US embassy cable - 05KABUL4967

UNCLAS SECTION 01 OF 02 KABUL 004967 
 
SIPDIS 
 
DEPT FOR SA/FO AMBASSADOR QUINN, SA/A NSC FOR AHARRIMAN, 
KAMEND FOR CENTCOM FOR POLAND, CG CFC-A, CF CJTF-76 
USAID FOR AID/ANE, AID/DCHADG 
 
SENSITIVE 
 
E.O. 12958 N/A 
TAGS: EAID, PGOV, SNAR, AF 
SUBJECT: KARZAI DISCUSSES ASSISTANCE BUDGET WITH 
ADMINISTRATOR NATSIOS 
 
Summary 
----------- 
 
1. (SBU)  President Karzai and AID Administrator Natsios on 
November 17 ran through a tour dhorizon of the progress of 
U.S. assistance programs, Afghan needs, U.S. budget 
realities, and plans for counter-narcotics work in the 
coming year.  While Karzai continues to believe a twenty 
percent reduction in the are under poppy cultivation is 
attainable, and is committed to achieving this, both Karzai 
and Finance Minister Ahadi expressed concern for the 
economic and political fallout that could occur if counter- 
narcotics (CN) performance impacted on economic prospects 
for rural populations without adequate alternative 
livelihood income substitutes.  End Summary, 
 
2. (SBU) On November 17, AID Administrator Natsios, 
accompanied by Ambassador, met with President Karzai and 
key ministers, including finance Minister Ahadi and 
Economic Minister Farhang, to discuss assistance and 
Afghanistans current top development priorities.  Natsios 
briefed President Karzai on AID activities that he had 
visited the day before in the Panjshir Valley.  He noted 
that the blacktop (Note: the sphaltic concrete road from 
Charikar and Gulbahar and the double bituminous surface 
treatment road from Gulbahar to Baharak)in the Panjshir 
would be finished by the end of 2006.  The new courthouse 
would be completed in three weeks, as well as four schools 
and four health clinics. 
 
Roads 
------- 
 
3. (SBU)  Karzai then asked about progress on the national 
plan for roads, health clinics and schools.  The 
Administrator responded that 389 schools had been 
completed, and 378 health clinics with trained personnel, 
and stocked with pharmaceuticals were now operational. 
Responding to Karzais question about the status of the 
Kandahar-Heart road, Natsios said that the U.S. and Saudi 
portions of the road would be completed by July and 
December of next year, respectively, but that the Japanese 
portion of the project is still lagging.  Of the originally 
targeted 1,000 kilometers of Provincial/District Center 
roads, USAID has funded work on 850 kilometers.  (Note: 
About 360 kilometers are already completed).  Karzai 
mentioned that he had heard that the Jalalabad-Asmar road 
was having problems with contracts, which Natsios promised 
to look into. (Note: Two contractors were replaced with a 
single new contractor and the road is scheduled for 
completion on/about December 30, 2006).  When the Afghan 
leader asked about the Gardez-Khost road, Ambassador 
answered that we did not currently have the money to 
support the project, even though it was an important road. 
 
Power 
------- 
 
4. (SBU)  Administrator Natsios noted that the Ambassador 
had been in the U.S. lobbying hard for additional 
supplemental funds, which would be targeted on roads, 
power, and other key infrastructure projects.  Natsios 
cautioned, however, that recovery from Katrina made the 
budget climate difficult and the attitude of the American 
public toward foreign aid was not as supportive as 
Europes.  He noted that the FY 07 budget looked pretty 
good, but said that it was almost inevitable that there 
would be some decline from present levels.  Natsios added 
that power generation was also one of the three major areas 
that need more funds. He pointed out that when the U.S. had 
started on the Kajacki Dam (the major source of power for 
Helmand and Kandahar), we had expected other international 
donors would help with transmission; but they did not.  The 
additional costs could come the USD 100 million.  The 
German and French aid ministers say they cant help now. 
The EU speaks loudly in councils, but has been light on 
donations and disbursements.  Projects for power 
generation, transmission, and distribution are very 
expensive, and all must be completed in order for the 
systems to function economically.  USAID is already funding 
the gas power generation plant in Sherbegan near the Uzbek 
border to the tune of USD 100 million, and the World Bank 
in Kabul alone was spending USD 23 million on distribution 
networks.  The IFIs were helping, but there was not enough 
funding to do everything that was desirable. 
 
Counter-narcotics 
--------------------- 
 
5. (SBU)  The Ambassador noted that success in CN 
performance would be a factor in U.S. budget support.  Good 
progress on Afghanistans part will improve the chances of 
increasing U.S. assistance.  The alternative livelihoods 
development program will work in conjunction with 
interdiction and eradication, but will not work otherwise. 
Both Karzai and Finance Minister Ahadi emphasized that 
there was no doubt about the GOAs commitment and 
determination to succeed in CN activities, but expressed 
the concern that if the solution were not comprehensive 
enough, it could lead to poverty and instability.  Karzai 
noted that narcotics might contribute as much as USD 3 
billion to the economy, and if eliminated, the economy will 
suffer.  Karzai opined that cartels had not yet formed in 
Afghanistan, but that Turkish, Iranian, and Central Asian 
mafias are involved, as well as intelligence officers from 
former Soviet Union countries.  The Afghan President also 
felt that some of the recent attacks in the Kandahar area 
had been narcotics-related. 
 
Natsios noted that there was no way that any alternative, 
, 
livelihood development would replace the total lost 
revenues, except in the long run if the economy takes off. 
Natsios added that the U.S. was aware that eliminating 
poppy cultivation cannot be done in one year, and that it 
will take time.  If another twenty percent reduction in the 
area of cultivation occurs next year on top of the twenty 
percent reduction achieved last year, this will be seen as 
a success. 
 
Comment 
------------ 
 
5. (SBU)  President Karzai appearedconcered that if the 
economy is not productive enough in the rural areas after 
CN campaigns, instability will increase.  He stressed his 
determination to succeed at the CN agenda, but at the same 
time he does not want Afghanistan to be held to unrealistic 
standards in the counter-narcotics struggle.  If CN 
activities lead to a snapback in support for the 
government, then our CN goals and our governance goals in 
Afghanistan will have moved into conflict with each other. 
NEWMANN