US embassy cable - 05NEWDELHI7494

C O N F I D E N T I A L SECTION 01 OF 05 NEW DELHI 007494 
 
SIPDIS 
 
E.O. 12958: DECL: 09/26/2015 
TAGS: PREL, EPET, ETRD, MOPS, CN, PK, AF, IN, India-Russia 
SUBJECT: GOI CONSIDERING RUSSIAN THRUST IN CENTRAL ASIA 
 
REF: A. NEW DELHI 4353 
 
     B. ALMATY 3075 
 
Classified By: PolCouns Geoff Pyatt, for Reasons 1.4 (B, D) 
 
1.  (C) Summary: As India perceives a shift by Central Asian 
nations toward their Soviet roots and increased competition 
from China, the GOI is taking a new look at how to orient its 
foreign policy in the region.  Frustrated with the slow 
progress expanding influence in its extended neighborhood and 
concerned about being edged out by Sino-Russian 
consolidation, the GOI is considering whether to parlay its 
historically strong relationship with Russia into a quiet, 
but influential, partnership.  After India's first turn as an 
observer in the Shanghai Cooperation Organization (SCO), the 
GOI hopes for full membership in the Central Asian group. 
Indian analysts have a variety of perceptions about the US 
role in what some call (erroneously) a new "Great Game", but 
all agreed that India is happy to benefit from its close 
relationship with Russia for greater influence in Central 
Asian trade, energy and counterterrorism efforts, especially 
as they perceive that US deference to Pakistan will limit 
greater GOI involvement in Afghanistan.  Central Asia is of 
growing importance to US and Indian foreign policy, 
especially in Iran and Afghanistan, and we should look for 
additional ways to engage the GOI in this area with a view to 
avoiding any revival of the old Delhi-Moscow axis.  End 
Summary. 
 
India Feels Benched 
------------------- 
 
2.  (C) India was invited for the first time to participate 
in the July 5 SCO as an observer, but aspires to early 
membership.  Nivetida Das Kundu from the MOD supported 
Institute of Defense Studies and Analysis explained that the 
GOI indicated it was not content with the observer role, but 
sent Foreign Minister Natwar Singh anyway to mingle with top 
participants, including Pakistani Prime Minister Aziz and 
Iranian Vice President Arif.  MEA Deputy Secretary for 
Eurasia Sandeep Chakravorty told Poloff in an August 3 
meeting that India wants to be a full SCO participant, but 
understands the organization does not yet have rules for 
admitting new members.  He clarified that domestic 
engagements on July 5 and the G-8 in Scotland on July 6 
prevented the Prime Minister from attending the Astana 
meeting.  Chakravorty indicated that India's SCO priorities 
are counterterrorism and energy cooperation, but as an 
observer, the delegation had not been able to participate in 
decision making.  Noting that the discussions about US bases 
in Central Asia had taken place in a private meeting closed 
to India, he said that the GOI had not been involved in the 
SCO's deliberations on US presence and considered it a 
bilateral matter between Washington and governments of the 
region.  Other senior officials have expressed GOI support 
for continued US military presence in Central Asia, 
especially insofar as this helps preserve stability in 
Afghanistan and prevent a resurgence of Pakistani/ISI 
influence. 
Struggling for Energy and Trade 
------------------------------- 
 
3.  (C) Despite top level speeches about the importance of 
Central Asia and a 2003 "Focus CIS" MEA policy (Ref A), India 
has enjoyed only limited success.  As Das Kundu summarized 
recently, "India had high expectations for trade and energy 
deals with Central Asia, but has been disappointed with what 
it found."  Nirmala Joshi, the Director of the India-Central 
Asia Foundation, complained that India "hasn't made a dent" 
because MEA "can't implement their vision for the region and 
the government's priorities are elsewhere."  MEA's 
Chakravorty elaborated on the "barriers" to India's 
relationship with Central Asian countries.  Since these 
countries were relatively closed until the breakup of the 
Soviet Union, India got a "late start and has a long way to 
go" in forging closer ties.   Unlike Russia and China, which 
have natural frontiers with Central Asia, India's lack of 
direct transportation links complicate people to people 
contacts and potential energy trade. 
 
4.  (C) ORF's Unnikrishnan observed that India's energy 
options have been narrowed to Turkmenistan and Kazakhstan, 
where any eventual energy trade will require problematic 
pipelines.  According to Professor Joshi, India is now 
considering a more complicated "oil swap," through which 
India would pay Kazakhstan to send its oil via the Caspian 
Sea to refineries in Northern Iran, after which Iran would 
send an equivalent amount of oil from southern wells by sea 
to India.  After entering the markets of Central Asia, some 
Indian businesses have struggled to make profits.  Ajanta 
Pharma, a mid-size Indian pharmaceutical company, recently 
pulled out from its joint ventures with the governments of 
Uzbekistan, Kazakhstan, Kyrgystan and Tajikistan. 
Unnikrishnan noted that while some businesses are continuing 
to invest, instability has affected the investment climate 
negatively.  Jawaharlal Nehru University Professor Gulshan 
Sachdeva agreed that these countries are facing a "serious 
perception problem" in India due to their lack of 
institutions, law and stability. 
 
Indian Outpost in Tajikistan 
--------------------------- 
 
5.  (C) India has been quietly developing a small military 
facility in Tajikistan since 2002.  Located between Pakistani 
Kashmir, Afghanistan and Central Asia, it represents a 
strategic forward location for GOI foreign policy.  JNU's 
Professor Sachdeva explained that the GOI has never 
"officially mentioned" the base, so information about it 
varies widely among the strategic community in Delhi.  Most 
accounts describe a hospital in Farkhor which was used to 
support the Northern Alliance and later converted into a 
small military facility.  Other experts say that India was 
awarded a contract to upgrade and use an air strip, which may 
be Russian, in Aini. We would welcome any recent information 
Embassy Dushanbe can provide. 
 
China and Russia Get Into the Action 
------------------------------------ 
 
6.  (C) Central Asian analysts in Delhi worry that the 
perceived Russian and Chinese consolidation in the area 
threatens GOI foreign policy goals in economics and energy. 
Despite lingering Indian suspicion of Russian and Chinese 
intentions, Professor Sachdeva speculated that Central Asian 
regimes have become even more suspicious of US influence. 
Analysts in New Delhi fear that Russia and China are making a 
power play to regain influence by playing on Central Asian 
fear of US-sponsored democratic movements.  According to 
Sachdeva, the combination of Russian military might and 
Chinese economic power makes India both uncomfortable and 
more determined not to lose out in what some have been quick 
to christen a new "Great Game."  India-Central Asia 
Foundation Director Joshi argued that Central Asia was more 
or less united under the "War on Terrorism," but is now being 
pulled in multiple directions.  As a result, India is having 
trouble competing against US, Chinese and Russian influences. 
 "India," she forewarned, "is going to have to make some very 
difficult choices in the region" about how to regain 
influence. 
 
7.  (C) India is unable to compete against China's effective 
combination of money, access and proximity.  Professor K. 
Warikoo, the Director of the Central Asian Studies Program at 
JNU, worried that India's inaction has left more room for 
China's expanding influence.   Beijing spends so much money 
building infrastructure such as railways and pipelines, he 
observed, that India can't keep up.  Assistant Editor for the 
"Himalayan and Central Asian Studies" Dr. Sharad Soni 
suggested that Chinese money, used to pay off local officials 
and businessmen in energy rich Central Asian countries, gives 
them an edge over Indian businesses in securing oil and gas 
deals.  Warikoo added that close ties between China and 
Pakistan have "cornered India out." 
 
India Looks for a Clubhouse Leader 
------------------------------- 
 
8.  (C)  As it grows frustrated with trends in Central Asia, 
Indian analysts speculate that the GOI is looking for a quiet 
partner, most likely Russia, to preserve and expand influence 
in the region.  Professor Sachdeva believes MEA has realized 
that India is not yet strong enough to have an effective 
independent policy and should instead look to play a 
partnering role.  Concerned about Central Asian regimes' 
negative attitudes about American influence and Chinese 
positioning, Sachdeva suggests that the GOI "has chosen 
Russia as a partner in Central Asia."  Das Kundu agreed that 
there has been a "policy shift to draw on the strong 
relations with Russia."  (Note: This thinking may have 
contributed to the flurry of Indian visits to Russia in May 
and June of this year as described in Ref B.  End note.) 
When asked about Indo-Russian cooperation in Central Asia, 
MEA's Chakravorty replied that Indian policy is always 
independent but the GOI is looking for ways to "develop 
policy in conjunction with Russia."  India "would like" 
closer cooperation but doesn't have any concrete proposals in 
the region yet. 
 
9.  (C)  ORF's Unnikrishnan predicted that in the short-term, 
India sees the greatest trade and energy advantages in a 
Russian partnership.  JNU's Joshi agreed, saying that India 
understands that Russia dominates the energy field, and 
realized that "if they want a greater role, it will have to 
be with Russia."  However, Unnikrishnan is worried that the 
GOI has sacrificed a "holistic approach" in exchange for 
immediate gains in these areas.  With this in mind, the ORF 
has launched a "Task Force on India-Central Asia" to 
determine "whether India has sufficient commonality of 
interests with Russia" and "whether the association carries 
negative or positive baggage."  Sachdeva commented that this 
partnership was not a sustainable policy, because in his 
opinion Central Asia's long term interests do not coincide 
with those of Russia. 
 
10.  (C) The only dissent we heard came from SAPRA's 
Banerjee, who observed that closer Russian cooperation would 
actually bring significant disadvantages.  He cited Central 
Asian resentment towards Russia, competition over energy 
supplies, and Russian dissatisfaction with the Indian base in 
Tajikistan as examples.  Nevertheless, Joshi predicted that 
India will downplay its US ties in the region in order not to 
upset Russia or hurt its chances of SCO membership.  JNU's 
Sachdeva stressed the positive effects of a stronger US role 
in Central Asia, but admitted he was of a minority opinion in 
this regard. 
 
Indian Oil Venture Cries Foul and Asks Russians to Referee 
--------------------------------------------- -------------- 
 
11.  (C) As an indication of Russia's expanded influence, an 
Indian oil venture between state-owned ONGC and the private 
company Mittal Energy asked the Russians for help in its 
latest energy bid.  When the Chinese National Petroleum 
Corporation (CNPC) won the takeover of Canadian-based 
PetroKazakhstan Inc. on August 22, Delhi-based newspapers 
claimed foul play, alleging that the Indian company was not 
given a chance to rebid after CNPC upped the price.  The deal 
is waiting for GOK approval.  Almaty has supported Russia's 
Lukoil in the past (Ref B) and the "Times of India" reported 
on August 25 that the company's partnership in 
PetroKazakhstan gives it the right to block the deal.  The 
GOI has thus far stayed out of the affair, but ONGC officials 
reportedly traveled to Russia to try to persuade Lukoil to 
block the CNPC deal. 
 
Comment 
------- 
 
12.  (C) Indian partnership with Russia in Central Asia is a 
short-sighted policy, induced by Delhi's frustration with 
Chinese and Russian consolidation, unsecured energy deals, a 
deteriorating business environment, barriers to trade through 
Afghanistan and increasing Chinese infrastructure projection 
into Central Asia. As we create an expanding Indo-US agenda, 
we should look for ways to improve policy coordination on 
Central Asia, building on our successful partnership in 
Afghanistan and converging interests on issues of terrorism, 
democracy and radical Islam. 
 
13.  (U) Visit New Delhi's Classified Website: 
(http//www.state.sgov/p/sa/newdelhi) 
BLAKE