DEMARCHE PRIOR TO POSSIBLE VISIT BY PAKISTAN

C O N F I D E N T I A L STATE 100914 SIPDIS E.O. 12958: DECL: 09/17/2018 TAGS: CH EAID ECON EFIN PGOV PK PREL PTER SUBJECT: DEMARCHE PRIOR TO POSSIBLE VISIT BY PAKISTAN PRESIDENT ZARDARI TO BEIJING Classified By: EAP Assistant Secretary Christopher R. Hill, Reasons: 1.4(b) and 1.4(d) ¶1. (U) This is an action request for Embassy Beijing. See requested action in Para 3. ¶2. (C) Background: China shares our concern about instability in Pakistan and has requested closer coordination with the United States on Pakistan. China has significant interests in Pakistan and provided some financial support to the Government of Pakistan in the past year to alleviate short-term problems with Pakistan,s current account. The Chinese deposited $500 million in the State Bank of Pakistan to boost reserves. However, the Chinese asserted the deposit was only intended as a short-term loan and was not intended to serve s a permanent grant to Pakistan. ¶3. (U) Action Request: In the event of a visit of Pakistan,s President Asif Zardari to Beijing, the Department requests that Embassy Beijing convey the following points to the Chinese Foreign Ministry at the highest appropriate level. ¶4. (C/REL PRC) Talking points: - - The United States encourages the Chinese Government to join with the international community in urging Pakistan,s leadership to undertake strong measures to resolve Pakistan,s security and economic crises. Stability in Pakistan is a shared interest of the United States, China, and the international community. - - The United States requests that you urge President Zardari to maintain military pressure against both al Qaeda and the Taliban. Recent efforts in Swat and other areas of the Northwest Frontier Province and in the Federally Administered Tribal Areas have disrupted extremist efforts both within Pakistan and across the border in Afghanistan, but much remains to be done. - - We believe Pakistan must act quickly to stabilize the economy and restore confidence by taking immediate steps to: a) further cut fuel subsidies and eliminate them by the end of 2008 calendar year, b) cease borrowing from the central bank and resume market borrowing to fund the budget deficit, and c) resume and accelerate privatization. Accordingly, if Pakistan takes credible steps to stabilize its economy, the international community should work together to organize external finance to support Pakistan. - - The United States would welcome continued consultation with the Chinese Government on developments in Pakistan. - Musharraf,s Future (if asked): - -President Zardari committed to providing his predecessor Pervez Musharraf indemnity against prosecution for acts Musharraf allegedly committed in office. We believe he should keep that commitment. - End Talking Points. ¶5. (U) Department requests that Post deliver this demarche when President Zardari,s visit is confirmed and report back. RICE