UNCLAS SECTION 01 OF 02 ISLAMABAD 003002

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: ECON EFIN EAID PGOV PREL PK
SUBJECT: ASSISTANCE COORDINATOR BRIEFS FOREIGN MINISTER

Summary
--------------


1. (SBU) Ambassador Robin Raphel, Coordinator for Economic
and Development Assistance in Pakistan briefed Foreign
Minister Shah Mehmood Qureshi on U.S. plans to channel more
assistance through the Pakistani government, target USG
assistance in areas vulnerable to militants, and to focus on
several "signature" projects to raise the overall profile of
the USG in a positive way with the Pakistani people on
December 7. Qureshi welcomed the shift in focus, and
suggested that the U.S. focus on water as having the most
immediate and wide reaching impact in both energy and
agriculture. He promised his personal support and offered a
larger MFA role in coordinating the implementation of U.S.
assistance. End Summary.

On the Right Track...
--------------


2. (SBU) Ambassador Robin Raphel, Coordinator for Economic
and Development Assistance in Pakistan (AssistCoord), and
Acting USAID Mission Director met with Foreign Minister Shah
Mehmood Qureshi and other Foreign Office officials on
December 7 to discuss the U.S. assistance strategy for
Pakistan. Qureshi expressed his gratitude that MFA input is
being sought, and welcomed MFA involvement in "developing and
overseeing implementation" of USG assistance. He emphasized
the need to build bridges between the GOP and the USG and the
importance that the Pakistani people understand that
assistance money is being well spent.

...But Complaints Persist
--------------


3. (SBU) Qureshi reiterated the common GOP refrain, in
particular calling the USAID process in place until recently
an opaque, "closed door" system that worked only with NGOs.
Warming to his theme, Qureshi asserted that, while a great
deal of money was spent, there was "no impact" in the country
receiving aid because projects are not prioritized to meet
the needs of the host nation. Because USAID funds often are
given to U.S. based organizations and then subcontracted to
local organizations, the costs are "two to three times
higher" than they would otherwise be. Assistance money is in

reality being siphoned back to the United States, Qureshi
said.

MFA Suggested Ways Forward
--------------


4. (SBU) Qureshi suggested that the American-Pakistani
Foundation be used to raise funds to help in social sectors.
MFA could assist the Embassy's Assistance Coordination office
in facilitating the foundation's efforts. He also announced
his intention to create an Economic Diplomacy Division.
Because MFA has neither the people nor the resources to
create the new section, Qureshi said he is looking to the
private sector for support.


5. (SBU) Qureshi said that the United Arab Emirates (UAE)
Foreign Minister supported the idea of Public/Private
Partnerships (PPP), as discussed at the Friends of Democratic
Pakistan meeting in Istanbul. The UAE Foreign Minister has
offered to host a PPP conference in Dubai and had suggested
January 26, 2010, as a target date, according to Qureshi.


6. (SBU) Qureshi complained that the U.S.-Pakistan strategic
dialogue has not produced meaningful results in recent years.
Qureshi suggested the dialogue be restructured and welcomed
Secretary Clifton's willingness to chair the meetings. The
first talks could be held in Washington in late January/early
February.

New Way Forward for USAID
--------------

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7. (SBU) Ambassador Raphel explained that U.S. assistance
will now move more funds through the GOP, target vulnerable
areas where the GOP is not strongly represented in order to
counter militant attitudes, and begin investing in
"signature" projects, so that the Pakistani people can see
directly the results of U.S. assistance. She also emphasized
the need for economic reform in Pakistan, including resolving
the so-called "circular debt," reapportioning the GOP budget
to better address development needs and emphasized the need
for greater GOP accountability. She also highlighted the
need for the GOP to increase Pakistan's tax-to-GDP ratio,
adding that American taxpayers need to see that Pakistani
citizens are paying for services within their own country.


8. (SBU) Qureshi stressed that water projects focusing on
the energy and agriculture sectors would alleviate poverty,
create jobs, and stimulate the economy. Qureshi agreed that
GOP reforms and increased accountability would be important
factors as the U.S. implements its new strategy. He
recommended that USAID establish a hub in Multan as the best
means of targeting USAID assistance to southern Punjab and
northern Sindh. Multan has more ties to the local population
than Lahore, is geo-strategically located and is easily
accessible. Qureshi offered his personal assistance in
connecting USAID with contacts in the area to help target USG
assistance. (Comment: Qureshi is from Multan and would
presumably benefit politically by bringing a USAID hub there.
End Comment.) Qureshi stated that the MFA would appreciate
a donor community meeting to discuss donor activities in
Southern Punjab.

Assistance Coordination
--------------


9. (SBU) Qureshi asked what role MFA is expected to play in
the U.S. assistance strategy, adding that MFA would like to
appoint a focal point with whom the U.S. should coordinate on
assistance. Ambassador Raphel responded that, to date, the
America's Desk in the MFA has been the Embassy's main point
of contact at MFA. Qureshi requested a meeting with the
Embassy to coordinate efforts to implement the U.S.
assistance strategy, once it is finalized, in order to
"better sell" the strategy to the people of Pakistan and, in
turn, the United States. Qureshi offered his own public
support as necessary.


10. (SBU) Comment: Qureshi's support for the new aid
assistance strategy is no surprise: he was a vocal supporter
for the Kerry-Lugar bill and its positive implementation will
be a political win for him to build upon in the future. His
enthusiasm for coordinating U.S. assistance via the MFA is a
less positive development, but one which we have heard (and
quietly pushed back against) before. The MFA lacks capacity
and the GOP already has in place coordination mechanisms,
such as the Economic Affairs Division (EAD) through which
donor assistance is directed. Post will, however, work to
harness Qureshi's enthusiasm and his offer of public support
for the better implementation of the overall assistance
strategy. Multan as a satellite base for activities in
southern Punjab, for example, is an idea that Post will
investigate further. End Comment.
PATTERSON