US embassy cable - 05NEWDELHI8034

S E C R E T SECTION 01 OF 04 NEW DELHI 008034 
 
SIPDIS 
 
E.O. 12958: DECL: 10/16/2015 
TAGS: PTER, PREL, PGOV, PINR, ETRD, EPET, MASS, KPAO, IN, PK, INDO-PAK 
SUBJECT: INDO-PAK COUNTRY TEAMS DISCUSS HOW TO ENCOURAGE 
BETTER BILATERAL RELATIONS 
 
Classified By: Charge Robert Blake, Jr. for Reasons 1.4 (B, D) 
 
1.  (C) Summary: Taking advantage of Ambassador Crocker's 
trip to India, New Delhi and Islamabad country teams on 
October 4 convened a round table discussion on Indo-Pak 
relations.  Both sides agreed that, although there are few 
feasible avenues for direct USG involvement in this sphere -- 
and that direct US involvement risks poisoning the process -- 
there are constructive avenues we can pursue to keep the two 
sides moving in the right direction.  In addition to 
Ambassador Crocker and DCM Blake, the POL, ECON, PA, DAO, and 
ORA sections of each Embassy participated in this exchange. 
End Summary. 
 
Opening Trade a Potential Boost to Improving Relations 
--------------------------------------------- --------- 
 
2.  (C) All agreed that growing economic ties between India 
and Pakistan would improve overall relations.  India's larger 
and growing economy -- and the South Asia Free Trade 
Agreement, due to take off next year -- could help fuel 
growth throughout much of South Asia, but some businesspeople 
in Pakistan fear they would be displaced by bigger Indian 
firms.  Promoting cross-border investment would enlarge the 
already growing peace constituencies in both countries. 
 
3.  (C) Businesspeople in both countries complain that the 
visa regimes -- which, among other restrictions, limit the 
number of cities a traveler can visit -- are the most 
significant hurdles to overcome; other key obstacles include 
limited travel and transport routes and restrictive shipping 
policies.  Many of these items are already on the New 
Delhi-Islamabad agenda under the auspices of the recently 
inaugurated Joint Commission.  To help accelerate trade and 
investment liberalization, the US-India and US-Pakistan 
Chambers of Commerce could consider coordinating their 
messages to New Delhi and Islamabad; business nationals could 
flex their leverage more effectively in this arena than any 
outsider.  One drag on using trade to foster goodwill, 
however is the pervasive GOP concern that too much progress 
on trade ties risks sidelining the Kashmir issue. 
 
Energy Cooperation: Most Prospects Have High Negatives 
--------------------------------------------- --------- 
 
4.  (C) The Indian and Pakistani economies face tough 
challenges in securing increased domestic and imported energy 
supplies to sustain their rapid rates of economic growth. 
India has greater energy concerns, but Pakistan has fewer 
options to address their own declining resources.  The 
TAP/TAPI proposal for a natural gas pipeline from 
Turkmenistan via Afghanistan is stymied by Ashgabat's 
inability to authenticate  sufficient gas reserves needed for 
production levels above its export commitments to Russia and 
Ukraine --  a concern that the Asian Development Bank shared 
with Embassy Islamabad.  Proposed gas pipelines from 
Bangladesh or Burma only meet some of India's growing demand, 
and probably would not  traverse the country to supply 
Pakistan as well.  There is commercially-feasible  potential 
for connecting the Indian and Pakistani electrical grids in 
Punjab.  Prospects for Pakistani investment in, or purchases 
from, Indian hydro-electric projects in Jammu and Kashmir 
still face bilateral political hurdles. 
 
5.  (C)  Another area for bilateral energy cooperation -- the 
proposed Iran-Pakistan-India natural gas pipeline now under 
negotiation -- faces questions of financial and commercial 
viability and both the GOI and GOP are concerned about 
running afoul of US ILSA sanctions. (NOTE: Each country team 
has heard the joke from its national contacts that New Delhi 
and Islamabad should consider a joint demarche to Washington 
on ILSA.  End Note.)  One promising avenue for cooperation 
would be to expand the growing US-India Energy Dialogue to 
include regional initiatives. 
 
Greater Transparency Can Increase Confidence 
-------------------------------------------- 
 
6.  (S) US officials have been unable so far to share some 
information with GOI/GOP interlocutors that could improve 
transparency and increase confidence between the two 
countries, due to regulations that govern intelligence 
sharing (i.e. the "friends on friends" policy).  For example, 
Indian confidence would increase if we could confirm to New 
Delhi actions Musharraf takes to check cross-border 
terrorism.  Similarly, especially in crisis situations prone 
to mutual misperception and conflicting signaling, our 
ability to reassure Islamabad that New Delhi does not plan to 
escalate could help restrain Musharraf from deciding to 
preempt.  We understand this is a complex topic with numerous 
equities at stake, but addressing this issue during a period 
of positive bilateral relations has the potential to reap 
exponential benefits in crisis prevention and crisis 
management at a later date. 
 
Balancing (But Not Hyphenating) Perceptions on F-16s 
--------------------------------------------- ------- 
 
7.  (C) Recent Pakistani public statements on upcoming F-16 
transfers have drawn little attention in India, but that may 
change as the details on the transfer firm up and are 
publicized. Ambassador Crocker noted that, contrary to Indian 
pundits who describe the F-16 as a purely nuclear platform, 
it has been employed by the Pakistani military to a limited 
degree in counter-terrorism operations, including in 
Waziristan this month and in Shkai in 2004.  It may allay 
some Indian concerns to describe the transfer as giving 
Pakistan a non-nuclear option rather than allow them to 
define it as a nuclear delivery system. 
 
8.  (C) The Islamabad Country Team underlined the "mythic 
proportions" the F-16 has in the minds of many Pakistanis, 
which outstrip the platform's strategic value.  To withhold 
the F-16s, they judge, would harden the Pakistan Army against 
the US and the peace process: "It would be back to the 
bunkers."  Objectively, however, many Indian strategic 
analysts have acknowledged that the F-16 package would not 
tip the scales in Islamabad's favor. 
 
Political Trends: Auspicious Timing for Progress 
--------------------------------------------- --- 
 
9.  (C) The assessment of Islamabad Country Team was that the 
best time for progress in Indo-Pak relations is between the 
present and the run-up to Pakistan's 2007 elections, when 
Musharraf as Army Chief can best sell the military on 
whatever deals emerge out of his dialogue with PM Singh. 
Similarly, New Delhi PolCouns noted that, in India, peace is 
currently a bigger vote-getter than anti-Pak demagoguery. 
 
10.  (C) The problem, however, is that the two governments 
have yet to agree on what form "progress" will take.  Working 
under the boundaries of PM Singh's assertion that the borders 
in Kashmir cannot be redrawn and Musharraf's declaration that 
the LoC cannot be the solution, a number of plausible options 
emerged from discussion: limited autonomy, softening of the 
LoC to permit greater intra-Kashmir travel and trade, and a 
pan-Kashmir body that would exercise limited jurisdiction 
over the whole of (Pakistani and Indian) Kashmir are all 
constructs that would appear to be within the stated 
parameters. 
 
11.  (C) PM Singh needs good behavior from Musharraf, 
especially against cross-border terrorism, so he can sell 
this kind of out-of-the-box thinking to the Army, his 
coalition partners, and the country (i.e. the electorate); 
India also needs to know that the USG is not giving Musharraf 
a free ride on terrorism, or the GOI will be more inclined to 
take matters into their own hands, with potentially 
disastrous results.  Musharraf needs to show some degree of 
progress on Kashmir and that the Pakistan Army's Kashmir 
policy was not an abject failure.  These are not mutually 
exclusive requirements, although they can be difficult to 
finesse.  Until a mutually agreeable end-game emerges, the 
best route is for both sides to keep moving the ball up the 
field. 
 
Countering Mutual Misperceptions 
-------------------------------- 
 
12.  (C) Most Indians and Pakistanis will say that they 
understand the people on the other side of the border, "After 
all, we are all from the same family."  This fallacy makes 
countering mutual misperceptions all the more difficult -- it 
would be more accurate to describe the Indian and Pakistani 
people as being from a family that suffered a painful divorce 
50 years ago, where many of the grandchildren only have a 
one-sided idea of what happened and why.  A staggering 
statistic PAO New Delhi offered was that out of less than 
8,000 foreign students in all of India, there are 750 
Americans, and only one Pakistani.  A number of USG and NGO 
programs bring together students and professionals from both 
sides of the border, but even these have to work against very 
large populations and the momentum of 50 years of distrust 
and ignorance, which has been reinforced over the years by 
books, films, and public discourse. 
 
13.  (C) End-of-session brainstorming produced several ideas 
deemed worth exploring: 
 
-- Joint programs on how regional trade can be mutually 
beneficial, targeted to audiences other than the business 
community 
 
-- Assistance -- where politically acceptable -- on reforming 
textbooks that include intolerant and inflammatory language 
 
-- A program on how the media can help restrain and counter 
incitement during a crisis 
 
-- Facilitating exchanges and VCDs between private schools 
like Pakistan's Beacon House School and the Delhi Public 
Schools  (COMMENT: These private schools are owned and run by 
elites who are well known Embassy contacts, and would be 
easier to facilitate than working through state-owned 
schools.  End Comment.) 
 
What We Do (or Don't) is Less Important Than How We Do It 
--------------------------------------------- ------------ 
14.  (C) There are few areas where the USG can directly 
improve Indo-Pak relations during a non-crisis period, but 
there are many fruitful, indirect approaches that can help 
build confidence between the two countries without our taking 
a leadership role in their affairs.  There was general 
agreement between the two Country Teams, furthermore, that 
attempting to insert the USG directly into the process risks 
poisoning even the best ideas -- our most constructive 
location is on the margins offering support, not in the 
middle brokering deals. 
 
15.  (U) Ambassador Crocker has cleared this message. 
 
16.  (U) Visit New Delhi's Classified Website: 
(http://www.state.sgov.gov/p/sa/newdelhi/) 
BLAKE