DAWN (via Oman Tribune) | 28 May 2011

US rejoiced when AG quit, pushed for investment treaty, show cables

KARACHI — The US was not exactly sorry that Attorney General Makhdoom Ali Khan resigned from General Parvez Musharraf’s cabinet in the wake of the Supreme Court’s decision to reinstate ‘suspended’ Chief Justice Iftikhar Chaudhry, according to a ‘confidential’ US diplomatic cable accessed by Dawn News through WikiLeaks.

However, the reason for their happiness was the possible approval of an investment treaty which the attorney general had disapproved.

In a cable dated August 6, 2007, then US Ambassador Anne W. Patterson wrote that despite her reservations over Khan’s ‘controversial’ replacement, “We will not be sorry to see Khan go, as he blocked further negotiations on the bilateral investment treaty over concerns about investor-state arbitration and other issues.”

Patterson notes that “by offering to resign, the attorney general became the only cabinet member to take the blame for the chief justice debacle.”

She was very specific about the reasons for American displeasure with Makhdoom Ali Khan.

When contacted, Khan said that prior to then US president George Bush’s visit in 2006, US officials had been pressing Pakistan to sign the bilateral investment treaty (BIT).

“They were insisting that the signing of this treaty was a must,” said Khan.

The initial pressure, according to Khan, came from the presidency itself.

“Pakistani officials, including myself, had been in negotiations with the US officials to discuss the treaty,” he said, adding that it was a ‘sensitive matter’ and the relevant documents had to be ‘vetted in the light of international laws and conventions.’

According to the International Centre for Settlement of Investment Disputes (ICSID), which the country is a member of, if Pakistan signs an investment treaty and any of the treaty’s clauses is violated, the matter would have to be referred for arbitration under the terms of the treaty.

“We wanted to protect our side and I had told the US that we were ready to negotiate, but I refused to sign on the dotted line,” he said.

According to him, there had been many clauses in the treaty which were against the interests of the country.

Khan said that during negotiations he had made it clear that US officials should keep in mind the difference between the protection to foreign investors and the authority of the state to regulate the investor.

“They wanted me to go abroad and discuss the issue with them,” he revealed and added that he refused as he thought it was a way of bribing him.

“I had told the prime minister and the commerce minister about it,” Khan said and added that there had been many video-conferencing negotiations, but all failed.

Accroding to Khan, the US clauses included the option of arbitration even after a decision from the Supreme Court.

The Americans also wanted Pakistan to give a 90 days advance notice in case any law relating to foreign investors were introduced in the country.

“This was against the constitution, which empowers the president to issue any ordinance at his discretion,” he said.

They also wanted to ensure against what they termed “denial of justice.”

In their view, a delay in any judgment could have amounted to denial of justice, Khan said.

“Now, we have our own system of judicial process, so I asked them to define denial of justice, which they were unwilling to do. I had also told the US that the government was ready to provide as much protection to investors as the US provide, but told them please don’t ask from us more than that.”

Khan said, he wanted to guard the country’s interests with regard to foreign companies. Khan also claims that he had told the US that, if it wanted such blanket protection for its investors, it should sign a free trade agreement with Pakistan. “To this they did not agree,” he added.