PUTIN VISIT: FROM RUSSIA WITH TOUGH LOVE

C O N F I D E N T I A L SECTION 01 OF 04 NEW DELHI 007733

SIPDIS

KABUL FOR JIM ALVERSON (SECDEF DELEGATION)

E.O. 12958: DECL: 12/06/2014
TAGS: PREL ENRG KNNP MASS IN
SUBJECT: PUTIN VISIT: FROM RUSSIA WITH TOUGH LOVE

REF: A. NEW DELHI 7675

B. NEW DELHI 6707

C. NEW DELHI 5978

Classified By: PolCouns Geoff Pyatt. Reasons 1.4 (B,D).


1. (C) Summary: Russian President Vladimir Putin's December
3-5 visit to India did little to broaden their ties beyond
defense, despite efforts by both sides to infuse the
relationship with new momentum. Both leaders pressed their
issues with Russia extracting a promise from India to sign a
defense secrecy agreement within five months, and India
securing Russia's support for a UNSC seat with full veto
powers. Moscow, however, pushed harder and announced it
would not supply another consignment of nuclear fuel for
India's Tarapur reactor. Significantly, Putin spent half his
India tour in Bangalore with a view to securing a Russian
piece of India's booming IT sector. The growing US-India
partnership showed itself to be a factor in the India-Russia
calculus during this visit, and may have inspired Russia's
nuclear cold shoulder. End Summary.


2. (C) Preceding Putin's arrival, Russian Foreign Minister
Sergei Lavrov and Defense Minister Sergei Ivanov visited New
Delhi to preview the visit, leading to speculation that Putin
and PM Manmohan Singh would sign a number of far-reaching
agreements. In the end, deliverables from this annual summit
were rather modest. With discussions that ranged from arms
to pharmaceuticals to visas, the leaders produced a four-page
Joint Declaration and 10 to 14 MOUs (the exact number is
unclear). New Delhi-based Russia-watchers waxed eloquent on
the depth and historical strength of India-Russia bonds
"even" in light of improving relations with the US, but the
general tone of the visit was unusually scratchy.

Shoring up the Foundation: Defense
--------------


3. (U) As expected, defense issues dominated the talks with
official statements and media reports highlighting GOI
concern about reliability of arms sales and support, a strong
desire by both sides to pursue defense co-production, Russian
concern about leakage of sensitive technology from India, and
the increasing role of India's growing energy needs in
shaping its foreign policy. Some observers noted Russian
eagerness to conclude long-pending agreements in order to
frustrate the US from getting a piece of the large Indian
arms market.

Arms: Upgrades, Supply Guarantees, and Joint Ventures
-------------- --------------


4. (U) Just before Putin's arrival, Defense Ministers from
the two countries signed a "Protocol of the
Inter-Governmental Commission for Russian-Indian
Military-Technical Cooperation" to expand bilateral military
cooperation, specifically in upgrading weapons systems and
various joint production and training initiatives. India is
pursuing upgrades of weapons systems and technology as well
as guaranteed delivery schedules for contracted weapons
systems, uninterrupted supply of spare parts, life-cycle
support, and joint production and training ventures.
According to media reports, the Ministers agreed to upgrade
equipment including T-72 tanks, but negotiations are still
underway on upgrading the maritime TU-142 reconnaissance
aircraft and MiG 29K for the aircraft carrier Admiral
Gorshkov. They also agreed to establish service centers to
repair Russian-made combat hardware.


5. (C) Significantly, Russia offered to make India a partner
in producing its new fifth generation multi-role fighter and
has offered India a role in developing a multi-functional
transport aircraft. (The US is a potential competitor in
both of these categories.) Russia also reportedly committed
to increasing its 50 percent investment in production of the
supersonic Brahmos cruise missile to 60 percent, with an
optimistic proposal to build 360 per year for sale to third
countries. Finally, both sides agreed to hold military joint
exercises in India in 2005, following in the wake of an
increasingly sophisticated US-India exercise program.

IPR: Co-Production Carrots and Weapons Stoppage Sticks
-------------- --------------


6. (C) Intensified Russia-India defense cooperation remains
contingent upon the GOI signing a Defense Technology Secrecy
Agreement (DTSA) (pending for more than two years),under
which India would agree not to transfer products and
technology to third parties. Dangling the carrot of
co-production, Russian Defense Minister Ivanov said, "An
early conclusion of an agreement on intellectual property
rights would lay the foundation for development of many more
hi-tech weapons systems jointly by the two countries."
However, before coming to India, Ivanov hinted that defense
ties could come to a halt if India sought to mix Russian
technology with proposed purchases from the US (especially
Patriot),according to Russian press reports quoted in the
Indian media. Observer Research Foundation Senior Fellow
Nandan Unnikrishnan told Poloff he thought the revived
interest in securing a DTSA originated with new Russian
Ambassador Vyacheslav Trubnikov, who is "a man of the
Kremlin," rather than a diplomat. (He added that the
Ambassador has "cut the MFA out," noting that the senior
Russian diplomat responsible for India was not part of the
Putin delegation.)


7. (C) Indian MOD officials say the GOI agreed to protect
Russian technology, but also wanted Moscow to sign an MOU to
provide bank guarantees to ensure future supplies of spares.
India has been reluctant to sign a DTSA because it is seeking
a more equitable partnership in joint research and production
of military hardware, rather than simply importing Russian
arms. At the conclusion of the visit, Indian Defense
Minister Mukherjee said that a non-retroactive DTSA should be
signed "in the next five months." A senior MEA official told
the UK High Commission that India sees this as an Indian
concession, but one without substantial costs.
Significantly, the MEA also signaled a general sense of
dissatisfaction with recent Russian performance as an arms
supplier.

UNSC Veto Flap Blamed on Translators
--------------


8. (C) President Putin defused a flap over a remark he made
during a press conference on December 3 in which he was
quoted as saying that an increase in the number of
veto-holding UNSC members would be "absolutely unacceptable,"
and would erode the effectiveness of the institution (Ref A).
After the ensuing media uproar, Putin clarified his
statement in a December 4 meeting with Indian Vice President
Shekhawat, attributing the misunderstanding to a translation
error. Later on December 4, the MEA released a statement
that Putin had unambiguously offered Russia's support for
India's bid for a permanent UNSC seat, with "the right of
veto." Most of our interlocutors saw this as a Russian
flip-flop in the face of the strong GOI reaction.

Energy: Strike out on Nuclear, Green Light on Oil and Gas
-------------- --------------


9. (C) Russia is currently helping India build two 1,000 MW
nuclear reactors at Kudankulam in Tamil Nadu, but during the
visit, the director of Russia's Federal Atomic Energy Agency
gave an interview indicating Moscow would not go against NSG
rules by providing several additional reactors. This echoes
the message that FM Lavrov reportedly delivered during a
pre-Putin visit (Ref B). However, it contradicts widespread
expectations in the Indian nuclear establishment and media
that Moscow was prepared to provide additional reactors for
Kudankulam. The same interview also indicated that Moscow
had decided to turn down the Indian request for another batch
of fuel for the US-built Tarapur reactors. Mission will
follow-up on these reports, which suggest that Russia may
have changed its mind on lobbying India to buy more VVER-1000
reactors. The ORF's Unnikrishnan suggested to us that
Moscow's nuclear cold shoulder may have been a pressure
tactic, and may not be the end of the story. He speculated
that the Russians wanted to send a message that if India
wants the US to be the "pole" of its foreign relations, there
will be consequences.


10. (C) The two countries did, however, agree to improve
cooperation in non-nuclear energy, calling for joint
"development of new oil and gas fields and the means of their
transportation in Russia, India, and other countries." This
agreement also reportedly includes welcoming Indian bids for
Russian oil giant Yukos. In one deal, India's state-owned
Oil and Natural Gas Corporation and the Russian Gazprom will
work together in the Bay of Bengal. Putin's visit also
produced speculation that India will add to its 20 percent
stake in Russia's Sakhalin One oil field with an investment
in Sakhalin Three. In the context of India's expanding
energy needs, the GOI was reportedly surprised at the
Russians' private declaration that they control all the gas
coming out of Turkmenistan.

Eyeing a Piece of the IT Pie
--------------


11. (C) Putin spent more than half of his India tour in
Bangalore in an effort to open more economic fronts in the
India-Russia relationship. Prior to and throughout the Putin
visit, Russian officials cited the woefully low level of
bilateral trade (Ref B). Traveling with a delegation of
Russian businesspeople, Putin visited software giant Infosys
with an eye to gaining from the booming Indian IT sector.
However, after the stop, an Infosys official remarked that
his company "has no plans to expand our operations to
Russia," underlining Bangalore's remarkably tight economic
connection to the US, which leaves little space for
late-coming Russian firms. Although Putin also visited
Bangalore's Hindustan Aeronautics, the dominant impression
one gets from the city is the who's who of American IT firms
that now operate from there.

Blast From the Past
--------------


12. (U) Delivering the 2004 Jawarhalal Nehru Memorial Lecture
in New Delhi, Putin cited uptapped potential of the
Non-Aligned Movement and decried "unilateral action in
international affairs." In a speech notable for its wooden,
Soviet-style language, Putin commented that "it is extremely
dangerous to attempt to rebuild modern
civilization...according to the barracks principles of a
unipolar world." He condemned "dictatorship packaged in a
pretty wrapping of pseudo-democratic phraseology," as
exacerbating regional conflicts, and added that terrorism,
with respect to which there are "double-standards...cannot
and must not be used in some geo-political games." The
audience welcomed and saw Putin off with a standing ovation,
but D/PolCouns noted that listeners applauded only after
Putin's reiteration of support for India's UNSC membership.

Beyond India-Russia
--------------


13. (C) In addition to public gripes about the US, in his
private meetings, Putin expressed his irritation with Western
involvement in the Ukraine crisis, according to the MEA
readout provided to the UK High Commission (strictly
protect). The British added that Putin and the Indians
commiserated over inconsistent handling of proliferation
issues, particularly AQ Khan and Iran, and concluded that
India and Russia have a basically similar approach towards
Tehran, although neither wants to see Iranian nuclear
weaponization. On Iraq, Putin privately expressed his
concerns about security there and the danger of the country
splitting along religious and clan-based lines.

Comment
--------------


14. (C) Although Putin's visit saw many of the old
India-Russia friendship themes, the two had little success in
their attempt to move beyond defense cooperation. Although
we have still to get a complete GOI readout on this visit, we
are struck by the generally scratchy atmospherics. As MEA
Joint Secretary (Americas) S. Jaishankar put it to PolCouns,
"we have dealt with the Russians a long time," and know how
to handle their pressure (a reference to Ivanov's
heavy-handed message that Russia might consider an arms sales
relationship with Pakistan). In courting an IT connection
with Bangalore, Russia will have to get in line behind the
US, Europe and Japan, who are all more established and more
attractive technology partners. On first examination, this
visit reconfirmed the impression that India and Russia still
have not figured out how to adjust their partnership to the
realities and changing relationships around them. Emerging
tension in the India-Russia relationship is a trend we may
see more of as the New Delhi-Moscow power equation continues
to shift gradually in India's direction, and the GOI seeks
further to shed the dependency that has characterized their
relationship for much of India's history.
MULFORD