R 070605Z OCT 08
FM AMCONSUL LAHORE
TO SECSTATE WASHDC 3787
INFO AMEMBASSY ISLAMABAD 
AMCONSUL KARACHI 
AMCONSUL PESHAWAR 
AMEMBASSY NEW DELHI 
AMEMBASSY KABUL 
CIA WASHDC
NATIONAL SECURITY COUNCIL WASHINGTON DC
AMCONSUL LAHORE

C O N F I D E N T I A L LAHORE 000276 
 
 
E.O. 12958: DECL:  10/6/2018 
TAGS: PGOV PTER EFIN PK
SUBJECT: PUNJAB GOVERNOR TASEER TELLS AMBASSADOR THAT SHARIFS ARE TOO 
CLOSE TO EXTREMISTS 
 
Derived from: DSCG 05-1, B,D 
 
¶1. (C) Summary:  Punjab Governor Salman Taseer told Ambassador 
Patterson September 30 that Punjab Chief Minister Shabaz Sharif 
and his brother Nawaz have ignored the growing extremist threat 
in the Punjab.  Taseer, a member of the Pakistan People's Party 
(PPP), criticized the Sharifs' focus on political horse-trading 
designed to break the Pakistan Muslim League (PML) and allow the 
PML-N to "escape" from its provincial coalition with the PPP. 
Taseer believed, based on his discussions with the PML, that 
Shahbaz Sharif would not/not be able to muster the necessary 
votes if Taseer demanded that he show support of the majority of 
the assembly -- a move that the Govenor can constitutionally 
make at any time.  While Taseer repeatedly stated that he did 
not wish to use this power, he also indicated that if Shahbaz 
continued to try and break the PML and marginalize the PPP, he 
would have no alternative.  Taseer equally underscored that 
President Zardari would be the final arbiter of the timing of 
this move.  Taseer also indicated that if Shahbaz managed to 
avoid a confidence vote, the PPP might also consider imposing 
Governor's Rule in the Punajb on the grounds that Shahbaz's 
government was not doing enough to maintain law and order.  End 
Summary. 
 
Future of the Shahbaz Sharif Provincial Government 
 
¶2. (C) The Ambassador asked Punjab Governor Taseer about recent 
efforts by the PPP to forge a provincial alliance with the PML 
in an effort to force PML-N Chief Minister Shabaz Sharif from 
government.  Taseer responded that he had no interest in 
destabilizing the current provincial government.  However, 
Shahbaz had precipitated the crisis with his repeated attempts 
to create a sizeable forward block within the PML.  If Shahbaz 
succeeded in convincing the majority of the PML to join the new 
forward block, its members would then be free from prohibitions 
on party crossing and able to vote with the PML-N to give 
Shahbaz an outright majority in the Provincial Assembly (the 
PML-N currently has 171 provincial assembly members, 15 short of 
the 186 necessary for a majority).  The PML-N could then 
jettison its PPP partner and use its provincial power to 
challenge the PPP-led central government.  "They (the Sharifs) 
want to use the Punjab as in the past - to launch a ground 
assault to destabilize the federal government," he said.  "They 
are trying to replicate 1988, and they haven't learned 
anything." 
 
¶3. (C) Taseer claimed, therefore, that the PPP had to act 
preemptively in its own defense.  Taseer stated that if he 
believes the PPP no longer supports Shahbaz's provincial 
government, he would be constitutionally required to ask the 
Chief Minister to prove that he continues to enjoy a majority in 
the Assembly.  Taseer doubted that Shahbaz could win such a vote 
without PPP support.  The PML, unlike the "disciplined" MQM, is 
composed of "a scattering of individuals" and the PML-N cannot 
rely on it as a bloc of support.  "Even Shahbaz's own 171 
members will not all go with him in a vote," Taseer noted. 
Moreover, the Governor asserted that even if 15 PML members 
decide to support the PML-N, the law against floor-crossing 
would invalidate their votes and disqualify them from the 
Provincial Assembly. 
 
¶4. (C) Taseer also noted that the PPP had considered moving a 
vote of no-confidence against Shahbaz on the grounds that he had 
not done enough to protect law and order and/or implementing 
Governor's rule in the Punjab on the same pretext.  Neither of 
these possibilities, however, seemed to enthuse Governor Taseer. 
 Taseer concluded by noting that the PPP had recently issued an 
ultimatum to Shahbaz that he respect its "rights" in the 
provincial government and stop trying to create a PML forward 
block, or it would move against his government.  Taseer believed 
the likelihood of Shahbaz living up to this agreement was slim, 
but stressed that timing of any action against Shahbaz and the 
nature of the action was up to President Zardari. 
 
¶5. (C)  The Ambassador voiced concern that taking the provincial 
government from the PML-N would remove that party's stake in 
constructive governance and could lead it to destabilize the PPP 
government through street protests that could take on a very 
anti-American tone.  She reflected that the anti-American 
comments voiced by the PML-N in response to President Zardari's 
visit to the U.S. could herald a wider campaign.  Taseer 
disagreed, arguing that the Sharifs were more dangerous in the 
provincial government than out of it, as they were using the 
organs of state power to strengthen their grip on the Punjab at 
the expense of the federal government.  He feared that left to 
their own devices, the PML-N would use the provincial government 
to destabilize the country.  The Governor bemoaned the PML-N's 
willingness to sacrifice long-term policy for short-term 
political gains.  "I wish they would take the five-year view 
because we cannot have elections every month," he opined.  "We 
need to be clear that on the economy and security, the parties 
need to work together."  Instead, he continued, the PML-N "is 
using populist methods by taking an anti-American stance." 
 
Taseer Links Sharifs to Terrorists 
 
¶6. (C) Taseer claimed that Shahbaz Sharif's government lacked 
any real plan or commitment for dealing with 
extremists/terrorists in the Punjab.  In response to the 
Ambassador's inquiries the Governor lamented that the Punjab 
government has done nothing to arrest Qari Saif Ullah Akhtar of 
Harkat Jihad al Islami; Maulana Masood Azhar of 
Jaiseh-e-Muhammad; Maulana Ludianvi of Sipah-e-Sahaba, or Hafiz 
Muhammad Saeed Azhar of Lashkar-e-Taiba -- despite outstanding 
warrants for their detention.  He claimed that the Sharif 
brothers "keep going to madrassas that are extremely 
reactionary, and canoodling with maulvis."  He contrasted the 
PML-N negligence with the PPP's attention to the issue: 
"President Zardari, [Interior Minister] Rehman Malik, yours 
truly -- we are clear [the mullahs] are the number one enemies." 
  Taseer related that he organized a terrorism briefing for 
local officials and media, which detailed the linkages between 
the terrorists in northern Pakistan and extremist groups in 
Punjab, which have spawned Taliban commanders.  Extremists run 
"rampant" in Punjab, Taseer maintained.  He worried that the 
army's recent success in Bajaur will compel the militant groups 
to "seek sanctuary" in Punjab. 
 
Financial Crisis Will Hurt Pakistani Brokers and Clients 
 
¶7. (C) Taseer, who in addition to his official role owns one of 
Pakistan's largest brokerage firms, lamented that the American 
financial crisis will impact margin-buying in Pakistan and cause 
many Pakistani brokerages to go out of business when they cannot 
cover the margin cost.  Taseer related that the crisis has hurt 
his own firm, but a large amounts of cash on hand from the 
recent sale of the majority holding in his telecommunications 
company has helped him weather the storm.  He noted that the 
Pakistan stock market attracts nearly one million investors, 
with the middle-class owning a substantial share of the funds. 
Taseer doubted that foreign portfolio investors, who in recent 
years have held large shareholdings in the local exchange, would 
continue to come to Pakistan during the international and 
domestic financial "debacle."  He predicted that the impact on 
second-level brokerage houses will be "disastrous."  Compounding 
the problem, many investors put their futures in oil, which has 
also taken a speculative hit and, he surmised, could decrease to 
USD 70 per barrel.  On the other hand, low fuel prices are good 
for Pakistan's budget crisis and lack of reserves, he noted. 
Taseer advised that China has the cash to deposit in the State 
Bank of Pakistan.  China could then fund its many projects in 
Pakistan by using the cash it would have invested in the Bank. 
Any infusion would help pop the speculative bubble that has 
pushed the dollar exchange rate to 78 rupees, about ten rupees 
above the actual price, he estimated. 
 
Comment 
 
¶8. (C) Taseer's personal and political animosity with Shahbaz 
Sharif may be clouding his political judgement.  While the PPP 
may gain short-term in the Punjab by ending its alliance with 
the PML-N, forcing Shahbaz from power will only serve to anger 
the PML-N's sizeable provincial base and lead to demonstrations 
against the sitting government.  Further, with the PML-N in 
government, it must at least assist in helping to deal with the 
twin national crises of economic collapse and terrorism in order 
to maintain credibility with voters.  If the party is locked out 
of the system, it will, no doubt, turn its venom on the PPP and 
take an increasingly unhelpful and stridently anti-American tone 
on both issues.  The PML-N has a demonstrated ability to shape 
public opinion in the Punjab.  At present, the Governor's 
over-the-top allegations notwithstanding, both Shahbaz and Nawaz 
have been constructive both in condemning extremism and in 
working cooperatively through provincial authorities to 
dismember terrorist cells in the Punjab.  Their historically 
close relationship with the security establishment, which the 
PPP lacks, has been critical in this regard.  In addition, while 
Shahbaz has not been helpful to his PPP allies, he has not/not 
yet demonstrated any intention to utilize the Punjab government 
as a tool to destabilize the center as in 1988.  Even if he 
wanted to do so, such a move would likely be untenable as unlike 
in 1988, the Sharifs do not control the presidency or have a 
close relationship with the military establishment.  End Comment. 
 
 
HUNT