Cablegate: Afghanistan: The Dysfunctional World Of

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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.

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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

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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

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