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2004-11-29 05:33:00
Embassy New Delhi
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						C O N F I D E N T I A L SECTION 01 OF 03 NEW DELHI 007512 


E.O. 12958: DECL: 11/15/2014

23-24, 2004

Classified By: Charge Robert O. Blake, Reasons 1.4 (B,D).

1. (C) Summary: In a series of senior level GOI meetings on November 23-24 during a private visit to India, Senator Evan Bayh (D-Indiana) heard a strong Indian commitment to move ahead with our bilateral partnership, coupled with concern about the potential disruptive effect of US F-16 sales to Pakistan. Citing India's ""impeccable"" record of preventing onward proliferation, Foreign Secretary Saran advised that the US needs to bear in mind our shared interest in stopping the spread of WMD and to clarify whether India is part of the problem or the solution. NSA Dixit made a similar point, urging America not to look at India as another Libya or Iraq, but as a democracy and responsible nuclear power. Dixit characterized the ""theology"" of non-proliferation as the only difference between our two countries. Echoing points made during his recent visit to Washington, Saran also flagged the Indian need to expand the use of clean nuclear energy, and sought flexibility on civilian nuclear supplies. Senator Bayh praised the progress in Indo-U.S. relations on many fronts, but noted that U.S. intelligence experts would like to deepen operational cooperation. The Senator also made a strong pitch for enhanced IPR protection. End Summary.


2. (C) Indo-US Relations: After welcoming Senator Bayh, Foreign Minister Singh hailed the good momentum in Indo-Pak relations. Infiltration rates from Pakistan have dropped, partly due to the winter weather and defensive steps taken by India, but also because the GOP has made ""some"" effort. On Indo-U.S. relations Singh laughingly apologized to the Senator and said India was glad President Bush had won re-election. He praised the President's vision for Indo-U.S. relations and said they have been moving forward since day one of the Bush presidency. He recalled with satisfaction that the President had told the PM in September that India would be one of the first countries he visits if re-elected.
The FM predicted Indo-U.S. relations will continue to improve. But he told the Senator he wanted to flag one concern. He predicted any sale of F-16s to Pakistan would be a ""fly in the ointment of Indo-U.S. relations"". The key point for India is that F-16s can be fitted with nuclear weapons.

3. (C) NRIs: Singh praised the success of non-resident Indians in the United States. He recounted how Indian steel tycoon Lakhsmi Mittal is now the largest steel magnate in the world. Senator Bayh responded that Indiana manufactures more steel than any state in America, and that Mittal owns four of the state's five steel mills.

4. (C) No Clash of Civilizations: In response to a question from Senator Bayh about radical Islam, the FM noted proudly that India had proved Sam Huntington's Clash of Civilizations theory wrong. India's Islam differed substantially from the Islam of Saudi Arabia or Indonesia. Although India has the second largest population of Muslims, not a single one had joined Al-Qaida or the Taliban. The Minister noted with concern, however, that the Madrassah ""movement"" is catching fire, so the issue of radical Islam affects all of us, including the United States where Islam is the fastest growing religion. Senator Bayh concluded by expressing his hope that the United States and India can work to enhance our long term mutual strategic interests, which he said are many.


5. (C) Indo-US Relations: Saran welcomed the Senator by noting that he had just returned from a productive visit in the United States, during which he had been pleased to see SecState designate Rice and enjoyed good meetings of the working groups on High Technology Cooperation (HTCG) and the Next Steps in Strategic Partnership (NSSP). He expressed his satisfaction with the higher than expected turnout of American and Indian business to the HTCG private sector meeting, which he characterized as ""on track"" to get tangible results. Overall, he thought there is a strong commitment on both sides to carry relations forward. Now that landmarks like NSSP Phase 1 have been achieved, both sides need to make important decisions and turn words into action. Given that India has had an ""impeccable"" record on proliferation and given our shared interest in stopping the spread of WMD, the US needs to clarify whether India is part of the problem or part of the solution. Another challenge for India is to maintain economic growth rates of 7 to 8 percent per annum, for which its energy needs will be enormous. Given constraints on conventional energy supplies and the global need to ensure environmental and climate sustainability, India has no choice but to resort to greater use of clean nuclear energy. This could be an area for closer economic cooperation between the United States and India and the FS expressed hope that India's US partners could be flexible.
The FS also recounted the potential for technology cooperation and co-production in the areas of information, defense, and bio-technology.

6. (C) IPR: Senator Bayh noted that India's emphasis on innovation would require a strong IPR regime, which would find favor among potential US business partners. Saran confirmed that many IT contracts already include IPR provisions and India was working on more comprehensive legislation that would be in place before the January 1, 2005 deadline. He elaborated that India is one of the few developing countries where services contribute 50% of GDP, underlining the importance of IPR to Indian companies.

7. (C) Indo-Pak Relations: In response to Senator Bayh's question about Pakistan PM Aziz's visit, Saran began by noting while infiltration attempts had stopped, this was more due to Indian efforts to beef up the border fencing in key areas, improve its surveillance technology, and winter weather. He said Pakistan had cracked down on some of the Jihadi groups inside Pakistan in part to satisfy American requests, in part because several had turned against Musharraf. He cautioned, however, that the LET is still active, has no restraints imposed on them, and are ""more or less in the arms of ISI."" The FS also noted India's concern that the infrastructure to support cross border infiltration remains. Nonetheless, India remains committed to take the peace process with Pakistan forward, according to Saran. He reviewed PM Singh's recent visit to Kashmir and his reduction in the number of troops there which had played well in Pakistan, despite Musharraf's dismissal of the action as a ""cosmetic"" measure. He expressed hope that India's action would help create ""a virtuous cycle"" in Indo-Pak relations.
In response to the Senator's question about the internal situation in Pakistan, Saran said Pakistan should have faith in its people and that democracy was worth fostering to strengthen the fight against the Taliban and Jihadis.


8. (C) Indo-US Relations: Dixit characterized Indo-US relations as on the right track. On the economic and technological side, he said India accepts that it must address U.S. concerns and provide the necessary incentives for U.S. businesses to come to India. But India needs the U.S. to trust India a little more. He urged America not to look at India as another Libya or Iraq, but as a democracy and responsible nuclear power. Senator Bayh praised the progress in Indo-U.S. relations on many fronts, but noted that deeper operational intelligence cooperation would be desirable. Dixit acknowledged that operational cooperation is ""not there yet,"" but he predicted great potential for such cooperation as the campaign against terror and organized crime proceeds, and as the need for greater maritime security cooperation grows. He pledged that as long as the current Congress government is in place, it will work toward greater cooperation with the U.S. in these areas. He told the Senator that the FBI and CIA already have good interaction with their Indian counterparts and expressed appreciation for recent CIA information and security advice regarding potential security threats to the PM during his trip to Kashmir. He observed there is no conflict between U.S. and India in any field; the only difference is in the ""theology"" of nonproliferation. Senator Bayh saw India's rise as an economic and strategic power as inevitable and said U.S. wants to help India emerge as a great and responsible world power, and in helping to resolve the Kashmir problem. Dixit responded that the U.S. has a role as a friend and facilitator and that the U.S. has emerged as a high priority in India's foreign, economic and security policies.

9. (C) Iran: Dixit took the opportunity to urge that the United States not pursue too punitive a policy with Iran as that would only strengthen hard-liners there. Recalling his visit to Tehran in October, Dixit recounted that the Iranian President and Foreign Minister had told him Iran will sign additional safeguard agreements if deliberations continue within the IAEA. However, if the matter is referred to the UN Security Council, Iran may reject all cooperation with the IAEA. The NSA averred that the international community should not be blackmailed, but does need to encourage the forces of reason and moderation in Iran. Senator Bayh responded that there is strong bipartisan support for sanctions against Iran and skepticism that Iran is not seeking nuclear weapons.

10. (U) Senator Bayh's staff cleared this cable.