PRIME MINISTER AZIZ BRIEFS SENATOR HAGEL ON

C O N F I D E N T I A L SECTION 01 OF 03 ISLAMABAD 006419

SIPDIS

SIPDIS

E.O. 12958: DECL: 04/13/2016
TAGS: MNUC PREL MARR PK AF IN PGOV IR
SUBJECT: PRIME MINISTER AZIZ BRIEFS SENATOR HAGEL ON
PAKISTAN FOREIGN AND DOMESTIC ISSUES.

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


1. (C) Summary: In a wide-ranging conversation with
visiting Senator Hagel (R-NE),Prime Minister Shaukat Aziz
reiterated Pakistan's opposition to any nuclear weapons
program in Iran, but supported Iran's right to a civil
nuclear energy program. He praised Afghan President Karzai,
and highlighted Pakistan's security efforts in its restive
tribal areas. On peace discussions with India, he said
Pakistan hoped for accelerated progress on Kashmir. Pakistan
was concerned that the civ-nuc deal with India would give
India the capability to produce 100-400 additional warheads
per year. The deal would have been improved, Aziz said, had
it been combined with a Pakistan-India nuclear restraint
regime. Aziz reported that Pakistan had prepared a Letter of
Request (LOR) for 18 C and D block F-16s and 30 A and B
block. Later, Pakistan might ask for an additional 18 C and
D block F-16s. He defended the government's performance in
promoting the economy and moving the country toward
democracy. He stressed that Pakistan was making strides
toward democracy and said that on this score many in the
Cabinet deeply resented the "condescending statements" of
visiting dignitaries. End Summary.


2. (C) In an April 12 meeting with visiting Senator Chuck
Hagel, Prime Minister Shaukat Aziz offered a tour de horizon
of Pakistan's foreign and domestic policy concerns. Aziz
explained that his comments were "hot off the press,"
reflecting discussions held that day in (a) an unusually
substantive cabinet meeting dealing with national and
security issues, and (b) a meeting of Pakistan's National
Command Authority (chaired by President Musharraf and
including Aziz, the Ministers of Defense and Foreign Affairs,
the Chairman of the Joint Chiefs of Staff and the military
Section chiefs). The latter meeting, he said, had also
included scientists and had focused on nuclear issues.
Senator Hagel reported on his discussions in India over
previous days. He offered his sympathies in the wake of the
deadly bombing at a Karachi religious festival, underscoring
that he was a strong supporter of Pakistan and that Pakistan
had a lot of friends in Congress.

Iran
--------------


3. (C) Aziz said that Pakistani scientists at the NCA
meeting, viewed Iran's announcement on uranium enrichment was
"nothing new." In their judgment, Iran was "re-declaring" a
capability it already had. Pakistan had been clear that Iran
must not produce nuclear weapons under any circumstances,
Aziz continued, but Iran was entitled to a civil nuclear
program under IAEA safeguards. The international community
should use diplomacy much more rigorously; "anything short of
military action." Aziz also sought to distinguish Pakistan's
program from Iran's, saying that Pakistan had pursued its
program only in response to India's, and had done so in order
to preserve balance and regional stability.

Afghanistan
--------------


4. (C) Pakistan is interested in a "strong, stable, vibrant
Afghanistan," Aziz asserted. Violence and instability in
Afghanistan would be destabilizing to the entire region. For
that reason, Pakistan had taken very significant steps in the
border region, Aziz noted, adding that he had asked Secretary
Rumsfeld for additional USG help. Pakistan had sent the army
into the tribal areas for the first time in history in order
to deny the Taliban a sanctuary -- a move that had led to
resistance from the local population. Pakistan did not need
to be "preached at" on this score; it was pursuing terrorists
out of conviction. However, it took "two to tango" and
Afghanistan needed to do more on its side of the border.
Pakistan had "clear evidence" that anti-Pakistan elements
were filtering in from across the border and from Afghan
refugee camps.


5. (C) Despite the "snafu" over the "obsolete" intelligence
information passed to Pakistan by President Karzai, Aziz said
he was convinced that Karzai was well meaning. Pakistan
would support him "two hundred percent." Aziz noted that
Pakistani representatives at the recent trilateral
U.S.-Afghan-Pakistan intelligence meeting in Bagram had

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returned pleased, though there was a lingering "trust
deficit" between the sides.

India
--------------


6. (C) Pakistan was continuing to press forward on peace
efforts with India, Aziz said, adding that there might be a
window of opportunity on a couple issues. However, there was
a need for progress on the core issues relating to Jammu and
Kashmir, especially steps toward demilitarizing the area.
India acknowledged that the level of infiltration had
declined; international relief workers had been given free
reign in Azad Kashmir and no "camps" were visible. (Note:
presumably a reference to militant camps.) The Indian side
needed to match President Musharraf's "passion" for progress
on the issue. This was a defining moment, and Pakistan was
open-minded on possible solutions.

Civil-Nuclear Initiative
--------------


7. (C) Aziz focused on two points relating to the U.S.-India
Civil Nuclear Initiative. First, it would have been better
if any deal affecting nuclear capabilities had been combined
with a nuclear restraint regime that covered both countries.
The restraint regime had been the subject of a long
conversation in the NCA meeting, Aziz added. Second, the
deal as currently structured would allow India to produce
more fissile material, which would lead to more warheads,
creating a strategic imbalance. Aziz reported that
Pakistani experts estimated that this new ability to
substitute imported fuel for use in safeguarded civil
reactors would free up fuel for the production of 100-400
extra warheads per year. He said Pakistan understood
Washington's desire to engage India on the issue, but if it
affected Pakistan's security, Pakistan would have to respond.
Pakistan would "have to do whatever it has to do" to
maintain regional stability.


8. (C) Aziz noted that Pakistan also had very significant
civil nuclear energy needs, and projected that it would
require 8800 MGW of nuclear power by 2030. Pakistan
understood that it was in the "doldrums" due to AQ Khan's
misdeeds, but its needs were real and it would have to
identify alternative sources. Pakistan had been burned by
Khan, Aziz added. Khan had not even been a scientist, but
rather an engineer and entrepreneur -- and now he was "in the
doghouse."


9. (C) Senator Hagel responded that Congress was looking
closely at the civil nuclear initiative with India, with
particular attention to "the IAEA piece." Congress would want
to understand the India-specific safeguards protocol with the
IAEA. In his view, taken as a whole, the agreement was in
the interests of both Pakistan and India. It should not be
seen as directed against other countries in the region,
whether India or China. Hagel said he expected the agreement
would ultimately be ratified, but there were uncertainties.

Law and Order and Security
--------------


10. (C) Pakistan is strongly opposed to terrorism, Aziz
said. "There is no good terrorist." Alluding to the April
12 bombing in Karachi, he explained that law and order was a
provincial responsibility and he planned to travel to Karachi
the next day to look into the situation. However, the
investigation into the bombing was proceeding well.


11. (C) Aziz reported that Pakistan had prepared the Letter
of Request (LOR) for U.S. aircraft and "targeting equipment."
This would include a request for 18 F--16 C and D block
aircraft, with the prospect of purchasing another 18 later.
In addition, Pakistan would request 30 F--16 A and B block
aircraft. At the same time, Pakistan was awaiting a contract
for a purchase of Chinese aircraft. Pakistan's overall
doctrine was "minimum credible deterrence," Aziz explained.
In fact it had considerably paired down its request due to
the earthquake.

Economy
--------------

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12. (C) Aziz defended the government's handling of the
economy over recent years, saying the middle class was
expanding as Pakistan retained high growth rates (the second
highest in the world last year). Inflation was under
control, reserves had increased, foreign direct investment
had hit a new high of $3 billion last year, and there were a
lot of important projects still in the pipeline.
Unemployment had declined, but further progress would require
steps to improve skill levels among workers. Aziz added that
Pakistan's economic agenda was focused on deregulation,
market economics and privatization of state assets. Pakistan
had recently sold a state-owned steel mill and half of its
banks were owned by foreigners.

Democracy
--------------


13. (C) "We are neither apologetic nor defensive" about the
progress of democracy in Pakistan, Aziz asserted. Pakistan
had a very active political scene, with vociferous opposition
parties. The governing coalition had only 200 of the 342
seats in the parliament. Leaders of some of the opposition
parties were now out of the country only because they were
"up to their necks" in activities that would land them in
jail in any civilized country. The press was more of a
force than at any time in Pakistan's history, and there had
been a proliferation of electronic media outlets. For much
of Pakistan's history offending journalists would be locked
up. In contrast, President Musharraf took pride in the
independent media. Pakistan also had a "new, tough,
Independent Election Commissioner." In selecting the
Commissioner, the government had asked the opposition parties
to give their views. Some had; some hadn't.


14. (C) Pakistan needed no lessons on democracy, Aziz
concluded. It believed in freedom of expression and the
power of the ballot box, but that did not mean it would
permit corruption to flourish again. On this score, even
opposition figures privately credited Musharraf, who was
widely seen as clean. Aziz admitted that Pakistan had "some
issues," including a President that also held another office.
That arrangement had been dictated by circumstances and it
would expire. For the first time, an elected parliament
would serve its full term -- until November 2007 -- Aziz
observed. He noted that during the cabinet meeting, his
colleagues had expressed resentment at "condescending
statements" made by friends and visitors about democracy in
Pakistan.


15. (U) Senator Hagel has cleared this message.
CROCKER