US embassy cable - 05NEWDELHI2380

S E C R E T SECTION 01 OF 05 NEW DELHI 002380 
 
SIPDIS 
 
 
E.O. 12958: DECL: 03/30/2015 
TAGS: PREL, ENRG, MASS, KNNP, ETRD, IN, PK, NSSP 
SUBJECT: MAKING OUR SOUTH ASIA INITIATIVE A REALITY 
 
REF: A. NEW DELHI 2299 
 
     B. NEW DELHI 2273 
     C. NEW DELHI 1824 
 
Classified By: Ambassador David C. Mulford for Reasons 1.4 (B, D) 
 
1.  (S) Summary: We recommend capitalizing on Foreign 
Minister Natwar Singh's April 13-14 meetings with the 
Secretary and the President to make significant progress on 
 
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strategic, energy and economic tracks the Secretary 
highlighted in her March 15-16 visit to India.  Specifically, 
we suggest the Secretary: 
 
-- make a forward leaning statement in the Secretary,s joint 
press availability on India's UNSC aspirations (without 
making a specific commitment), and announce a visit by Shirin 
Tahir-Kheli to Delhi for further discussions on UNSC reform. 
 
-- invite Secretary Bodman to attend the Rice/Singh meeting 
so Secretary Rice can announce Secretary Bodman will lead the 
US-India Energy Dialogue and a date or at least timeframe for 
Secretary Bodman to visit India; 
 
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-- cast her meeting with Natwar as the launch of the Indo-US 
Strategic Dialogue and ask the President to express his 
support for it; 
 
-- seek Natwar,s agreement to establish a Defense Production 
Cooperation Group under the Economic Dialogue to underline 
our interest in expanding rapidly Indo-US defense trade; 
 
-- announce a trip by the NASA Administrator to India to meet 
with ISRO Chairman Nair to launch a Space Working Group; 
 
-- seek Natwar,s agreement to constitute a Civil Nuclear 
Working Group perhaps led by Counselor Zelikow to examine how 
India and the US can expand civil nuclear cooperation; 
 
-- tell Natwar that in order to respond to our promise to 
spur clean energy cooperation, we are prepared to expand 
USAID programs on rural electrification and clean coal 
technologies; 
 
-- invite Montek Singh Ahluwalia to Washington to discuss 
with NEC Director Hubbard the future of the Economic 
Dialogue, including White House backing of a CEO Forum; 
 
-- announce the restoration of GSP benefits to India in 
recognition of India,s passage of its IPR bill; 
 
-- tell Natwar that the US is ready to propose now India,s 
entry into the Proliferation Security Initiative Core Group 
at the time of the G-8 summit provided India has agreed to 
support the PSI principles and has a significant operational 
proposal to table that underscores its capacity to be a 
player in PSI; and 
 
We recommend the President: 
 
-- re-emphasize the US objective of helping India become a 
world power in the 21st century; 
 
-- tell Natwar that in return for what we expect will be a 
promise by him that India will submit its export control 
legislation as soon as Parliament reconvenes on April 18, we 
will take the steps necessary to prepare to conclude Phase 2 
of the NSSP once we have had a chance to review the draft 
legislation. 
 
End Summary. 
 
Maintaining Momentum 
-------------------- 
 
2.  (S) The MEA has indicated to us that Natwar is willing to 
visit Washington only if he can (1) show at least some 
progress in India's quest for UNSC membership and (2) launch 
a US-India Energy Dialogue.  Progress on these two issues 
would enable Natwar to tell Parliament when it reconvenes on 
April 18 that the US-India Strategic Partnership is quickly 
producing results.  This will also lay the groundwork for 
additional progress during PM Manmohan Singh's expected visit 
to Washington in July.  The following are the Embassy,s 
explanations for these recommendations for progress. 
 
UNSC Reform 
----------- 
 
3.  (S) The GOI,s top foreign policy goal is to become a 
permanent member at what is often referred to here as "The 
High Table," the UNSC.  The MEA is in the middle of a major 
diplomatic campaign to achieve this objective.  Despite our 
attempts to persuade the GOI that much larger issues of UN 
reform are at stake, the MEA considers some progress on this 
issue the other most important objective of Natwar's visit. 
If a forward leaning statement can be made by the Secretary 
in her joint press appearance with Natwar, it is his opinion 
that he can return to India as Parliament reconvenes with the 
prospect of demonstrating that the Secretary,s initiatives 
are genuine and worthy of active engagement by the 
Government.  If the Secretary also announces that Dr. Shirin 
Tahir-Kheli will travel to Delhi for discussions on UNSC 
reform, momentum will be strongly reinforced. 
 
Energy Dialogue 
--------------- 
 
4.  (S) The MEA has made it clear that the launch of the 
Energy Dialogue is one of Natwar's two highest priorities for 
his visit.  Although the energy dialogue has been the most 
active track of the Economic Dialogue with numerous bilateral 
activities across a broad spectrum (Refs A and C), greater 
strategic focus is required.  Increased and higher level USG 
attention to the Energy Dialogue would be a sign that we want 
to be part of the solution to India's energy needs.  The four 
areas that hold the greatest potential for cooperation are 
energy security, civil nuclear activities, natural gas, and 
cleaner/more efficient energy.  India wants Cabinet-level 
sponsorship for the Dialogue, and would also like to see a 
timeline for action.  We recommend that Secretary Bodman 
chair the Energy Dialogue.  If this is possible, we believe 
Deputy Planning Commissioner Montek Singh Ahluwalia would 
agree to anchor the Indian side.  (Four Indian Ministers 
divide up energy responsibilities making Montek the logical 
choice to lead the Indian side.)  We recommend Secretary Rice 
invite Secretary Bodman to attend the Rice/Singh meeting so 
Secretary Rice can announce Secretary Bodman will lead the 
 
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US-India Energy Dialogue and a date or at least a tentative 
timeframe for Secretary Bodman to visit India. 
 
 
Strategic Dialogue 
------------------ 
 
5.  (C) We recommend the Secretary cast her meeting with 
Natwar as the launch of the Indo-US Strategic Dialogue, and 
ask the President to express his support for it during his 
meeting.  In terms of substance, we recommend the creation of 
a Defense Production Cooperation Group (DPCG) under the 
U.S.-India Economic Dialogue that would lay further 
groundwork for our emerging strategic defense relationship. 
Such a DPCG could streamline and subsume existing defense 
industry dialogues under the High Technology Working Group 
and Senior Technology Security Group. 
 
6.  (C) Establishing the DPCG would encourage direct 
bilateral commercial interaction on the basis of corporate 
partnerships for defense cooperation.  The group,s 
objectives would be to remove political and bureaucratic 
barriers, and facilitate maximum private sector involvement. 
Military sales as the platform for cooperation will propel 
development of India's defense sector, spin off new 
industries, spur economic growth, and create jobs. 
 
Space Working Group 
------------------- 
 
7. (S) To invigorate US-Indian space cooperation, we propose 
the implementation of a Space Working Group led by the NASA 
Administrator and the Chairman of the Indian Space Research 
Organization.  We recommend the Secretary announce a trip by 
the NASA Administrator to India to meet with ISRO Chairman 
Nair to formally launch the Space Working Group. 
 
Civil Nuclear 
------------- 
 
8.  (S) In view of India,s critical energy needs, and the 
highly sensitive nature of cooperation in this area with a 
nuclear weapons state that is not party to the NPT, we 
recommend the establishment of a Civil Nuclear Working Group 
(CNWG) under the Energy Dialogue to discuss what steps India 
must take to demonstrate its unequivocal support for the 
principles of the NPT so that the US can then consider ways 
to expand our cooperation in this area.  This group could 
look at broader ways the US could support nuclear safety of 
Indian power plants, review our policy of blocking India's 
efforts to acquire uranium for civil nuclear power from other 
countries, and pursue additional US-India cooperation on 
fusion research and safe reactor designs.  By moving our 
civil nuclear relationship forward within the constraints of 
our NPT and NSG obligations, we believe we can move Indian 
policy on other issues of importance to us, and fold civil 
nuclear issues into the broader matrix of cooperative energy 
and economic efforts.  The GOI would welcome the naming of a 
senior official such as Counselor Zelikow to anchor the US 
side. 
 
Rural electrification and clean coal technologies 
--------------------------------------------- ---- 
 
9.  (U) With a large portion of India's rural population 
lacking access to electric power, and a political imperative 
to spur rural development, the GOI has evinced strong 
interest in the US experience in electrifying America during 
the early/mid 20th century through the USDA Rural Utilities 
Service (RUS).  An innovative partnership program that 
USAID/India has established pairs RUS with the GOI Rural 
Electrification Corporation (REC).  The travel of senior REC 
staff and GOI power sector officials to the US in April and 
May to learn about possibilities for developing cooperatives 
in Indian conditions provides an opportunity to increase our 
attention on this area. 
 
10.  (U) Clean Coal: India is one of the world's largest 
users of coal and a major emitter of greenhouse gases.  DOE, 
USAID and EPA have a robust set of cooperative activities 
with India to encourage the use of clean, efficient, 
renewable energy.  Although these activities have been 
generally successful, we need to raise their profile and 
broaden and deepen our efforts in energy efficiency, 
demand-side management, and distribution reform.  Announcing 
a Clean Coal Initiative in conjunction with DOE, USAID, and 
EPA would signal that we are upgrading energy and environment 
activities already underway. 
 
Economic Dialogue 
----------------- 
 
11.  (C) We have agreed with the GOI that the existing track 
structure of the Economic Dialogue should remain (trade, 
commerce, finance, environment, energy).  We have not yet 
discussed with India our idea to break the energy dialogue 
out into a free- tanding Energy Dialogue, but we expect the 
GOI would agree given the importance India attaches to 
enhanced energy cooperation with the U.S.  We have also 
agreed on the need for high-level involvement by US and 
Indian CEOs in priority sectors.  This would involve the 
convening of an informal group of CEOs from both countries 
which would meet once or twice to identify the most important 
impediments that require high level attention at the PM or 
White House level.  The Embassy is now prepared to begin 
contacting US CEOs who would act as counterparts for India,s 
Investment Commission.  Announcement of White House support 
for this initiative during the Foreign Minister's visit would 
assure robust participation by US CEOs and the high level 
attention we require on the Indian side to gain traction on 
key issues, push forward structural economic reforms, and 
resolve remaining "legacy" issues. 
 
Restoring GSP Benefits 
---------------------- 
 
12.  (SBU) In recognition of recent significant improvements 
in India's patent system, which will have a resoundingly 
positive impact on US interests, we believe the time is ripe 
to reconsider India's status under the GSP.  Despite some 
shortcomings in the law passed by the Indian Parliament on 
March 23, we believe the step India took merits recognition, 
and that the pharmaceutical product benefits suspended in 
1992 because of India's weak IPR protection should be 
restored.  With tariffs on most of those products now near or 
at the zero level, the economic importance of such a step 
would be limited, but an announcement would have political 
significance and carry with it a message of encouragement for 
further Indian efforts to strengthen its IPR regime. In the 
past, amendment of the Indian Patent Law has been considered 
the defining moment to review the GSP issue, so the timing 
could not be more appropriate. 
 
PSI 
--- 
 
14.  (C) In order to anchor India,s participation in the 
international non-proliferation enforcement regime, we must 
resolve the long-running impasse over India,s participation 
in the Proliferation Security Initiative (PSI) Core Group. 
India,s exclusion from the Core Group has led to the GOI 
refusing to join the PSI initiative.  We recommend the 
Secretary tell Natwar that the US will propose that India be 
 
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incorporated into the PSI Core Group provided India has 
agreed to support the PSI principles and has a significant 
operational proposal to table that underscores its capacity 
to be a player in PSI.  Formal entry could be recognized at 
the time of the G-8 Summit. 
 
Natwar,s Meeting with the President 
----------------------------------- 
 
15. (C) We recommend the President use his meeting with FM 
Singh first to re-emphasize the US objective of helping India 
become a world power in the 21st century.  We also understand 
from the MEA that Natwar hopes to be able to tell the 
President that the GOI will submit its export control 
legislation early in the session of Parliament that begins on 
April 18.  In return, the President should tell Natwar the 
USG will take the steps necessary to prepare to conclude 
Phase 2 of the NSSP once we have had a chance to review the 
draft legislation. 
 
MULFORD 
MULFORD