MGPK02: SITREP 5: PPP POST-BENAZIR STRATEGY;

C O N F I D E N T I A L SECTION 01 OF 03 ISLAMABAD 005393

SIPDIS

SIPDIS

E.O. 12958: DECL: 12/28/2017
TAGS: PGOV PK PREL AEMR AMGT ASEC CASC KFLO MARR
PINR
SUBJECT: MGPK02: SITREP 5: PPP POST-BENAZIR STRATEGY;
REJECTION OF MEDICAL REPORT; DEATH IMPACTS ECONOMY

REF: A. ISLAMABAD 5392 ISLAMABAD 5390

B. ISLAMABAD 5380

Classified By: Anne W. Patterson, Reasons 1.4 (b),(d)


1. (C) Summary: Order was being restored in much of Pakistan
on the last day of the 3-day mourning period in memory of
Benazir Bhutto. In Sindh and its major city of Karachi,
violence and casualties continued with widespread property
loss. Shops remained closed, but airports and roads
reopened. The Pakistan People's Party (PPP) was meeting
today to choose the party's successor to Benazir and
formulate a post-Benazir strategy; the PPP is expected to
make a public announcement on its decisions at 5 pm local
(probably later). There are growing indications that the
elections will be postponed (see septel for Ambassador's
conversations with NSA Tariq Aziz, PPP Vice Chairman Faheem
and Pakistan Muslim League President Chaudhry Shujaat).
There was significant coverage of the investigation with many
sources questioning the GOP's determination of the cause of
Bhutto's death. Baitallah Mehsood denied any involvement
with the assassination, while PPP leaders, the Human Rights
Commission of Pakistan, and Nawaz Sharif accused the GOP of
mishandling the investigation. Financial losses from the
post-assassination violence are mounting, and transportation
problems are exacerbating fuel and food shortages in Sindh.
Analysts predict significant losses when the Karachi Stock
Market reopens on Monday. Iran officially closed its border
with Pakistan pending a reduction in violence. Mission
Pakistan continues to operate normally, and all offices will
reopen tomorrow, Monday, December 31. We expect
transportation problems may limit our locally engaged staff's
ability to come to work. End summary.

PPP POST-BENAZIR STRATEGY


2. (C) The Central Executive Committee of the Pakistan
People's Party (PPP) was meeting today following a memorial
service and the reading of Benazir's will to discuss a
post-Benazir strategy. Sources in the PPP predict that
Benazir's son will be named titular head of the party, backed
by his father, Asif Ali Zardari, with PPP Vice Chairman Amin
Faheem controlling party operations. This has yet to be
confirmed. The PPP will also today discuss whether to go
forward with elections. Faheem told Ambassador (septel) that
the party was now leaning toward a delay in elections. The
PPP is expected to make a public statement around 5 pm local
time, although we expect this will be delayed.

INVESTIGATION QUESTIONED


3. (U) Local media reports that Tehrik-i-Taliban Pakistan
chief Baitallah Mehsood denied on December 29 that his
organization had any role in the assassination of Bhutto
after the Ministry of Interior (MOI) announced on December 28
that Baitallah's men had carried out the attack. A spokesman
for the group unconvincingly said that killing a woman is
against their tribal customs and traditions.


4. U) MOI reiterated the GOP's pledge to the diplomatic corps
(Ref A) that it is prepared to conduct an autopsy if the
Bhutto's family allowed for the exhumation of Bhutto's body
and made the request for an autopsy to take place. Today's
media included multiple articles that questioned or ridiculed
the MOI investigation due to its changing theories--from
gunshot to shrapnel to a skull fracture. Sherry Rehman, the
PPP Information Secretary, told local media that she saw the
bullet wound while washing Bhutto's body in preparation for
the funeral, and she accused the GOP of a cover-up. The
General Secretary of Human Rights Commission of Pakistan
(HRCP),Iqbal Haider, demanded that the United Nations'
experts should investigate the assassination in the same way
it had investigated Lebanese PM Hariri's death. Haider said
that the medical report was "concocted and ridiculous" and
that the HRCP would not accept the judicial commission of the
probe as it was not independent.


5. (U) Former prime minister Nawaz Sharif met with Asif Ali
Zardari, the husband of Bhutto, to offer his condolences.
Prior to this meeting, Nawaz told reporters that the
assassination was a result of inadequate security provided to

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her by the GOP.


GOP SEEKS TO MAINTAIN ORDER


6. (U) President Musharraf ordered a crackdown on December 29
against elements involved in the looting and torching of
public and private buildings following the assassination of
Bhutto and directed authorities to arrest those committing
these acts under the Anti-Terrorism Act.


ELECTIONS


7. (U) President Musharraf announced that he would like to
see elections continue as scheduled but a final decision on
the matter would be made after the political parties are
consulted. The Election Commission of Pakistan announced
that it is also considering a postponement of the January 8
general elections because the security situation in some
areas of the country were not conducive to hold the election.
See septel for Ambassador's conversations with NSA Tariq
Aziz and Pakistan Muslim League President Chaudhry Shujaat
Hussain; it appears there is a consensus growing for a
postponement of elections until mid-February.

ECONOMIC IMPACT


8. (U) Most businesses across Pakistan remained closed on
Sunday; in Sindh Province, there were reports of mounting
shortages of food, dairy, and fuel products. Transport
companies have been unable to make deliveries to wholesalers,
and many shopkeepers report empty shelves. Fuel stations are
either out of gas or running very low. Estimates of the
official economic impact will begin to be compiled during the
next week to account for lost property and investments.
Daily wage earners, including factory workers and
contractors, will be particularly hit hard due to the coupled
closures for official mourning following the EID holiday
closures. Many factories simply remained closed and without
public transportation, many employees are simply unable to
report to work.


9. (U) Local insurance companies are expecting huge losses to
be reported as a result of the violence across Pakistan, with
the largest losses expected in Karachi. Looted shops,
factories, burned vehicles, and vandalized bank branches will
constitute the majority of insurance claims. Local media
reports that several insurance companies fear the loss could
be in the billions of dollars and could result in the
collapse of some of Pakistan's twelve national insurance
companies.


10. (U) While information is still being collected, early
estimates provide that over 150 branches of local banks were
looted, burned, or partially damaged. The continued violence
has delayed the official tallies of damage to ATMs and banks.
Some bank owners report to EconOffs that they expect massive
capital flight when banks reopen on Monday as looting is
expected to continue.


11. (U) The Karachi Stock Exchange (KSE) is expected to
reopen on Monday, and local contacts report to EconOffs that
they expect the KSE 100 Index to take a major hit due to the
political uncertainty. KSE has an automatic trigger
mechanism that halts trading if the overall index falls five
percent by volume.


SINDH PROVINCE


12. (U) The Election Commission in Sindh reports that its
offices in nine districts were torched, and basically
everything within the offices was destroyed, including the
ballots and ballot boxes for the January 8 elections. The
Army has been deployed in 16 Sindh districts, and the
Pakistan Railways has asked for the Army to patrol the
tracks. Airports and roads have reopened, but with the
limited fuel supplies, flights are still limited and few
vehicles are on the road. The train service is still
suspended due to damages to the tracks, and it has been

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reported that it will be at least until January 5 before any
repairs can be made and normal service resumes.

KARACHI


13. (U) A mob torched a parking lot of vehicles near the
Financial Trade Center. Locals report that gangs of Afghans
and Pathans from North Nazimabad, armed with shovels and
pickaxes, looted several local banks and stores. Fires
continue throughout the city. Food stuffs are continuing to
dwindle, especially water, due to roads blocks preventing
delivery trucks from getting to certain neighborhoods. Six
people were killed in Lyari, a PPP stronghold.

LAHORE


14. (U) Lahore remains quiet. Several prayer services for
Bhutto are planned for today and are expected to remain
peaceful. Shops and petrol stations remain closed, but some
stores in the more affluent areas of Lahore are quietly
reopening. Public transportation is starting to reemerge on
the roadways, but the closure of the petrol stations is
preventing many rickshaws from returning. With the end of
the 3-day mourning period on Monday, transport and shops are
expected to reopen.

PESHAWAR


15. (U) Peshawar CG reports that the city is quiet today.


AMERICAN CITIZEN SERVICES


16. (U) Embassy and Consulates report that no emergency ACS
calls have been made. The three Consulates also report that
airports and roads have reopened in their areas, allowing
flights to take place and people to travel to and from the
airports more freely.


INTERNATIONAL RESPONSE


17. (U) On December 29, Iran closed its border with Pakistan
for an indefinite period in view of the uncertainty in
Pakistan. Sources said the Government of Iran took the
decision after the unrest in Panjgur, Turbat, Gwadar, Mand,
and Taftan areas of Balochistan.


18. (U) Media reports that train service with India has been
restored.
PATTERSON