ASSISTANT SECRETARY BOUCHER'S NOVEMBER 6 MEETING

C O N F I D E N T I A L SECTION 01 OF 04 ISLAMABAD 021946

SIPDIS

SIPDIS

E.O. 12958: DECL: 11/11/2016
TAGS: AF EAID ECON ENRG ETRD MNUC PARM PK PREL PTER
SUBJECT: ASSISTANT SECRETARY BOUCHER'S NOVEMBER 6 MEETING
WITH PAKISTANI FOREIGN SECRETARY KHAN

REF: STATE 182262

Classified By: Ambassador Ryan C. Crocker, Reasons 1.4 (b) and (d)


1. (C) Summary: On November 6, Assistant Secretary for
South and Central Asian Affairs Richard Boucher met with
Pakistani Foreign Secretary Riaz Mohammad Khan. The two
discussed the upcoming strategic dialogue, including the
status of dialogues on energy, education, and science and
technology. Boucher previewed the U.S. study on Regional
Opportunity Zones and assured our support for the Federally
Administered Tribal Areas development plan and for the
Frontier Corps. Khan expressed his expectations for the
upcoming composite dialogue discussions with India and his
thoughts on the jirga process agreed to by Presidents Karzai
and Musharraf. Finally, Boucher noted again our
disappointment in Paksitan's recent meeting with the Nuclear
Suppliers Group; Khan was unrepentant. End Summary


2. (U) On November 6, Assistant Secretary of State for
South and Central Asia Richard Boucher called on Foreign
Secretary Riaz Mohammad Khan of Pakistan. U.S. participants

SIPDIS
included Ambassador Crocker, SCA Senior Advisor Caitlin
Hayden, and notetaker. Pakistan participants included
Additional Secretary (Americas) Shahid Kamal and Director
General (Americas) Sohail Mahmood.


3. (C) A/S Boucher and Foreign Secretary Khan opened with a
tour d'horizon of key issues, most of which are part of the
U.S.-Pakistan Strategic Dialogue. Khan stressed that, while
the strategic dialogue had generated many good ideas,
implementation should now be the priority.

--Economic Dialogue: Khan was concerned that, if Pakistan
signed the Bilateral Investment Treaty, the treaty's terms
would "ipso facto" become applicable to the 40 other nations
with whom they had treaties containing Most Favored Nations
clauses. He noted that including the Bilateral Investment
Treaty in a free trade agreement would be more politically
palatable in Pakistan. Boucher replied that the U.S. had the
opposite problem: an investment treaty would be relatively
uncontroversial, a Free Trade Agreement more complicated. He
added that the draft Pakistan treaty used standard language
and that creating special language for Pakistan was not
possible.

--Regional Opportunity Zones: Kahn said he was looking
forward to receiving a briefing on the study of the zones.
Boucher replied that the study was substantially finished and
was being circulated to various agencies in Washington. The
report would look at a broad range of products that could be
produced in the zones and at likely locations for the
industrial areas. Defining the economic regulations
surrounding the zones would be an important step.

--Assistance to Frontier Corps and Levies (tribal police):
Khan said Pakistan was hoping to raise $300 million to hire
and equip more Levies and Frontier Corps troops. Improving
capacity in these forces was important for both the Federally
Administered Tribal Areas and for Balochistan. Khan noted
that enlarging the two groups, besides enhancing security,
would provide immediate economic benefits to the areas, as
employment and income would increase. Boucher replied that
the U.S. military was working with Pakistan military to
assess Frontier Corps capacities and challenges and would
develop a plan based on that study. He added U.S. officials
desired to help the corps improve its capabilities.

--Federally Administered Tribal Areas Development: Khan
noted that the GOP was looking at a Federally Administered
Tribal Areas development plan that would cost about USD 150
million per year for five years. He described Federally
Administered Tribal Areas residents as "living in a time

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warp" that made them susceptible to many negative influences.
Boosting development and living standards in the area was
the only way to provide an alternative to those influences.
Boucher said the U.S. was working with Pakistan on the
Federally Administered Tribal Areas development plan and was
assembling a funding package. While he still could not
provide specific monetary figures, he noted he was looking
for a variety of funding sources. He added he was
encouraging other countries to assist with the effort and was
"talking it up" on his travels. Ambassador Crocker commended
the previous week's Federally Administered Tribal Areas
conference as an effective way of "getting the word out." He
said it had been particularly impressive that representatives
from all the tribal agencies had attended.

--Science and Technology: Khan noted that training and
scholarships were key. He said that Pakistan had announced a
plan to build a series of new universities to enhance
education around the country. He anticipated about 1/3 of
the higher education budget would be devoted to these new
universities, while 2/3 would go toward improving existing
higher education centers. Boucher agreed education must be a
prime area of cooperation. The U.S. was investing $100
million per year in Pakistan's education system and the
Pakistan Fulbright program was the largest in the world.
That said, the U.S. wanted to concentrate on existing
exchange programs rather than begin new ones. Boucher also
noted the importance of not taking money from primary and
secondary schools in order to build new universities.

--Energy: Pakistan was interested in obtaining clean coal
technology as well as renewable energy technology. Boucher
noted that the Energy Efficiency and Fossil Fuel bilateral
groups would be meeting soon and could discuss these issues.

--Other topics: Boucher noted the Embassy had delivered a
draft Status of Forces Agreement text earlier in the day and
that the U.S. looked forward to working toward an approved
agreement for Pakistan.

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Pak-Afghan Relations
--------------


3. (C) Khan reported that Pakistan was still developing
goals for the parallel jirgas agreed to at the September 27
trilateral meeting of President Bush, President Musharraf and
President Karzai. He stressed that the jirgas should be
effective, "not just a spectacles." The question facing
jirga planners was how to use the meetings to reduce violence
in Afghanistan. To do that, the jirgas needed to involve
"people who mattered locally." Khan said he would begin
working on these questions in about a week, when the Foreign
Ministry began preparing for Foreign Minister Spanta's visit
to Islamabad in early December. Boucher responded that, in
addition to the to foreign ministers' meeting to discuss the
jirgas, Pashtun organizers also needed to meet to plan the
way forward. The sooner Governor Orakzai began working with
his Afghan counterpart, the better.


4. (C) Khan said that President Musharraf was moving forward
on his plan to fence the border and close refugee camps. The
President believed both actions would improve security in
Afghanistan. Khan also stressed the need for "real time"
intelligence sharing with Afghanistan. "We have cooperated
when given the chance," he noted. Boucher noted that the
U.S. military was not convinced a border fence would be all
that effective, given the particulars of the Pak-Afghan
border.


5. (C) Khan assessed that problems in Afghanistan revolved
around failure to achieve reconciliation between Pashtuns and
non-Pashtuns since the end of the civil war. He said the

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reconstruction effort's failure to help many Afghans also
encouraged violence and lawlessness. Corruption, gun
running, the narcotics trade, and the government's failure to
reign in warlords made Afghans pessimistic about their
futures. People would not support a government that was not
helping them, and there were limits to what Pakistan could do
to solve Afghanistan's problems.


6. (C) Boucher noted that some problems facing Pakistan and
Afghanistan were similar. Both countries were attempting to
extend government influence to the border. The U.S. was
working with the Karzai government to bring benefits of
government, such as police, justice, and development, to
Afghanistan's border areas. We would continue working with
Pakistan to counter Taliban influence in its border areas.

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Pak-India
--------------


7. (C) Foreign Secretary Khan was visiting India later in
the week to work on resuming the Composite Dialogue. He said
both countries needed to acknowledge they had terrorism
problems and needed to share intelligence. He said the
accusations of Pakistani intelligence involvement in the
Mumbai bombing had sparked resentment in Pakistan, but that
Pakistan was still pushing forward on sharing intelligence
and had engaged in preliminary talks with India on the
matter.


8. (C) Khan reported he was working on scheduling a date
for a visit of the Indian Prime Minister to Pakistan. He
said India was insisting in firm deliverables first, where as
Pakistan believed that committing to a meeting was the
important first step. Pakistan was also working on resolving
the Siachen Glacier dispute. Boucher asked why India was
resisting withdrawal. Khan believed India did not wish to
set a precedent of being willing to roll back from areas
under their control. He added that those in Pakistan who
were pressing to regain forward momentum on talks with India
were criticized as unrealistically optimistic, since "India
hasn't resolved any boundary problems with any neighbors.
Bangladesh has 56 rivers in dispute." Nevertheless, Khan was
sure elements in the Indian establishment favored engagement
with Pakistan and that those same Indians believed that
progress on demilitarization would bring great benefits "down
the line." Khan added that the process of confidence
building would soon not be enough -- real progress was
needed. "Progress is the best kind of confidence builder,"
he noted. Boucher recommended that Pakistan raise issues it
could reasonably expect the other side to act on. He added
that the U.S. was encouraging India to work toward progress
on Siachen and Kashmir.


9. (C) Khan reviewed the list of cross-border trade
concerns. He said formal trade between India and Pakistan
over the last two years had increased fromUSD 200 million to
800 million annually, mostly to the benefit of India. India's
composite tariffs, which disproportionately affected
low-priced goods, limited Pakistan's competitiveness.
India's container regulations were also hurting Pakistan's
export levels. Khan then admitted that, while India was
allowed to export to Afghanistan via Karachi port, Pakistan
was not allowing overland trade from India into Afghanistan.


10. (C) Boucher explained that the U.S. thought
opportunities for cross-border trade throughout South and
Central Asia were significant. Exporting hydro-electricity
from Tajikistan through Afghanistan to Pakistan was one
example of trade ties that could benefit many countries. In
order to increase regional trade, though, many countries
needed to rationalize regulations on phyto-sanitary
standards, drivers' licenses, and customs procedures. Khan

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added that, in Afghanistan, security on transport routes was
key. He said the global community needed to utilize the
entire South Asian market in a way to encourage stability in
Afghanistan.

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Civil Nuclear Issues
--------------


11. (C) Khan reported he had received Under Secretary
Burns' letter concerning the recent Nuclear Suppliers Group
meeting in Vienna and would respond. Boucher said that the
U.S. needed Pakistan's help on the U.S.-India civil nuclear
agreement, and that Pakistan's demands for a criteria based
system were hurting our efforts. Khan explained that his
statements to the Nuclear Suppliers Group has stressed
Pakistan's interest in access to nuclear power technology
under any and all types of safeguards. Pakistan's requests
were not meant to attack the U.S.-India civil nuclear
agreement but were designed with the interests of Pakistan in
mind. Pakistan wanted a criteria-based decision making
process for access to nuclear power generation. Boucher
replied that Khan was aware of the U.S. position, as
explained in the letter from Under Secretary Burns (Reftel).


12. (U) This cable was coordinated with SCA - Caitlin
Hayden.
CROCKER