VZCZCXRO1942
RR RUEHDBU RUEHPW RUEHSL
DE RUEHBUL #3792/01 3320640
ZNR UUUUU ZZH
R 280640Z NOV 09
FM AMEMBASSY KABUL
TO RUEHC/SECSTATE WASHDC 3430
INFO RUCNAFG/AFGHANISTAN COLLECTIVE

UNCLAS SECTION 01 OF 03 KABUL 003792 
 
SIPDIS 
SENSITIVE 
 
E.O. 12958 N/A 
TAGS: EAID ENRG SENV ETRD EMIN EAGR EINV PREL AF
SUBJECT:  Kunar's Timber Industry and Smuggling: Solutions Await a 
New Cabinet 
 
REF: A. Kabul 2438 
     ¶B. Kabul 3479 
 
¶1.  (SBU) Summary: With some of the most dangerous pockets of 
insurgency in Afghanistan, Kunar province sits on the country's 
eastern border with Pakistan's Federally Administered Tribal Areas 
(FATA).  Rampant timber smuggling has long undermined faith in the 
government and supported local insurgents, while deforestation has 
seriously damaged watersheds and agricultural production.  The 
Cabinet's September 28 decision to allow sales of stockpiled 
impounded timber will permit timber merchants to make licit money 
and should decrease fire hazards in population centers.  However, 
this decision has yet to be implemented, with timber being 
increasingly smuggled out of lumber yards at night.  Just as 
importantly, the National Assembly has yet to adopt a long-awaited 
Forest Law that will permit controlled harvests and donor 
participation in the development of a value-added wood-processing 
industry over the longer term.  We are encouraging national and 
provincial leaders to move forward on these issues, but the Karzai 
government's transition to a new cabinet is likely to slow down this 
process at least another 1-2 months.  End Summary. 
 
Smuggling and Deforestation 
- - - - - - - - - - - - - - 
 
¶2.  (SBU) By Presidential decree, harvesting timber for export has 
been illegal in Afghanistan since 2004.  This ban, however, has not 
effectively protected the environment and has indirectly fostered a 
widespread smuggling network, rapidly depleting forests in Kunar and 
Nuristan provinces.  Deforestation decreases agricultural 
productivity and water availability, depriving the region of 
potential jobs.  Smuggling encourages corruption, undermines faith 
in the national and regional government, and supports the 
insurgency.  Kunar Governor Sayed Fazlullah Wahidi brought 
ministerial attention to these issues when he hosted a timber shura 
in July (ref A).  The lack of a legal framework for the logging 
industry puts Afghanistan in a lose-lose situation: timber and its 
associated enterprises and jobs move out of the country, while the 
environment and economic prospects are degraded. 
 
The Cabinet Decision to Allow Stockpile Sales 
- - - - - - - - - - - - - - - - - - - - - - - 
 
¶3.  (SBU) A September 28 cabinet decision to allow the sale of 
stockpiled illegally-cut timber represents a positive step that 
timber owners have long anticipated (ref B).  The stockpiles 
represent a depreciating asset and fire hazard.  In Kunar's capital 
Asadabad, stockpiles are located in the middle of residential 
neighborhoods, where a fire could have catastrophic consequences. 
Sales have not yet begun, however, pending cabinet approval of 
procedures and disposition of a high-level request for a stronger 
anti-corruption focus.  As a result, frustrated merchants and 
power-brokers are increasingly smuggling timber out of the lumber 
yards at night.  We are urging the Afghan government to announce and 
carry out their plan for licit sales as soon as possible. 
 
 
¶4.  (SBU) The draft procedures explicitly call for an "exact 
account" of the amount of stockpiles to be sold.  During a November 
1 meeting, Econoffs asked Finance Ministry Chief of Staff Safi if 
this amounted to an upper-limit "cap" on sales, as previously 
recommended by Kunar Governor Wahidi to prevent newly cut timber 
from being added to stockpiles.  Although unwilling to commit to a 
sales cap, Safi said the Afghan government estimates about 5.47 
million cubic feet of confiscated wood have been stockpiled and no 
more than this amount should be sold.  (Note:  When pressed, Mr. 
Safi said sale quantities would be announced and tracked, 
contradicting his earlier statement on October 6 that sale 
quantities would not be limited.  While the possibility of a cap is 
a positive development, we are not confident it will be effectively 
implemented.  End note.) 
 
¶5.  (SBU) The draft procedures also require weekly and monthly 
reporting of tax revenues from sales to Customs and the Ministry of 
Finance, with the resulting sales tax revenue to be spent primarily 
on infrastructure rehabilitation projects, pending Ministry of 
Finance and Presidential approval.  Safi said some of the money will 
be directed to the originating timber-producing provinces, but 
emphasized such an arrangement could not be made public, since tax 
revenues officially go to the central government, not the provinces. 
 PRT Kunar reports Governor Wahidi was confident, following his 
discussions with the Ministry of Finance, that fifty percent of tax 
revenue would be returned to Kunar.  (Note:  Wahidi's recent 
avoidance of the topic with PRT officers may indicate this proposal 
is shifting.  End Note) 
 
New Forest Law Offers Hope for Engagement 
- - - - - - - - - - - - - - - - - - - - - 
 
¶6.  (U) A new Forest Law, currently in Parliament, is expected to be 
passed in 2010.  Once adopted, the law will provide a statutory 
 
KABUL 00003792  002 OF 003 
 
 
basis for international donors to engage with the Afghan Government 
on the creation of a sustainable cutting, reforestation, and 
value-added business cycle benefiting the country's timber-producing 
regions.  We are working closely with parliamentary leaders to 
encourage its passage.  In the interim, however, PRT Kunar is 
investigating options for an outreach campaign on conservation and 
reforestation, possibly through local mullahs, who are widely 
respected sources of information in Kunar.  (Note:  Security issues 
will restrict activities and entry into some areas.  End note.) 
 
¶7.  (U) Afghan-leadership and community ownership are critical 
components of a long-term sustainable forestry plan.  Otherwise, 
economic development could rapidly accelerate environmental 
degradation.  Local government capacity-building and support for 
civil society are also essential, offering opportunities for 
international donor support.  Local timber agribusiness development 
also call for tree nurseries for reforestation and wood-lot 
development, mobile sawmills, value-added furniture manufacture, 
increased artisanal work, and improved quality control to take 
advantage of the U.S. "Afghan First" policy promoting local 
procurement.  Additional value-added production in Afghanistan will 
provide greater employment opportunities and improve security. 
Greater local value added through a stronger wood-processing 
industry will also prompt a sense of ownership in the province's 
timber resources, thereby strengthening the measures needed to 
safeguard and sustain these resources. 
 
Water and Irrigation 
- - - - - - - - - - - 
 
¶8.  (U) Kunar is a traditional agriculture area where changes in 
altitude provide a variety of growing zones suitable for grapes, 
wheat, fruit and nut trees.  Locally-based NGOs and PRT elements 
recommend increased support for irrigation infrastructure, such as 
USAID's work on the 27 kilometer Salar Canal, the longest in Kunar, 
which will irrigate 3,500 hectares and benefit 8,500 families.  The 
newly-arrived California National Guard Agribusiness Development 
Team (ADT) is building on these efforts and reviewing additional 
means to improve water access.  A Kunar local leader told PRT and 
Emboffs on November 12 that potable water is one of his community's 
top three priority projects: the Embassy's new Sustainable Water 
Supply and Sanitation project (SWSS, providing $52 million 
nationwide over three years to address drinking water issues) can be 
deployed to address these local needs. 
 
Electricity: Key to Economic Development 
- - - - - - - - - - - - - - - - - - - - 
 
¶9.  (U) Improved electricity infrastructure will benefit almost any 
business, and greater job growth will improve security by providing 
fighting-aged males with jobs.  Woodlot and furniture factory owners 
in Asadabad consider lack of reliable power the main hindrance to 
expansion of their businesses.  Local representatives of the 
Ministry of Rural Rehabilitation and Development (MRRD) also 
described a pilot program of matching grants supporting a candy 
factory, cheese factory, bakery, and fish farm.  ADT representatives 
are investigating options for a citrus processing factory and other 
value-added food processing, building on Roots for Peace, Madera, 
and other NGO donations of fruit trees in Kunar. 
 
¶10.  (U) Kunar's plentiful rivers have proven its best energy 
source.  (Solar power is only suited for small-scale village 
projects such as street lights.)  Asadabad has a community 
mini-hydro plant with the potential for 700KW output and a 
rarely-used 1MW diesel generator, although transmission losses and 
grid issues limit power available to the city.  Owners of 
woodworking shops consistently use private generators instead of 
city power, calling city power "not strong enough" or reliable. 
Over the past few years, there has been significant PRT and Afghan 
government investment in mini- and micro- hydro throughout Kunar, 
but lack of maintenance training resulted in degraded and unreliable 
systems.  In Asadabad, a recently-approved engineering study of the 
mini-hydro plant funded by the PRT will analyze generation, 
distribution, and sustainability of the plant and grid.  PRT Kunar 
is also investigating the system's inefficiencies and may be able to 
request technical assessment and rehabilitation assistance through 
the Embassy's new Afghan Clean Energy Program (ACEP, $83 million 
nationwide over four years). 
 
 
Roads and Border Crossings 
- - - - - - - - - - - - - - 
 
¶11.  (SBU) CERP funding is improving access to the Nawah Pass with a 
13km paved road due for completion by March 2010, allowing an easy 
two-hour drive to Peshawar in Pakistan.  We are exploring with the 
Afghan government the possibility of opening and staffing the 
crossing by that time to ensure it does not develop into a new 
smuggling route.  People and goods currently only cross on foot and 
reload to local vehicles on the other side.  Over the longer term, 
the official opening of this crossing with the government of 
 
KABUL 00003792  003 OF 003 
 
 
Pakistan could bolster the local licit economy by providing an 
alternative to the Torkham Gate crossing to Pakistan.  A better 
connection to Pakistan will encourage timber firms to export their 
products.  However, the draft Forest Law will need to be amended to 
legalize exports of raw timber.  This anti-export strategy would 
indirectly foster greater timber smuggling into Pakistan, in the 
absence of adequate border crossing forces to interdict illicit 
trade.  Afghan authorities are aiming to rebuild wood-working 
industrial capacity in the region to keep jobs in Afghanistan and 
put it on a competitive footing with the more advanced Pakistani 
industry. 
 
Gemstones 
- - - - - 
 
¶12.  (SBU) Kunar's Chapa Dara district and the Pech River Valley 
also produce gemstones, including tourmaline and emeralds.  Chapa 
Dara is one of the province's few districts to maintain most of its 
forest cover, primarily because the local communities have focused 
on gem smuggling instead of timber smuggling.  Gemstones are 
currently smuggled to Pakistan, where skilled cutting increases the 
value of the raw stones more than tenfold.  An Embassy project 
through USAID to reinforce Afghanistan's "mines to market" value 
chain for gemstones through training (on-site mining safety, cutting 
and testing), equipment supply, public-private partnerships, market 
linkages, and industry infrastructure strengthening could be useful 
if implemented in Kunar.  A new gemstone market opened in Jalalabad, 
the capital of neighboring Nangarhar province on November 14, and 
there may be opportunities to provide training associated with this 
private market, increasing employment opportunities and local 
revenues. 
 
Comment 
- - - - 
 
¶13.  (SBU) We are working closely with local and provincial leaders, 
who agree that accelerating Kunar's economic development constitutes 
the most effective way to improve security and reduce the appeal of 
the insurgency.  This effort will call for significant investment in 
infrastructure and a sustainable use plan for Afghanistan's forests, 
thereby protecting its watersheds, spurring job growth, and 
ultimately making the region safe enough for Afghan security forces 
to take responsibility for the area. 
 
¶14.  (SBU) Over the short term, we continue to push for the rapid 
implementation of licit timber sales.  Nonetheless, we anticipate 
that the Karzai government's transition to a new cabinet is likely 
to slow down this process at least another 1-2 months.  In addition, 
we are encouraging the Parliament's passage of the vitally needed 
Forest Law to legalize new timber cutting.  Parliamentarians 
recognize the need for action, and we are cautiously optimistic that 
the law will be passed in 2010 following the upcoming winter 
recess. 
 
Eikenberry