UN chief says Afghan transition faces obstacles

The Associated Press
Wednesday, March 16, 2011; 7:10 PM

UNITED NATIONS -- U.N. Secretary-General Ban Ki-moon said Afghans must overcome "major obstacles" to demonstrate their ability to control the country's future, including a dispute over the status of parliament and an impasse over the embattled Kabul Bank.

The United Nations chief said in a quarterly report to the U.N. Security Council that Afghan parties have taken a number of positive steps, but he warned that if tensions over parliament continue or lead to a political crisis, the government's credibility and effectiveness will be adversely affected.

Afghanistan's parliament - one of few checks on the administration of President Hamid Karzai - was finally inaugurated in late January after months of investigations and debate over allegations of widespread fraud during the polling. But vote recounts and continued questions about who was rightfully elected could throw doubts on parliament's legitimacy.

Ban said the tension between the executive, legislative and judicial branches over the status of parliament must be resolved.

He said there were "significant flaws" in the election process and the results, which reflected the instability in the country, created a parliament where the majority Pashtun population "in some areas is apparently underrepresented compared to the previous parliament."

This problem needs to be addressed and he warned that the way it is addressed "will have consequences for the transition process in particular, and the future stability of Afghanistan in general."

He said U.N. envoy Staffan De Mistura has been working with all parties to find a solution while stressing that it should not be achieved "at the expense of the electoral institutions, the constitutional separation of powers, the confidence of the international community, or indeed that of the Afghan people."

Ban said the impasse over Kabul Bank is weakening confidence in Afghanistan's financial system and preventing the International Monetary Fund from completing a new program for the country.

Kabul Bank - the nation's largest lender - nearly collapsed last year after allegations of mismanagement, cronyism and questionable lending. Afghanistan's central bank took control of Kabul Bank in mid-September after a run on the lender sparked by the removal of two top executives.

The central bank has spent the past several months combing Kabul Bank's books to determine the size of its exposure and recoup loans. Last month, Afghan officials said an "erroneous" audit and inadequate help from international banking advisers compounded long-running financial problems at Kabul Bank.

The secretary-general said the impasse over Kabul Bank also "has implications for the prospect of international partners aligning assistance with Afghanistan's national priority programs," and the delay in resolving it "threatens to undermine the government's vision for economic growth."

"These delays weaken confidence in the country's financial system and, crucially, prevent the finalization of an agreement on a new IMF country program," Ban said.

Without an IMF program, he said, it will be difficult for international partners to meet commitments they have made to help Afghanistan and direct funds through the government's budget.

The secretary-general said the bank impasse and uncertainty over adequate security for development projects because of problems with private security companies "puts at risk the critical financing needed to implement the government's prioritized development agenda."

The Afghan government has ordered all private security companies to disband by March 21, 2012.

© 2011 The Associated Press