ZARDARI- AHMEDINEJAD BILAT MEETING: PROGRESS ON THE IPI?

UNCLAS ISLAMABAD 003120

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: ECON ETRD EAID EFIN ENGY PK
SUBJECT: ZARDARI- AHMEDINEJAD BILAT MEETING: PROGRESS ON THE IPI?


1. (SBU) Summary: Local media reports that while in New York for
United Nations General Assembly meetings, Information Minister
Sherry Rehman briefed journalists on the outcome of a meeting
between President Zardari and President Ahmedinejad. Rehman
reportedly stated that both countries have agreed to float a joint
company to raise funds for the Iran-Pakistan-India (IPI) gas
pipeline and will hold future discussions in October. End Summary.


2. (U) A local media report in the Business Recorder on September 24
states that while in New York for United Nations General Assembly
meetings, Information Minister Sherry Rehman briefed journalist on
the outcome of a meeting between President Zardari and President
Ahmedinejad. Rehman reportedly stated that both countries have
agreed to float a joint company to raise funds for the Iran-Pakistan
portion of the gas pipeline.


3. (U) According to the report, Iran will provide a sovereign
guarantee for the creation of a proposed company and funds will be
sought in Pakistan, Iran and the Middle East. She told journalists
that Iranian and Pakistani foreign ministers will meet on Oct 9 or
Oct 10 to work out details. Rehman also reportedly stated that
Pakistan and Iran agreed to constitute a team of five deputy
ministers each in order to flesh out details of the funding plan.
She is quoted as stating that the Presidents "discussed bilateral
relations between the two sides but their main focus was on the IPI
gas line."


4. (SBU) Despite acting as the lead Ministry on previous
negotiations with Iranian officials on the IPI, Ministry of
Petroleum Joint Secretary for Development, Taimur Azmat Osman told
ECON, after checking with superiors in the Ministry, that "this is
the first time the [Petroleum] Ministry has heard of this idea, and
perhaps the Foreign Ministry is taking a lead on this rather than
the Petroleum Ministry." Rehman's Secretary, Mubashir Hussain, also
confirmed that they are not aware of any details on this. Likewise,
Mansoor Khan, Director of Americas at the Ministry of Foreign
Affairs, was unaware of the proposal but promised to relay any
information on the subject to the Embassy as it becomes available.



5. (SBU) Comment: While Pakistan has increased efforts recently to
find new energy resources, progress on the IPI negotiations is
relatively minimal if at all. With a lack of funding and an
increasingly cash strapped financial situation, the Government of
Pakistan certainly will not be able to meet any financial
obligations for the reported multi-billion dollar pipeline deal nor
will the GOP be able to ensure security of the pipeline crossing the
volatile Balochistan Province. End Comment.