US embassy cable - 04NEWDELHI7733

C O N F I D E N T I A L SECTION 01 OF 04 NEW DELHI 007733 
 
SIPDIS 
 
KABUL FOR JIM ALVERSON (SECDEF DELEGATION) 
 
E.O. 12958: DECL: 12/06/2014 
TAGS: PREL, ENRG, KNNP, MASS, IN, India-Russia 
SUBJECT: PUTIN VISIT: FROM RUSSIA WITH TOUGH LOVE 
 
REF: A. NEW DELHI 7675 
     B. NEW DELHI 6707 
     C. NEW DELHI 5978 
 
Classified By: PolCouns Geoff Pyatt.  Reasons 1.4 (B,D). 
 
1. (C) Summary: Russian President Vladimir Putin's December 
3-5 visit to India did little to broaden their ties beyond 
defense, despite efforts by both sides to infuse the 
relationship with new momentum.  Both leaders pressed their 
issues with Russia extracting a promise from India to sign a 
defense secrecy agreement within five months, and India 
securing Russia's support for a UNSC seat with full veto 
powers.  Moscow, however, pushed harder and announced it 
would not supply another consignment of nuclear fuel for 
India's Tarapur reactor.  Significantly, Putin spent half his 
India tour in Bangalore with a view to securing a Russian 
piece of India's booming IT sector.  The growing US-India 
partnership showed itself to be a factor in the India-Russia 
calculus during this visit, and may have inspired Russia's 
nuclear cold shoulder.  End Summary. 
 
2. (C) Preceding Putin's arrival, Russian Foreign Minister 
Sergei Lavrov and Defense Minister Sergei Ivanov visited New 
Delhi to preview the visit, leading to speculation that Putin 
and PM Manmohan Singh would sign a number of far-reaching 
agreements.  In the end, deliverables from this annual summit 
were rather modest.  With discussions that ranged from arms 
to pharmaceuticals to visas, the leaders produced a four-page 
Joint Declaration and 10 to 14 MOUs (the exact number is 
unclear).  New Delhi-based Russia-watchers waxed eloquent on 
the depth and historical strength of India-Russia bonds 
"even" in light of improving relations with the US, but the 
general tone of the visit was unusually scratchy. 
 
Shoring up the Foundation: Defense 
---------------------------------- 
 
3. (U) As expected, defense issues dominated the talks with 
official statements and media reports highlighting GOI 
concern about reliability of arms sales and support, a strong 
desire by both sides to pursue defense co-production, Russian 
concern about leakage of sensitive technology from India, and 
the increasing role of India's growing energy needs in 
shaping its foreign policy.  Some observers noted Russian 
eagerness to conclude long-pending agreements in order to 
frustrate the US from getting a piece of the large Indian 
arms market. 
 
Arms: Upgrades, Supply Guarantees, and Joint Ventures 
--------------------------------------------- -------- 
 
4. (U) Just before Putin's arrival, Defense Ministers from 
the two countries signed a "Protocol of the 
Inter-Governmental Commission for Russian-Indian 
Military-Technical Cooperation" to expand bilateral military 
cooperation, specifically in upgrading weapons systems and 
various joint production and training initiatives.  India is 
pursuing upgrades of weapons systems and technology as well 
as guaranteed delivery schedules for contracted weapons 
systems, uninterrupted supply of spare parts, life-cycle 
support, and joint production and training ventures. 
According to media reports, the Ministers agreed to upgrade 
equipment including T-72 tanks, but negotiations are still 
underway on upgrading the maritime TU-142 reconnaissance 
aircraft and MiG 29K for the aircraft carrier Admiral 
Gorshkov.  They also agreed to establish service centers to 
repair Russian-made combat hardware. 
 
5. (C) Significantly, Russia offered to make India a partner 
in producing its new fifth generation multi-role fighter and 
has offered India a role in developing a multi-functional 
transport aircraft.  (The US is a potential competitor in 
both of these categories.)  Russia also reportedly committed 
to increasing its 50 percent investment in production of the 
supersonic Brahmos cruise missile to 60 percent, with an 
optimistic proposal to build 360 per year for sale to third 
countries.  Finally, both sides agreed to hold military joint 
exercises in India in 2005, following in the wake of an 
increasingly sophisticated US-India exercise program. 
 
IPR: Co-Production Carrots and Weapons Stoppage Sticks 
--------------------------------------------- --------- 
 
6. (C) Intensified Russia-India defense cooperation remains 
contingent upon the GOI signing a Defense Technology Secrecy 
Agreement (DTSA) (pending for more than two years), under 
which India would agree not to transfer products and 
technology to third parties.  Dangling the carrot of 
co-production, Russian Defense Minister Ivanov said, "An 
early conclusion of an agreement on intellectual property 
rights would lay the foundation for development of many more 
hi-tech weapons systems jointly by the two countries." 
However, before coming to India, Ivanov hinted that defense 
ties could come to a halt if India sought to mix Russian 
technology with proposed purchases from the US (especially 
Patriot), according to Russian press reports quoted in the 
Indian media.  Observer Research Foundation Senior Fellow 
Nandan Unnikrishnan told Poloff he thought the revived 
interest in securing a DTSA originated with new Russian 
Ambassador Vyacheslav Trubnikov, who is "a man of the 
Kremlin," rather than a diplomat.  (He added that the 
Ambassador has "cut the MFA out," noting that the senior 
Russian diplomat responsible for India was not part of the 
Putin delegation.) 
 
7. (C) Indian MOD officials say the GOI agreed to protect 
Russian technology, but also wanted Moscow to sign an MOU to 
provide bank guarantees to ensure future supplies of spares. 
India has been reluctant to sign a DTSA because it is seeking 
a more equitable partnership in joint research and production 
of military hardware, rather than simply importing Russian 
arms.  At the conclusion of the visit, Indian Defense 
Minister Mukherjee said that a non-retroactive DTSA should be 
signed "in the next five months."  A senior MEA official told 
the UK High Commission that India sees this as an Indian 
concession, but one without substantial costs. 
Significantly, the MEA also signaled a general sense of 
dissatisfaction with recent Russian performance as an arms 
supplier. 
 
UNSC Veto Flap Blamed on Translators 
------------------------------------ 
 
8. (C) President Putin defused a flap over a remark he made 
during a press conference on December 3 in which he was 
quoted as saying that an increase in the number of 
veto-holding UNSC members would be "absolutely unacceptable," 
and would erode the effectiveness of the institution (Ref A). 
 After the ensuing media uproar, Putin clarified his 
statement in a December 4 meeting with Indian Vice President 
Shekhawat, attributing the misunderstanding to a translation 
error.  Later on December 4, the MEA released a statement 
that Putin had unambiguously offered Russia's support for 
India's bid for a permanent UNSC seat, with "the right of 
veto."  Most of our interlocutors saw this as a Russian 
flip-flop in the face of the strong GOI reaction. 
 
Energy: Strike out on Nuclear, Green Light on Oil and Gas 
--------------------------------------------- ------------ 
 
9. (C) Russia is currently helping India build two 1,000 MW 
nuclear reactors at Kudankulam in Tamil Nadu, but during the 
visit, the director of Russia's Federal Atomic Energy Agency 
gave an interview indicating Moscow would not go against NSG 
rules by providing several additional reactors.  This echoes 
the message that FM Lavrov reportedly delivered during a 
pre-Putin visit (Ref B).  However, it contradicts widespread 
expectations in the Indian nuclear establishment and media 
that Moscow was prepared to provide additional reactors for 
Kudankulam.  The same interview also indicated that Moscow 
had decided to turn down the Indian request for another batch 
of fuel for the US-built Tarapur reactors.  Mission will 
follow-up on these reports, which suggest that Russia may 
have changed its mind on lobbying India to buy more VVER-1000 
reactors.  The ORF's Unnikrishnan suggested to us that 
Moscow's nuclear cold shoulder may have been a pressure 
tactic, and may not be the end of the story.  He speculated 
that the Russians wanted to send a message that if India 
wants the US to be the "pole" of its foreign relations, there 
will be consequences. 
 
10. (C) The two countries did, however, agree to improve 
cooperation in non-nuclear energy, calling for joint 
"development of new oil and gas fields and the means of their 
transportation in Russia, India, and other countries."  This 
agreement also reportedly includes welcoming Indian bids for 
Russian oil giant Yukos.  In one deal, India's state-owned 
Oil and Natural Gas Corporation and the Russian Gazprom will 
work together in the Bay of Bengal.  Putin's visit also 
produced speculation that India will add to its 20 percent 
stake in Russia's Sakhalin One oil field with an investment 
in Sakhalin Three.  In the context of India's expanding 
energy needs, the GOI was reportedly surprised at the 
Russians' private declaration that they control all the gas 
coming out of Turkmenistan. 
 
Eyeing a Piece of the IT Pie 
---------------------------- 
 
11. (C) Putin spent more than half of his India tour in 
Bangalore in an effort to open more economic fronts in the 
India-Russia relationship.  Prior to and throughout the Putin 
visit, Russian officials cited the woefully low level of 
bilateral trade (Ref B).  Traveling with a delegation of 
Russian businesspeople, Putin visited software giant Infosys 
with an eye to gaining from the booming Indian IT sector. 
However, after the stop, an Infosys official remarked that 
his company "has no plans to expand our operations to 
Russia," underlining Bangalore's remarkably tight economic 
connection to the US, which leaves little space for 
late-coming Russian firms.  Although Putin also visited 
Bangalore's Hindustan Aeronautics, the dominant impression 
one gets from the city is the who's who of American IT firms 
that now operate from there. 
 
Blast From the Past 
------------------- 
 
12. (U) Delivering the 2004 Jawarhalal Nehru Memorial Lecture 
in New Delhi, Putin cited uptapped potential of the 
Non-Aligned Movement and decried "unilateral action in 
international affairs."  In a speech notable for its wooden, 
Soviet-style language, Putin commented that "it is extremely 
dangerous to attempt to rebuild modern 
civilization...according to the barracks principles of a 
unipolar world."  He condemned "dictatorship packaged in a 
pretty wrapping of pseudo-democratic phraseology," as 
exacerbating regional conflicts, and added that terrorism, 
with respect to which there are "double-standards...cannot 
and must not be used in some geo-political games."  The 
audience welcomed and saw Putin off with a standing ovation, 
but D/PolCouns noted that listeners applauded only after 
Putin's reiteration of support for India's UNSC membership. 
 
Beyond India-Russia 
------------------- 
 
13. (C) In addition to public gripes about the US, in his 
private meetings, Putin expressed his irritation with Western 
involvement in the Ukraine crisis, according to the MEA 
readout provided to the UK High Commission (strictly 
protect).  The British added that Putin and the Indians 
commiserated over inconsistent handling of proliferation 
issues, particularly AQ Khan and Iran, and concluded that 
India and Russia have a basically similar approach towards 
Tehran, although neither wants to see Iranian nuclear 
weaponization.  On Iraq, Putin privately expressed his 
concerns about security there and the danger of the country 
splitting along religious and clan-based lines. 
 
Comment 
------- 
 
14. (C) Although Putin's visit saw many of the old 
India-Russia friendship themes, the two had little success in 
their attempt to move beyond defense cooperation.  Although 
we have still to get a complete GOI readout on this visit, we 
are struck by the generally scratchy atmospherics.  As MEA 
Joint Secretary (Americas) S. Jaishankar put it to PolCouns, 
"we have dealt with the Russians a long time," and know how 
to handle their pressure (a reference to Ivanov's 
heavy-handed message that Russia might consider an arms sales 
relationship with Pakistan).  In courting an IT connection 
with Bangalore, Russia will have to get in line behind the 
US, Europe and Japan, who are all more established and more 
attractive technology partners.  On first examination, this 
visit reconfirmed the impression that India and Russia still 
have not figured out how to adjust their partnership to the 
realities and changing relationships around them.  Emerging 
tension in the India-Russia relationship is a trend we may 
see more of as the New Delhi-Moscow power equation continues 
to shift gradually in India's direction, and the GOI seeks 
further to shed the dependency that has characterized their 
relationship for much of India's history. 
MULFORD