195795            3/7/2009 16:44            09ISLAMABAD495   Embassy Islamabad      CONFIDENTIAL            09ISLAMABAD488|09LAHORE41   "VZCZCXRO3255

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SIPDIS

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

TAGS: PREL, PTER, PGOV, PK

SUBJECT: ZARDARI-NAWAZ RECONCILIATION: PLEAS FOR U.S.

INTERVENTION

REF: A. LAHORE 41

B. ISLAMABAD 488 (NOTAL)

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

1.  (C)  Summary.  Amid flurries of political horse trading and so-far unsuccessful efforts to mediate a resolution to the Sharif brothers' disqualification from public office and the imposition of governor's rule in Punjab, Chief of Army Staff General Kayani and several political parties appealed to the U.S. to intervene.  Pakistan Muslim League (PML) leader Chaudhry Shujaat Hussain indicated to Ambassador he would align with Zardari if we would guarantee he became leader of the Senate (next in line to the President); Shahbaz Sharif told PO Lahore (Ref A) the Pakistan Muslim League-N (PML-N) would need a guarantor for any reconciliation with Zardari; the Muttahida Quami Movement (MQM) wanted U.S. reassurance we still supported Zardari but also was concerned that MQM would be damaged by its association with him.

2.  (C)  There are several common themes here:  distrust of Zardari; agreement on the need to find a way out of the current political impasse to prevent disruptive street violence; and abandonment of all pretense that the U.S. should not intervene in Pakistani internal affairs. Ambassador has been careful to keep the U.S. out of the political souk; however, it is in our interests to ease Zardari off the ledge he has walked onto and avoid the kind of violence that will force the Army to restore law and order.  Even if a reconciliation package can be found, it is unlikely Nawaz can back out of support for the lawyers' march, scheduled to begin on March 12 and culminate in Islamabad on March 16.  We have no leverage over Nawaz but continue weigh in with Zardari.  We will urge him to resolve quickly the political leadership issue in Punjab and avoid further exacerbating the judiciary issue with a decision to extend the current Chief Justice.  End Summary.

MEDIATORS SHUTTLE-----------------

3.  (C)  On March 6-7, multiple political mediators, including Balochistan Chief Minister Nawab Aslam Raisani, Awami National Party leader Asfundyar Wali Khan and Jamiat Ulema-e-Islam chief Fazlur Rehman, conducted visits aimed at reconciling President Zardari and Pakistan Muslim League-N (PML-N) leaders Nawaz and Shahbaz Sharif in the wake of mounting political pressure following the Sharifs' disqualification from public office and Zardari's imposition of governor's rule in Punjab.  There was a mixed response to PML-N's call for nationwide strikes on March 6; as expected, the biggest support for strikes and PML-N rallies continued to be in the Sharifs' home base of Punjab.  Zardari and PM Gilani met to review the situation, and Zardari saw Muttahida Quami Movement (MQM) in-country leader Farouq Sattar. Representatives of rival center-right parties PML-N and the Pakistan Muslim League (PML) also met, while PML also offered to mediate between Zardari and Nawaz.  PML also reportedly met with PM Gilani to discuss a possible alliance with the Pakistan People's Party (PPP).

4.  (C)  Despite assertions by Fazlur that Nawaz and Zardari were seasoned politicians who would come to an agreement, Nawaz continued to address large crowds and Zardari has shown no sign of budging on the judges' issue or the Sharifs' disqualification.  In impassioned speeches in Lahore and Faisalabad this weekend, Nawaz asserted that the dispute could only be settled on the street and predicted that the lawyers' march would mark the beginning of ""revolution"" in the country.  Both Zardari and Nawaz have boxed themselves into hardline positions.

MQM WORRIED-----------

5.  (C)  On March 6, MQM leader Farouq Sattar asked urgently to see Ambassador to convey the concerns of MQM leader Altaf Hussain regarding the political upheaval.  Sattar emphasized that MQM continued to support Zardari 100 percent, but said:

(1) it was clear Zardari had not done his homework by accurately counting votes before declaring governor's rule;

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(2) the Pakistan People's Party (PPP) support for both the disqualification and governor's rule was weak at best; and

(3) the coalition was not governing well and this latest distraction would not help matters.  His conclusion was that Zardari's friends had to get together and find a way to help him out of this mess, so that the coalition could concentrate on the economy and growing militancy.  Altaf Hussain wanted to know if the U.S. still supported Zardari.

6.  (C)  Ambassador agreed with Sattar's analysis, said emphatically that we continued to support the elected government and asked Sattar for suggestions on how to reconcile Nawaz and Zardari.  Sattar described a formula he had proposed to Zardari several days ago--enact a constitutional amendment that would concurrently fire all/all judges who had taken oaths to dictators (this would include both the former and current Chief Justices Chaudhry and Dogar) and, through a new judicial review board, hire new judges with impeccable credentials (this could include judges backed by Nawaz and Zardari).  Sattar, whose MQM party strongly dislikes the PML-N, did not suggest that the disqualification of Nawaz and Shahbaz Sharif be overturned. MQM remains a key player the PPP cannot afford to lose; Zardari did not move against Nawaz until MQM (with its 25 seats in the National Assembly) agreed to join the governing coalition and return the PPP government to a slim majority in the National Assembly.

PML IN THE SOUK---------------

7.  (C)  On March 7, Ambassador met with Pakistan Muslim League (PML) leaders Chaudhry Shujaat Hussain and Pervaiz Elahi.  PML holds the votes to enable either the PPP or the PML-N to form a coalition government in Punjab but has been sitting on the fence courting offers from both Zardari and Nawaz.  A significant (30 plus) forward block within PML has made it clear it supports joining Nawaz, and many in the party agree it would make more sense to bring these two center-right parties together again.  However, uniting PML and PML-N would precipitate a leadership struggle between the Sharifs and the Chaudhrys.  Others within the party believe an alliance with the PPP makes more sense because Zardari now controls a larger share of the spoils.

8.  (C)  Shujaat made it clear to Ambassador he would like U.S. support for his bid to become leader of the Senate (second in line to the President); Elahi would like to return to his former post as Chief Minister of Punjab.  Shujaat told Ambassador, however, that he does not trust Zardari to follow through on his promises without a guarantor.  (Note:  Shahbaz Sharif told PO Lahore (Ref A) that PML-N would also like a guarantor to any reconciliation deal because of questions about Zardari's trustworthiness.) 9.  (C)  Comment:  With the lawyers' march scheduled to begin on March 12, and election of a new Senate leader expected the same day, time is running short for a resolution of these disputes.  The media, which overwhelmingly has criticized Zardari for both the Sharifs' disqualification and governor's rule, will have a field day covering the long march. Meanwhile, the situation in Swat and even the Sri Lankan cricket team attack have receded from the front pages to make way for the current political drama.  As Awami National Party leader Khattak told Polcouns March 5, ""Zardari will not be able to concentrate on anything else but the Punjab crisis from now on.""  This has all become reminiscent of Musharraf's obsession with the former Chief Justice, to the detriment of his own rule and government control over the tribal areas.

PATTERSON

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