US embassy cable - 05NEWDELHI9205

C O N F I D E N T I A L SECTION 01 OF 04 NEW DELHI 009205 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 12/06/2015 
TAGS: PREL, ECIN, ETRD, ENRG, TRGY, KNNP, CH, JA, IN, ASEAN, India-Japan 
SUBJECT: INDO-JAPANESE INTERESTS CONVERGING AHEAD OF EAST 
ASIA SUMMIT 
 
REF: A. TOKYO 6376 
 
     B. TOKYO 6236 
     C. TOKYO 5850 
 
Classified By: PolCouns Geoffrey Pyatt for Reasons 1.4 (B, D) 
 
1.  (C) Summary:  Prime Minister Singh is heading to Kuala 
Lumpur for the December 14 East Asian Summit (EAS) at a time 
of rapid improvement in Indo-Japanese relations that may 
finally overcome the sense on both sides of unfulfilled 
potential.  In a December 2 meeting with PolCouns, MEA's Asia 
Coordinator Ashok Kantha emphasized the positive changes in 
Japanese attitudes that New Delhi perceives following 
Koizumi's re-election.  In addition to a shared approach to 
the East Asian Summit (Refs A and B), Kantha and Japanese DCM 
Ryoichi Horie noted other factors driving this India-Japan 
rapprochement, including changes in the GOJ Foreign Ministry, 
booming corporate interest in India and a gradual Japanese 
turn around on nuclear issues.  In a recent speech to a World 
Economic Forum meeting in New Delhi, PM Singh outlined his 
vision for an Asian economic grouping "which could be the 
third pole of the world economy" after the EU and NAFTA. 
India views closer relations with Japan and a Japanese role 
in South Asian security as a means to take advantage of 
economic opportunities and balance Chinese influence in 
ASEAN.  According to DCM Horie, Tokyo still resists full 
civil nuclear cooperation with India, but the Japanese 
Foreign Ministry and business leaders are waking up to the 
advantages of closer relations with New Delhi.  End Summary. 
 
India and Japan EAS Buddies 
--------------------------- 
 
2.  (C) Amidst an increasing sense of shared interests, India 
and Japan are working together over the East Asian Summit's 
role in building a regional architecture.  As Embassy Tokyo 
has detailed (Refs A and B), the GOI sees the EAS as a 
building block for a future East Asian Community, and is 
adamant that this new architecture include a prominent role 
for India.  Noting that China was initially "not enthusiastic 
about India's participation in the EAS," MEA Joint Secretary 
(East Asia) Ashok Kantha told PolCouns and Poloff in a 
December 2 meeting that China was more comfortable with the 
ASEAN Plus Three format, "where they could dominate."  He 
relayed that many ASEAN countries have stressed to India the 
need for better geopolitical balance in the region, but 
admitted that these countries are not comfortable voicing 
their opinion in multilateral fora where China is present. 
Kantha listed Singapore, the Republic of Korea, and Thailand 
as examples of countries that tell the GOI privately that 
India needs to be involved to "prevent China from 
dominating," but are afraid to articulate this in other ASEAN 
formats.  Japan has been most supportive of the Indian 
position on the Summit, he commented, but wants the EAS to 
meet every other year while the GOI is pushing for an annual 
event.  In a December 5 meeting, Japanese DCM Ryoichi Horie 
told us that Japan is supporting India's challenge to China 
because it has greater confidence in India's positive, 
democratic influence in Asian stability.  Since India joined 
the ASEAN Plus One group, it has become "intensively" 
involved in the region, he observed. 
 
The Flag Follows Trade 
----------------------- 
 
3. (C) Looking beyond the EAS, Prime Minister Singh lauded 
the advantages of an Asian economic grouping in a recent 
speech to a World Economic Forum meeting in New Delhi.  He 
suggested that a Pan-Asian Free Trade Zone could be the 
"third pole of the world economy" after the European Union 
and the North Atlantic Free Trade Area, and would open up 
"new growth avenues" for the Indian economy.  The PM's Media 
Advisor Sanjay Baru is a big-time advocate of this Asia push, 
and has spoken in the past of GOI hope that the EAS could be 
the foundation for a regional free trade zone.  This long 
term plan raises the stakes on Indian participation in 
architecture building through the EAS.  MEA's Kantha also 
told PolCouns that India is open to US participation in this 
notional economic grouping. 
 
Closer Relations Across the Board 
--------------------------------- 
 
4.  (C) In addition to GOJ support of India's approach to the 
EAS, Kantha also praised Japan's stronger commitment to 
bilateral relations with India.  He indicated that the 
changes have started with Koizumi and are "percolating down 
the system" following the Japanese election.  DCM Horie noted 
that Japan's new Foreign Minister, Taro Aso, is a strong 
proponent of Indo-Japanese ties going back to his tenure as 
Communications Minister, and plans to visit New Delhi in 
January in his new capacity.  Kantha was optimistic that the 
Foreign Ministry finally understands where India is heading, 
and "starting to change the entrenched stereotypes in the 
bureaucracy."  Kantha credited the common EAS alignment, 
stronger economic ties and the joint UNSC effort for driving 
Japan's changing perception of India.  He added that the 
Japanese business community still believes that India needs 
better infrastructure, but noted that India would welcome 
further Japanese investment in this area. 
 
5.  (C) Horie listed several other factors which have led to 
stronger Indo-Japanese ties, including Tokyo's evolving 
position on civil nuclear cooperation, the booming Japanese 
interest in India's economy, and the selection of Taro Aso as 
the new Foreign Minister.  The Japanese concurrence on Indian 
participation in ITER is the most substantial sign of greater 
leeway for civil-nuclear cooperation, Horie commented, since 
non-proliferation is historically a bone of contention in 
Indo-Japanese relations.  After the Keidanren group of 
business leaders (Ref C), led by Toyota President Hishiro 
Akuda, met with Finance Minister Chidarambam and PM Singh in 
November, they declared that India was the "last remaining 
big market for Japanese business."  Mid-size and small 
companies have also become more interested in doing business 
with India, leading to a major "India boom" in Japan, and 
Horie listed several upcoming visits by prominent business 
leaders. 
 
Tokyo "Will Come Around" On Civil Nuclear Cooperation 
--------------------------------------------- -------- 
 
6.  (C) Kantha expressed appreciation for USG efforts to 
persuade Japan to "come around" on allowing India to join the 
International Thermonuclear Experimental Reactor (ITER) as a 
partner, and predicted that once Nuclear Suppliers Group 
policies are changed to accommodate civil nuclear cooperation 
with India, Japan would again "come along" there too.  DCM 
Horie explained that he and Japanese Ambassador Enoki support 
greater civil nuclear cooperation with New Delhi, and believe 
that Japan needs to treat India as a de-facto nuclear power 
in order to avert an impending energy crisis.  However, he 
explained that the GOJ had its own "non-proliferation 
ayatollahs" who resist the Indo-US civil nuclear agreement. 
Horie reported that Ambassador Enoki had used his recent 
consultations in Tokyo to "send signals" that it was time to 
change Japanese policy towards India's nuclear program. 
According to Horie, the GOI has indicated that they are 
looking towards Japan and France as the front runners to 
supply civil nuclear technology.  Nevertheless, he commented 
that Japanese businesses that export this technology have not 
begun to lobby the GOJ to loosen its regulations, and thusfar 
all discussions have been government to government.  Although 
Tokyo had agreed to support India's participation in ITER, he 
predicted that Japan would be one of the last countries to 
support the Indian civil nuclear agreement in the NSG. 
 
Comment: A Historic Realignment 
-------------------------------- 
 
7.  (C) While the GOI has proactively reached out to Japan on 
the economic front, the two countries' converging interests 
on China's role in Asia, the future of the UNSC and evolving 
nuclear cooperation have occurred more spontaneously, as both 
countries look for a more prominent role and greater 
stability in Asia.  Horie indicated that the Japanese would 
like to expand the next Japan-India Symposium to be held in 
Tokyo next February or March to include trilateral 
cooperation with the US.  Closer Indo-Japanese interests are 
in America's interest, and we will keep an eye on how the 
GOI's stronger ties with Japan and FS Saran's recent public 
comments about India's role as a "balancing power" in Asia 
will play out in upcoming regional meetings. 
 
8.  (U) Visit New Delhi's Classified Website: 
(http://www.state.sgov.gov/p/sa/newdelhi/) 
MULFORD