197042            3/16/2009 12:24          09ISLAMABAD560   Embassy Islamabad      CONFIDENTIAL                   "VZCZCXRO0532

OO RUEHLH RUEHPW DE RUEHIL #0560/01 0751224 ZNY CCCCC ZZH O 161224Z MAR 09 FM AMEMBASSY ISLAMABAD TO RUEHC/SECSTATE WASHDC IMMEDIATE 1885 INFO RUEHBUL/AMEMBASSY KABUL PRIORITY 0010 RUEHLO/AMEMBASSY LONDON PRIORITY 9894 RUEHNE/AMEMBASSY NEW DELHI PRIORITY 4625 RUEHKP/AMCONSUL KARACHI PRIORITY 1284 RUEHLH/AMCONSUL LAHORE PRIORITY 6947 RUEHPW/AMCONSUL PESHAWAR PRIORITY 5874 RHMFISS/CDR USCENTCOM MACDILL AFB FL PRIORITY RUEKJCS/JOINT STAFF WASHINGTON DC PRIORITY RUEKJCS/SECDEF WASHINGTON DC PRIORITY RUEAIIA/CIA WASHDC PRIORITY         "C O N F I D E N T I A L SECTION 01 OF 04 ISLAMABAD 000560

SIPDIS

E.O. 12958: DECL: 08/04/2018

TAGS: PREL, PTER, PGOV, PK

SUBJECT: IMPLICATIONS OF THE LONG MARCH

Classified By: Anne W. Patterson, for reasons 1.4 (b)(d)

1.  (C)  Opposition parties and lawyers are dancing in the streets.  Asif Zardari's sudden decision late March 15 to capitulate to Nawaz Sharif exposed his political weakness and isolation after the debacle of imposing governor's rule in Punjab. Chief of Army Staff General Kayani's late night meetings with Zardari and Gilani may have helped them decide on the merits of avoiding more street violence after a troubled day in Lahore.   Interestingly, Zardari allowed PM Gilani to take the public credit for plans to restore Punjab Chief Minister Shahbaz Sharif and former Chief Justice Iftikhar Chaudhry.

2.  (C)  This alleged win for civil society was really a victory for Nawaz Sharif, and whether he presses for more may determine Zardari's future.  Nawaz does not have the votes to bring down the government or impeach Zardari, but that does not mean he would not try.  A weakened Zardari may not be able to prevent enactment of constitutional reform to shift powers from the President to the Prime Minister.

3.  (C)  It is too soon to count Zardari out--we expect he still has cards to play--but we need to consider the consequences of our most effective interlocutor in Pakistan losing the political strength to pursue a shared agenda. Increasingly, we may have to deal with an empowered PM Gilani who supports a close U.S.-Pakistan relationship but is concerned about U.S. strikes in the tribal areas and prefers reconciliation to combat with militants.  To retain coalition support, Zardari may feel compelled to sign the Swat deal on Shari'a law.  Interior Minister and Zardari confidant Rehman Malik has been our strongest partner in pressing for Mumbai prosecutions, but he also has lost standing as a result of this crisis.

4.  (C)  Longer-term, if Gilani becomes the face of Pakistan, we will lose Zardari's ability to project confidence to both Donors and Friends.  He also may be unable to deliver on his promise to give former President Musharraf indemnity; a reinstated Chief Justice Chaudhry could challenge his old nemesis Musharraf on a number of grounds.  Chaudhry could renew his efforts to release the ""disappeared,"" and we will need to engage to protect our equities on a small number of these terrorist detainees.  On a positive note, U.S. efforts to mediate the Zardari-Sharif dispute generally have been well-received by the public and the opposition parties alike. High-level Washington intervention with the Sharifs has helped build relations with the brothers and should strengthen our hand in future interactions.  End Summary.

5.  (C)  It will take some time for all the consequences of the lawyers' ""long march"" to play out.  In the short term, Prime Minister Gilani's announcement that the judges (including former Chief Justice Iftikhar Chaudhry) deposed by then President Musharraf would be restored and the government would file a review petition challenging the Supreme Court's decision to disqualify Nawaz and Shahbaz Sharif from office is good news.  It will end governor's rule, restore Shahbaz Sharif as Chief Minister of Punjab, and resolve a two-year struggle by lawyers to overturn Musharraf's extra-constitutional action to sack uncooperative judges. The government's sudden capitulation and the Pakistan Muslim League-N (PML-N) decision to stop the march ended an unnecessary political crisis that was creating violent street protests.

Sudden Capitulation -------------------

6.  (C)  Several factors contributed to the government's sudden change of heart.  Despite repeated polling that showed Nawaz Sharif as the most popular leader in Pakistan (by a favorability factor of 83% to Zardari's 20% in the latest IRI poll), Zardari underestimated Nawaz's ability to bring people into the streets.  In spite of extensive efforts, neither the GOP nor the Punjab government under Pakistan People's Party (PPP) Governor Taseer was able to limit or control the crowds.  Zardari believes that Taseer misled him in estimating the reaction to imposing governor's rule.  As resignations of mid-level police officers in Punjab and the ability of the Sharifs to ""evade"" police blockades demonstrated, many of the police sided with Nawaz and were

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reluctant to use force to stop the protests.  It was never clear exactly why Zardari so feared the proposed sit-in in the capital, which the GOP should have been able to manage peacefully.

7.  (C)  Zardari lost support within the PPP and among his coalition partners after he over-reached and imposed governor's rule in Punjab. PM Gilani, Awami National Party leader Asfundyar Wali Khan and Jamiat Ulema-e-Islam leader Fazlur Rehman had made it clear publicly that they disagreed with the disqualification ruling and the move to impose governor's rule.  Two PPP ministers (Raza Rabbani and Sherry Rehman) resigned over Zardari's decisions to support his lawyer (Law Minister Farouq Naek) as Chairman of the Senate and to shut down a TV station critical of Zardari.  Gilani, Naek and other key PPP members believed that it was time to compromise on the judges' issue, despite Zardari's continued intransigence on the restoration of Iftikhar Chaudhry.  Late March 15, even coalition partner Muttahida Quami Movement (which controls a critical block of 25 votes in the National Assembly) was warning Zardari he had to compromise.  Last, but perhaps not least, Chief of Army Staff General Kayani reportedly met yet again with the President and the Prime Minister late on March 15.

Restoring the PPP's Reputation ------------------------------

8.  (C)  In his short speech, Gilani emphasized the long relationship between the PPP and the lawyers and said that Benazir Bhutto had supported restoration of the judiciary and of Iftikhar Chaudhry.  (Note: Benazir most assuredly did not support restoration of Chaudhry.)  This was an attempt to reverse a twist in which the populist PPP had ceded the moral high ground on the independence of the judiciary to the PML-N.  In fact, Nawaz has been expanding PML-N's base into PPP territory for months on traditional liberal/democracy issues.  Meanwhile, Zardari has been creating rifts within the PPP by appointing cronies at the expense of Benazir loyalists and ignoring the need to rebuild the party in the wake of her death.  Also in his speech, Gilani made it a point to say that the decision to restore the judiciary fulfilled a promise (made by Zardari to Nawaz in 2008); in this, Gilani was responding to Zardari's serious credibility problem and trying to restore the PPP's reputation as a reliable partner with the PML-N.  Gilani and the PPP will emerge from this crisis stronger than before.

Seeds of Conflict -----------------

9.  (C)  This is a clear victory for Nawaz, who did agree to cancel the long march and is expected to meet with PM Gilani later today on the way forward.  We expect a show of reconciliation in the form of joint committees on implementing the PPP/PML-N Charter of Democracy.  If Nawaz is smart, he will consolidate his winnings and wait while the PPP-led government continues to struggle with economic and security challenges.  However, flush with success, Nawaz may use the PML-N government in Punjab to create political gridlock (as it did in the 1990s) for the PPP in the center. Nawaz does not have the votes to bring down the government or to impeach Zardari (both require a two-thirds parliamentary majority), but he may at least make life difficult for Zardari, perhaps by keeping alive corruption allegations. Nawaz surely will press for enactment of an 18th amendment to transfer power from the President to the Prime Minister, and we expect Gilani will support this popular initiative.  Nawaz will also support any effort by Chaudhry to go after his old nemesis Pervez Musharraf; Zardari was never enthusiastic about securing Musharraf's indemnity, and now Zardari may be too weak to win approval. (Nevertheless, even Nawaz will understand the need for caution in taking on Musharraf for fear of provoking the Army.)  Nawaz may win yet another victory if Zardari ousts PPP Punjab Governor Taseer for giving him bad advice on the PPP's prospects to take over the Punjab Assembly.  Zardari's Future ----------------

10.  (C)  It is curious that Zardari chose to have Gilani

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make the concession speech.  While it allowed Zardari to avoid personally conceding defeat to Nawaz, it also permitted Gilani to take all the credit for what is a very popular decision.  We do not expect any immediate changes in Zardari's status, but he definitely has lost political power and influence in this self-inflicted drama, and many will be asking how long he can last.  Whether or how he will survive in the longer term will depend on Nawaz, Justice Chaudhry and PM Gilani.  If Zardari expects to face impeachment or be forced to cede his presidential powers to the Prime Minister, he may resign after concluding that remaining in office simply isn't worth it.  Despite his loss, we believe Zardari is unlikely to give up even a reduced hold on power voluntarily, at the least because he will want to preserve the family franchise for Bilawal.  At a minimum, PPP Co-Chair Zardari will need to concentrate on mending fences within his own party and expanding his circle of advisors to include more old-line PPP politicians.

A Not-So-Independent Judiciary ------------------------------

11.  (C)  Civil society, particularly Pakistan's long-suffering lawyers, will tout this as a step toward an independent judiciary.  The reality is not quite so pristine. Despite his decision to stand up to Musharraf in 2007, Iftikhar Chaudhry was one of many judges who took an oath to Musharraf in 1999.  Chaudhry now is deeply politicized, and the temptation to use his newly restored status to strike out at Zardari and/or Musharraf or again become judicially active will be strong and difficult for the government to control. Beginning in 2007, the media used its new-found freedoms to publicize and support the lawyers' movement.  In this latest crisis, the media lost some objectivity in its overwhelming bias against Zardari and the government; Zardari's efforts to shut down two TV channels simply backfired and probably deepened the media's long-time animus against him.

Kayani: Adroit Moves --------------------

12.  (C)  Kayani also emerged as a winner, due to his adroit behind-the-scenes maneuvering.  He effectively worked to encourage U.S. and UK intervention and managed his Corps Commanders.  Perhaps more importantly, he made the Army's concerns clear without being alarmist.  The Army remained on stand-by to protect law and order, but Kayani was not seen as publicly intervening in any negative way.  Assurances that the Army was not ready to step in reinforced Kayani's reputation as a friend of democracy and preserved his options if any intervention becomes necessary in the future.

Effect on USG Interests -----------------------

13.  (C)  It is too soon to predict the extent of fallout from this weekend's capitulation to Nawaz.  However, Zardari has been our most effective interlocutor in Pakistan, and his reduced power will affect negatively our ability to get things done.  Above all, if Zardari continues to be focused on his own political future, he will not concentrate on the economic or security situation.  The most obvious fallback to Zardari, especially if parliament shifts constitutional powers, is PM Gilani.  In the fight against extremism, Gilani agrees with Zardari on goals but not necessarily on tactics. Gilani has serious concerns about U.S. strikes in the tribal areas and believes that dialogue will go further than military action in defeating the militants.  Under pressure to restore coalition support, Zardari may now be more willing to sign on to the Swat Shari'a accord negotiated with local taliban.

14.  (C)  On the Mumbai investigation and the arrests and detention of the Lashkar-e-Taiba masterminds, our strongest partner has been Interior Minister Rehman Malik, but he was largely responsible for the GOP's over-zealous reaction to the demonstrators and is cited by many as giving Zardari bad advice during this political crisis.  As a close Zardari advisor, Malik's future is not at all clear at the moment.

15.  (C)  Zardari may not be a sophisticated economist, but he understands and projects confidence to the international community far better than Gilani; this confidence will be

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important as we move towards a Donors/Friends conference in April.  Zardari may not now be in a position to push against the military on approving trans-shipments of wheat from India to Afghanistan.  Chaudhry may also decide to again champion the ""disappeared,"" and we will have to engage to protect our equities over a small number of detained terrorists.

16.  (C)  Comment:  Sorting through the fallout of this political crisis will take some time.  With the glory will come pressure on Gilani to find a way forward on forming a government in Punjab and enacting the ambitious agenda of the Charter of Democracy.  Don't count Zardari out yet--we expect he has more (and not necessarily good) cards to play.

PATTERSON

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