US embassy cable - 03KABUL1225

C O N F I D E N T I A L SECTION 01 OF 03 KABUL 001225 
 
SIPDIS 
 
NSC FOR ZKHALILZAD, JDWORKEN, HMANN, RHANSON, DSEDNEY 
DEPT FOR SA/PAB, SA/AR, EB/FO 
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: 05/11/2013 
TAGS: EAID, ECON, PGOV, ASEC, AF 
SUBJECT: UPDATE ON KABUL-KANDAHAR ROAD: AMBASSADOR'S MAY 7 
MEETING WITH ARC VP LANE 
 
Classified By: AMBASSADOR ROBERT P. FINN FOR REASONS 
1.5 (B) AND (D) 
 
1. (C) On May 7, Ambassador met with the Afghan 
Reconstruction Company,s Vice President, Tim Lane, and 
Managing Director, Zaher Yaqoubi.  Lane presented the 
Ambassador with a summary of progress on the Kabul-Kandahar 
road and shared concerns over the end-of-2003 completion 
deadline. 
 
2. (C) Lane acknowledged ARC could have performed better to 
date.  He pointed out, however, that ARC started operations 
with no infrastructure in place and significant demining 
required.  ARC had to import and build up all production 
facilities and faced considerable delays in importation and 
transportation of relevant equipment.  Right now, operations 
were proceeding very quickly.  Lane noted that the most 
visible work ) blacktopping ) was done last and 
comparatively took very little time. 
 
3. (C) Lane noted three factors of concern.  First, the 
material amounts detailed in Louis Berger,s bid document 
were not sufficient to complete the project ) partially due 
to the following two factors.  Second, after conducting 
survey work, ARC determined that heavily overloaded truck 
traffic traditional to Afghan transport would necessitate 
much thicker layers than originally planned.  Third, the 
Afghan government had mandated that the road, including 
shoulders, be 12 meters wide, rather than the originally 
planned 10.5 meters.  Lane acknowledged that the second 
factor could be alleviated if weight restrictions could be 
enforced on the road, but felt this was unrealistic in the 
near term.  Addressing these factors, while maintaining 
world-class road building standards, would cost an estimated 
additional $8.5 million. 
 
4. (C) Lane said ARC was determined to build a world-class 
road as they had agreed and the USG had promised.  The 
Ambassador noted that completion of the road was a foreign 
policy priority of the USG in Afghanistan.  Indeed, it held 
the personal attention of President Bush.  No one would 
benefit if the road fell apart in a few years.  Lane agreed, 
noting that ARC also had a reputation to maintain.  Lane 
added another factor that would require possible changes to 
ARC,s original plans ) the issue of frost depth.  After 
study, ARC had determined that ensuring longevity of the road 
required modification of the original plan to account for 
frost depth. 
 
5. (C) Lane detailed an often-troubled relationship between 
ARC and Louis Berger.  Lane noted Berger was defensive 
regarding reasons it had not included the Afghan 
government,s requirement of 12-meter width in the original 
agreement.  Lane also detailed intense disagreements over 
minor accounting discrepancies.  Finally, Lane shared his 
concern that Berger or USAID would think that ARC was trying 
to &scam8 them by raising their concerns over anticipated 
additional costs for completion of the project.  The key 
issue, Lane asserted, was that if Berger and/or USAID 
&pushed back8 against these additional requirements, the 
result would be a diminution in quality of the finished road. 
 (USAID Comment: USAID has heard many complaints from TISA 
officials about the &high8 costs associated with this road. 
 ARC,s comments will likely generate more criticism.  End 
comment.) 
 
6. (C) Lane also noted that security issues were perhaps not 
being fully reported by Berger.  According to Lane and 
Yaqoubi, on Saturday, April 3, an armed group forced ARC,s 
workers to cease working.  According to Yaqoubi, the workers 
involved were all Afghan, and the gunmen reportedly asked 
them &When will the Turkish workers be here.8  ARC reported 
the incident to Louis Berger, and has taken steps to enhance 
security along the road project.  At the May 8 Emergency 
Action Council meeting, both RSO and USAID confirmed they had 
not received any report about the incident.  ARC has agreed 
to pass their security incident report to the Embassy.  USAID 
subsequently raised this issue with Louis Berger. 
7. (C) Lane told Ambassador that ARC would soon be fully 
active, with blacktop scheduled to be laid beginning in July 
at 1-2 km a day.   He was confident that ARC would complete 
the project on schedule.  It was unfortunate, however, that 
just when ARC had its operations going at full speed, it 
would be completing its contracted project.  ARC had not bid 
on future segments of the road, Lane said, because they 
wanted to complete their existing obligation to standard and 
they were assured that the entire road would be built to this 
same standard.  Now it appeared that this standard would be 
diluted on the remaining portions of the road to meet a 
December 31, 2003 deadline.  Given this situation, Lane 
maintained that ARC could complete additional portions of 
road at substantially lower cost per km ($100,000 less) than 
their own project had required, and vastly less than the 
accelerated plans for completion of the remainder of the road 
entailed.  For this reason, Lane asked if arrangements could 
be made to maneuver upcoming tender allocations of the road 
so that ARC could push on with its now-efficient work on the 
section adjoining their current project. 
 
8. (C) Finally, Lane noted that ARC was preparing to test the 
output of their asphalt plant through a demonstration in 
Kabul sometime in June, and suggested the road from the 
airport to the Presidential palace might be appropriate. 
FINN