BMENA CONFERENCE: A/S WAYNE'S MEETING WITH

C O N F I D E N T I A L SECTION 01 OF 02 AMMAN 004597

SIPDIS

STATE PASS TO USTR
STATE FOR SA FRONT OFFICE, NEA FRONT OFFICE, NEA/PI

E.O. 12958: DECL: 06/03/2015
TAGS: EFIN EAID KMPI PREL ECON JO PK
SUBJECT: BMENA CONFERENCE: A/S WAYNE'S MEETING WITH
PAKISTANI MINISTER OF STATE FOR ECONOMIC AFFAIRS KHAR

Classified By: A/DCM CHRIS HENZEL FOR REASONS 1.4 (B) AND (D).


1. (C) SUMMARY: On the margins of the BMENA Trade and
Investment Conference in Amman on May 18, Pakistan's Minister
of State for Economic Affairs Hina Rabbani Khar told
Assistant Secretary E. Anthony Wayne that her government was
pleased to be part of the BMENA process and was committed to
broad-scale reforms in support of stable macroeconomic growth
and fiscal responsibility including through more
privatizations. In response to A/S Wayne, she expressed
support for the U.S.-Pakistan "shared objectives" approach to
review reform efforts in conjunction with the release of ESF
monies. She also outlined health and education development
goals (more rural focus, moving away from World Bank
programs),Pakistan's second UNDP Millennium Development
Goals report (better than before),Pakistan's OECD credit
rating (not truly reflective),and the U.S. Millennium
Challenge Account statistics on Pakistan (outdated). Wayne
reminded the Minister of the need to resolve lingering
investment disputes such as the Siemens Westinghouse case.
END SUMMARY.


2. (C) Minister Khar was joined by Pakistan's Amman Embassy
Counselor Prince Baktar Ali, and also by Minister Counselor
for Economics Mushtaq Malik from Pakistan's Embassy in
Washington, DC. Accompanying A/S Wayne in the meeting with
Khar was Econoff Greg Lawless (notetaker).

Reform Is Key
--------------


3. (C) A/S Wayne opened with a brief review of the "shared
objectives" exercise and the USG's desire to work with
Pakistani counterparts in efforts to reform. The immediate
need is to update the objectives or the year ahead Wayne
said. He noted that, among other benefits, the U.S. Congress
would be more committed to supporting Pakistan if it could
see results through this exercise. Khar noted that the
process was similar to the annual Pakistan Development Forum
and expressed support for the process.

Macroeconomic Picture: An "Investment Opportunity"
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4. (C) Turning to Pakistan's macroeconomic framework,
Minister Khar said that it was strong, as reflected by the
government's commitment to quickly pass the Fiscal
Responsibility (and Debt Limitation) Law. The law had passed
the lower house of parliament and was pending in the upper
house, she noted. Pakistan Telecom was up for bid, she said,
noting there had been 6-7 bids to that point. SingTel had
expressed keen interest, she said. All in all, the good
response had shown that the world saw Pakistan as a good
investment opportunity. Karachi Electric Supply Corporation
(KESC) was also put on the auction block earlier in the year.
Economic Counselor Malik noted KESC was a picked up by a
combination of German technology (Siemens) and Saudi money
(Kanuz al-Watan). Wayne reminded the Pakistani team of the
need to resolve lingering investment disputes, noting in
particular the Siemens-Westinghouse case which had now been
pending in Pakistan courts for years.

Development: More IDA Soft Loans
--------------


5. (C) On the human development side, Pakistan had a
variety of infrastructure programs in water, energy, and
educational infrastructure, Khar said. Other programs were
aimed at governance (devolution) and at health and education
sectors. From the policy perspective, Khar said she believed
there were discrepancies in the urban/rural mix of programs
and in their geographic distribution in Pakistan. Although
she believed a World Bank program aimed at enhancing
education in the Punjab was successful, both in increasing
enrollments and in keeping more girls enrolled in grades 6-8,
she said that the GOP was looking at ending its programs with
the World Bank because it offered no soft loans. As far as
IDA went, Pakistan would look for as much soft lending as
possible, she said.


6. (C) The second UNDP Millennium Development Goals (MDG)
report (released in February) had shown Pakistan was doing
better than before, she noted. There were some challenges,
but basically Pakistan was on track and would meet its next
targets. That at least was her government's hope, she said.

One Plan for Channeling Assistance
--------------


7. (C) The Pakistan Development Forum review of donors had
been useful, she said, in that it had set a goal of having a
mechanism for distribution of assistance and the government
channeling funding through one plan. She noted that Mr. John
Wall of the World Bank (WB Country Director for Pakistan)
would be drafting a proposal to be ready at the end of May.
A/S Wayne noted that the ESF review would also aim to review
a coordinated approach to assistance distribution, starting
with the disbursement of up to $200 million in the near
future.

Enthusiasm for BMENA Process
--------------


8. (C) Noting that Pakistan had played an active role in
the Rabat BMENA conference, Khar indicated enthusiasm for
taking a leading role and said that the GOP was committed to
supporting programs in entrepreneurship and press freedoms,
to name just two. She mentioned plans to build an
entrepreneur help center like those being established in
Morocco and Bahrain under the BMENA umbrella. In connection
with these and other plans, she requested to know more about
the USTDA and if it could play a role. A/S Wayne replied
that he had written Aziz in support of this enterprise and
would need to check to see if a decision had been made.

OECD "Not a True Reflection"; MCA Uses Old Statistics
-------------- --------------


9. (C) Minister Khar noted that the OECD credit rating for
Pakistan was not a true reflection of the country's economic
stability. She said that, compared to India and Bangladesh,
Pakistan's rating was not reflective of its stronger
standing. She asked for the USG view on this issue, and
perhaps its assistance. A/S Wayne replied that he would
check on this matter, but made no commitments.


10. (C) Khar also noted that the USG's Millennium Challenge
Account (MCA) was relying on outdated statistics regarding
Pakistan. A/S Wayne advised the minister that Pakistan
should be in contact with the MCA Corporation directly and,
for example, refer them to more recent World Bank data.


11. (C) COMMENT: Minister Khar, who had received
post-graduate education in the U.S., displayed an impressive
mastery of her brief. Her presentation conveyed a commitment
to reform and dedication to the improvement of the lives of
average Pakistanis, especially women and those from rural
areas. She should prove to be a strong supporter and useful
ally in the BMENA process.
HALE