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08ISLAMABAD762 2008-02-21 12:27:00 CONFIDENTIAL Embassy Islamabad
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1. (C) Summary. Pakistan People's Party (PPP) leader Asif
Zardari is in the driver's seat as he begins a complex series
of negotiations on forming a new government in Pakistan. But
in Nawaz Sharif he has an influential passenger who is
calculating when he can take the wheel. Zardari is trying to
balance electoral math and provincial power projection goals
while keeping the PPP together under his leadership. His
initial insticts are based on a practical power calculus that
an alliance with Nawaz is his strongest and most stable
option. However, this is just the first round in what may be
protracted negotiations to form a coalition government. End

The Math


2. (C) Zardari told Ambassador February 20 (Ref A) that he
was considering a coalition with Nawaz Sharif's party and
proposed offering the Prime Minister position to either
Pakistan Muslim League-Nawaz (PML-N) leader Javed Hashimi or
to Awami National Party (ANP) leader Asfandyar Wali Khan.
This is only the first round of what likely will be
protracted negotiations to form a coalition. While it may be
surprising that Zardari would consider this alliance and
offer the PM post to another party, his rationale is based on
sound electoral math, national/provincial power calculations
and complicated party politics.

3. (U) A rough party breakdown of the election shows that
the PPP has 32%, Nawaz's party has 25% and Musharraf's party
has 15%. The rest is split among smaller parties with the
largest 7% share gong to the Muttahida Quami Movement (MQM)
that controls Karachi. The Awami National Party has about 4%.

4. (C) Zardari argued that a coalition based on the PPP
joining with Musharraf's party plus other smaller parties
would barely give him a majority share in the National
Assembly. Zardari told Ambassador, this would be a weak
coalition. Zardari fears that opposition within the PPP to
working with Musharraf's party after trouncing it in the
election would increase the likelihood that the PPP would
split into factions. There is a history of Musharraf
successfully splitting the PPP to deny them power.

5. (C) One rule of Pakistani politics is that voters and
politicians follow a winner, and Nawaz won big in this
election. Musharraf's party was formed with many of the
members of Nawaz's party who left when Musharraf overthrew
Nawaz in 1999. Many voters who deserted Nawaz to join
Musharraf in 1999 went back to Nawaz in this election. We
are seeing increasing reports that members of Musharraf's
party are following suit by switching back to Nawaz. Thus
the limited strength of a PPP coalition with Musharraf's
party is weakening daily.

6. (C) In comparison, Nawaz's numbers and strength are
growing. If Zardari forms a coalition with Nawaz and some
smaller parties, he could achieve a solid majority (perhaps
two-thirds) in the National Assembly. Nawaz has publicly set
some difficult conditions on a partnership--a commitment to
restore the 1973 constitution and restoration of the
judiciary. Zardari likely will agree to restoration of the
1973 Constitution because it reverses Musharraf-era
amendments and returns power from the President to the Prime
Minister. Zardari has indicated to us that he would prefer
that the next parliament wrangle with the complicated legal
issue of restoring the deposed judiciary. Again, these
conditions are only the opening gambit in what may be
protracted negotiations.

7. (C) Despite Zardari's optimism, Nawaz may not agree to
put Javed Hashimi in the PM chair. Nawaz expects more
defectors from Musharraf's party to join him and is
contemplating a possible chance to form a government himself
(Ref B) if the PPP rejects his conditions. If Nawaz can
attract enough Musharraf party members, he could pull close
to even with the PPP in terms of Assembly strength. Whether

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in government or in opposition, Nawaz will be a major player
that Zardari cannot afford to ignore.

Provincial Calculations


8. (C) Zardari must also consider how to expand PPP
influence in the four provincial assemblies and the National
Assembly through power sharing deals. The PPP won a sizable
victory in Bhutto's home province of Sindh and could agree to
work with MQM in a ruling coalition. It has a good chance of
working with the Pashtun ANP party to form a government in
the Northwest Frontier Province and could even choose to work
with Musharraf's party in Balochistan to govern there.

9. (C) The real prize is always the Punjab, where the PPP
and Nawaz are competing to exploit Musharraf's losses and
expand their political base. While Nawaz's party won a
majority in the provincial Punjab election, the PPP could
consider an alliance there with Musharraf's party as a means
to block Nawaz's growing national influence. Regardless of
whether Nawaz joins in a national coalition this time, his
long game will be to expand his power in Punjab as a stepping
stone to again becoming Prime Minister under his own

Party Politics


10. (C) By offering the Prime Minister slot to PML-N,
Zardari is trying to avoid a leadership struggle within the
PPP. While Zardari publicly has taken himself out of the
running for PM, we suspect he will keep his options open by
going forward with plans to run in a by-election for his
sister's seat in Sindh. Zardari told Ambassador he continues
discussions with Musharraf because Musharraf will be key to
solidifying Army support for a PPP government. Zardari would
also like Musharraf to extend the National Reconciliation
Ordinance (NRO) that granted Zardari and others immunity from
prosecution on corruption charges. Although Zardari
ultimately will have to votes to extend the NRO in the next
Assembly, the optics of such a move could stir up ugly
Pakistani memories of "Mr. Ten Percent."

11. (C) With solid party credentials and significant rank
and file support (Refs C and D), PPP Vice Chairman Amin
Faheem is the most likely party choice for PM. But Zardari
considers Faheem to be weak and lazy. Each of the other
choices is also problematic. PPP Punjab President Shah
Mehmood Qureshi is a divisive figure within the party and is
probably too independent for Zardari. PPP Vice Chairman
Yousef Gilani is a possibility, but he too has corruption
baggage and is a Punjabi and his appointment could spark
Sindh-Punjab rivalries within the party. Former Defense
Minister (under Bhutto) Mirani lost in the election. PPP
barrister Aitzaz Ahsan remains very controversial within the
PPP; he also is ineligible because he withdrew from the



12. (C) At this point, a PPP-Nawaz coalition looks the most
solid in terms of numbers. But long-standing rivalry between
the parties and their leaders may limit its effectiveness and
long-term viability. The PPP is a populist party founded on
socialist economics and a strong secular base. PML-N has
always appealed to a religiously conservative middle-class
business community. Both parties campaigned on
anti-Musharraf platforms which stressed the importance of
getting the military out of civilian politics, restoring the
power of the Prime Minister over that of the President, the
need for economic reform and increased spending on education,
a continued commitment to retaining Pakistan's nuclear
capability, and pledges to allow political parties to operate
in the tribal areas.

13. (C) Especially if Nawaz gains in strength, however,
political infighting among members of a PPP-Nawaz coalition
may preclude any effective governance. As Shahbaz Sharif has
already noted (Ref B), the next government faces some
difficult and unpopular decisions. These include weaning

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Pakistanis from excessive energy and food subsidies. Many
have predicted that the next government may have a short
shelf-life of 6-12 months.

GWOT Commitment


14. (C) While PPP is decidedly more vocal about the need to
fight extremism, the platform of both parties stresses their
preference for dialogue over military action in combating
militancy. Nawaz at every opportunity has reminded us that
he overrode his chief of staff to join the U.S. in the first
Gulf War and criticized Musharraf for allowing the growth of
talibanization in Pakistan.

15. (C) Nawaz returned from exile because the Saudis
refused to keep him any longer and reportedly wanted a
counterweight to the liberal, Shia-connected Benazir Bhutto.
The Saudis provided Nawaz with an armored car and reportedly
lots of campaign cash. There is at least one poster in
Lahore that features King Abdullah between pictures of Nawaz
and Shahbaz. Nawaz's wife reportedly is quite conservative,
but so is PML President Chaudhry Shujaat Hussain's wife. It
is not clear that PML-N's ties to the religious parties are
any stronger or more significant than those of Musharraf's
party. Both PML leaders Chaudhry Shujaat and Chaudhry
Pervaiz Elahi have connections to conservative Deobandi
madrassas, and Musharraf was perfectly willing (as was
Bhutto) to deal with the Jamiat Ulema-e-Islam party.

16. (C) Comment: Zardari's initial instincts are to find
practical solutions, and an alliance with Nawaz makes sense
from a pure power calculus. But this is round one of what
could be protracted negotiations.