BOUCHER ENGAGES FARUQUI ON FRIENDS OF PAKISTAN AND

C O N F I D E N T I A L SECTION 01 OF 02 ISLAMABAD 000072

SIPDIS

E.O. 12958: DECL: 01/13/2019
TAGS: EAID ECON EFIN EINV ENRG ETRD PGOV PREL PK
SUBJECT: BOUCHER ENGAGES FARUQUI ON FRIENDS OF PAKISTAN AND
DONORS' CONFERENCE

Classified By: Anne W. Patterson for reasons 1.4 (b),(d).


1. (C) Summary. On January 5, Assistant Secretary for South
and Central Asian Affairs Richard Boucher met with Salman
Faruqui, Secretary General to the President of Pakistan, to
outline a timeline leading to the Friends of Democratic
Pakistan meetings and a donor conference. Faruqui and his
advisors emphasized Water and Power projects and stressed the
importance of Reconstruction Opportunity Zones. End Summary.


2. (C) Assistant Secretary Boucher met with Salman Faruqui,
Secretary General to the President of Pakistan on January
5th. Also in attendance were Senior Advisor Caitlin Hayden,
Political Counselor, and 13 representatives from the
Government of Pakistan, including Foreign Secretary Salman
Bashir, Finance Secretary Waqar Masood, MFA Additional
Secretary for South Asia (Friends Coordinator) Aizaz
Chaudhry, and Water and Power Development Authority Chairman
Shakeel Durani.

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TIMELINE
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3. (C) Boucher began the discussion by asking Faruqui and his
advisors what direction and focus they envisioned for the
Friends of Democratic Pakistan. Faruqui explained that on
January 29, all of the various ministries within the
Government of Pakistan will submit proposals based on their
needs. On 3-4 February, the Government will circulate the
proposals to the relevant Ambassadors involved in the Friends
of Democratic Pakistan. On 20-21 February, Pakistan will
tentatively host an expert-level meeting of the Friends.
Faruqui expects a Ministerial-level meeting at some point in
March. As to where it will be held (e.g. Tokyo, New York
City),Pakistan has not decided. He proposed that the
donors, conference be held after the International Monetary
Fund review in February. He also suggested that the donors'
conference and Friends meetings could be held at the same
time, if necessary, as the Government of Pakistan's
participants will be the same.

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FRIENDS OF DEMOCRATIC PAKISTAN MEMBERSHIP
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4. (C) Assistant Secretary Boucher asked Faruqui's thoughts
on expanding the membership of the Friends group. Boucher
noted that his office has been receiving inquiries from
Nordic countries, the Commonwealth, NATO, Spain and others on
how to join the Friends of Democratic Pakistan. Foreign
Secretary Bashir confirmed that the Government of Pakistan
has also received similar inquiries and was thinking about
membership for the Republic of Korea and Malaysia. As of yet,
there has not been a discussion on how to proceed on this
subject. Hayden noted that if they were to accept some
countries and not others, the Government could be asked to
explain what criteria makes a "friend." Assistant Secretary
Boucher added his sentiment that "the more the merrier if
you're prepared to bring something to the table."


5. (C) Bashir characterized the first meeting of Friends as a
"show of political solidarity with Pakistan" which led to the
identification of four critical tracks. He agreed with
Boucher that it would be a good idea to enable those
countries who want to participate at this time to do so. Of
course, Pakistan would consult with the United Kingdom and
the United States since these two countries are in the
"driver's seat." He admitted that he does not want the
Pakistan Development Forum to merge with the Friends of
Democratic Pakistan. If the Nordic countries, Spain, and
others want join, Pakistan will support the move.

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DONORS, CONFERENCE
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6. (C) The Finance Secretary asked about the idea of a World
Bank Trust Fund for the frontier. Boucher commented that
countries want to do work in the border areas but that the

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traditional way of being a donor does not work in the
Federally Administered Tribal Areas because of the security
conditions. While the United States is able to operate
fairly successfully, many other countries need a different
way to provide assistance. Thus, the United States was
suggesting the idea of the trust fund with the World Bank to
focus on education, infrastructure, and development in the
border areas.


7. (C) Bashir questioned whether the trust fund becomes part
of donors' conference or the Friends of Democratic Pakistan.
Hayden explained that the trust fund could be launched at
either meeting, but plans made under the auspices of the
Friends of Democratic Pakistan should guide how the
Government will spend money from the trust fund. Faruqui
stated that he has not approached the World Bank yet.
Boucher said that the United States has talked to the World
Bank but the Bank is looking for Pakistani interest and
ownership if it is going to proceed.


8. (C) Bashir asked if the trust fund could be expanded to
all of Pakistan rather than just the border areas. Boucher
responded with "a note of caution," and explained that he has
heard concerns on this subject from different donors. The
Chinese, for example, insist on bilateral programs. Most
donors do not want an overarching committee which will take
all of their money.


9. (C) Boucher said that while the timeline sounded good,
unfortunately, he cannot "commit a new Secretary of State (to
a donor conference) until I have one," noting that the new
administration is not in place yet. He advised the
Government to continue with the timetable and proceed "with a
little sense of flexibility," -- "providing specific ideas
for the donors' conference would be a good way to proceed."
Faruqui thanked him for his comments and indicated that March
has been left open to schedule meetings. Bashir asked how
the Pakistani Government should deal with Japanese offer to
host the new Friends meeting, and Boucher advised him to
thank the Japanese and mention that it is too early to pin
down a time and location just yet.

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RELATIONS WITH AFGHANISTAN
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10. (C) Bashir stated that President Zardari is very
interested in bilateral cooperation with Afghanistan.
Pakistan is in the process of institutionalizing bilateral
agreements and joint projects between the two countries.
Pakistan is interested in projects that would benefit both
countries, specifically those involved in building roads,
generating energy, and increasing communication.

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WATER AND POWER
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11. (C) Durani highlighted two hydroelectric power projects
that the Government of Pakistan would like to see come to
fruition. According to Durani, the Munda Dam (850 MW) and
the Kurram Tangi Dam are both good projects and he recommends
investment in these two projects. The "country desperately
needs" the Diamer Basha dam (4,500 MW). The World Bank has
turned down financing of this project because the dam is
located in disputed territory in Azad Jammu and Kashmir. The
project cost is USD 9 billion which is too big for any single
donor to support recounted Durani. The U.S. Export Import
Bank reportedly offered its support if U.S. companies were
involved in the project.


12. (U) A/S Boucher has cleared this message.
PATTERSON