US embassy cable - 05NEWDELHI8035

UNCLAS SECTION 01 OF 02 NEW DELHI 008035 
 
SIPDIS 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: PREL, PTER, PGOV, ETRD, IN, PK, INDO-PAK 
SUBJECT: AMBASSADOR CROCKER'S MEETINGS WITH DELHI DEFENSE 
THINKERS AND BUSINESS COMMUNITY 
 
 
1.  (SBU) Summary: Ambassador Crocker's October 4 meeting 
with strategists focused largely on Indian concerns that 
Musharraf is continuing Pakistani polices that foster 
intolerance, a hawkish stance on India, and cross-border 
terrorism.  With business leaders, the emphasis was on recent 
incremental progress on trade liberalization, the pent up 
pressure among Indian and Pakistani businesspeople to go 
further, and government obstacles that impede rapid trade 
growth, including both countries' restrictive visa policies. 
End Summary. 
 
Security-Wallahs Concerned Musharraf Hawkish on India 
--------------------------------------------- -------- 
 
2.  (SBU) Ambassador Crocker opened the Institute for Defense 
Studies and Analysis (IDSA, the Defense Ministry's 
think-tank)-hosted breakfast roundtable by listing the 
opposing political forces at work in Pakistan and underlining 
that President Musharraf is actively engaged on combating 
terrorism within Pakistan, as well as along Pakistan's border 
with Afghanistan and in Kashmir.  He pointed to Musharraf's 
address to the cadets at the Pakistan Military Academy, which 
highlighted the threat of domestic extremism and was devoid 
of anti-India rhetoric, as an encouraging indicator that 
Pakistan's attitudes toward India were starting to change in 
a positive direction. 
 
3.  (SBU) The assemblage of retired military officers, 
diplomats and senior civil servants -- most of whom have been 
active in Indo-Pak and regional affairs for decades -- argued 
that Pakistan still had a long way to go to improve 
relations.  The concerns they voiced included: 
 
-- Islamabad's keen focus on Kashmir obstructing economic 
liberalization and CBMs; 
 
-- Musharraf's accumulation of power and international 
attention eclipsing progress toward democracy; 
 
-- Persistent hatred of India in Pakistani textbooks. 
 
4.  (SBU) Ambassador Crocker reported progress in all these 
areas.  Pakistani businessmen are pressing the government for 
more open trade with India, and local body elections are 
showing success in breaking the back of the religious 
obscurantist political parties, he answered.  State textbooks 
and curricula are also changing, albeit incrementally. 
 
5.  (SBU) JNU Professor SD Muni asked whether the US or India 
could trust Musharraf.  Ambassador Crocker answered by 
describing the current state of play throughout South Asia as 
"a transformational period" -- for Pakistan, Afghanistan, 
India, and for relations among these countries and with the 
US.  He continued that this trend includes Musharraf's views 
on Kashmir, although it is difficult to determine if this is 
a true transformation, or a change in tactics.  Several 
follow-up comments focused on the role of CBMs on the 
Indo-Pak dialogue Kashmir: Indians view CBMs as necessary to 
normalize relations so progress can be made on Kashmir, 
whereas they perceive that Pakistanis view CBMs as a 
distraction meant to relegate Kashmir to the back burner. 
 
Facilitate Biz Visas so India Can Trade with Pakistan 
--------------------------------------------- -------- 
 
6.  (SBU) At a lunch hosted by the DCM for business leaders 
under the auspices of the Federation of Indian Chambers of 
Commerce and Industry (FICCI),  Ambassador Crocker explored 
opportunities for increased trade and investment flows 
between India and Pakistan. The consensus among Indian 
participants was that the business community on both sides of 
the border are enthusiastic about future prospects for trade 
and investment with Pakistan but are waiting for a clear 
political signal from government.  The immediate stumbling 
block is visas.  Unless both sides liberalize visa 
restriction to enable greater person-to-person contact for 
potential business partners, all other efforts to catalyze 
cross-border economic activity will languish. 
 
7.  (SBU) A decision to facilitate business visas would send 
a strong political signal to the business community. 
Subsequent necessary steps would be liberalization of 
transport and telecommunications linkages and increased trade 
facilitation efforts.  This, combined with tariff reductions 
and other restrictions on cross-border trade would have a 
strong and immediate impact by enabling goods now 
transshipped via third countries to cross the border 
directly.  The result would be dramatic price reductions and 
consumer benefit, mainly on the Pakistani side of the border. 
  Already the Pakistan government has begun to allow import 
of non-sensitive food products, sugar and some other 
commodities and has managed to augment shortages and bring 
down prices by doing so. 
 
8.  (SBU) Despite an initial positive economic impact of 
trade liberalization, there is a strong fear on the Pakistani 
side that increased imports of Indian manufactured goods 
would cause economic dislocations and job losses.  While 
Pakistan has good potential to export basic commodities and 
handicrafts to India, the expectation is that India would 
benefit disproportionately from trade liberalization and that 
India would need to offer non-reciprocal concessions to 
facilitate market access for Pakistani goods if the benefits 
are to be shared more equally.   In the medium-term, good 
potential also exists for cross-border investment and 
increased intercompany trade and the positive impact of 
investment liberalization would probably be exceed that of 
trade liberalization. 
 
9.  (U) Ambassador Crocker has cleared this message. 
 
10.  (U) Visit New Delhi's Classified Website: 
(http://www.state.sgov.gov/p/sa/newdelhi/) 
BLAKE