KARACHI - MUSHARAFF MEETS WITH BUSINESS COMMUNITY

C O N F I D E N T I A L SECTION 01 OF 02 KARACHI 000466 USCENTCOM INTEL CEN MACDILL AFB FL PRIORITY USCINCCENT MACDILL AFB FL PRIORITY CIA WASHDC PRIORITY SIPDIS E.O. 12958: DECL: 08/05/2018 TAGS: PGOV ECON PREL PTER PK SUBJECT: KARACHI - MUSHARAFF MEETS WITH BUSINESS COMMUNITY Classified By: Classified by Kay Anske, Consul General, 1.4 b and d ¶1. (C) Summary: The Consul General (CG) was briefed by Majyd Aziz, a Karachi textile manufacturer, who attended meetings between President Pervez Musharraf and the city,s business leaders during his August 1)4 visit to Karachi. Musharraf first held a private meeting on August 2 with a small group of business leaders, during which he expressed concern over the current lack of political leadership and the worsening economic scenario in Pakistan. He did not rule out using his authority to dissolve the government, but implied that the time is not right for such an action. On August 3, the President defended the Inter-Services Intelligence (ISI) agency at a dinner gathering of around 200 business leaders and called for leadership to reinvigorate the country,s ailing economy. End summary. ¶2. (C) On August 4, Majyd Aziz, a textile manufacturer, gave the Consul General (CG) a read out on meetings he attended between President Pervez Musharraf and business leaders during the President,s August 1)4 visit to Karachi. Private Meeting With Business Leaders -------------- ¶3. (C) Aziz participated in the private meeting that Musharraf held with business leaders on August 2 at the office of Sindh Governor Ishrat-ul-Ebad (a member of the Muttahida Qaumi Movement (MQM) party),during which Musharraf expressed concern about the lack of leadership in Pakistan,s current coalition government. Musharraf pointed out a growing gap between the current Pakistan People,s Party (PPP) government and the business community. This was a problem exacerbated, he said, by a lack of accountability among the current GOP leadership. According to Musharraf, there is confusion over whether Prime Minister Yousef Gilani or PPP Chair Asif Zardari is actually in charge of the government. ¶4. (C) Musharraf told the business leaders that he had tried to stay in the background since the election, but the business community,s concerns over the State Bank of Pakistan,s recent interest rate increases had forced him to intervene and question the bank,s governor. The rate increases, taken to combat rising prices, were actually fueling inflation, the business executives told Musharraf. They reminded the President that the issues of small and medium enterprises were substantially different than those faced by larger corporations. ¶5. (C) The business representatives were concerned that PPP government support for new labor unions was fomenting labor unrest, and cited a case where the President of the Karachi PPP had joined in one labor protest at a bank. They also complained to Musharraf about a worsening law and order situation, using a sharp increase in kidnappings as an example, and asked for resumption of the country,s Inter-Services Intelligence (ISI) agency assistance in locating cell phones used by kidnappers to make ransom demands. As a result, Aziz said, the President ordered ISI to coordinate with provincial law enforcement authorities on this issue. ¶6. (C) Aziz said the President told the group that for the moment, he did not plan to use his power to dissolve the government under Article 58.2(b) of the Pakistan Constitution, but did not rule it out completely. Aziz said he believed that Musharraf realized that Nawaz Sharif,s Pakistan Muslim League-Nawaz (PML-N) party would sweep new elections at this time, thus the reason for his reticence to force new elections. Musharraf also told the group that he would not attempt to regain power by decree as that would make Pakistan an &international pariah.8 Dinner With Business Leaders -------------- ¶7. (C) Musharraf defended the ISI at an August 3 dinner, telling around 200 attendees that attacks on the agency were part of a conspiracy against the GOP. Weakening the intelligence agency would weaken Pakistan, he said. KARACHI 00000466 002 OF 002 Musharraf called upon the business leaders to support ISI and declared that the time had come for Pakistanis to decide what kind of country they want, adding that &we have to stand up and be counted.8 He said that Pakistan remains a moderate nation with a small extremist element. ¶8. (C) Political instability, a dysfunctional coalition government, and a prevalent view of Pakistan as &uncivilized8, Musharraf cautioned, was driving investors away from the country and leading to a capital exodus. Musharraf said he supported the current government, but referred to his commitment to his &constitutional duties8 on several occasions, which, Aziz felt, was a veiled reference to his power to dissolve the current government. ¶9. (C) Aziz forecast that PPP Chair Zardari would soon be asked to step aside from his role as de facto leader of the government in favor of Prime Minister Gilani. Aziz noted that Musharraf appeared more confident than he had in over a year. Aziz predicted to the CG that the economy would deteriorate over the next year. It was at that point, he reasoned, that Musharraf would dissolve the government and call for new elections. ¶10. (C) Comment: Musharraf's visit to Karachi is part of a new strategy by his Pakistan Muslim League party to increasingly criticize the PPP-led coalition. With the business community, Musharraf was playing to a receptive crowd worried about the lack of a coherent plan to tackle a growing economic crisis. Anske