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SS E C R E T SECTION 01 OF 03 ISLAMABAD 000428 

SIPDIS 

E.O. 12958: DECL: 02/16/2020 
TAGS: PGOV PREL ECON ETRD IN PK
SUBJECT: SENATOR KERRY MEETS WITH PAKISTANI PRESIDENT 
ZARDARI 

REF: ISLAMABAD 399 

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

¶1. (C) Summary: In a February 16 meeting with President 
Zardari, Senator Kerry said that India was "very open" to 
constructive talks with Pakistan, and urged Pakistan to reach 
an agreement with India on counter terrorism. Zardari said 
with U.S. support, talks could move forward. He said he 
doubted broad talks with the Taliban were possible, specific 
regional efforts might succeed. Pakistan was fighting 
militants in Pakistan on a "shoe-string" budget, but Zardari 
said that he was committed to finding ways to undermine the 
pull towards militancy in Pakistani society. Kerry said that 
the GOP needed to rebuild conflict-affected areas to cement 
military gains against the insurgency. Kerry encouraged 
Zardari to develop trade agreements with Pakistan's neighbors 
and agreed to Zardari's request to build consensus for 
liberalizing U.S. trade with Pakistan. Zardari lamented that 
he was "a casualty of the world recession," and requested 
U.S. support to relieve IMF conditions on the Pakistani 
economy. He said he needed "a deal" with the United States 
to strengthen his political position. End Summary. 

Encouraging an Indo-Pak Agreement 
- - - - - - - - - - - - - - - - - 

¶2. (C) Senator John Kerry opened the February 16 meeting with 
President Asif Ali Zardari by referring to his recent talks 
with Indian PM Manmohan Singh and Pakistani PM Yousuf Raza 
Gilani (reftel). Kerry said Singh was "very open" to 
negotiation with Pakistan, starting with the upcoming 
discussions between Pakistan and India's Foreign Secretaries. 
Kerry said that cooperation on counter terrorism with the 
Indians could lead to Indian compromises on key Pakistani 
issues such as Kashmir and water use in subsequent meetings. 
Kerry encouraged the GOP to come up with specific offers to 
which the GOI could respond. 

¶3. (C) Zardari agreed dialogue is the only way forward. 
However, he justified continued suspicion of India, citing 
recent "confirmation" that there was Indian involvement in 
the Mumbai attacks. He claimed India had increased its 
military spending 30 percent this year and described this as 
a direct threat to Pakistan. When Kerry pointed out the 
Chinese threat to India, Zardari responded that Indian tanks 
cannot operate in the Chinese border region and could only be 
intended for an attack on Pakistan. India has 4,700 tanks, 
he explained, while Pakistan has only 2,600. "Capability 
creates a fear," he added. 

¶4. (C) Kerry said Zardari should put his concerns on the 
negotiating table as there was a real opportunity for 
productive conversation between India and Pakistan now: "You 
could arrive at a surprising consensus of mutual 
understanding." Zardari conceded that Singh deserved 
respect, but said he was not confident about the rest of the 
Indian government. 

Zardari,s Take on Afghanistan and Iran 
- - - - - - - - - - - - - - - - - - - 

¶5. (C) Kerry asked Zardari what affect President Obama's 
announcement of a U.S. drawdown date had had on the 
possibility of success in Afghanistan. Zardari answered that 
it had given a boost to those fighting against the United 
States, but that they "live in illusion." Zardari doubted 
that the U.S. would actually leave Afghanistan in two and a 
half years, adding that "no one can afford that." Kerry 
asked if dialogue with the Taliban was possible. Zardari 
gave a qualified yes: in specific regions, like Quetta, 
dialogue might be possible, but on a larger scale it was not. 
Kerry asked to what degree events in Iran have an impact in 
Pakistan. Zardari said Iran needs to be engaged, and 
recounted his visit to Iran as an emissary of the "free 
world." 

Pakistan's Fight Against Militants 
- - - - - - - - - - - - - - - - - 


ISLAMABAD 00000428 002 OF 003 


¶6. (C) Kerry noted that, with the December mosque bombing in 
Rawalpindi, Pakistani terrorism had changed. He asked if 
Pakistan was going to commit to doing whatever it takes to 
get rid of extremism. Zardari replied that he was thinking 
of the future and what will win people away from extremism in 
ten or fifteen years. He added, however, that he was 
"fighting a war on a shoestring budget." 

¶7. (C) Kerry said the GOP needed to rebuild the 
conflict-affected areas as soon as possible. He explained 
that new roads, power plants, and health clinics need to go 
in quickly or any progress made in vanquishing the militants 
and extremists would be lost. Zardari agreed but added that 
the war went beyond these areas. He explained that when a 
U.S. soldier leaves Afghanistan, he no longer fears for his 
life; when a Pakistani soldier leaves the conflict areas, 
however, he has to worry that militants might target him in 
his home in Punjab or Sindh. 

Trade, not Aid 
- - - - - - - 

¶8. (C) Zardari complained that Reconstruction Opportunity 
Zones (ROZs) were too confined and requested broader trade 
concessions for Pakistan. Kerry said that, given the 
increase in troops in Afghanistan and the subsequent 
increased U.S. demand on Pakistan, he would see if greater 
trading concessions for Pakistan as a whole could be included 
in an upcoming security package. 

¶9. (C) Kerry warned, however, that his ability to push for a 
liberalized trade agreement between Pakistan and the U.S. was 
directly tied to Pakistan's democratic stability and 
continued cooperation in supporting Afghanistan and defeating 
terrorists. Every time there is a "hiccough" in Pakistan's 
support, Kerry explained, Congress waivers on giving Pakistan 
additional concessions or aid. As Pakistan was a new 
democracy, Zardari said there would naturally be many 
"hiccoughs," but added, "message understood." Kerry said 
that Pakistan also needed to create trade agreements with its 
neighbors, which would let the Pakistani public know that the 
GOP was committed to real economic improvement. 

Pakistan Nuclear Assistance 
- - - - - - - - - - - - - - 

¶10. (S) Kerry said that the lingering A.Q. Khan network 
remained "an albatross" around Pakistan's neck. Pakistan's 
ability to reach a new security arrangement with India and 
the increased strength of Pakistan's democratic institutions 
would be necessary conditions for the U.S. to consider 
civilian nuclear assistance to Pakistan. 

Something for the People of Pakistan 
- - - - - - - - - - - - - - - - - - 

¶11. (C) Zardari expressed his gratitude for U.S. assistance 
to Pakistan. He opined that he was "a casualty of the world 
recession" and needed something to give his people, as all 
they had since he came to power were price increases. 
Zardari requested that the USG weigh in with the IMF against 
further electricity tariff increases. Another increase, he 
warned, would result in riots in the streets. However, 
Zardari promised to broaden the tax base and implement a 
Value-added Tax (VAT), as required by the IMF Stand-by 
Arrangement. 

¶12. (C) Zardari said poverty, uncertainty, and the lack of 
educational and employment opportunities undermined 
Pakistan's potential as well as his political standing. 
Zardari said he needs a "deal" to show his people that he has 
something to offer them, and that assistance and trade 
concessions were prerequisites to "be able to think about 
India." 

¶13. (U) This cable was drafted after Senator Kerry departed 
Pakistan. 

¶14. (U) Participants 


ISLAMABAD 00000428 003 OF 003 


United States 
Senator John Kerry 
Ambassador Anne W. Patterson 
Dr. Jonah Blank, Senior PSM, SFRC 
Ms. Fatema Sumar, PSM, SFRC 
LCDR Greg Kausner, Military Liaison 
Wendy Nassmacher, Embassy Notetaker 

Pakistan 
President Ali Asif Zardari 
Defense Minister Chaudhry Ahmed Mukhtar 
Interior Minister Rehman Malik 
Finance Minister Shaukat Tarin 
Senator Syeda Sughra Hussain Imam 
Foreign Secretary Salman Bashir 
Presidential Chief of Staff Salman Faruqi 
Presidential Media Advisor Farahnaz Ispahani 
PATTERSON