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PP RUEHLH RUEHPW
DE RUEHPW #0434/01 2381007
ZNY CCCCC ZZH
P 251007Z AUG 08
FM AMCONSUL PESHAWAR
TO RUEHC/SECSTATE WASHDC PRIORITY 7601
INFO RUEHIL/AMEMBASSY ISLAMABAD PRIORITY 4367
RUEHKP/AMCONSUL KARACHI PRIORITY 1603
RUEHLH/AMCONSUL LAHORE PRIORITY 1596
RUEHBUL/AMEMBASSY KABUL PRIORITY 1225
RUEHNE/AMEMBASSY NEW DELHI PRIORITY 0881
RUEHBY/AMEMBASSY CANBERRA PRIORITY 0503
RUEHLO/AMEMBASSY LONDON PRIORITY 0641
RUEHOT/AMEMBASSY OTTAWA PRIORITY 0593
RUEHNO/USMISSION USNATO PRIORITY 0504
RUEHTC/AMEMBASSY THE HAGUE PRIORITY 0551
RHEHAAA/NSC WASHINGTON DC
RUEAIIA/CIA WASHDC
RUMICEA/USCENTCOM INTEL CEN MACDILL AFB FL
RHMFISS/CDR USSOCOM MACDILL AFB FL
RUEHPW/AMCONSUL PESHAWAR 4631

C O N F I D E N T I A L SECTION 01 OF 02 PESHAWAR 000434 
 
SIPDIS 
 
E.O. 12958: DECL:  8/25/2018 
TAGS: PTER EAID PGOV PINR ASEC PK
SUBJECT: NWFP: OPERATIONS CONTINUE IN SWAT WHILE BUSINESS DECLINES 
 
REF: A) PESHAWAR 422 B) PESHAWAR 345 C) PESHAWAR 364 D) 07 PESHAWAR 800 
 
CLASSIFIED BY: Lynne Tracy, Principal Officer. 
REASON: 1.4 (a), (b), (d) 
Summary 
------- 
 
¶1. (C) Noor Muhammad Khan, a resort and business owner in Swat 
who has been a regular contact of the Consulate, detailed the 
decline of business interests in Swat during a meeting with 
Principal Officer on August 18.  He said that while the recent 
round of operations (Ref A) in Swat have been more successful 
than those of November 2007-January 2008 (Ref D), the Pakistan 
army and civilian government still lack credibility.  The 
government, he commented, could do the most immediate good by 
providing relief in the form of basic food staples.  Although 
some of Noor's economic statistics are difficult to confirm, we 
offer his comments as a window onto the toll that Swat's 
insurgency has taken on the local economy and as a community 
leader's assessment of the government's performance in Swat. 
End Summary. 
 
Continuing Operations 
--------------------- 
 
¶2. (C) Noor told PO that the Pakistan Army's first operation in 
Swat (Ref D) had ended abruptly and without results.  Then, from 
the beginning, questions about the militants' sincerity in 
negotiation suggested that the peace agreement would fail (Ref B 
& C).  He remarked that in the first operation it seemed like 
"the army was trying to scare the militants rather than defeat 
them," striking to the side of targets rather than hitting the 
center.  Noor remarked that the second phase of the agreement 
has been conducted more correctly.  Nevertheless, he made the 
caveat that the army should strike targets more carefully and at 
closer range.  Frequently, attacks hit civilians.  He expects 
the operation to last until Ramadan. 
 
¶3. (SBU) Mingora and Saidu Sharif observe a curfew time from 
2000-0700 hrs.  However, during the daylight traffic is moving 
as normal.  In some ways infrastructure has improved, the road 
over the Malakand River has been completed expediting travel 
between Swat and Islamabad or Peshawar. 
 
Credibility 
----------- 
 
¶4. (C) Noor credited the provincial government with taking the 
correct course of action in signing a peace deal in May with 
militants.  The government, he said, need to show a willingness 
to talk.  Now that the militants have continued attacks, the 
government, he continued, is justified in a military response. 
 
¶5. (C) Noor maintained, however, that the Pakistan Army loses 
credibility when it has the opportunity to strike and fails to 
act or strikes inaccurately.  A recent press conference held by 
militants was a perfect example, he said, of how the military's 
credibility can be undermined.  Despite the fact that the 
militants gave advance notice of the press conference, held it 
around 5 kilometers from a Pakistan Army location, and several 
high level militants attended, the Army did nothing. 
 
¶6. (C) Noor said that between January and February the Pakistan 
Army received PRS 100 million ($1.43 million) for relief 
efforts.  After negotiation, the money went to locally elected 
officials for distribution and implementation of relief 
projects.  Now, due to the second operation, the civilian 
government has stopped work in areas where militants are most 
active (Kabal and Matta Tehsils).  Noor said that immediate 
relief was necessary.  As Ramadan approaches, edibles, 
particularly flour and oil could be as important as larger scale 
projects. 
 
Business Decline 
---------------- 
 
¶7. (C) Noor's hotel, Rock City Resort (located on the opposite 
side of the Swat River from Mullah Fazlullah's Imam Dheri 
compound), is not operating both because there are no tourists 
and because the army is occupying it.  He closed his factory, 
Allied Rubber, because most of the skilled laborers were from 
the Punjab and returned home for fear of the security situation. 
 
PESHAWAR 00000434  002 OF 002 
 
 
 Many poor people and semi-skilled laborers have also departed 
for Karachi and the Punjab to find jobs.  Many more are trying 
to go to the Middle East for work. 
 
¶8. (C) Noor estimated that 70% of Swat's fruit crops are still 
arriving at market.  However, people are becoming afraid to work 
in the village fields.  He said that places around Mingora, 
previously safe, are being targeted by militants.  Noor also 
noted that a cosmetics factory had been receiving threats 
because it employed 50% female workers.  It closed last week 
after being bombed. 
 
Comment 
------- 
 
¶9. (C) Swat continues to be plagued by militant attacks, 
particularly a bombing campaign that has reportedly destroyed at 
least 25 girls' schools since May.  The simmering instability in 
Swat will continue to hamper the revival of local industries, 
and Swat's long-term recovery in part depends on the 
government's ability to restore the confidence of businessmen 
like Noor. 
TRACY