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OO RUEHDBU RUEHPW RUEHSL
DE RUEHBUL #0122/01 0141417
ZNR UUUUU ZZH
O 141417Z JAN 10
FM AMEMBASSY KABUL
TO RUEHC/SECSTATE WASHDC IMMEDIATE 4727
INFO RUCNAFG/AFGHANISTAN COLLECTIVE PRIORITY

UNCLAS SECTION 01 OF 03 KABUL 000122 
 
SENSITIVE 
SIPDIS 
 
DEPARTMENT FOR SRAP, SCA/FO, SCA/A, EUR/RPM, INR/B 
STATE PASS USAID FOR ASIA/SCAA 
USFOR-A FOR POLAD 
 
E.O. 12958: N/A 
TAGS: PGOV EAID AF
SUBJECT: AFGHANISTAN:  THE DYSFUNCTIONAL WORLD OF 
PROVINCIAL BUDGETING AS SEEN FROM PANJSHIR PROVINCE 
 
¶1.  (SBU) SUMMARY:  Panjshir, with its unrivaled security, 
has never been the object of &clear and hold8 operations by 
U.S. forces.  Instead, the U.S. moved straight to "build," 
with the establishment of the Panjshir Provincial 
Reconstruction Team (PRT) in 2005.  Today, 65 million dollars 
worth of projects later, PRT Panjshir is focused on 
strengthening the ability of local officials to administer 
their province more effectively, an effort complicated by 
those officials, ineffectual links to Kabul.  Provincial 
officials, like their counterparts in other provinces, have 
failed to obtain sufficient resources from the central 
government to drive development in Panjshir, a problem only 
exacerbated by Afghanistan's still immature budget process. 
The result has been an over-reliance on the PRT. The PRT is 
working intensively with the provincial government to support 
capacity-building along with appropriate resource requests to 
Kabul ministries.  End summary. 
 
BUDGET COORDINATION NOT A REALITY ON THE GROUND 
--------------------------------------------- -- 
 
¶2. (U) Draft guidelines from the Afghan Ministry of Finance 
posit an organized system of budget coordination and 
consultation between the national and provincial levels, 
based on clear guidance and timelines.  However, these 
guidelines have not been finalized and are not a reality on 
the ground.  While line directors are generally satisfied 
with their Operations and Maintenance budgets, most say they 
are powerless to obtain adequate resources for development 
projects and programs.  As a result, they turn first to the 
PRT to meet Panjshir,s development needs.  (Note:  100 
percent of provincial line ministry development budgets 
throughout the country are ultimately donor-funded.  End 
note.) 
 
¶3. (U) As Ministry of Finance provincial representatives 
("mostoufi") point out, provinces are not legal budget 
entities according to the Afghan constitution and thus have 
no budget authority.  For their part, line directors at the 
provincial level submit project requests to their ministries 
in Kabul.  At best, what they receive in return are earmarked 
allotments for specific projects and programs.  At worst -- 
and all too often -- they receive nothing.  In Panjshir, some 
provincial officials, including the directors of Environment, 
Social Affairs, Economy and Border and Tribal Affairs 
represent ministries with little project funding potential. 
Others, however, including the line directors of Health, 
Education, Power, Rural Rehabilitation and Development, 
Agriculture, Communications, Public Works and Religious 
Affairs, have at least the theoretical possibility of tapping 
resources from the central government.  The Ministry of Mines 
also has this potential but is not currently represented at 
the level of line director in Panjshir. 
 
WHAT HAPPENS IN KABUL STAYS IN KABUL 
------------------------------------ 
 
¶4. (SBU) Provincial line ministry officials complain that 
they have no visibility on the national budget process, 
including sometimes within their own ministries.  This lack 
of information inhibits the development of rational 
development planning in the province.  In the words of the 
Panjshir Province Executive Director, "How do we know what to 
spend if we don,t know what's in our pockets?"  The process 
by which some projects are funded and others are rejected is 
equally opaque.  As a result, provincial officials are quick 
to suspect political favoritism, cronyism and corruption. 
Most take for granted that ministers such as the outgoing 
Minister of Energy and Water Ismail Khan favor their home 
regions.  (Note: Khan is from Herat in the West. End Note.) 
Parliamentarians, too, are suspected of diverting projects to 
their home constituencies.  Panjshir,s Director for the 
Ministry of Rural Rehabilitation and Development (MRRD) 
believes that ministries have too much latitude to allocate 
their appropriations between provinces, a situation he feels 
breeds corruption.  Note: The manner in which ministries have 
been divvying up what development resources they may have for 
provinces has been unfathomable; the Ministry of Finance is 
moving towards a norms-based budgeting model which will 
allocate budgetary resources across provinces through set 
criteria.  In addition, the draft sub-national governance 
policy proposes a "people's" development component which will 
provide some provincial say-so on how a portion of line 
ministry development funds for a particular province are 
spent.  End Note. 
 
¶5.  (SBU) Governor Bahlol, an overt supporter of Dr. 
 
KABUL 00000122  002 OF 003 
 
 
Abdullah, believes President Karzai,s government 
deliberately neglects Panjshir.  According to Bahlol, one 
senior Kabul official told him he would like to fund 
construction of a sports facility in Panjshir, but "Karzai 
will fire me if I do that."  In a perverse way, failure to 
obtain resources from Kabul can become a badge of honor for 
line directors who claim it as evidence of their fealty to 
Bahlol.  Whatever the reasons, the mostoufi concurs that most 
line directors seem to have despaired of trying to obtain 
resources from Kabul and no longer take the process 
seriously; many fail to provide adequate justifications for 
their project submissions.  Panjshir,s Irrigation Director 
told PRTOFF that he has proposed the same 19 flood wall and 
reservoir projects to his ministry for the last three years, 
each year dusting off the same old list and sending it back 
up his chain. 
 
¶6. (SBU) Other provincial officials are having greater 
success in obtaining resources.  The Education Director is 
implementing a new teacher training program and also has 32 
Ministry of Education schools under construction in the 
province.  However, the PRT has visited most of these schools 
and, unfortunately, found all of them in the same 
half-finished state, two years after construction began.  The 
Director claims this is because funding comes from the World 
Bank in widely dispersed tranches.  Panjshir,s new Director 
of Public Works recently obtained a $20,000 allotment for 
winter snow removal on the main valley road (Comment: We have 
heard of several provinces receiving their snow-removal 
allocations.  End comment).  He is also overseeing work on a 
large retaining wall in Dara district, a project that 
reportedly owes its origins to the lobbying of Panjshir 
parliamentarian Judge Rahila Salim. 
 
¶7. (SBU) Most remarkably, the Director of Agriculture claims 
that he has approval from his Ministry for 36 projects over 
the next three years totaling $7-8 million.  Additionally, 
the Ministry of Rural Rehabilitation and Development (MRRD) 
has some GIROA-funded projects underway, including 
improvements to the Aryu road.  According to the Director, 
however, projects that ought to fall under his responsibility 
are instead being contracted out of Kabul and not coordinated 
with him.  For example, he learned about planned MRRD-funded 
improvements to the Abdullah Khel road not from his ministry 
but from the (non-Panjshir-based) company that won the 
contract.  (Note:  Under the current legal and regulatory 
framework, contracting is the responsibility of the central 
government.  End Note.) 
 
¶8. (SBU) Panjshir is one of only three provinces where, on an 
experimental basis, the Ministry of Public Health (MoPH), 
with World Bank help, deploys its own employees (rather than 
funds NGOs to do so) to provide health care.  The province 
draws on funds from the World Bank's Strengthening Mechanism, 
a reliable budget stream for equipment and maintenance, 
though not new construction. the Director told PRT he is able 
to get "100 percent" of his requests approved through the 
Strengthening Mechanism.  In contrast, he routinely comes up 
empty in his efforts to draw on resources from the Ministry's 
project budget for new construction.  His main complaint, 
however, relates to hiring and procurement.  Salaries for 
doctors are too low to attract qualified professionals to 
Panjshir and, while funding is available to hire midwifes and 
buy medicine, obtaining the ministry's authorization to do so 
takes four or five months.  Compounding this problem is the 
lack of liquidity -- even basic purchases require action by 
the provincial mostoufi. 
 
TO PLEASE THE PRT, CREATE A PROVINCIAL DEVELOPMENT COUNCIL 
--------------------------------------------- ------------- 
 
¶9. (SBU) As in most provinces, there is no systematic 
provincial-level coordination of the requests that Panjshir 
line directors make to their respective ministries. Although 
the Governor signs off on each of these submissions, they are 
not regularly discussed in meetings of the Provincial 
Development Council (PDC).  Asked what the PDC is for if not 
to coordinate provincial government requests for development 
projects, Panjshir,s mostoufi offered the intriguing -- and 
somewhat depressing -- explanation that the PDC exists in 
order to identify projects requiring support from 
international donors. 
 
¶10. (SBU) The provincial Executive Director made an equally 
revealing comment during a discussion of last year's Good 
Performers, Initiative (GPI) counternarcotics funds for 
Panjshir, $400,000 of which remains unspent.  He lamented 
 
KABUL 00000122  003 OF 003 
 
 
that the Counternarcotics Ministry wants the provincial 
government to submit new prioritized proposals for spending 
the $400,000.  Why, he wondered, cannot the Ministry just 
choose some projects left over from last year's list -- that 
way, the Ministry, rather than the provincial government, 
would take the heat from Panjshir,s communities for any 
proposals on the list that fail to make the cut.  PRT 
Director responded by noting that the provincial government, 
not the central government or the PRT, is best-placed to 
determine Panjshir,s present needs, and has an obligation to 
make the tough decisions and trade-offs. 
 
¶11. (U) UNAMA, with support from the PRT, is working with the 
provincial government to improve the province's PDC process. 
UNAMA will convene a three-day workshop in January aimed at 
mentoring provincial officials toward updating the Provincial 
Development Plan (PDP) in consultation with district and 
community leaders.  The PRT is working closely with UNAMA to 
ensure that this updated PDP is oriented not only toward the 
PRT and other international donors, but to obtaining direct 
GIRoA resources.  The PRT continues to make the point that 
Panjshir needs a single development planning process that 
places Afghans firmly in the lead in identifying and 
addressing the province's development needs. 
 
¶12. (U) Meanwhile, the PRT is also working intensively with 
individual line directors to gain visibility on their 
resource requests to Kabul ministries.  In some cases, the 
PRT is encouraging line directors to expand their requests to 
ensure that the PRT is not delivering services that GIRoA has 
the capacity to deliver itself.  Governor Bahlol has 
instructed all provincial line directors to share their 
requests with the PRT.  Unfortunately, there seems to be no 
common understanding of what the ministry deadlines are. 
Some line directors tell us their annual requests are due 
this month, while others say the deadline is February, and 
still others say there is no deadline at all.  Whatever the 
case, the PRT is encouraging them to move forward without 
delay. 
 
COMMENT 
------- 
 
¶13.  (SBU)  PRT Panjshir is focusing intensively on good 
governance, not because governance is any worse here than in 
other provinces -- in fact, we believe it to be better than 
in most -- but because Panjshir,s unrivaled security 
situation gives us the luxury of doing so.  Unlike some of 
its counterparts elsewhere in the country, Panjshir,s 
provincial government appears to have the staff and technical 
capacity to deliver more effective services to the people of 
Panjshir.  Unfortunately, it faces the same challenge as 
other provinces in drawing greater resources from ministries 
in Kabul.  The provincial government will no doubt benefit 
from the additional civil service training planned for 
Panjshir.  Where bottlenecks and anomalies come to the 
surface, PRT Panjshir will make use of the Embassy's new 
Sub-National Governance Consultative Group to channel 
questions to those at the Embassy with the best lines into 
the ministry concerned to get a coherent answer. 
EIKENBERRY