AMBASSADOR'S MEETING WITH POTENTIAL NEW MINISTER OF FINANCE

C O N F I D E N T I A L SECTION 01 OF 02 ISLAMABAD 000924

SIPDIS

SIPDIS

E.O. 12958: DECL: 03/03/2018
TAGS: PGOV ECON PREL PK
SUBJECT: AMBASSADOR'S MEETING WITH POTENTIAL NEW MINISTER OF FINANCE
SYED NAVEED QAMAR

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


1. (C) Summary: In a February 29 meeting with the Ambassador,
Pakistan Peoples Party (PPP) Member of National Assembly Syed Naveed
Qamar, whose name has come up as a potential PPP Minister of Finance,
reviewed economic priorities and challenges facing a PPP-led national
government. Qamar rejected views that a PPP-led government would be
hostile to the business community, referring to business as the
country's engine of growth. Qamar cited rising fuel subsidies as
particularly damaging to the fiscal deficit but recognized that
increasing consumer fuel prices was not politically desirable. He
stated that the new government would look for any and all support on
economic issues and urged the USG to expedite Coalitional Support
Fund (CSF) payments. End Summary.


2. (C) The Ambassador met on February 29 with Syed Naveed Qamar,
whose name has been floated as a potential Minister of Finance in a
PPP-led government. The Ambassador said that we were reaching out to
economic decision makers in all the major parties. Qamar, who sits
on the PPP's Central Executive Committee, has held a National
Assembly seat in Hyderabad since 2002. He previously served in the
National Assembly from 1990 to 1999, was Chairman of the
Privatization Commission from 1993 to 1996, and Federal Minister for
Finance and Privatization until former Prime Minister Benazir
Bhutto's ouster in November 1996. Qamar described the post of
Finance Minister as a "hot seat" in the new government but rejected
rumors that the PPP would pass the portfolio to a potential coalition
partner.


3. (C) While Qamar described the current state of Pakistan's economy
as "grim," he rejected perceptions that the PPP was populist and
hostile towards the business community. He opined that PPP
Co-Chairman Asif Zardari was "more pro-business than Benazir Bhutto,"
as a private sector businessman. Recognizing that businesses and
investors are the engine of growth in Pakistan, Qamar pledged
continued PPP outreach to private sector and foreign investors. He
emphasized that the PPP strongly supported privatization but admitted
that certain individuals in the party had "dated views" on the
subject. Privatization, he asserted, "will be vigorously pursued."


4. (C) Qamar signaled out the rising cost of fuel subsidies as a
major concern. The Government of Pakistan (GOP) has been unwilling
to pass the rising international cost of oil to domestic consumers,
subsidizing fuel and energy costs at great expense to the government.
Qamar faulted the caretaker government of Prime Minister Soomro for
not tackling the issue of rising subsidy costs, stating that as a
caretaker, he had "little to lose." Recognizing that an immediate
end to fuel subsidies would be politically unviable, Qamar emphasized
a multi-pronged approach to the issue. By combining decreased
subsidies, marginally higher pump prices and increased inflows into
government coffers, the subsidy issue could be tackled without
inflationary borrowing. With a fiscal deficit projected to surge
from four to seven percent of GDP this fiscal year, excessive
borrowing is not a viable option.


5. (C) Turning to the anti-money laundering bill passed by
Presidential Ordinance in September 2007, Qamar stated that any
anti-money laundering (AML) legislation must satisfy international
norms. He rejected claims that since the AML Ordinance was renewed
in January 2008 under the Provisional Constitutional Order (PCO),it
was now permanent. The AML bill, he contended, still must move
through parliamentary channels and obtain approval. Qamar further
stated that the AML Ordinance and Financial Management Unit (FMU)
should not be used as a political tool to target opponents of the
government. He didn't foresee any problem with securing National
Assembly approval for an updated bill, provided it was moved through
quickly. (Comment: The AML bill was passed as an ordinance after
being stalled in the previous parliament for over two years. End
Comment)


6. (C) Qamar commented that the new government would be looking for
any and all support on economic issues. Every Coalition Support Fund
(CSF) payment, he continued, directly impacts the GOP's ability to
stay fiscally solvent. Qamar asked the U.S. to ensure that the next
tranche of CSF reimbursements were credited to Pakistani accounts
before the June 30, 2008 end of the current fiscal year. He
expressed hope that the U.S. would increase oversight of CSF payments
to ensure that military claims were not over-inflated or siphoned off
into private coffers.


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7. (C) Qamar emphasized parliamentary budget oversight as a key
priority for the PPP. Hoping to increase transparency in the budget
process, he described the current level of oversight as "pantomime."
He faulted the executive branch for independently formulating a
budget and "ramming it through" the National Assembly with little
parliamentary oversight. The PPP hopes to increase the National
Assembly's role in budget formation by requiring the executive branch
to submit a draft budget in February, allowing three months of
debate. Qamar also supported increased discussion and transparency in
the defense budget, currently restricted to one line in the national
budget. "Only when an institution [such as the National Assembly] is
strong enough," Qamar concluded, "can it take power back from those
that insist it be usurped."


8. (C) Comment: Having been the last member of the PPP to hold the
position of Finance Minister, Qamar looks ready to reclaim the role
he had over eleven years ago. Confident and clearly briefed on major
economic issues, he was eager to dispel impressions that the PPP was
hostile to business and investment. Whoever is selected as the next
Finance Minister will be in an unenviable position, having few
politically popular options for decreasing subsidies and reducing the
fiscal deficit. The Embassy will continue outreach to potential
economic decision-makers in the new government. End Comment.

PATTERSON