1. (C) Summary. With his retirement as Chief of Army Staff
(COAS) November 28 and his inauguration November 29 as a
civilian president, Pervez Musharraf begins another chapter
in Pakistan's rocky road to democracy. By ceding control of
Pakistan's strongest institution, Musharraf knows he faces a
decline in both his power and prestige. Although Musharraf
plans to continue influencing policy, he has admitted
publicly that he is returning Pakistan to its traditional
power troika of Army, President and Prime Minister. The Army
appears ready to return to barracks and hopefully now can
concentrate on the battle with extremist militants. Musharraf
continues to align himself as President with the Army side of
this equation. But the balance of power between President
and Prime Minister will depend on the outcome of upcoming
general elections. Although marred by the continuing state
of emergency, the big story here is the institutional one of
a military dictator voluntarily turning over power to
civilian governance. Post's sources indicate Musharraf will
announce November 29 that he will lift the state of emergency
and restore the constitution on December 16, the last day
candidates can withdraw from elections.

2. (C) Pakistanis continually are looking to the USG for
signs of which candidate/party we are supporting and will be
watching to see whether we take seriously Musharraf's
decision to govern as a civilian. We recommend continuing to
stress the "free, fair and transparent elections" message
which is being well-received by the Pakistani people and by
meeting with all Pakistani candidates/parties. End Summary.

The Embattled President


--------------------------



3. (C) While he still sees himself as Pakistan's savior,
Musharraf today is not the same popular, secure leader who
felt confident enough in 2006 to appear on "The Daily Show"
to sell his auto-biography. To his credit, over eight years
Musharraf provided Pakistan with more than five years of
seven percent economic growth, encouraged women's rights,
increased press freedom, tightened controls over Pakistan's
nuclear weapons, provided extensively bilateral intelligence
cooperation, and forced the Army to change its myopic focus
on India as Pakistan's sole existential threat. In a society
rife with corruption, Musharraf remains personally untainted,
and he deeply believes he is moving Pakistan on a slow but
deliberate path to democracy.

4. (C) When Musharraf made his ill-conceived decision to
fire the former Chief Justice in March, his popularity at
home and abroad was high, and he probably has been bewildered

at how quickly everything has unraveled. In retrospect, it
is clear that economic growth had not filtered down to offset
growing food and rent inflation among the poorer majority.
Musharraf's own reforms had encouraged a critical and freer
press as well as the development of bolder civil society
groups The former Chief Justice's popular rallies tapped a
surprisingly deep well of economic discontent and a broad
sense that the government was not delivering justice/law and
order.

5. (C) Musharraf's personal fixation with the former Chief
Justice distorted his political judgment as he compounded his
initial mistake of firing the Chief Justice with a succession
of bad decisions informed by a narrowing circle of advisors.
Musharraf's delayed action over the Red Mosque operation and
his decision to defy domestic and international warnings by
suspending the constitution and imposing a state of emergency
have weakened his popularity and his power. What should,
according to his master plan for Pakistan's democracy, have
been a crowning moment of a transition to civilian leadership
has been marred by criticism over firing the judiciary,
arrests of politicians and civil society activists, and
counter-productive media restrictions. However, post's
sources close to the presidency indicate Musharraf will
announce to the nation November 29 that he will lift the
state of emergency and restore the constitution on December
16, the last day candidates can withdraw from elections.

6. (C) Although we view Musharraf's decision to join with
the U.S. after 9/11 as necessary and pragmatic, it was a

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courageous step at home that has been a mixed blessing for
him politically. Musharraf tried, with only limited success,
to reverse the pro-Islamic tendencies that former President
General Zia al-Haq introduced into Pakistan. Plans to
control extremist madrassas have been only marginally
successful, while Musharraf devoted insufficient resources to
basic health, education and law enforcement programs.
Musharraf's efforts to overcome the effect of twenty plus
years of Pakistani ties with the pro-Taliban elements
fighting the Soviet invasion of Afghanistan remain a work in
progress. As the local reaction to the July Red Mosque
operation and continued widespread anti-Americanism show,
Pakistanis remain deeply ambivalent about what still is
viewed as an American war on Islamic militants. A growing
number of suicide bombings and the recent militant takeover
in the settled areas of Swat have begun to alter public
opinion, and Musharraf now has an opportunity as a civilian
leader to develop the political support the Army needs to win
this battle.

Back to Barracks


--------------------------



7. (C) The Army is viewing Musharraf's departure with mixed
emotions. On one hand, they technically are losing someone
who has been a powerful ally in the office of the President.
However, Musharraf's growing political unpopularity tainted
the Army itself, which has come under unprecedented public
criticism. The Army's declining reputation has been affected
by allegations of questionable land acquisitions and unfair
economic influence by current and/or retired Army officers.
Within the institution itself, morale has dropped over
reports of inadequate equipment and logistical support for
troops in the field and embarrassment over soldiers who are
surrendering to militants without a fight.

8. (C) The new COAS, General Ashfaq Kayani, is a long-time
and trusted Musharraf ally who is uncomfortable with the
sudden glare of international attention and speculation about
his future role in the power troika. In recent meetings with
us, Kayani has been at pains to state his continued loyalty
to Musharraf, but Kayani has also gone to some lengths to
express his loyalty as a soldier to a leader (the President)
and the rule of constitutional law. Interestingly, restating
the military's loyalty was a major theme at the farewell
dinner for Musharraf hosted by the Chairman of the Joint
Chiefs for Musharraf on November 27.

9. (C) For the next few months, this undercurrent of
nervousness will persist as both the Army and Musharraf
revert to their traditional bureaucratic norms after eight
years of Musharraf being both President and COAS. Gradually,
however, we expect Kayani to assert himself as defender of
Pakistan's national interests. When Musharraf lifts the
state of emergency and returns Pakistan to normal governance,
there should be little divergence between Musharraf's
interests and those of the Army.

10. (C) For months, Musharraf has been preoccupied with his
own political future and has either ignored or paid
insufficient attention to the deteriorating security
situation in the tribal areas and Swat. It is encouraging,
therefore, that with his appointment as Vice Chief, Kayani
immediately visited troops in the tribal areas and is
implementing a more robust offensive against militants.
(Note: It is still unclear if the Amry's new strategy will be
effective, but at least Kayani appears fully engaged.) In
Kayani, we believe we have a committed partner and will
pursue with him efforts to redouble GOP actions against
militants.

The Next Prime Minister?


--------------------------



11. (C) The third leg of the Pakistan power troika is, at
the moment, very uncertain. The return from exile of
Pakistan People's Party leader Benazir Bhutto and Pakistan
Muslim League-N leader Nawaz Sharif will level the playing
field if, as we expect, they both agree to contest the
election. In the campaign, the ruling Pakistan Muslim League
party will be led by Pervaiz Elahi, the former Chief Minister
of Punjab. The government retains a significant ability both

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to sway the electorate through traditional spoils or
determine the outcome through behind the scenes manipulation.
But it appears that none of the three major parties will win
a sufficient majority in the January elections to form a new
government. The political horse trading over possible
coalitions has begun even before serious campaigning gets
underway. It is simply too soon to call a winner or predict
how stable the next coalition government will be.

12. (C) Neither Bhutto nor Sharif can become Prime Minister
until the constitution is amended to lift the current
two-term limit on prime ministers. With convictions on the
books, both also face scrutiny over their ability to even
qualify as candidates for the National Assembly. To avoid
possible charges of treason, Musharraf will need a two-thirds
vote in the next National Assembly to approve his Provisional
Constitutional Order.

13. (C) Constitutionally, the President still retains the
power to fire the Prime Minister, and the Parliament has the
power to remove (with a two-thirds majority) the President.
Given the animosities among Musharraf, Bhutto and Sharif, the
constitutional order could yield surprises for any of them,
including the new civilian President. The key will be how
well these three and their parties perform in the January
elections.

14. (C) Comment: Although marred by the continuing state of
emergency, the big story here is that a military dictator
voluntarily turned over power to civilian governance. In the
coming days, Pakistanis will be looking to the USG for signs
of which candidate/party we are supporting and whether we
take seriously Musharraf's decision to govern as a civilian.
We recommend, therefore, that the USG continue to press
publicly for free, fair and transparent elections and be in
contact with all Pakistan's parties and candidates.
PATTERSON