C O N F I D E N T I A L SECTION 01 OF 12 NEW DELHI 001764

SIPDIS

E.O. 12958: DECL: 01/19/2013
TAGS: PREL PHSA MASS MOPS PTER PK XD IZ IN

SUBJECT: SCENESETTER FOR ADMIRAL PRAKASH,S MARCH 19-28 VISIT TO USA
Classified By: Ambassador David Mulford. Reason 1.5 (B,D)


1. (C) Summary: Admiral Clark, we greatly appreciate your willingness to host the upcoming visit to the USA of your counterpart, Admiral Arun Prakash, India's Chief of Naval Staff and Chairman, Chiefs of Staff Committee. President Bush and Prime Minister Manmohan Singh agree that Indo-US relations have ""never been as close as they are at present."" Expanded defense cooperation has been integral to our growing ties. We expect your interaction with Admiral Prakash will present numerous opportunities to build on our existing military cooperation and to help fulfill President Bush's vision of a long-term strategic partnership with India.


2. (C) With your help, our military cooperation program with India has expanded steadily since the waiving in September 2001 of US sanctions imposed after India's 1998 nuclear tests. We now routinely engage in mil-mil exercises of growing scope and sophistication. I was pleased to attend the USN hosted reception for the MALABAR 2004 Naval Exercise, which included the first visit of a US nuclear powered warship to India, the first use of the newly developed USN-IN Standard Operating Procedures (SOPs), our first sub vs sub exercise, and the first use of the Navy Fuels Transfer Agreement. In another example of our growing exercise program, during Cooperative Cope Thunder the Indian Air Force deployed four Jaguars and an IL-76 tanker to Alaska - as a demonstration of their newly acquired tanking capability.
These exercises, and numerous others, were well covered in the Indian press and viewed as opportunities for the Indian military to demonstrate their professional prowess and to gain credibility as a region al power. Our recent mil-mil cooperation in tsunami relief in Sri Lanka and elsewhere provides a template for what we expect will be increased Indo-US cooperation to manage crises and address common threats in the region from Southeast Asia to the Arabian Gulf and East Africa.
3 (C) Although our militar

y sales relationship remains underdeveloped, the government's serious consideration of US suppliers for its next generation multi-role fighter reflects a new willingness to consider the US for a major hardware purchase. US arms sales have struggled to overcome the perception that the US is not a dependable partner (based on our sanctions), and heavy competition from the Russians, Israelis, and French for a very price sensitive customer. We believe a significant contract would further cement Indo-US defense ties and we continue to see good potential for the sale of P-3C Orions. In 2004 the Indian Navy signed a LOA for Deep Submergence Rescue Vehicle services worth $700,000 and they have indicated a desire to test this capability as soon as possible. The recently enacted budget includes a 7.8 percent increase for the military to fund ongoing modernization and purchases.


4. (C) I think you will find Admiral Prakash to be a highly professional and thoughtful officer, well disposed toward the United States, and progressive in his thinking. He will be direct and engaging in conversation. He attended the US Naval War College, graduating in 1990. He has fond memories of his time in Newport, and is looking forward to the opportunity to speak at the college during this visit.
Admiral Prakash is a Naval Aviator with 2,500 hours of flight time. He attended flight training in the UK and was the first commanding officer of an Indian Navy Harrier squadron.
He has commanded four ships including the Indian Navy aircraft carrier INS Viraat. He was promoted to flag rank in 1993 and as a Rear Admiral served as the Commander of the Eastern Fleet. As Vice Admiral he served as the Commander-in-Chief, Andaman Nicobar Command (India's only operational joint command), and Commander-in-Chief, Western Naval Command. He was appointed Chief of Naval Staff and promoted to Admiral in August 200 4 and became the Chairman of the Chiefs of Staff Committee (CJCS equivalent) in January 2005.


5. (C) Admiral Prakash leads a highly professional, regionally dominant Navy with growing capability and blue water aspirations. Most importantly, India shares many of our key maritime concerns - maritime terrorism, use of the seas for proliferation of WMD, safety of sea lines of communication (particularly for Arabian Gulf Oil), piracy, smuggling, and un-regulated dhow traffic. Regrettably, we expect Admiral Prakash's leadership will be somewhat constrained by a lumbering and sometimes corrupt bureaucracy (particularly in procurement), a coalition government that includes representation of two regional Communist Parties, and some old-think (in a few cases anti-American) government officials. We ask that you join us in continuing to search out practical, mutually beneficial ways to expand military cooperation, understanding that this is part of a long term effort to build a substantial, reliable, useful 21st century partnership with India. A priority in this area is to bring India into the Proliferation Security Initiative (PSI), since it has unique assets it can bring to bear in this region. End Summary.
Background
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6. (C) PM Singh's Congress Party came to power in an upset election victory over the BJP-led coalition in May 2004.
Although Singh's senior advisors had been out of power for eight years, they wasted no time articulating their priorities for India's foreign and defense policies. They have stressed that an expanded and mutually beneficial partnership between India and the US on regional and transnational security issues is a high priority for the new government. There is still, however, lingering suspicion in some parts of the United Progressive Alliance (UPA) coalition and the GOI about this new relationship. The PM's team is divided between modernizers who favor stronger ties with the US, and Nehruvian socialists whose views of the US have changed little since the Cold War. The modernizers clearly are in the driver's seat, however. Defense Minister Pranab Mukherjee sees practical advantage in cooperating with the US to modernize India's military equipment and strategy while advocating for transparency in defense acquisitions.


7. (C) As noted in ""The Congress Agenda on Security, Defense, and Foreign Policy,"" the Party seeks to improve the function and transparency of India's national security decision-making process, reform the intelligence services, address Service personnel issues, and combat domestic terrorism. Unlike the BJP which concentrated national security decision-making largely in the Prime Minister's office, Congress has a more diffuse, transparent, and collective approach which utilizes a resuscitated National Security Council (NSC), expanded Cabinet Committee on Security (CCS), and reenergized Strategic Policy Group (SPG) and National Security Advisory Board (NSAB).


8. (C) Defense Minister Mukherjee, an economist and former Foreign Minister with no defense background, will likely acquiesce to the senior Congress leadership (particularly Sonia Gandhi, who remains the power behind the throne) on matters requiring broad consensus. A proponent of maintaining strong mil-mil ties with Russia, we expect Mukherjee to adhere to the larger Congress agenda toward the US by continuing to move US-India defense ties forward, albeit with less public rhetoric than the BJP, out of deference to the leftist parties.
Next Steps in Strategic Partnership
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9. (C/NF) On September 17, the US and India signed Phase One of the President's ""Next Steps in Strategic Partnership"" (NSSP). The NSSP lays out an ambitious path of cooperation in four strategic areas: civil nuclear energy, civilian space programs, high-technology commerce, and dialogue on missile defense. These areas of cooperation are designed to progress through a series of reciprocal steps that build on each other. Completion of Phase One has enabled the US to make modifications to US export licensing policies that will foster cooperation in commercial space and civilian nuclear energy programs, remove the headquarters of the Indian Space Research Organization (ISRO) from the Department of Commerce's ""Entities List,"" and offer an FMS sale of the PAC-2 missile defense system. On February 22, the GOI received a classified briefing on the capabilities of the PAC-2 GEM PLUS missile defense system as a deliverable for successful completion of Phase One. The Indian government has now requested a missile defense technical cooperation agreement of the sort we have with other key allies. In his role as Chairman, Chiefs of Staff Committee, Admiral Prakash will have a role in shaping Indian nuclear and missile defense policy. We believe the visit to NORAD was proposed by the Indian Navy specifically to offer Admiral Prakash a view of US policy in these areas.


10. (S) Phase Two of the NSSP requires intensive efforts by the GOI to adopt national legislation governing technology transfer, adhere to the Missile Technology Control Regime and Nuclear Suppliers Group guidelines, and strengthen export controls. In turn, the US commits to undertake cooperation on US-Indian commercial satellites, approve the sale of the PAC-2 system and offer a classified briefing on the PAC-3 system. Until now, the Indian Ministry of External Affairs (MEA) has the lead in this effort, with the MOD playing a supporting role.
Regional Political-Military Issues: Tsunami Relief
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11. (C) The Indian military reacted exceptionally well to the recent tsunami disaster. The rapid and effective deployment of resources to Sri Lanka, the Maldives and later Indonesia, in addition to India's hard hit Andaman and Nicobar Islands clearly demonstrated India's regional force projection capability. At the peak of operations, the Indian Navy had 31 ships, 22 helicopters, four aircraft and 5,500 personnel assigned to disaster relief. The Air Force, Army and Coast Guard were just as heavily involved. The Indian military was hit hardest on the island of Car Nicobar. The Indian air force lost 103 personnel on this island and the Navy lost about half that. During the operation, the Indian Navy converted three hydrographic ships to 47 bed hospital ships (a design feature of the class) and sailed them to Sri Lanka, Indonesia and Chennai, India. During the relief effort the Indian military was unusually responsive to questions about their intentions and provided almost daily briefings. We reciprocate d with the PACOM force lay down. The Indian government also coordinated closely with us as a founding member of the Tsunami Core Group. Later, India provided two MPAT planners
SIPDIS to CSF-536 in Utapao, Thailand and sent an liaison officer (Indian Naval Attache in DC) to PACOM Hqs and a liaison officer to CSF-536 (Indian Air Attache in Bangkok). This exchange of information assisted both countries in channeling relief to those areas most in need while avoiding duplication of effort.
Pakistan
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12. (C/NF) While India and Pakistan are currently in their most intense period of dialogue in decades, the GOI continues to place a high priority on containing Pakistan's nuclear threat. Following the positive Indo-Pak Foreign Ministers' talks (dubbed the ""Composite Dialogue"" or ""CD""), the successful Singh-Musharraf meeting in September, and an attempt at developing a ""Kashmir Roadmap"" based on the PM's first visit to Kashmir in November, a mood of cautious optimism has emerged in India that Islamabad and New Delhi have indeed started on a path of sustainable rapprochement.
During these recent CD meetings, India put forward a total of 72 CBMs, of which Indian FM Singh and his Pakistani counterpart FM Kasuri agreed to 13 including to: continue the LOC ceasefire; conduct a joint survey of the International Boundary along Sir Creek; implement the outcome of the August meeting of Defense Secretaries regarding the Siachen Glacier; and discuss trade cooperation. The Ministers also agreed to technical talks on conventional and nuclear CBMs among other issues during the fall. As expected, the two sides disagreed on infiltration levels and the centrality of Kashmir, but have expressed commitment to continue their dialogue on these issues. The February 16 agreement to begin bus service between Srinigar and Muzaffarabad beginning April 17 has been hailed as the most important Kashmir-specific CBM since the November 2003 ceasefire.

13. (S) Despite recent Indian allegations of mortar firing by Pakistan against Indian positions along the LOC twice in three days (January 18 and 20, 2005), both governments have responded in a measured and serious manner, conscious that the 14 months of silence along the LOC has come to symbolize the de-escalation of the Indo-Pak conflict, while providing tens of thousands of Kashmiris the longest respite from daily shelling since the 1999 Kargil War. The ceasefire, the first formally observed in peacetime between the two countries since 1947, has fueled hopes for broader progress in military CBMs. These instances of shelling, if they do not stop, could spill over into the Composite Dialogue and negatively affect the broad sense of goodwill that exists in India for fixing relations with Pakistan.

14. (C/NF) Despite positive progress on these pending issues and growing acceptance of ""de-hyphenating"" America's relationships with the two neighbors, reports in the Indian press of possible renewed consideration of F-16 sales to Pakistan has brought long-held fears to the fore again. The widely-held view in India is that such weapons are inappropriate for destroying terrorist assets and that Islamabad ultimately seeks F-16s as a nuclear weapons delivery system to be used against New Delhi, thereby sparking a regional arms race. Moreover, Indians often complain of a lack of balance in US policy which Indians believe favors Pakistan. The US is seen as soft on proliferation issues regarding Pakistan and harsh in its judgment on India. The fear among the Indian security and military establishment is that new weapons for Pakistan will cause Pakistan to become more aggressive against India.
Siachen Glacier
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15. (C) In 1984, India and Pakistan occupied parts of the Siachen Glacier and the Saltoro Ridge, which became the highest altitude battleground in the world. Siachen is politically relevant as it is linked to unresolved border disputes with Pakistan and China. This remote region lacks military strategic relevance, leading many Indians to question the economic cost of such a burdensome deployment.
In 1994, in an effort to lower tensions, New Delhi and Islamabad almost reached an agreement on demilitarizing the Glacier. If redeployment/demilitarization along the Siachen Glacier were to take place, monitoring mechanisms would need to be implemented to provide both sides confidence that reoccupation of the ridge lines was not occurring. The cease-fire along the LOC on the Glacier, in effect since November 26, 2003, remains in effect, and the two sides continue to discuss the matter as part of the Composite Dialogue. India's main demand is that positions currently occupied by both armies be verified.
Afghanistan
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16. (C) On Afghanistan, India has backed up its strong political support for President Karzai with generous economic assistance (over $500 million). India provided in-kind assistance for the October elections, has offered to assist in training Afghan diplomats, army, and police, and has committed to construction of a power line connecting Kabul to Baghlan province in the north. With the imminent completion of the GOI program to outfit the ANA with military vehicles, New Delhi is now assessing what more India might do to assist with the Afghan Army's development.
Iran
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17. (C) India views Iran as a source of energy, a corridor for trade to Central Asia (most importantly to Afghanistan), a partner in stabilizing Afghanistan, and as a counterweight in Pakistan's regional calculations. Increased high-level exchanges and intensified cooperation in the energy sector illustrate the degree to which the GOI values the relationship. There has been considerable movement recently in the Indian position on the proposed Iran-Pakistan-India pipeline. India has removed its MFN and transit corridor conditions and given Cabinet backing for the Petroleum Minister to negotiate with Iran and Pakistan. At the same time, the GOI is strongly opposed to Iran's acquisition of nuclear weapons. New Delhi is pursuing a low-key but engaged policy toward Iran, attempting to achieve its strategic goals in the Gulf without jeopardizing its growing ties with the US or Israel. New Delhi portrays itself as a moderating influence on Tehran, particularly on nuclear issues where Indian and US interests o n nonproliferation converge.
Nepal
-------------- 18. (C) New Delhi responded swiftly and with unusual firmness to King Gyanendra's February 1 decision to dissolve the multiparty government in Nepal and reserve all power for himself, calling the action ""a serious setback to the cause of democracy."" The GOI has expressed a strong desire to coordinate with the United States as the situation unfolds in Kathmandu and remains concerned about the effect of the King's actions on the ongoing Maoist insurgency. Prior to these developments, New Delhi had expressed concerns about the Maoist influence in Nepal, the potential for violence and political instability to spill over into India, and repercussions for Indian interests in Nepal. The US and GOI have coordinated closely in response to the coup, providing a template for the sort of security partnership we would like to apply elsewhere. Although we have not joined India in publicly declaring a suspension on supplies of weapons, the US and India broadly agree on the problem and the way forward.
Bangladesh
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19. (C) The wave of terrorist attacks in early October in the northeastern Indian states of Nagaland and Assam are raising alarms that violence and political instability in Bangladesh are now affecting India, courtesy of the United Liberation Front of Assam (ULFA). These follow other incidents such as the August attack on former Prime Minister Sheikh Hasina and seizure of a major arms shipment in Chittagong in April. Dhaka has accused New Delhi of contributing to its deteriorating political situation while Delhi maintains that the source of Bangladesh's problems is Islamic fundamentalism and terrorists the GOB is unwilling or unable to control. Despite these differences, both countries' Foreign Ministers recently agreed to work together to address each others' security concerns. The GOI is also considering increasing its deployment of security forces along its border with Bangladesh and constructing a fence, similar to the LOC fence in Kashmir, along the border.
Iraq
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20. (C) The escalating violence in Iraq, including the taking of Indian hostages in July (who were subsequently released), stories of abuse of prisoners, and inaccurate reports of mistreatment of Indian laborers by US forces and companies in Iraq have hardened public opinion against Coalition activities. The GOI, however, has a strong interest in stability in Iraq and wants to preserve its historic cultural, economic and political links with Baghdad.
Although their line remains firm against sending troops to Iraq, the GOI has already disbursed half of its $20 million commitment to Iraqi reconstruction, split evenly between the UN and World Bank Trust Funds.

21. (C) Despite the GOI's deliberately low profile public and material support in the run-up to the elections, Indian Government, media, and other observers welcomed the successful completion of Iraq's first election on January 30.
The MEA called the election a ""noteworthy development"" and reaffirmed Iraq's strategic importance to New Delhi.
Circumspect about engaging the interim regime, the GOI will likely engage the new Baghdad government with more conviction, although practical and security concerns and continued opposition from India's left wing parties will present obstacles to a more visible Indian presence in the near future.
China
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22. (U) India's ""Look East"" policy, initiated in the 1990s, envisions India as an equal player in the greater Asian community, ideally and eventually as influential as China.
Beijing, on the other hand, does not view New Delhi as a geographic, strategic, or economic peer. Dialogue on the long-standing border dispute between the two countries plods along with minor progress, the most recent being the designation of trade markets on both sides of the disputed border in August. While India's direct dispute with China about its border does not present much of a hurdle, China's supply of material and technology to rival Pakistan has been a more formidable obstacle to relations between the two countries. Much of India's political class continues to see China as a long term military, economic, and political challenge if not threat.
Russia
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23. (C) By far the largest supplier of military equipment to India for decades, Russia's exceptional military relationship with the country is guaranteed for a long time to come and was reaffirmed by Russian President Putin's December 04 visit to Delhi. The inconsistent quality of Russian-made materiel as well as the difficulty of obtaining spares since the break-up of the Soviet Union are common complaints among the Indian military. The Indians, however, are shopping more on the global market for other sources of weaponry -- namely Israel and France -- to improve their military capabilities.
While not reneging on its traditionally strong bond to Russia, the Congress Party has made it clear that more effort must be spent on fostering India's relationship with the US on a variety of fronts, especially in the areas of defense and high-tech.
Israel
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24. (C) Despite the return to power of India's traditionally pro-Palestinian Congress party, the robust Indo-Israeli relationship established under the previous government does not appear to have lost steam. This is largely a result of India's growing reliance on Israel for military hardware, technology, and training, and Israel's streamlined and less public arms sales process. Although official figures are not available, Israel appears to be India's number two supplier of military hardware (behind Russia). Most recently, India signed a $1.5 billion contract for three Phalcon airborne radars. Previous deals included infantry and special forces equipment, UAVs, aircraft avionics, Barak missiles, sensors for defense above the LOC, Green Pine radars, and assorted munitions. New Delhi is also considering acquiring the Arrow ATBM from Israel, and is a strong contender for a multi-billion dollar contract to upgrade and modernize the Indian Army's artillery. Recent reciprocal visits by top brass from both arm ies are paving the way for the first ever joint military exercises between the two countries which may be held in India some time in 2005.
Foreign Military Sales (FMS)
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25. (SBU) Reliability and Responsiveness of the USG - The Indians remain concerned about the reliability (i.e., no sanctions) and responsiveness of the US as a defense supplier in general, although less so than previously. These concerns emanate from past experience with sanctions and delays in responding to requests for information and pricing data.
Four rounds of sanctions over the years have left some within GOI with the impression that the US is not a reliable defense supplier and that we practice ""light switch"" diplomacy. The sanctions that followed the 1998 nuclear tests in particular left a deeply negative impression because they cut off military supplies not just from the US, but also from third party sources that contained US components. On 1 December 2004, Chief of Naval Staff Admiral Prakash sent a letter to Admiral Doran expressing concerns about the status of FMS and security assistance issues. Three main issues raised concern the Sub-Rescue contract, P-3 Orion, and Aviation Training.
Admir al Doran replied on 14 January 2005 with details on the status of each program.

26. (U) Aero India the largest aerospace tradeshow in South Asia, took place from 9-13 February 2005 at the Yelahanka Indian Air Force Base in Bangalore. The centerpiece of press attention for Aero India 2005 was the participation of five US military aircraft on static display and fifteen US defense contractors. The US demonstrated the largest foreign presence at this show. Two themes emerged from Aero India:
1) All MoD officials and military personnel were very pleased and impressed with the USG's participation in this event and
2) There are still serious doubts about the USG's reliability as a defense supplier. Having established the seriousness of US commitment to competing in the Indian arms market, the challenge now is to come to the table in a timely fashion with competitively priced products for a major military platform.

27. (SBU) P3 Orion Maritime Patrol Aircraft - In response to their request, the Indian Navy was provided P&A data in September 2003 for 8 P-3B(H) Orion maritime reconnaissance aircraft. These aircraft would be brought out of long-term storage and fully refurbished, bringing them up to P-3C Plus capability. The total case value for 8 aircraft with associated weapons, equipment, spares and training would be approximately $1 Billion. When the Indian Navy learned that P-3Cs might be available they expressed interest in these aircraft instead of the P-3Bs. A P-3C aircraft and sensor package has since been cleared for release to India and a weapons package is under development. The US Navy's International Programs Office sent a delegation to New Delhi from February 15-16, to discuss P&A information for P-3C with the Indian Navy. Currently, the US Navy's International Programs Office is exploring Indian Navy requests for the ""hot"" transfer of one or two P-3Cs to the Indian Navy and is exploring the possibili ty of lowering the total costs of this proposed sale.

28. (SBU) SH-60 Sea Hawk helicopters - In September 2003 the Indian Navy requested pricing data for the purchase of 16 Sea Hawk helicopters to replace their aging Sea Kings. This P&A data is expected in early 2005. ODC has learned that GOI will probably release a global Request for Proposal (RFP) to meet this requirement. If that happens the Sea Hawk will face stiff competition from French and Russian aircraft, which are likely to be aggressively priced.

29. (SBU) E-2C Hawkeye aircraft - In July 2003 Northrop Grumman provided the Indian Navy with an open source brief on the E-2C Hawkeye, which led to a request for P&A data for 6 aircraft. This P&A data has just arrived, with a total case value of approximately $1.3 Billion for 6 aircraft and associated equipment. The Indian Navy's interest in the Hawkeye waned however, when they learned that it would not be able to operate from their newly acquired aircraft carrier Admiral Gorshkov. As a result, the Hawkeye sale is on hold for the foreseeable future.

30. (C) Deep Sea Rescue Vehicle (DSRV) - The DSRV case was initially opened in 1997 but was suspended in 1998 due to sanctions. The case was restarted after September 2001. In March 2004, the Indian Navy approved an amendment to the DSRV case and made an initial deposit of $158,425. The total value of the DSRV amendment is $734,443. ODC is currently working with the Indian Navy to update the DSRV case to allow for modifications to their model 209 submarines so they are compatible with the DSRV. The Indian Navy has indicated their desire to conduct a demonstration of this rescue capability.

31. (C) Excess Defense Articles. On 15 February the Indian Navy was briefed by Navy IPO that the US will be retiring MHC and LPD class ships in FY 2006 and 2007. The Indian Navy has indicated an interest in these vessels and specifically asked that this information be kept confidential (possibly to avoid interference from Indian shipyards).
Challenges to Defense Cooperation with India
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32. (SBU) The Indian bureaucracy is large and slow moving.
Every case revolves around a ""file"" that contains everything related to the case and which must physically move from one agency to another for approval. There is little delegation of authority, so decisions of any importance are made at very high levels. In general, decisions are made by committee, which diffuses responsibility and is a legacy of past arms scandals. One by-product of past arms scandals is that the Indians are beginning to prefer FMS to DCS for defense sales because government-to-government transactions have less potential for allegations of corruption.
US-India Joint Military Exercises Continue to Expand
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33. "