US embassy cable - 05AMMAN4597

C O N F I D E N T I A L SECTION 01 OF 02 AMMAN 004597 
 
SIPDIS 
 
STATE PASS TO USTR 
STATE FOR SA FRONT OFFICE, NEA FRONT OFFICE, NEA/PI 
 
E.O. 12958: DECL: 06/03/2015 
TAGS: EFIN, EAID, KMPI, PREL, ECON, JO, PK 
SUBJECT: BMENA CONFERENCE: A/S WAYNE'S MEETING WITH 
PAKISTANI MINISTER OF STATE FOR ECONOMIC AFFAIRS KHAR 
 
Classified By: A/DCM CHRIS HENZEL FOR REASONS 1.4 (B) AND (D). 
 
 1. (C)  SUMMARY:  On the margins of the BMENA Trade and 
Investment Conference in Amman on May 18, Pakistan's Minister 
of State for Economic Affairs Hina Rabbani Khar told 
Assistant Secretary E. Anthony Wayne that her government was 
pleased to be part of the BMENA process and was committed to 
broad-scale reforms in support of stable macroeconomic growth 
and fiscal responsibility including through more 
privatizations.  In response to A/S Wayne, she expressed 
support for the U.S.-Pakistan "shared objectives" approach to 
review reform efforts in conjunction with the release of ESF 
monies.  She also outlined health and education development 
goals (more rural focus, moving away from World Bank 
programs), Pakistan's second UNDP Millennium Development 
Goals report (better than before), Pakistan's OECD credit 
rating (not truly reflective), and the U.S. Millennium 
Challenge Account statistics on Pakistan (outdated).  Wayne 
reminded the Minister of the need to resolve lingering 
investment disputes such as the Siemens Westinghouse case. 
END SUMMARY. 
 
2.  (C)  Minister Khar was joined by Pakistan's Amman Embassy 
Counselor Prince Baktar Ali, and also by Minister Counselor 
for Economics Mushtaq Malik from Pakistan's Embassy in 
Washington, DC.  Accompanying A/S Wayne in the meeting with 
Khar was Econoff Greg Lawless (notetaker). 
 
Reform Is Key 
------------- 
 
3. (C)  A/S Wayne opened with a brief review of the "shared 
objectives" exercise and the USG's desire to work with 
Pakistani counterparts in efforts to reform.  The immediate 
need is to update the objectives or the year ahead Wayne 
said.  He noted that, among other benefits, the U.S. Congress 
would be more committed to supporting Pakistan if it could 
see results through this exercise.  Khar noted that the 
process was similar to the annual Pakistan Development Forum 
and expressed support for the process. 
 
Macroeconomic Picture: An "Investment Opportunity" 
--------------------------------------------- ----- 
 
4.  (C)  Turning to Pakistan's macroeconomic framework, 
Minister Khar said that it was strong, as reflected by the 
government's commitment to quickly pass the Fiscal 
Responsibility (and Debt Limitation) Law.  The law had passed 
the lower house of parliament and was pending in the upper 
house, she noted.  Pakistan Telecom was up for bid, she said, 
noting there had been 6-7 bids to that point.  SingTel had 
expressed keen interest, she said.  All in all, the good 
response had shown that the world saw Pakistan as a good 
investment opportunity.  Karachi Electric Supply Corporation 
(KESC) was also put on the auction block earlier in the year. 
 Economic Counselor Malik noted KESC was a picked up by a 
combination of German technology (Siemens) and Saudi money 
(Kanuz al-Watan).  Wayne reminded the Pakistani team of the 
need to resolve lingering investment disputes, noting in 
particular the Siemens-Westinghouse case which had now been 
pending in Pakistan courts for years. 
 
Development: More IDA Soft Loans 
-------------------------------- 
 
5.  (C)  On the human development side, Pakistan had a 
variety of infrastructure programs in water, energy, and 
educational infrastructure, Khar said.  Other programs were 
aimed at governance (devolution) and at health and education 
sectors.  From the policy perspective, Khar said she believed 
there were discrepancies in the urban/rural mix of programs 
and in their geographic distribution in Pakistan.  Although 
she believed a World Bank program aimed at enhancing 
education in the Punjab was successful, both in increasing 
enrollments and in keeping more girls enrolled in grades 6-8, 
she said that the GOP was looking at ending its programs with 
the World Bank because it offered no soft loans.  As far as 
IDA went, Pakistan would look for as much soft lending as 
possible, she said. 
 
6.  (C)  The second UNDP Millennium Development Goals (MDG) 
report (released in February) had shown Pakistan was doing 
better than before, she noted.  There were some challenges, 
but basically Pakistan was on track and would meet its next 
targets.  That at least was her government's hope, she said. 
 
One Plan for Channeling Assistance 
---------------------------------- 
 
7.  (C)  The Pakistan Development Forum review of donors had 
been useful, she said, in that it had set a goal of having a 
mechanism for distribution of assistance and the government 
channeling funding through one plan.  She noted that Mr. John 
Wall of the World Bank (WB Country Director for Pakistan) 
would be drafting a proposal to be ready at the end of May. 
A/S Wayne noted that the ESF review would also aim to review 
a coordinated approach to assistance distribution, starting 
with the disbursement of up to $200 million in the near 
future. 
 
Enthusiasm for BMENA Process 
---------------------------- 
 
8.  (C)  Noting that Pakistan had played an active role in 
the Rabat BMENA conference, Khar indicated enthusiasm for 
taking a leading role and said that the GOP was committed to 
supporting programs in entrepreneurship and press freedoms, 
to name just two.  She mentioned plans to build an 
entrepreneur help center like those being established in 
Morocco and Bahrain under the BMENA umbrella.  In connection 
with these and other plans, she requested to know more about 
the USTDA and if it could play a role.  A/S Wayne replied 
that he had written Aziz in support of this enterprise and 
would need to check to see if a decision had been made. 
 
OECD "Not a True Reflection"; MCA Uses Old Statistics 
--------------------------------------------- -------- 
 
9.  (C)  Minister Khar noted that the OECD credit rating for 
Pakistan was not a true reflection of the country's economic 
stability.  She said that, compared to India and Bangladesh, 
Pakistan's rating was not reflective of its stronger 
standing.  She asked for the USG view on this issue, and 
perhaps its assistance.  A/S Wayne replied that he would 
check on this matter, but made no commitments. 
 
10.  (C)  Khar also noted that the USG's Millennium Challenge 
Account (MCA) was relying on outdated statistics regarding 
Pakistan.  A/S Wayne advised the minister that Pakistan 
should be in contact with the MCA Corporation directly and, 
for example, refer them to more recent World Bank data. 
 
11.  (C)  COMMENT:  Minister Khar, who had received 
post-graduate education in the U.S., displayed an impressive 
mastery of her brief.  Her presentation conveyed a commitment 
to reform and dedication to the improvement of the lives of 
average Pakistanis, especially women and those from rural 
areas.  She should prove to be a strong supporter and useful 
ally in the BMENA process. 
HALE