passenger vehicles, but shippers 
readily note the increased cost of freight transport due to highway 
insecurity.  In a March 17 meeting with the Afghanistan Chamber of 
 
KABUL 00000899  002 OF 003 
 
 
Commerce and Industries (ACCI), CEO Mohammad Qurban Haqjo said that 
in 2008, at least 300 freight trucks of ACCI members were attacked 
in the South.  Haqjo noted that there has been some progress for 
freighters but that the cost of business is high and risky because 
of accidents and insurgent activity.  Haqjo said that fuel and cold 
storage trucks cost USD 100,000 and the loss of these trucks can be 
devastating for freighters.  Zarghuna Walizada, head of ACCI's 
freight forwarders interest group, told Econoff that security 
increases the cost of freight forwarding by two to three times.  For 
instance, she said that from Kabul to Kandahar or Helmand province, 
it costs freighters USD 4,000-5,000 to ship one freight truck.  She 
said if security were not an issue, it would only cost freighters 
USD 2,000. 
 
¶6. (SBU) On March 24, Deputy Minister of Interior Mangal told 
Econoff that the current system of highway patrol is "useless" and 
the lack of adequate police forces at checkpoints leads to high 
Afghan National Police (ANP) casualties.  He noted that nearly half 
of the RR, particularly in Kandahar, Helmand, Farah, Herat, and 
Badghis provinces, presented high risk for insurgent ambush attacks 
and suicide bombings.  Mangal advocated re-instituting a highway 
police force of 8,000 to 15,000 ANP to control insurgent activity 
along the RR.  Mangal noted that the former highway patrol was 
corrupt and untrustworthy.  He said that the international community 
has not been supportive of this idea because of the degree of 
corruption and allegations of smuggling among the old force.  But he 
believes that with special training and equipment including heavy 
weapons and helicopter support, a highway patrol force could be 
effective. 
 
¶7. (SBU) Mangal also advocated a decentralized approach to highway 
security whereby each province is responsible for security of roads, 
including the RR, in their area.  Mangal claimed that police 
corruption is under control as the MOI arrests and brings corrupt 
officials to trial.  Finally, Mangal advocated strong local 
community involvement in maintaining road security.  He said that 
road construction contractors, particularly the Chinese in Badghis 
province, should implement community development projects that 
provide employment and needed infrastructure in order to convince 
villagers not to cooperate with insurgents (Ref B).  Mangal also 
noted that the Afghan Public Protection Force (APPF), an ANP pilot 
program in Maidan and Wardak, could serve as a model for community 
policing.  The APPF hires locals as security and provides them with 
training and equipment.  These officers have the same training as 
ANP but lack arrest power. 
 
*************************************** 
Poor Road Infrastructure, Taxes and 
Corruption Constrain Economic Potential 
*************************************** 
 
¶8. (SBU) ACCI business leaders charged that 40 percent of the roads 
built since 2001 are now unusable because of poor construction. 
Zarghuna Walizada said road quality varies depending on the 
nationality of the contractor.  For instance, Zarghuna said that 
roads built by Chinese and Pakistani contractors are the worst 
quality.  Turkish contractor-built roads are better, and the roads 
built by Iranian and American contractors are the best quality. 
Zarghuna noted that the RR in much of the north is good.  However, 
on key routes towards Kabul, roads deteriorate greatly.  She said 
that road quality worsens between Kabul and Nangarhar province, 
particularly near Pul-e Charki.  ACCI CEO Haqjo also claimed that 
the system for contracting is inefficient with too many 
subcontractors at different levels for each project such that only 
20 to 40 percent of project funds are implemented on the ground.  He 
charged that companies cut costs by using low-quality construction 
materials that are ill-suited for Afghanistan's seasonal variations 
in weather. 
 
¶9. (SBU) ACCI also offered that roads decay quickly because 
freighters shipping goods transnationally try to maximize their 
loads by over loading trucks which puts additional pressure on 
roads.  Haqjo said each axle can carry a maximum of 10 tons; 
however, in reality, freighters carry from 15-20 tons.  Haqjo also 
noted that since the weight is not evenly distributed on trucks, as 
trucks stop at the numerous checkpoints, the frequent stoppages put 
pressure on the trucks, destabilizing the trucks, increasing the 
risk of accidents, and contributing to road deterioration. 
 
KABUL 00000899  003 OF 003 
 
 
 
¶10. (SBU) ACCI said that over-taxation of freight forwarders and 
corruption within the border police and Customs department are the 
main concerns of transporters.  Haqjo said the police, traffic 
police, ministries of Finance, Labor, and Public Works, and Customs 
all collect taxes (legitimate and illegitimate) and bribes.  For 
example, from Herat to Islam Qala, the Herat municipality collects a 
fee of 10,000 afghanis (about USD 200) per vehicle.  (NOTE: 
Municipalities are allowed to collect certain revenues under the 
Afghan constitution, but the application of this right may not be 
uniform across all areas.  END NOTE)  Haqjo said that President 
Karzai issued a decree in July 2008 aimed at simplifying and 
rationalizing the tax code as well as eliminating some nuisance 
taxes.  However, the day after the President issued the decree, the 
Mayor and Governor of Herat increased the fee and they continue to 
defy the President's decree.  ADB officials say that the Ministry of 
Transport's passenger and freight tariffs impede growth in the 
freight transport sector.  The ADB is providing technical assistance 
to the ministry on reforming the tariff structure. 
 
¶11. (SBU) COMMENT:  Road security is an enduring concern for all 
involved: construction contractors, donors, freight forwarders, and 
government officials.  However, MOI's proposal to institute a 
highway authority has no support, and donors are loath to bring back 
such a reviled entity.  We see no indication that police corruption 
is under control, and if the comments of Afghan business leaders are 
accurate, rent-seeking behavior remains rampant on Afghan roads. 
The rise in legitimate government revenues spurred by improved roads 
represents good news; the persistence of onerous, unofficial 
collections on transporters does not.  The significance of the 
Indian-built road in the Southwest remains to be seen.  Access to 
Iranian roads leading to the Chabahar port via the Zaranj-to-Delaram 
road offers the shortest route to a seaport for Afghanistan and may 
in time become a rival supply route if security can be maintained. 
End Comment. 
 
RICCIARDONE