VZCZCXYZ0000
OO RUEHWEB

DE RUEHBUL #3285/01 2881110
ZNR UUUUU ZZH
O 151110Z OCT 09 ZDK
FM AMEMBASSY KABUL
TO RUEHC/SECSTATE WASHDC IMMEDIATE 2188
INFO RUEHBJ/AMEMBASSY BEIJING 4999

RUEHNT/AMEMBASSY TASHKENT 0023
RUEHIL/AMEMBASSY ISLAMABAD 8013

UNCLAS KABUL 003285 
 
SIPDIS 
SENSITIVE 
 
DEPT FOR S/SRAP, SCA/FO, SCA/RA, SCA/A 
 
E.O. 12958: N/A 
TAGS: ECPS EINV AF
SUBJECT: ASIAN DEVELOPMENT BANK-FUNDED PORTION OF RING ROAD STALLED, 
BUT RAILROAD MOVING FORWARD 
 
¶1. (SBU) Summary:  Responding to a recent ultimatum from the Afghan 
government, Chinese contractor CREC has minimally resumed work on a 
critical section of the ring road in Badghis, funded by the Asian 
Development Bank (ADB). The contractor had agreed in July to restart 
the project once the GIRoA assigned 500 Afghan police officers to 
the site, but did not do so for almost three months.  The Chinese 
contractor claimed security remained a persistent problem, despite 
the police presence.  However, a Korean company working at a nearby 
location did not encounter any major security issues.  On October 
13, the Chinese Ambassador to Afghanistan reported to Emboffs that 
CREC now claims it has not resumed work because the new 
ADB-appointed site engineer is ineffective and has not been at the 
site.  ADB has confirmed with us that the engineer is absent, but 
says there is no reason for him to be there if meaningful work is 
not underway.  In contrast to the Chinese project, ADB reports it 
has genuine security concerns about a ring road section it plans to 
run through Badghis' Murghab Valley.  The Army Corps of Engineers 
(ACE) is investigating whether it can take on this project.  Work 
will start soon on an ADB-funded railroad from Hairaton to 
Mazar-i-Sharif, and the project should be finished in the next 14 to 
21 months.   End summary. 
 
RING ROAD PROBLEMS PERSIST 
-------------------------- 
 
¶2. (SBU) China Railway Engineering Corporation (CREC) recently 
resumed minimal work on the Qaisar - Bala Murghab portion of the 
ring road, thus ending a three-month construction halt, according to 
ADB Country Director Craig Steffensen.  This resumption was 
undoubtedly prompted by a letter from Finance Minister Omar 
Zakhilwal to CREC demanding that work resume by October 10 or the 
Afghan Government would terminate the contract.  Zakhilwal said if 
the contract is terminated, the Afghan Government and ADB would 
blacklist CREC from any future contracting opportunities.  CREC 
would also have to pay a penalty of $3.8 to $4 million and forfeit 
its equipment. 
 
¶3. (SBU) Earlier in July, Finance Minister Omar Zakhilwal offered to 
provide CREC with 500 police at ADB expense to guard the site, 
following the kidnapping of CREC employees in the first quarter of 
¶2009.  CREC assured Minister Zakhilwal it would resume work with 
this additional security.  ABD paid the police officers $50,000 per 
week to do nothing but guard equipment for most of the past three 
months.  On October 10, however, ADB representatives reported that 
CREC had restarted a minimal amount of the work, but ADB could not 
verify to what extent construction had been reinitiated.  While 
Steffensen admitted the security situation at the site is not ideal, 
he noted that a Korean contractor a few kilometers down the road has 
incurred just a few incidents with far less protection than the CREC 
project. 
 
¶4. (SBU) In explaining the three-month hiatus, Steffensen said the 
Chinese Ambassador to Afghanistan Zheng Qingdian told him that the 
Chinese Government had instructed all its Ambassadors to avoid 
security incidents that would mar the ongoing celebrations of the 
PRC's 60th anniversary.  But on October 13, Zheng reported to 
Emboffs that CREC now claims it has not resumed work because the new 
ADB-appointed site engineer, who is from the UN Office of Project 
Services (UNOPS) is ineffective.  According to Zheng, CREC says the 
engineer left the site after only two hours on his first day, saying 
he needed to study the situation. He has not returned since, and he 
is needed to serve as a liaison between CREC and the Afghan crew 
doing the work.    ADB has confirmed with us that the engineer is 
absent, but says there is no reason for him to be there if 
meaningful work is not underway. 
 
MEANWHILE, HERE'S THE REAL SECURITY PROBLEM 
------------------------------------------- 
 
¶5. (SBU) The Qaisar - Bala Murghab is one of the few remaining 
portions of the ring road under construction.  Another section 
through the Murghab valley in Badghis province may be even more 
challenging, Steffensen said.  The local Spanish-led PRT warned him 
the road will be a terrorist target.  ADB has asked ISAF, the ANA 
and PRT troops for protection.  The project has three components: 
road building, security and a social component that includes school 
and mosque renovation, job creation and anything else needed to gain 
the local community's support.  He said the community most desires 
electricity, but a transmission line would cost $40 to $50 million 
and the Ministry of Energy and Water (MEW) prioritizes 
more-populated areas.  While the Spanish Government is helping 
develop the provincial capital of Qual-e Naw, Steffensen believes 
aid agencies have generally overlooked the province.  He asked if 
the Army Corps of Engineers (ACE) could build the road.  Ambassador 
Wayne said he would inquire, noting that current priorities focus on 
the South and East of Afghanistan.  (Comment: ACE is now looking 
into whether they can build the road.  End Comment.) 
 
 
RAIL PROJECT STEAMS AHEAD 
------------------------- 
 
¶6. (SBU) In contrast to the ring road, ADB's northern railroad 
project is going well. On September 30, ADB's board approved an 
80-kilometer rail line from Hairaton, near the Uzbek border, to 
Mazar-i-Sharif.  The contract calls for completion by June 2011, but 
Steffensen said contractor Uzbek Railways had assured the ADB it 
will complete work by December 2010.  ADB views this project as the 
first phase of a rail corridor linking Mazar-e-Sharif, Herat, 
Jalalabad and border points with Pakistan.  Steffensen noted said 
state-owned Uzbek Railways is shrewd to build the first phase, 
ensuring the line would be Russian gauge, ensuring smooth 
connections with the Soviet- built rail systems of Afghanistan's 
northern neighbors. 
 
¶7. (SBU) Security costs for the rail project should total about $10 
to $16 million out of a total $170 million budget.  Steffensen added 
that RC-North commanders support the project. 
 
USING THE AFGHANISTAN RECONSTRUCTION FUND? 
----------------------------------------- 
 
¶8. (SBU) With $900 million worth of projects underway, ADB is the 
second-largest development agency in Afghanistan (behind USAID). 
Steffensen said three employees have been killed, and 19 kidnapped, 
in the past year, and that he has a hard time attracting skilled 
expats, particularly to sites outside of Kabul. 
 
¶9. (SBU) Steffensen suggested that the USG consider co-financing ADB 
projects using Afghan Reconstruction Trust Fund (ARTF) money.  He 
said most donors do not currently use this mechanism, but that it 
would help support larger projects.  Although ARTF rules prohibit 
prioritizing funds for specific areas, Steffensen, an ARTF 
management committee member, indicated that such projects could be 
earmarked in a more general way.  Ambassador Wayne agreed this could 
be worth exploring. 
 
EIKENBERRY