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DE RUEHIL #3095/01 2661324
ZNR UUUUU ZZH
R 221324Z SEP 08
FM AMEMBASSY ISLAMABAD
TO RUEHC/SECSTATE WASHDC 8994
INFO RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RHEHNSC/NSC WASHINGTON DC
RUEAIIA/CIA WASHINGTON DC
RUEKJCS/SECDEF WASHINGTON DC
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RUEHNE/AMEMBASSY NEW DELHI 3810
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RUEHLM/AMEMBASSY COLOMBO 1520
RUEHLO/AMEMBASSY LONDON 8744
RUEHML/AMEMBASSY MANILA 3010
RUEHKP/AMCONSUL KARACHI 0373
RUEHLH/AMCONSUL LAHORE 6115
RUEHPW/AMCONSUL PESHAWAR 4926

UNCLAS SECTION 01 OF 02 ISLAMABAD 003095 
 
SENSITIVE 
SIPDIS 
 
E.O.  12958:  N/A 
TAGS: PGOV ETRD ECON EINV PK
SUBJECT: ECONOMIC POLICY IN PRESIDENT ZARDARI'S ADDRESS TO THE 
PARLIAMENT 
 
¶1. (SBU) Summary: On September 20, President Asif Zardari addressed 
a joint session of Parliament.  The speech touched briefly on 
economic issues, including a PKR 34 billion (USD 439.28 million) 
poverty alleviation plan and the need to eliminate oil and energy 
subsidies, increase the electric power grid capacity, and advance 
agricultural assets.  President Zardari also said he saw a new 
beginning for the economy, marked by renewed investor confidence and 
a resumption of foreign investment.  The speech did not contain 
details for achieving these goals and did not reassure either the 
domestic or the international audience that the government has a 
strategy for addressing the rapidly deteriorating economic 
situation. End Summary. 
 
¶2. (U) On September 20, newly-elected President Asif Zardari 
addressed a joint session of the Parliament.  This keystone speech 
covered a range of topics but lacked any comprehensive strategy on 
how to aid Pakistan's failing economy.  The following is an excerpt 
of the speech which was delivered in English, as it pertains to 
economic issues, from President Zardari's first Presidential 
address. 
 
¶3. (U) Begin excerpt quote: 
 
¶4. (U) POVERTY. 
 
¶5. (U) Madame Speaker, Honorable Members of Parliament, the greatest 
challenge this government faces is an economic one.  No elected 
government can survive the prospect of its people going hungry.  The 
immediate and most urgent task before the Government is to provide 
food security to the common man burdened with the rising prices of 
food items. 
 
¶6. (U) But we must realize that given the global oil and food shocks 
we face today, and the neglect of the Agricultural sector over the 
past nine years, this will not be enough to take the edge off the 
growing poverty our people face. To provide immediate relief to the 
poorest of the poor, the government has introduced welfare schemes 
across the board, with no political strings attached, like the 
Benazir Income Support Scheme for which a budgetary allocation of 
Rs. 34 billion has been made in the current Financial Year. 
 
¶7. (U) The ban on trade unions has been removed and the minimum wage 
of an unskilled worker has been increased. 
 
¶8. (U) ECONOMY. 
 
¶9. (U) Madam Speaker, I do realize that all this is not enough. 
Undoubtedly, your government inherited an economy that was driven by 
pure consumption, and as such was saddled with huge liabilities of 
unpaid subsidy-claims on account of petroleum products, power 
tariffs and luxury imports. The subsidies on oil and gas that we 
have removed is something no political government wants to shift, 
but this bitter pill we had to swallow because our balance of 
payments account could not sustain the expenditures of the last 
regime. 
 
¶10. (U) I see a new beginning for our economy, marked by a program 
of restoring investors' confidence, resumption of foreign 
investment, gradual build-up of reserves, exchange rate stability 
and, above all, revival of sustainable growth. 
 
¶11. (U) ENERGY. 
 
¶12. (U) Madam Speaker, I am aware of the harsh reality that Pakistan 
is passing through an acute energy crisis due to a serious shortfall 
of electricity. Unlike the last government, which did not install a 
single new Megawatt in seven years, our Government has taken 
immediate short and medium term measures to address the issue. We 
cannot take Pakistan out of darkness in one month, but we can 
certainly do it by the end of the next year. 
 
¶13. (U) AGRICULTURE. 
 
¶14. (U) Madam Speaker, the government needs to set core priorities. 
 
ISLAMABAD 00003095  002 OF 002 
 
 
 
¶15. (U) I believe that the vast and rapidly changing agriculture 
sector offers enormous opportunities to hundreds of thousands of 
rural poor to break the vicious cycle of poverty. 
 
¶16. (U) Agriculture-led growth will raise farm incomes, lower food 
prices and generate the surplus for exports that we so urgently 
need. Therefore, agriculture needs to be placed at the top of the 
agenda for ensuring food security on a long term basis, generating 
jobs and income for a vast majority of people living in the rural 
areas of the country. For the first time in the history of Pakistan, 
the government is looking at crop-insurance schemes. 
 
¶17. (U) End excerpt quote. 
 
¶18. (SBU) Comment: Zardari met with a high level visiting delegation 
including Monshin Khan, Director for the Middle East and Central 
Asia from the International Monetary Fund the previous day, in which 
he was reportedly urged to use the national address as a platform to 
convey a comprehensive strategy on how to stabilize the Pakistani 
economy.  Zardari, speaking in English, did not to use his national 
address to reassure international donors, investors, or Pakistani 
citizens about the rapidly deteriorating economic situation.  With a 
very small portion of his speech devoted to the economy and only 
vague measures enumerated, Zardari's speech did not provide comfort 
on economic measures for upcoming meetings with U.S government or 
World Bank officials.  Particularly in light of the bombing of the 
Marriott hotel and given the myriad of issues facing the PPP-led 
government, garnering high level attention on the economy has been 
slow in coming and may not yet be prioritized as appropriately as 
donor countries would prefer.   End Comment. 
 
PATTERSON