US embassy cable - 03KABUL1008

C O N F I D E N T I A L SECTION 01 OF 03 KABUL 001008 
 
SIPDIS 
 
NSC FOR ZKHALILZAD, JDWORKEN, HMANN, RHANSON, DSEDNEY 
DEPT FOR SA/PAB, SA/AR 
MANILA PLEASE PASS AMB PSPELTZ 
USDOC FOR DAS/TD MURPHY AND AFGHAN RECON TASK FORCE 
STATE PASS USAID FOR JPRYOR 
STATE PASS TDA FOR DSTEIN AND JSUSSMAN 
STATE PASS TREASURY FOR U/S TAYLOR, LMCDONALD 
STATE PASS OPIC FOR RCONNELLY AND DZAHNHEISER 
 
E.O. 12958: DECL: 04/17/2013 
TAGS: PREL, PGOV, ECON, EFIN, AF 
SUBJECT: AMBASSADOR'S APRIL 8 MEETING WITH PRIVATIZATION 
COMMISSION CHAIRMAN KHALIQ FAZAL 
 
Classified By: AMBASSADOR ROBERT P. FINN FOR REASONS 
1.5 (B) AND (D) 
 
1. (C) On April 8, Ambassador met with Privatization 
Commission Chairman and former Minister of Public Works, 
Khaliq Fazal.  Fazal,s comments focused on deteriorating 
security conditions around Kandahar, infiltration of 
Pakistanis in the south, political demands on President 
Karzai, and the regrettably stalled work to assess 
Afghanistan,s state-owned enterprises.  End summary. 
 
2. (C) Fazal told Ambassador that many Afghans maintained to 
him during his visit to Kandahar the previous week that the 
Taliban were gradually restoring power bases in the south and 
alleged that elements of the local military (governor 
Sherzai,s forces) were &somehow involved.8  Locals were 
unwilling to make their concerns too public out of fear that 
the central government would be unable to protect them. 
Fazal added that Pakistanis were &everywhere8, working as 
engineers and construction labor, and questioned why these 
jobs were not made available to local Afghans.  Fazal told 
Ambassador that he had urged President Karzai upon his return 
to Kabul to reinforce border security and appoint qualified 
leaders to replace the wayward leadership. 
 
3. (C) Karzai, Fazal claimed, agreed, but did not indicate 
any action he might take.  Fazal said that Karzai needed to 
take strong action to avoid losing popular support.  Fazal 
added that Karzai,s loss of support would also erode popular 
support for the U.S., which was already strained by the war 
in Iraq.  Ambassador agreed that the Afghan people needed to 
see results to maintain the Karzai administration,s 
standing. Ambassador affirmed that the U.S. remained strongly 
behind Afghanistan, noting that both CENTCOM General Franks 
and SE Khalilzad were coming to Kabul to reaffirm this 
commitment later in the week. 
 
4. (C) Fazal turned the conversation to the next year,s 
election, noting that supporters had asked him to form a 
pro-democracy party.  He felt it was too early for this, as 
the elections law was still incomplete, but asked the 
Ambassador his view.  The Ambassador replied that it was not 
necessary to wait for the final election law to be completed 
before forming political parties.  Ambassador added that he 
hoped parties would be formed and that NDI and IRI were 
helping in this regard. 
 
5. (C) Fazal then noted that resentment was building towards 
expatriate Afghans, like himself, who had returned to 
Afghanistan after long residence abroad.  The Ambassador said 
that while he was impressed by the dedication of those 
Afghans who remained in their country, all Afghans were now 
working to help rebuild their homeland.  Fazal said that the 
resentment towards &carpetbaggers8 was understandable, as 
even the Cabinet had not been paid in ten months.  Fazal 
noted that the expat-Afghans would &be finished if Americans 
leave8 and that the destruction and possible division of 
Afghanistan could follow.  Ambassador expressed his 
conviction that the fundamentalists and others resisting 
political and economic progress in Afghanistan would not 
prevail.  Fazal stressed that building economic capacity was 
critical to this, and that he should hear for himself from 
local Afghan entrepreneurs and traders what the challenges 
were.  Ambassador agreed and a readout of this later meeting 
will be reported septel. 
 
6.  (C) Fazal concluded by reporting that his commission had 
completed their assessment of 85 percent of Afghanistan,s 
176 state-owned enterprises.  Fazal would like to receive 
technical assistance to complete this assessment and act upon 
its findings, but repeated an earlier contention that Finance 
Minister Ghani had told USAID not to assist him in this 
regard.  The Ambassador assured Fazal that USAID did want to 
help and agreed to turn his attention to this matter.  (Note: 
USAID Kabul Economic Governance Program Officer confirmed 
that Ghani has indeed advised them not to proceed with 
privatization technical assistance efforts generally, 
although no specific instructions were given not to work with 
Fazal.  According to USAID Kabul, Ghani,s position may be 
based inter alia on distrust of Fazal and on Ghani,s desire 
to personally control the process.  Endnote.) 
FINN