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UNCLAS SECTION 01 OF 06 ISLAMABAD 001218 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON EFIN ENRG ERTD EAID PHUM PK
SUBJ: THIRD RECCA SOLDIFIES GAINS, CONFIRMS SUPPORT FOR REGIONAL 
COOPERATION 
 
¶1. (SBU) Summary:  At the third Regional Economic Cooperation 
Conference on Afghanistan (RECCA) May 13-14 in Islamabad, 39 
countries and international organizations discussed expansion of 
regional cooperation and coordination in support of Afghanistan. 
Working groups on health, labor, energy and infrastructure, mining, 
and transit trade were for the most part successful in focusing 
discussion on concrete projects and activities.  The Conference 
served as venue for the initial negotiations between Afghanistan and 
Pakistan on updating their Transit Trade Agreement, with many 
Conference participants offering assistance, if needed.  It also 
served to demonstrate progress on the reach of railheads into 
Afghanistan and to reconfirm commitments and progress on electricity 
cooperation centered on Afghanistan.  A parallel business event 
provided targeted networking opportunities for Afghan and Pakistani 
(and a smattering of foreign) companies.  Simply holding the event 
successfully after a more than two year delay, was an achievement. 
Turkey volunteered to host the next RECCA.  End Summary. 
 
Security and Atmospherics 
------------------------- 
¶2. (U) Delegations from 39 countries and international organizations 
met in Islamabad May 13-14 for the third Regional Economic 
Cooperation Conference on Afghanistan (RECCA).  The U.S. delegation 
was led by Principal DAS for South and Central Asia Pat Moon.  Prime 
Minister Yousef Raza Gilani represented Pakistan, while Afghan 
President Hamid Karzai led a large, ministerial-level delegation 
from Kabul. 
 
¶3. (SBU) Logistics became chaotic when the opening session was moved 
for security reasons from Jinnah Conference Center to the Prime 
Minister's Secretariat just minutes before the conference was due to 
open.  Adding to the morning's confusion, Karzai returned to Kabul 
soon after the opening session, taking most of the Afghan ministers 
with him and leaving a more junior delegation of one Minister and a 
group of senior officials and exasperating the Pakistanis.  Despite 
these glitches, however, the overall tenor of the gathering was 
positive. 
 
¶4. (SBU) Karzai, Gilani other ministers and heads of delegation all 
called for increased cooperation as a main contributor to stability 
and growth in region.  Although this was not a pledging event, most 
delegations could not resist detailing their assistance to date to 
Afghanistan.  U.S., EU, and United Nations Assistance Mission to 
Afghanistan (UNAMA) efforts to develop a more specific agenda 
contributed to slightly more concrete outcomes than in the two 
preceding RECCAs, in New Delhi and Kabul.  Working groups on health, 
labor, energy and infrastructure, mining, and transit trade were for 
the most part successful in focusing discussion on specific projects 
 
ISLAMABAD 00001218  002 OF 006 
 
 
and activities.  A parallel business event provided targeted 
networking opportunities for Afghan and Pakistani (and a smattering 
of local reps of foreign) companies. 
 
¶5. (SBU) Delegations welcomed Turkey's offer to host the next RECCA 
and an EU offer to support a center in the Afghan Ministry of 
Foreign Affairs to follow up on regional cooperation.  The final 
declaration also noted several other tangible outcomes, including: 
the Asian Development Bank (ADB)'s commitment to extend the railroad 
line from Hayraton, Afghanistan, to Mazar-e-Sharif and the European 
Commission's willingness to fund a broader Afghan Railroad 
pre-feasibility study; a shared desire to accelerate work on the 
electricity corridor (CASA 1000 from Kyrgyzstan and Tajikistan to 
Afghanistan and Pakistan) and the 
Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline; 
establishment of a customs academy in Kabul; and support for the 
establishment of joint Chambers of Commerce. 
 
Working Groups 
-------------- 
¶6. (SBU) On health, working group members agreed on four areas of 
cooperation:  short-term transfers of patients to countries such as 
Turkey for urgent medical attention; using telemedicine technology 
to treat patients in remote areas; cross-border facilitation of 
health professionals, such as psychiatrists, gynecologists, and 
anesthesiologists; and increased training for professionals in the 
health sector.  The Canadians stressed the importance of a more 
well-coordinated campaign to eradicate polio; all parties agreed 
that international donors should ensure funding sufficient to 
complete cross-border vaccinations ($135 million for Pakistan, $25 
million in Afghanistan). 
 
¶7. (U) The labor working group focused on an ILO/Afghanistan report 
that called for (among other things) international efforts to 
upgrade vocational training facilities and resources.  The working 
group also recommended that the ILO assist with a labor survey in 
Afghanistan and among Afghan refugees in Iran and Pakistan to assess 
the types of skilled labor that exist among potential returnees. 
Finally, the working group took note of the need to reduce reliance 
on informal mechanisms to send remittances, calling for a "regulated 
and incentive-based" initiative to encourage Afghans abroad to use 
it.  Participants acknowledged that Afghanistan's capacity building 
needs are much greater than migrant labor and returning refugees can 
meet, and suggested the export of unskilled labor from Afghanistan 
as a poverty alleviation strategy. 
 
¶8. (U) The Mining Working Group focused on human capacity and legal 
framework issues.  Representatives from the World Bank, and the 
 
ISLAMABAD 00001218  003 OF 006 
 
 
Italian, French, and Turkish Embassies joined USDEL in urging a 
review of regulations implementing Afghanistan's mining law to 
ensure that private sector views be incorporated into the draft. 
The Afghan Deputy Minister of Mines maintained that the law could 
not be changed and instead stressed Afghanistan's desire for human 
capacity development projects.  USDEL reiterated that without a 
commercially-viable mining sector, particularly marble, such 
projects would do nothing to increase responsible exploitation of 
Afghanistan's mineral wealth. 
 
¶9. (U) The working group recommended that the Afghanistan Ministry 
of Mines consult with all relevant stakeholders in framing mining 
regulations based on the Mining Law to facilitate investment in the 
mineral sector.  Further, training programs to develop professional 
manpower in geo-scientific disciplines in Afghanistan should be 
developed and the technical capacity of Gems and Gemology Centre in 
Peshawar should be enhanced in accordance with the goals of the 
Turkey-Afghanistan-Pakistan "Ankara Process."  Also within the 
Ankara Process, feasibility studies in the fields of coal mining, 
marble extraction and finishing will be conducted and a "Tripartite 
Project Unit" will be established by the Turkish International 
Cooperation and Development Agency (TIKA) to include development 
experts from three countries.  Finally,  Italy will consider 
supporting the marble and granite sectors in Afghanistan in 
coordination with similar assistance being provided to Pakistan. 
 
¶10. (SBU) The Energy and Infrastructure group reviewed plans for 
energy development between Afghanistan and its neighbors, 
Afghanistan's desire to establish a railroad network, and regional 
water management.  On railroads, Iran noted the progress on 
extending its Railroad to Herat.  ADB discussed its commitment to 
complete feasibility studies on a rail connection from Herat to 
Hayraton (Uzbek border) and Ishkan Bandar (on the Tajik border). 
The Bank representative confirmed it would fast track funding to 
construct the extension of the Uzbek rail line in Afghanistan beyond 
Hayraton to Mazar-e-Sharif, and hoped for completion in 14 months. 
The European Commission indicated its willingness to complete a 
pre-feasibility study for Afghan rail, possibly following the ring 
road.  One focus of such a study would be the Afghanistan-Pakistan 
priorities of extending their rail head from Chaman to Kandahar and 
Torkham to Jalalabad.  The Afghans clarified that their commitment 
with Iran and Tajikistan to a rail interconnection was "only 
political," adding that, while the Chinese were obliged to build a 
railroad to carry the output from its Aynak Copper concession, there 
was as yet no specific project. 
 
¶11. (SBU) On energy, Afghanistan presented progress on its Northeast 
power system, noting that the first electricity imports to Kabul 
 
ISLAMABAD 00001218  004 OF 006 
 
 
from Uzbekistan that began in January 2009 had changed everyone's 
perspectives on electricity.  These imports would soon increase 
significantly, now that the entire transmission line to Kabul is 
becoming operational.  The Afghans reconfirmed their commitment to 
the larger regional project for electricity trade from Central Asia 
to Afghanistan and Pakistan (CASA), consistent with the joint 
statement agreed with the World Bank in early May in Washington. 
Pakistan also reiterated its interest in moving forward to purchase 
electricity from this project and Tajikistan confirmed its 
continuing commitment.  The fourth project partner, Kyrgyzstan, did 
not participate in the working group.  ADB expressed concern that 
the electricity project would not be viable until new power 
generation was developed in Central Asia, and that in their dialogue 
on funding priorities the partner countries were not making this 
project a priority.  The Afghans agreed that there was a political 
commitment but had many claims on any available funding, adding that 
bringing other energy suppliers into the mix could help.  Despite 
Uzbek and ADB reservations, the working group recommended 
accelerating progress on this project. 
 
¶12. (SBU) The Afghans and the ADB also briefed on the status of the 
Turkmenistan-Afghanistan-Pakistan-India or TAPI pipeline, with the 
ADB noting that it had not seen "any progress":  although there are 
numerous bilateral contacts, the partners have not completed the set 
of proposed legal agreements to frame the project.  The ADB reported 
that Turkmenistan, whose delegation did not attend the working group 
session, has recently completed a required audit of reserves by 
Gaffney Kline, although audit results have not yet been distributed. 
 Pakistan added that Turkmenistan indicated it cannot move ahead 
because there has been no resolution of questions related to 
security in Afghanistan and Pakistan along the projected route. 
Furthermore, Pakistan noted that the project cost is now estimated 
to be $8 billion and, particularly in this economic climate, it will 
be difficult to attract either private sector partners or sufficient 
debt financing. 
 
¶13. (SBU) In a brief review of water management, Pakistan pressed 
Afghanistan to enter into discussion with its neighbors on its 
trans-boundary water rights.  The Afghans reiterated their lack of 
both the necessary data on water resources and the expertise to 
engage on trans-boundary water issues.  The Afghan representative 
said that Afghanistan is now actively talking to a select group of 
donors on developing the necessary capacity. 
 
¶14. (SBU) Uzbekistan indicated to the working group that as a matter 
of law it supported the rights of all riparian states to give 
priority to the ecological and social impact of any hydro resource 
development on trans-boundary waters, and suggested particular 
 
ISLAMABAD 00001218  005 OF 006 
 
 
caution in moving ahead with any project of that type (Note: the 
Uzbeks pushed for similar language to be included in the meeting 
final declaration.  A more general clause noting rights in 
accordance with international law was eventually inserted.  End 
Note).  The Tajik delegation spoke on the margins to SCA PDAS Pat 
Moon, stressing Tajikistan's desire to pursue the CASA project and 
requesting continued USG support for the electricity corridor 
project.  Tajikistan also sought U.S. support for their right to 
proceed with new hydro generation plants in the face of Uzbek claims 
and pressure. 
 
¶15. (SBU) The transit trade working group resulted in positive steps 
toward greater regional integration despite some heated discussions 
between the Afghan and Pakistan delegations.    Both sides 
reiterated the parties' commitment to renegotiate the 
Afghanistan-Pakistan Transit Trade Agreement by December 31, 2009, 
and to resolve issues bilaterally in the interim.  The Pakistani 
government agreed to include language on regional promotion of 
exports for Afghan fresh fruit and vegetables.  The exchanges were 
at times confrontational, with the Afghans raising familiar 
complaints about non-tariff barriers blocking trade and the 
Pakistanis raising familiar complaints about sanitary and 
phyto-sanitary issues.  The working group agreed to recommend 
arriving at a consensus draft of the Bilateral Customs Agreement 
between Afghanistan and Pakistan using the World Customs 
Organization template by June 30, and to sign the agreement itself 
not later than March 2010 (as previously agreed under the 
Canadian-led "Dubai Process").  Participants also recommended that 
Afghanistan harmonize border operating times with its neighbors, in 
particular with Pakistan. 
 
Business Event 
-------------- 
¶16. (SBU) The RECCA Business Conference was a busy networking event 
for Afghan and Pakistani businessmen, with activity focused in five 
groups:  agriculture, infrastructure, industry and manufacturing, 
services and banking, and trade.  The group recommended that 
governments and international donors address the weak infrastructure 
in both Afghanistan and Pakistan and applauded U.S. legislation to 
establish Reconstruction Opportunity Zones (ROZs), calling them 
"catalysts for regional development" and a means to improve regional 
law and order.  Participants highlighted the need for financing at 
concessional rates to support ROZ investment activity, and some 
noted concerns that local industry should be protected in the face 
of expanded transit trade. 
 
¶17. (SBU) Comment: The third RECCA was noteworthy in no small part 
because it happened at all.  Frequent delays over the past two 
 
ISLAMABAD 00001218  006 OF 006 
 
 
years, including an eleventh-hour postponement from the most 
recently planned April 2009 dates, and the haphazard planning for 
the business meeting left participants skeptical that the event 
would come together.  The UN and other donors (including the U.S.) 
playing a more active role in the run-up certainly helped to focus 
both the Afghan and Pakistani governments on concrete deliverables 
vice headline-grabbing promises.  The timing of the Islamabad RECCA 
allowed us to consolidate with a broader international audience some 
progress made at the U.S.-hosted trilateral summit in Washington and 
to follow up on those commitments with specific action.  It also 
provided a venue for others, notably the European Commission, to 
demonstrate their commitment to advancing tangible regional 
cooperation in support of Afghanistan. 
PATTERSON