188203 1/22/2009 7:16 09LAHORE9 Consulate Lahore SECRET "O P 220716Z JAN 09

FM AMCONSUL LAHORETO SECSTATE WASHDC IMMEDIATE 3881INFO AMEMBASSY ISLAMABAD PRIORITYAMCONSUL KARACHIAMCONSUL PESHAWARNATIONAL SECURITY COUNCIL WASHINGTON DCCIA WASHDCAMEMBASSY KABULAMEMBASSY NEW DELHIAMCONSUL LAHORE"S E C R E T LAHORE 000009 E.O. 12958: DECL:  1/20/2034

TAGS: PGOV, KDEM, PK

SUBJECT: THE BATTLE TO CONTROL THE PUNJAB Derived from: DSCG 05-1, B,D

1. (S) Summary:  The Pakistan Peoples Party (PPP) and Pakistan Muslim League - Nawaz (PML-N) coalition in the country's most-populous Punjab province is looking increasingly weak. Both parties are openly courting the opposition Pakistan Muslim League (PML) in an effort to solidify control over the province and end the current coalition arrangement, although the terms offered by the PML-N seem highly unrealistic.  The PML has remained in close contact with both sides, but has, thus far, refused to be pressured into solidifying a deal with either -- possibly on the advice of allies in the military establishment. Uncertainty over the PML's intentions has led PML-N leader Nawaz Sharif to present a ""final plan"" for salvaging the provincial coalition and repairing relations at the federal level with the PPP.  While this plan contains elements that could serve as the basis for rapprochement between the parties, it appears unlikely to gain traction as the country moves towards politically sensitive elections for the federal Senate in March.  While the political parties snipe at one another, senior politicians who have found themselves on the wrong side of their respective parties' current leadership have repeatedly told Principal Officer of approaches by military officials regarding formation of ""a national government like Bangladesh.""  While post cannot verify the veracity of these reports, the Pakistani military's history of intervention in national politics and its disagreements with the sitting PPP federal government and the PML-N make them plausible.  End Summary.

2. (C) The PML-N/PPP coalition government in the Punjab is effectively non-functional, with PML-N Chief Minister Shahbaz Sharif increasingly making most all decisions unilaterally with no pretext of consultation with PPP ministers or parliamentarians.  The animosity between the Chief Minister and his main PPP rival Governor Salman Taseer has grown increasingly bitter and personal, and neither side seems capable of peaceful coexistence.  Chief Minister Shahbaz's recent appointment of ""acting"" PML-N ministers to cover key unfilled government portfolios -- including the two most prestigious health and education -- and his steadfast refusal to release development funds to PPP parliamentarians and cede PPP ministers authority to engage in bureaucratic transfers and postings appear to have brought matters to a near political crisis point in the province and have fueled increasingly vocal PPP demands for an end to any coalition with the Sharifs.

3. (C) Governor Salman Taseer has been assiduously courting the leadership of the opposition PML almost since the formation of the PML-N/PPP coalition government.  If Taseer successfully negotiates a PPP/PML alliance, he would be in a numerical position to demand Shahbaz Sharif show his majority in the parliament and then replace his government.  PML leaders claim that Taseer engineered such an arrangement with them in October but then pulled out on the instructions of President Zardari. According to Moonis Elahi, son of PML Punjab President Chaudhry Pervaiz Elahi, Taseer's recent overtures have been rebuffed on two counts:  (1) the PML has demanded that the PPP first have the federal judiciary declare Shahbaz Sharif ineligible to continue as Chief Minister and Nawaz Sharif permanently ineligible for elected office (cases are pending against both of them in federal court) and (2) the PML is insisting on being given the Chief Minister's slot for its appointee (Taseer agreed to this during the October negotiations, but President Zardari has reportedly vetoed this idea demanding that the Chief Minister slot go to the PPP).

4. (C) As the PPP has renewed its efforts to court the PML, the Sharif brothers have countered with their own offer of a possible "reunification" or "alliance" between the Muslim League factions.  According to Moonis Elahi and senior PML-N officials, the idea was floated in early January during a face-to-face meeting between Nawaz Sharif and Chaudhry Pervaiz Elahi in Abu Dhabi, arranged through ""mutual Saudi friends.""  Moonis claimed that while the discussions were cordial, Nawaz Sharif's unwillingness to offer ""appropriately senior"" party and government positions to the Chaudhry family made the offer less than sincere.  Following the meeting, numerous emissaries were reportedly exchanged between the two sides and the PML-N's current offer (reportedly unveiled by Nawaz Sharif to Ch. Shujaat Hussain during a ""chance"" meeting at a friend's farm in southern Punjab) would give Ch. Pervaiz Elahi, leadership of the opposition in the National Assembly and presidency of the PML-N in the Punjab; Moonis Elahi, the title of senior Minister in the Punjab government; and Ch. Shujaat Hussain, chairmanship of the PML-N at the federal level (a position currently held by Raja Zafar-ul-Haq) and a Senate ticket.  Comment:  Post is very skeptical that the PML-N would actually follow through on making these appointments even if the PML accepted.  End Comment. Moonis claims that his father is still uncertain as to whether the Sharifs will follow through on their offers and has demanded that prior to the announcement of any deal that the PML-N formally sever its coalition government with the PPP in the Punjab.  Such a move would give the PML considerable leverage and the ability to extract (or guarantee) concessions from the PML-N.

5. (C) PML leaders report that the party is, at present, undecided as to which, if either, offer to pursue or what course of action to take should either the PPP or PML-N fulfill the prerequisites that the Chaudhries have laid down.  While forward blocks favoring both the PPP and the PML-N exist in the party, these blocks appear to be unable to muster sufficient numbers to force the PML leadership towards one side or the other.  There is also genuine concern at senior levels of the PML that should the party declare its open support for either the PPP or the PML-N at this stage, no more than half the party's sitting members would follow, making the party's ability to influence the ultimate composition of the federal or provincial governments questionable.  In addition, several leaders have pointed out that allowing either the PPP or the PML-N to believe that a deal with the PML is no longer possible could open senior PML leaders to corruption (or other criminal charges) at either the provincial or federal level.  These leaders, who seem to be in the majority in the new 50-member committee established to determine the ""future of the PML"", favor keeping prolonged negotiations open with both sides and sitting in opposition until much closer to the next national election.

6. (S) Sharif relative Sohail Zia Butt and senior PML-N politician Khawaja Saad Rafique recently told Principal Officer in separate meetings that the uncertainty of the PML's intentions have led the Sharifs to reconsider rapprochement with the PPP, provided that an equitable deal can be found.  They claimed that the broad outlines of such a deal had been presented by party leader Nawaz Sharif to President Zardari.  In their view, the minimum PML-N conditions for any deal were: (1) dismissal of Governor Salman Taseer, (2) removal of the President's ability to dissolve the National Assembly, (3) full retirement of Chief Justice Hameed Dogar and appointment of Justice Sardar Raza in his place, and (4) agreement to appoint judges in accordance with the provisions of the Charter of Democracy.  In exchange, the PML-N was prepared to offer a unified slate of candidates in the upcoming Senate elections, end its support of the lawyer's movement, appoint a full Punjab provincial cabinet with equitable PPP representation, cede governing authority to provincial ministers, release development funds to the PPP members of the Provincial Assembly, and reinitiate discussions on a federal coalition government. Neither Butt nor Rafique was aware of Zardari's response to the proposal, but both were skeptical about whether the initiative would succeed.

7. (S) PML leader Humayun Akhtar Khan recently told Principal Officer that the party was under significant pressure from ""the establishment"" -- the local euphemism for the military and intelligence services -- not to become embroiled in the PPP/PML-N conflict at this stage.  ""The establishment"" preferred that the party remained neutral and in opposition for the time being as ""additional alternatives might emerge.""  At the same time, several senior politicians from both PPP and PML-N have confided to Principal Officer that ""the establishment"" is once again active in attempting to ""undermine the civilian government.""  They reported that they had been approached by senior military officers, who requested that they consider supporting a ""national government"" similar to the Bangladesh model.  While all the politicians were quick to claim that they rejected the overture, each took pains to point out that similar approaches were doubtless made to others who might be more amenable to the suggestion.  Some even admitted that they might be tempted to support such an idea in the future if the current government proved unable to deliver.

8. (S) Comment:  While the local press is full of rumors of both a PPP/PML deal and a Muslim League reunification, post does not believe that either is likely to happen in the immediate future. Nawaz Sharif is unlikely to follow through on the appointments allegedly offered to the Chaudhry family, as they would require him to dump longstanding allies from key senior leadership positions.  In addition, the PML's self-interests are best served by remaining neutral at the moment, continuing negotiations with both sides, and joining with the presumptive winner of the next election at a future date.  Nor are we optimistic that the PML-N and PPP will be able to bury their differences and form either a workable coalition at the provincial level or a new national coalition.  Powerful, competing self-interests probably prevent a sensible deal from being struck.  As the two parties bicker, increasing frustration may well fuel outside moves by both disgruntled politicians and ""the establishment"" to try and build the PML and major party dissenters into a ""national government,"" but this is a long-term project with unknown prospects for success.  In the short-to-medium term, the unwieldy and fractious Punjab coalition government appears likely to limp forward with both coalition partners attempting to score political points from one another and little actual governance taking place.

End Comment.

HUNT

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