NWFP: OPERATIONS CONTINUE IN SWAT WHILE BUSINESS DECLINES

C O N F I D E N T I A L SECTION 01 OF 02 PESHAWAR 000434 SIPDIS E.O. 12958: DECL: 8/25/2018 TAGS: PTER EAID PGOV PINR ASEC PK SUBJECT: NWFP: OPERATIONS CONTINUE IN SWAT WHILE BUSINESS DECLINES REF: A) PESHAWAR 422 B) PESHAWAR 345 C) PESHAWAR 364 D) 07 PESHAWAR 800 CLASSIFIED BY: Lynne Tracy, Principal Officer. REASON: 1.4 (a),(b),(d) Summary -------------- ¶1. (C) Noor Muhammad Khan, a resort and business owner in Swat who has been a regular contact of the Consulate, detailed the decline of business interests in Swat during a meeting with Principal Officer on August 18. He said that while the recent round of operations (Ref A) in Swat have been more successful than those of November 2007-January 2008 (Ref D),the Pakistan army and civilian government still lack credibility. The government, he commented, could do the most immediate good by providing relief in the form of basic food staples. Although some of Noor's economic statistics are difficult to confirm, we offer his comments as a window onto the toll that Swat's insurgency has taken on the local economy and as a community leader's assessment of the government's performance in Swat. End Summary. Continuing Operations -------------- ¶2. (C) Noor told PO that the Pakistan Army's first operation in Swat (Ref D) had ended abruptly and without results. Then, from the beginning, questions about the militants' sincerity in negotiation suggested that the peace agreement would fail (Ref B & C). He remarked that in the first operation it seemed like "the army was trying to scare the militants rather than defeat them," striking to the side of targets rather than hitting the center. Noor remarked that the second phase of the agreement has been conducted more correctly. Nevertheless, he made the caveat that the army should strike targets more carefully and at closer range. Frequently, attacks hit civilians. He expects the operation to last until Ramadan. ¶3. (SBU) Mingora and Saidu Sharif observe a curfew time from 2000-0700 hrs. However, during the daylight traffic is moving as normal. In some ways infrastructure has improved, the road over the Malakand River has been completed expediting travel between Swat and Islamabad or Peshawar. Credibility -------------- ¶4. (C) Noor credited the provincial government with taking the correct course of action in signing a peace deal in May with militants. The government, he said, need to show a willingness to talk. Now that the militants have continued attacks, the government, he continued, is justified in a military response. ¶5. (C) Noor maintained, however, that the Pakistan Army loses credibility when it has the opportunity to strike and fails to act or strikes inaccurately. A recent press conference held by militants was a perfect example, he said, of how the military's credibility can be undermined. Despite the fact that the militants gave advance notice of the press conference, held it around 5 kilometers from a Pakistan Army location, and several high level militants attended, the Army did nothing. ¶6. (C) Noor said that between January and February the Pakistan Army received PRS 100 million ($1.43 million) for relief efforts. After negotiation, the money went to locally elected officials for distribution and implementation of relief projects. Now, due to the second operation, the civilian government has stopped work in areas where militants are most active (Kabal and Matta Tehsils). Noor said that immediate relief was necessary. As Ramadan approaches, edibles, particularly flour and oil could be as important as larger scale projects. Business Decline -------------- ¶7. (C) Noor's hotel, Rock City Resort (located on the opposite side of the Swat River from Mullah Fazlullah's Imam Dheri compound),is not operating both because there are no tourists and because the army is occupying it. He closed his factory, Allied Rubber, because most of the skilled laborers were from the Punjab and returned home for fear of the security situation. PESHAWAR 00000434 002 OF 002 Many poor people and semi-skilled laborers have also departed for Karachi and the Punjab to find jobs. Many more are trying to go to the Middle East for work. ¶8. (C) Noor estimated that 70% of Swat's fruit crops are still arriving at market. However, people are becoming afraid to work in the village fields. He said that places around Mingora, previously safe, are being targeted by militants. Noor also noted that a cosmetics factory had been receiving threats because it employed 50% female workers. It closed last week after being bombed. Comment -------------- ¶9. (C) Swat continues to be plagued by militant attacks, particularly a bombing campaign that has reportedly destroyed at least 25 girls' schools since May. The simmering instability in Swat will continue to hamper the revival of local industries, and Swat's long-term recovery in part depends on the government's ability to restore the confidence of businessmen like Noor. TRACY