VZCZCXRO5258
RR RUEHLH RUEHPW
DE RUEHIL #3377/01 3010558
ZNR UUUUU ZZH
R 270558Z OCT 08
FM AMEMBASSY ISLAMABAD
TO RUEHC/SECSTATE WASHDC 9470
INFO RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHBJ/AMEMBASSY BEIJING 5015
RUEHML/AMEMBASSY MANILA 3049
RUEHBUL/AMEMBASSY KABUL 9302
RUEHNE/AMEMBASSY NEW DELHI 3938
RUEHLO/AMEMBASSY LONDON 8950
RUEHKP/AMCONSUL KARACHI 0513
RUEHLH/AMCONSUL LAHORE 6251
RUEHPW/AMCONSUL PESHAWAR 5087
RUMICEA/USCENTCOM INTEL CEN MACDILL AFB FL
RHMFISS/CDR USCENTCOM MACDILL AFB FL
RUEAIIA/CIA WASHDC
RUEKJCS/SECDEF WASHINGTON DC

UNCLAS SECTION 01 OF 02 ISLAMABAD 003377 
 
SENSITIVE 
SIPDIS 
 
REF: BEIJING 04031 
 
E.O. 12958:  N/A 
TAGS: ECON EFIN EAID EIND ENGY EPET PREL PGOV PK
SUBJECT:  PAKISTAN-CHINA AGREEMENTS: NEITHER NEW NOR SPECIFIC 
 
¶1.  (SBU) Summary.  To further the strategic partnership between the 
two countries, Pakistan and China signed 11 agreements during 
President Zardari's recent visit to China.  These agreements range 
in scope from economic cooperation to the construction of two 
nuclear power plants to a Memorandum of Understanding (MoU) between 
China's Cricket Association and the Pakistan Cricket Board. 
Although these "new" deals received a large amount of fanfare and 
press in Pakistan, they are vague in detail and non-binding in 
nature. Many of the 11 accords are either old or in fields in which 
the two governments are already heavily collaborating.  Pakistan 
requested a soft loan to deal with the current balance of payment 
crisis but China has yet to offer any money.  End Summary. 
 
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NOTHING NEW IN THE DEALS 
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¶2.  (U) President Zardari traveled to China for four days on his 
first official state visit abroad. During his stay, Pakistan and 
China inked 11 deals in order to enhance economic cooperation in 
various sectors as part of a comprehensive strategic partnership. 
Both countries agreed that they share many economic opportunities 
which can be exploited to their mutual benefit. On October 15, 
protocols and Memoranda of Understanding (MoU) in the fields of 
infrastructure, information technology, energy, telecommunication, 
agriculture, industry, minerals, trade, and space technology were 
established.  The 11 deals include: 
 
- Assistance to build two more nuclear power plants; 
- Agreement on economic and technical cooperation; 
- Amending protocol to the bilateral Free Trade Agreement; 
- Framework agreement to set up a USD 300 million National 
Electronics Complex in Pakistan; 
- Framework agreement on mineral cooperation; 
- MoU on cooperation in petroleum and natural resources; 
- Agreement on environmental protection; 
- Framework agreement for cooperation in the field of radio and 
television; 
- Paksat-IR Satellite procurement contract; 
- MoU on scientific collaboration in agricultural research and 
technical cooperation, and; 
- MoU on cooperation between China's Cricket Association and the 
Pakistan Cricket Board. 
 
¶3.  (SBU) The Economic Affairs Division (EAD) Deputy Secretary, Mr. 
Waqar Ali, confirmed that all of these agreements are just Memoranda 
of Understanding that outline the broad areas of cooperation but do 
not require specific actions.  He stated that these MoUs are 
intentionally general in nature and lacking in details.  Ali noted 
that the governments are not obligated to implement MoUs as they are 
non-binding.  He also reported that this list of 11 agreements may 
not be the final list as they have not received all of the final 
details yet.  Follow up meetings between GOP officials and Chinese 
officials will be scheduled to hammer out the details of these MoUs, 
though no timelines have been fixed as of yet.  Furthermore, Ali 
confirmed that most of these agreements are either old or they are 
in sectors in which China and Pakistan are already cooperating. 
 
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INVESTMENT WANTED 
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¶4. (U) According to press reports, President Zardari met with over 
200 top corporate executives while in China and offered "special 
preferential treatment" to Chinese investors and urged them to 
invest in Pakistan and benefit from its geo-strategic location. He 
highlighted opportunities for investment in the trade, financial 
services, banking, energy, construction, real estate and tourism 
sectors and stated that Chinese companies are welcome to invest in 
these fields to help develop the country's untapped potential. 
President Zardari noted that all manner of amenities would be 
provided to Chinese investors and that he is in favor of the 
development of Pakistan-China industrial and economic zones across 
the country. 
 
 
ISLAMABAD 00003377  002 OF 002 
 
 
¶5. (U) President Zardari also reportedly met with representatives 
from important Chinese institutions such as China International 
Capital Corporation, Export and Import Bank of China, Sinoma Group 
(cement manufacturing), MCC (steel construction company), All China 
Federation of Industry and Commerce and Industrial Commercial Bank 
of China.  The media reported that they showed a keen interest and 
willingness in enhancing the existing cooperation in the banking, 
agriculture, and financial sectors, as well as in the cement, and 
steel industries. 
 
¶6. (U) Prime Minister Yousuf Raza Gilani traveled to Beijing on 
October 23 to participate in the Asia-Europe Meeting (ASEM).  Prime 
Minister Gilani addressed the plenary session of the ASEM and 
highlighted Pakistan's role as a bridge between Europe and Asia. He 
also reportedly met with Chinese businessmen to encourage more 
investment in Pakistan. 
 
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DESPERATE FOR BUDGETARY SUPPORT BUT NO MONEY ON THE TABLE 
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¶7. (U) Pakistan requested a soft loan from China to deal with its 
balance of payments problems and to shore up its finances. While 
China is purportedly still considering this request, no money was 
announced during the visit and no GOP officials can confirm that any 
aid will be forthcoming in the short term.  Officials note that 
China may not deliver money anytime soon as a large loan would 
require approval from various Chinese ministries and bureaucracies. 
The heads of the Bank of China, XEM Bank of China and People's Bank 
of China are reportedly scheduled to visit soon to asses Pakistan's 
financial needs.  In fact, the head of the People's Bank of China, 
the Chinese Central Bank, is likely to visit Pakistan on October 27. 
 In addition, representatives from the energy, information 
technology, and mineral development sectors will visit Pakistan to 
explore opportunities for Chinese companies in their respective 
sectors.  For example, GOP Foreign Minister Qureshi publicly stated 
that China would play a major role in completing the USD 11 billion 
Diamer-Bhasha dam and the USD 1.2 billion Neelum-Jhelum hydropower 
plant. 
 
¶8. (SBU) Comment. While the signing of these 11 agreements made 
headlines nationwide, these agreements primarily consist of 
non-binding Memoranda of Understanding which serve more as general 
umbrella agreements to indicate cooperation in various sectors 
rather than concrete, specific deals.  Post believes that the two 
nuclear power plants that were announced during this visit were part 
of a plan made several years ago when the Chinese helped construct 
the Chashma 1 and Chashma 2 nuclear power plants.   Post will 
continue to seek specific deals on any of these agreements and will 
report septel when available.  End Comment. 
 
PATTERSON