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UNCLAS SECTION 01 OF 02 ISLAMABAD 001601 
 
SIPDIS 
 
SENSITIVE 
 
SIPDIS 
 
E.O. 12958:  N/A 
TAGS: EINV EFIN ENGY ECON PGOV PREL PK
SUBJECT: GOP NOT YET FOCUSED ON BIT NEGOTIATIONS BUT INTERESTED IN 
ENERGY INVESTMENT CONFERENCE 
 
Ref:  Islamabad 
 
Summary 
------- 
 
¶1.  (U) This is an action request.  Please see para five. 
 
¶2.  (SBU) Summary:  Econoffs met with Board of Investment (BOI) 
Executive Director General Major (Rtrd) Iqbal Ahmad and BOI staff 
April 17 to discuss resumption of BIT negotiations and organization 
of a Pakistan energy investment conference in the U.S.  Ahmad stated 
that the new GOP is "on a war footing" regarding the energy and 
wheat shortages, and has not yet had time to read in on the BIT 
file.  The BOI has already begun to discuss organizing an energy 
investment conference in July or August in Houston, and asked for 
USG assistance. The Siemens-Westinghouse dispute settlement case was 
also discussed.  End summary. 
 
¶3.  (SBU)  Economic and Commercial Affairs Counselor, Deputy 
Economic and Commercial Affairs Counselor, and Economic Specialist 
met with Board of Investment (BOI) Executive Director General Major 
(Rtrd) Iqbal Ahmad (BOI's current number two) and BOI staff April 17 
to discuss resumption of BIT negotiations and organization of a 
Pakistan energy investment conference in the U.S. 
 
Bilateral Investment Treaty 
--------------------------- 
 
¶4.  (SBU) On the Bilateral Investment Treaty 
(BIT), Ahmad said that the new GOP is not yet ready to address 
resumption of negotiations.  Having only been in office for three 
weeks, the energy and wheat crises are occupying most of the new 
government's attention, and the relevant ministries have not yet had 
a chance to review the files.  We gave BOI a copy of the November 
22, 2006 letter to Pakistan's then Attorney General Makhdoom Ali 
Khan. 
 
¶5.  (SBU) BOI's legal advisor, Shamila Mahmood, commented that the 
U.S. still owes the summary ("minutes") of the last negotiating 
session in 2006.  BOI will remain the lead on the BIT, which the 
Ambassador raised in her April 11 meeting with Finance Minister Dar 
(reftel).  We also raised the BIT in briefings with the Pakistan's 
Ambassador-designate to the U.S. Husain Haqqani April 15, and 
People's Party of Pakistan (PPP) Co-Chairman Asif Zadari April 16. 
Action request:  Embassy requests a copy of the record of the 2006 
negotiating session to give to the GOP. Post believes that this 
session was done via teleconference.  End action request. 
 
¶6.  (SBU) Ahmad and Mahmood noted that several of the Ministries 
have asked BOI about the possibility of negotiating a Free Trade 
Agreement (FTA) with the U.S. They explained that the new Ministers 
were getting briefed on the issues and they have conveyed the 
details from the bilateral exchange of letters between Presidents 
Bush and Musharraf. Econ Counselor explained that the BIT is the 
best vehicle for cooperation and investment promotion and protection 
at this time, given the expiration of Trade Promotion Authority 
legislation in 2007.  BOI staff did understand that a BIT is very 
similar to the FTA investment chapter. 
 
Reconstruction Opportunity Zones 
-------------------------------- 
 
¶7.  (SBU) Ahmad asked about progress on Reconstruction Opportunity 
Zones (ROZs).  Deputy Econ Counselor briefed on the introduction of 
the legislation in the Senate, and expressed our hope that this 
legislation would be passed quickly so that we can move onto 
implementation.  BOI will take an active role once investors are in 
place. 
 
Energy Conference 
----------------- 
 
¶8.  (SBU) The GOP has wanted to sponsor an energy conference since 
last year but the timing has been problematic until now.  BOI will 
be the lead GOP agency, and it has identified a July/August 
timeframe in Houston.  They will reach out to the Pakistani Embassy 
in Washington, Consulate in Houston, and U.S. energy companies 
already active in Pakistan.  At the suggestion of the Canadian 
 
ISLAMABAD 00001601  002 OF 002 
 
 
government, they will do a similar conference in Calgary.  Econoffs 
emphasized that it will be important to set a date quickly, and that 
the GOP should contact Representative Shelia Jackson Lee and Senator 
Kay Bailey Hutchison since they both represent the Houston area and 
have traveled to Pakistan recently. 
 
¶9.  (SBU) Econoffs also raised the difficulties in setting utility 
tariffs in Pakistan and suggested that the energy Conference 
delegation also included representatives of the tariff regulatory 
body.  The BOI noted that the Finance Minister has raised the tariff 
issue as unnecessarily cumbersome in attracting foreign investment 
into the energy sector.  Ahmad acknowledged the tariff difficulties, 
and noted that the Finance Minister wants to create a "one stop 
window" within the BOI that would facilitate this process for 
foreign investors.  We also raised the issue of non-payment of the 
differential between international and domestic prices for U.S. 
energy companies in Pakistan.  BOI recognizes the problem and its 
potential effect on new U.S. energy investment here. 
 
Siemens-Westinghouse investment dispute 
--------------------------------------- 
 
¶10.  (SBU) In support of why a BIT is necessary for foreign 
investors, Econoffs raised the long-standing Siemens-Westinghouse 
investment dispute, which has been mired in Lahore courts for about 
five years.  BOI Legal Advisor said that she would take a look at 
the case, and recommended that both sides push for resolution with 
the parties to end this long-standing dispute.  Ahmed noted that the 
Finance Minister had recently asked about the details of this case 
as well.  We will continue to follow up. 
 
Comment 
------- 
 
¶11.  (SBU) Comment:  We will continue to raise resumption of BIT 
negotiations and the advantages of concluding a BIT with appropriate 
GOP officials, but recognize that resolution of the energy and food 
shortages and the fiscal deficit are the principal preoccupations 
for the new GOP.  We will be approaching Washington agencies for 
assistance with the GOP plans for an energy investment conference as 
they evolve.  End comment. 
 
PATTERSON