US embassy cable - 05NEWDELHI4862

C O N F I D E N T I A L NEW DELHI 004862 
 
SIPDIS 
 
E.O. 12958: DECL: 06/26/2015 
TAGS: PREL, IN, IR, India_Iran 
SUBJECT: INDIA PONDERS NEW IRANIAN PRESIDENT 
 
REF: 04 NEW DELHI 2556 
 
Classified By: Charge Bob Blake for Reasons 1.4 (B, D) 
 
1.  (C) Indian foreign policy watchers predict that the June 
25 Iranian presidential election outcome will upset the 
equilibrium in India's balancing act between its energy and 
trade interests in Iran and its growing strategic partnership 
with Washington.  New Delhi's improved ties with Tehran in 
recent years had been based on Iran's status as India's 
gateway to central Asia and a potential energy supplier, but 
were buttressed by the GOI's conviction that its engagement 
would help to moderate Tehran's policies (Reftel).  The 
ascent of a hard-liner to the presidency is causing 
apprehension among Indian strategists who fear that renewed 
tensions between Tehran and Washington could have a negative 
impact on India's Iran policy. 
 
2.  (C) In a meeting with visiting S/P Director Stephen 
Krasner held before the presidential runoff, MEA Joint 
Secretary (Pakistan, Afghanistan, Iran) Dilip Sinha defended 
 
SIPDIS 
India's current policy of engagement with Iran, noting that 
Iran had "moved considerably" from its most problematic 
stances over the past 7-8 years.  He admitted that Iran was 
not changing as fast as the US would like, but said its 
overall progress was "useful," and that Iran's funding of 
terrorist organizations had declined over the decade.  Sinha 
did not expect a change in Indian policy whatever the outcome 
of the runoff election. 
 
3.  (U) Prominent strategic affairs analyst C Raja Mohan 
speculated in the June 26 "Indian Express" that Ahmadinejad's 
election could "utterly complicate" India's balancing act 
between Iran and the US.  India had so far managed to keep 
its diplomatic relations with Tehran and Washington separate, 
but the burgeoning energy relationship with Iran and defense 
exchanges were becoming "issues of concern" to the US.  The 
ascent of a fundamentalist like Ahmadinejad would make it 
more difficult for New Delhi to insulate its Iran policy from 
its high-priority engagement with the US. 
 
4.  (C) Although the June 27 "Telegraph" quoted "Indian 
diplomats" that GOI policy would be unaffected by 
Ahmadinejad's victory, C Uday Bhaskar, Acting Director of the 
government-funded Institute for Defense Studies and Analyses, 
disagreed with these predictions, telling Poloff on June 27 
that increased tension in the US-Iran relationship would pose 
significant foreign policy challenges for New Delhi.  In 
private, the MEA will admit that it is worried, he said, and 
the GOI will be "closely monitoring" the new government in 
Tehran, but it was too early yet for real concern. 
 
Comment 
------- 
 
5.  (C) New Delhi sees its energy links to Iran as essential, 
and is eager to avoid clashes with the US over Iran that 
would upset either relationship.  While hoping that its 
increasing economic engagement will not trigger ILSA 
sanctions, the GOI recognizes that Iran is one of the 
"problem children" in the US-India bilateral relationship, 
and is likely to seek to use its influence with Iran to avoid 
a flare-up of tensions with the US, including continuing to 
encourage Iran to cooperate with the IAEA and EU-3 
interlocutors on nuclear matters. 
BLAKE