SHEDDING LIGHT ON PAKISTANI THINKING ON BIT, ENERGY

C O N F I D E N T I A L SECTION 01 OF 02 ISLAMABAD 003838

SIPDIS

E.O. 12958: DECL: 12/11/2018
TAGS: ECON EFIN EINV PGOV PREL PK
SUBJECT: SHEDDING LIGHT ON PAKISTANI THINKING ON BIT, ENERGY
DIALOGUE, FRIENDS OF PAKISTAN

Classified by: Anne W. Patterson for reasons 1.4 (b),(d)

Summary
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1. (C) Summary: On December 12 EconCouns met with Secretary General
Salman Farruqui and discussed the Energy Dialogue, the Friends of
Pakistan and the International Fund Donor's Conference. Farruqui
said that he would be the GOP's organizational lead for both the
Friends of Pakistan and the IMF Donor's Conference. On the Energy
Dialogue, Farruqui acknowledged that the timing was not ideal, but
hoped that it would produce some benchmarks so that future Energy
Dialogues could achieve something. He hoped to outline a dam
construction proposal for the Friends of Pakistan at the Energy
Dialogue in Washington. EconCouns also met separately with both
Ashraf Hayat, Secretary of Investment, and Farrukh Qayyum, Secretary
for Economic Affairs Division, both of whom expressed strong doubts
that the GOP would be able conclude a Bilateral Investment Treaty
before the end of the current Administration in the U.S.


2. (U) EconCouns paid a departing courtesy call on Secretary General
Salman Farruqui on December 12 and discussed the upcoming Energy
Dialogue and possible outcomes, the Friends of Pakistan, and the
International Monetary Fund Donor's Conference.

FRIENDS OF PAKISTAN


3. (C) Turning to the Friends of Pakistan, Farruqui stated that he
"had been tapped by the President to lead the organization efforts
for the GOP." He said that the GOP is moving forward with their
internal planning and hoped that the January expert meetings would be
well attended. Farruqui noted that the previous list of proposed
projects presented in Abu Dhabi "was disjointed and too large." He
noted that the GOP planned to present a list of projects for each of
the four expert groups. EconCouns expressed appreciation for his
leadership and organizational abilities in moving the Friends group
forward with tangible projects. Farruqui noted that he planned to
have a mixture of short term and long term projects.

ENERGY DIALOGUE


4. (C) Farruqui said that he had reviewed the revised agenda and
noted that "it looked okay." While acknowledging that the timing of
the Energy Dialogue so close to the change of Administration in the
U.S. was not ideal, Farruqui stated that the GOP really wanted to
have the talks "in order to start a discussion and set some
benchmarks so that the next Energy Dialogue would be able to achieve
something." He acknowledged that the GOP does not have "high
expectations" for this Dialogue especially given the short times
allotted for discussion on a broad range of topics. He also stated
that he hoped that "the next Dialogue could be held in the upcoming
summer."


5. (C) Farruqui noted that the current government wants to have
strong ties and more investment from the U.S. in their energy sector.
He expressed hope that a new reinvigorated Energy Dialogue could
provide a forum for policy advice and investment promotion.


6. (C) Farruqui noted that for the Friends of Pakistan, the GOP
planned to introduce a proposal for the Friends to fund the
construction of several small dams. Given the enormous energy
deficit facing all regions of Pakistan, the need for additional
capacity on the national grid is viewed as a short term necessity.
Farruqui expressed hope that he could outline this proposal at the
Energy Dialogue in Washington. Post is seeking to obtain a list of
these proposed small dams and will transmit septel.

DONOR'S CONFERENCE


7. (C) Farruqui also will be leading the GOP efforts on the
International Monetary Fund Donor's Conference. He noted that
President Zardari had asked him to lead on the coordination of this
as well since there is overlap with the Friends group and high level
oversight was needed for this conference. He said that the GOP is
moving forward with their internal planning and hoped that the
January 8 proposed date for a meeting in Beijing could work for the
other donors.

BILATERAL INVESTMENT TREATY

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8. (C) On December 13 EconCouns met with Ashraf Hayat, Secretary of
Investment, to follow up on recent discussions regarding the
conclusion of the Bilateral Investment Treaty (BIT). Despite
positive conversations between Deputy Secretary Negroponte and
President Zardari as well as the de facto Finance Minister Shaukat
Tareen, Hayat emphasized that the Government of Pakistan is simply
not prepared to conclude the discussions. Hayat noted that there
were internal differences between the newly appointed Minister of
Investment Waqar Ahmed Khan and the Minister of State for Investment
Saleem Mandiwalla. Due to these on-going internal discussions, Hayat
noted that it would be noted that the new government headed by the
Pakistan People's Party was very committed to getting the BIT
finalized, however Hayat did not think that the GOP could finish
under this time crunch. EconCouns also discussed the BIT with
Farrukh Qayyum, Secretary for Economic Affairs Division, who
expressed similar doubts about the GOP being able to finalize the BIT
before the end of the Bush Administration.

PATTERSON