150415            4/18/2008 14:06          08ISLAMABAD1613 Embassy Islamabad      SECRET          08STATE37957            "VZCZCXRO2055

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SIPDIS

SIPDIS

E.O. 12958: DECL: 04/16/2018

TAGS: PREL, PGOV, PHUM, KNNP, PK

SUBJECT: PAKISTANI LEADERS DENY INTENT TO RELEASE A.Q. KHAN

REF: STATE 37957

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

1.  (C) Summary.  In separate meetings with Strategic Plans Division (SPD) Chief Kidwai,Pakistan People's Party Co-Chair Zardari, and President Musharraf, DCM and Ambassador expressed our deep concern over GOP statements and press reports indicating that the restrictions on A.Q. Khan were about to be lifted.  Kidwai said he fully understood international concerns but noted that, legally, Khan has been pardoned and is voluntarily complying with house arrest. Kidwai suggested we discuss the issue with leaders of the new civilian government.  Zardari said flatly that the reports about GOP interest in releasing Khan were untrue; he had ordered the Foreign Minister to stop making statements about Khan.  ""If I had my way,"" said Zardari, ""I would give the IAEA access to Khan.""

2. (C)  Kidwai is due next week to brief the National Command Authority, including the new Prime Minister, on nuclear issues.  This will include SPD's previous tasking to create another 9,000 megawatts of electricity through civilian nuclear power.  Given Pakistan's growing energy shortages, we would not be surprised if the new government requests USG assistance (similar to the proposed agreement with India) in nuclear energy development.   End Summary.

3.  (C)  DCM and Polcouns met April 15 with Strategic Plans Division (SPD) Chief LtGen (ret) Kidwai to deliver reftel points.  Kidwai was accompanied by MG Bilal.  In a separate meetings April 16 and 17, Ambassador raised the issue with Pakistan People's Party (PPP) Co-Chair Asif Zardari and President Musharraf.

Kidwai:  Ask the New Government

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4.  (C)  DCM noted that recent press articles and statements by some GOP officials about the possible release of A.Q. Khan has caused alarm and concern.  The USG was firmly opposed to lifting the current restrictions on Khan's activities. Kidwai's first response was to recommend we discuss the issue with the new civilian government.  For its part, he insisted that SPD had not made any statements about Khan and had been concerned to read the recent press comments.

5.  (C)  Kidwai said he was scheduled in the coming week to brief Prime Minister Gillani and the other National Command Authority members (FM Qureshi, Defense Minister Mukhtar, CJCS Majid, Interior Minister Malik, and President Musharraf) on nuclear issues.  He did not yet know the new government's thinking on Khan but said he suspected that FM Qureshi's comments that Khan should be released had been made off-the-cuff without due consideration.  The facts, said Kidwai, were clear -- Khan had admitted his guilt and received a presidential pardon.  Therefore, his legal status was that he was a free man.  The GOP had been providing security for ""personal and national security"" reasons, but Khan had accepted this agreement voluntarily and had not challenged his restrictions to date.  If he tried to walk out today, however, the GOP had no legal grounds to stop him. That said, Kidwai stressed the government continued to have concerns about Khan's safety; it would be the GOP's responsibility if some ""loon"" attacked him.

6.  (C)  Kidwai said he fully understood international concerns if Khan were released.  But Khan remains a national hero, noted Kidwai, and there were domestic political pressures stemming from statements made by the political parties during the campaign.  Khan may now be ""in a mood to get more human privileges.""

Gas Leak at Khushab: ""Minor""

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7.  (C)  Asked by the DCM about the April 8 gas leak at the Khushab heavy water plant which killed two workers, Kidwai said the leak had been ""very, very minor.""  The plant had been shut down for maintenance when a welder created a leak through which H2S toxic gas escaped.  Two workers died, SPD immediately sealed off and evacuated the area, and notified the media; after a few hours, it was clear there had been no radiation leak.

8.  (C)  When the DCM asked if Kidwai expected the cash-strapped government to cut back on military or nuclear programs, Kidwai defended his program as ""modest"" given a comparison with other nuclear programs in the world.  Kidwai commented on Pakistan's growing energy crisis as well.  He noted that he would be briefing the Prime Minister on a pending tasking for SPD to produce 9,000 megawatts of nuclear energy in the coming years; he noted that it would take five to six years to bring a new plant on line.

Zardari: No Release

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9.  (C)  Ambassador followed up on the A.Q. Khan issue April 16 with Pakistan People's Party Co-Chair Asif Zardari. Zardari said categorically that the reports were untrue and the GOP had no/no plans to release Khan.  ""I told Foreign Minster Qureshi, who has no decision-making role on this issue, to stop talking about Khan,"" stated Zardari.  Zardari alleged that false information was being leaked to embarrass the PPP. ""If I had my way, I would give the IAEA access to Khan,"" said Zardari.  Not coincidentally, Ambassador raised the issue during a briefing on the extensive nature of U.S. aid to Pakistan.

10.  (C) Comment:  Benazir Bhutto's public comments (made in the U.S. before she returned to Pakistan) that she would grant the IAEA access to Khan were highly controversial in Pakistan.  Both Musharraf's party and Nawaz Sharif criticized her extensively during the campaign on this point.  Now that Nawaz is part of the coalition government, Zardari's options for delivering on Benazir's promise are more limited.  The good news is, however, that Zardari understands the negative reaction lifting restrictions would have in Washington.

11.  (C)  Comment continued:  Pakistan is facing a severe cash-crunch, fed largely by rising fuel prices, and extensive rolling power blackouts around the country.  While we are exploring ways to offer some USG technical energy assistance, we would not be surprised if the new government requested USG help (similar to the proposed agreement with India) in developing civilian nuclear capacity.

Musharraf: No Release

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12.  (C)  Separately, on April 17, President Musharraf assured Ambassador that there were no plans to release Khan. ""He knows what he did and accepted the consequences,"" said Musharraf.  Musharraf noted that he had taken the opportunity of briefing Foreign Minister Qureshi during their recent trip to China on the A.Q. Khan issue.  At most, said Musharraf, Khan may for humanitarian purposes be allowed additional family visitations.  But he will not be released.

PATTERSON

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