Our two principal military assistance funding streams for Pakistan -- Foreign Military Financing (FMF) and the Pakistan Counterinsurgency Capabilities Fund (PCCF) -- serve differing purposes.

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10/14/2009 1:02:00 PM

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Embassy Islamabad

CONFIDENTIAL

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C O N F I D E N T I A L SECTION 01 OF 02 ISLAMABAD 002488

SIPDIS

E.O. 12958: DECL: 10/14/2019 TAGS: PGOV, PREL, PTER, MARR, PK SUBJECT: RESOURCING THE MILITARY ASSISTANCE REQUIREMENTS IN PAKISTAN

REF: ISLAMABAD 2398

Classified By: Ambassador Anne W. Patterson, Reasons 1.4 (b/d)

1. (C) Summary: To build a long-term relationship with Pakistan and increase the country's political will and military capability to fight insurgent and terrorist groups, post recommends (1) obtaining "cash-flow" financing authority for Pakistan's FMF; (2) announcing a Presidential commitment to Pakistan of $400 million in FMF per year for FY2011 through FY2015; and (3) increasing FY2011 PCCF funding to $1.2 billion. Cash-flow financing will allow Pakistan to contract for defense articles and services without having the full amount of FMF available upfront. A multi-year FMF commitment, combined with cash-flow financing, will enable the Pakistanis to engage in a more strategic approach to defense procurement and increase Pakistan's trust in the U.S. as a reliable, long-term security partner. Our increased counterinsurgency engagement with the Pakistani Army has led to increased Army needs, requiring $500 million more for FY2011 PCCF than for FY2010 PCCF. End Summary.

FMF AND PCCF: DIFFERING PURPOSES

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2. (C) Our two principal military assistance funding streams for Pakistan -- Foreign Military Financing (FMF) and the Pakistan Counterinsurgency Capabilities Fund (PCCF) -- serve differing purposes.

3. (C) FMF is and must remain the foundation of our bilateral security relationship. FMF is designed to build trust with the Pakistani military and foster long-term U.S.-Pakistan mil-mil ties. We work with the Pakistani military to develop FMF spend plans, but the specific FMF procurement requests are driven by the Pakistani side. The Pakistanis utilize FMF to address the country's broad security needs, which entails their dividing the funds among their services -- Army, Navy, and Air Force -- and developing conventional as well as counterinsurgency capabilities. This includes their addressing their growing conventional disadvantage vis-a-vis India.

4. (C) In contrast to FMF, PCCF is a temporary authorization necessary to address Pakistan's immediate counterinsurgency and counterterrorism requirements. The uses of PCCF are largely directed by the U.S. side. While PCCF fulfills a critical function, it is not aimed at building a long-term relationship with Pakistan or countering Pakistani fears that we will disengage from them when we ultimately pull back from Afghanistan (as we did after the Soviet withdrawal from Afghanistan).

CASH-FLOW FINANCING AND FMF COMMITMENT

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5. (C) Post recommends that the Administration work with Congress to obtain the necessary authority for Pakistan to utilize so-called "cash-flow" financing for FMF. This would permit Pakistan to contract for defense articles and services without having the full amount of FMF available upfront. Additionally, post recommends the announcement of a five-year Presidential commitment of $400 million in FMF per year for the period FY2011 through FY2015, i.e. a total $2 billion FMF commitment.

6. (C) The multi-year FMF commitment, combined with cash-flow financing, would enable the Pakistanis to have a more strategic approach to defense procurement, facilitating the transformation of their military to an integrated, modernized force and interoperable regional ally. More important, these two initiatives would provide a powerful signal to the Pakistani military of the U.S. commitment to a true, long-term strategic partnership with Pakistan. This commitment from us is the key to sustaining Pakistan's commitment to the ongoing counterinsurgency and counterterrorism fight.

7. (C) The five-year FMF commitment would be used to

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implement several major programs. The Pakistani Army intends to purchase new transport and attack helicopters and modernize its tactical communication system. The Navy plans to request via EDA and refurbish via FMF up to four Oliver Hazard Perry class frigates and outfit them with helicopters. The Air Force would use FMF to implement the security procedures required for the delivery of new and MLU-ed F-16s to Pakistan, which is to commence in June 2010 (see reftel). The proposed procurements address Pakistan's broad defense needs and are also consistent with the Kerry-Lugar bill's requirement that a significant portion of FMF (for FY2010 through FY2014) be used for activities related to counterinsurgency and counterterrorism.

PCCF: $1.2 BILLION NEEDED FOR FY2011

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8. (C) As noted in para 4, PCCF allows us to address the counterinsurgency needs of Pakistani security forces engaged in combat operations rapidly. PCCF aims to build effective Pakistani security forces that are capable of preventing extremists from destabilizing the country, denying safe havens to terrorists, and protecting U.S. ground lines of communication to Afghanistan. The specific counterinsurgency capabilities that PCCF is developing include C4/ISR, air mobile capability, close air support, military intelligence, humanitarian assistance delivery, night operations, counter-IED capability, smuggling interdiction, forward critical medical care, and combat logistics sustainment.

9. (C) The Defense Department originally envisioned PCCF as a five-year program. However, PCCF may be needed to enhance Pakistan military capabilities for as long as U.S. troops are engaged in combat operations across the border in Afghanistan. The first two years of PCCF required the execution of $1.1 billion over fourteen months. The need for future PCCF is $1.2 billion for FY2011, and $900 million for both FY2012 and FY2013 -- a total of $2 billion over that three-year period.

10. (C) The FY2011 request is $500 million above the FY2010 request as a result of our increased counterinsurgency engagement with the Pakistani Army, which will be the recipient of the bulk of FY2011 PCCF funds. This increased engagement has led to increased Army requirements for communications and ISR, as well as anticipated "train and equip" requirements for unit rotations as the Army moves brigades and battalions into the Federally Administered Tribal Areas (FATA). We will also take advantage of Air Force involvement in ongoing operations for improvements in Air Force ISR assets, command and control, and integration with the delivery of close air support.

11. (C) The specific FY2011 PCCF request is broken down as follows:

-- Air mobility/CSAR: $300 million

-- CAS/joint fires: $2 million

-- COIN enablers and unit/individual level equipment: $390 million

-- C4/ISR: $200 million

-- Counter-IED: $20 million

-- Night operations: $1 million

-- Training: $65 million.

12. (C) We estimate transportation costs to be approximately $200 million and administrative costs associated with DSCA to be $22 million. These are estimates and exact numbers will be provided in the justification book and a one-slide summary that maps equipment/training to recipient and capabilities.

PATTERSON