MAKING OUR SOUTH ASIA INITIATIVE A REALITY

S E C R E T SECTION 01 OF 05 NEW DELHI 002380

SIPDIS


E.O. 12958: DECL: 03/30/2015
TAGS: PREL ENRG MASS KNNP ETRD IN PK NSSP

SUBJECT: MAKING OUR SOUTH ASIA INITIATIVE A REALITY

REF: A. NEW DELHI 2299


B. NEW DELHI 2273

C. NEW DELHI 1824

Classified By: Ambassador David C. Mulford for Reasons 1.4 (B, D)


1. (S) Summary: We recommend capitalizing on Foreign
Minister Natwar Singh's April 13-14 meetings with the
Secretary and the President to make significant progress on

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strategic, energy and economic tracks the Secretary
highlighted in her March 15-16 visit to India. Specifically,
we suggest the Secretary:

-- make a forward leaning statement in the Secretary,s joint
press availability on India's UNSC aspirations (without
making a specific commitment),and announce a visit by Shirin
Tahir-Kheli to Delhi for further discussions on UNSC reform.

-- invite Secretary Bodman to attend the Rice/Singh meeting
so Secretary Rice can announce Secretary Bodman will lead the
US-India Energy Dialogue and a date or at least timeframe for
Secretary Bodman to visit India;

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-- cast her meeting with Natwar as the launch of the Indo-US
Strategic Dialogue and ask the President to express his
support for it;

-- seek Natwar,s agreement to establish a Defense Production
Cooperation Group under the Economic Dialogue to underline
our interest in expanding rapidly Indo-US defense trade;

-- announce a trip by the NASA Administrator to India to meet
with ISRO Chairman Nair to launch a Space Working Group;

-- seek Natwar,s agreement to constitute a Civil Nuclear
Working Group perhaps led by Counselor Zelikow to examine how
India and the US can expand civil nuclear cooperation;

-- tell Natwar that in order to respond to our promise to
spur clean energy cooperation, we are prepared to expand
USAID programs on rural electrification and clean coal
technologies;

-- invite Montek Singh Ahluwalia to Washington to discuss
with NEC Director Hubbard the future of the Economic
Dialogue, including White House backing of a CEO Forum;

-- announce the restoration of GSP benefits to India in
recognition of India,s passage of its IPR bill;

-- tell Natwar that the US is ready to propose now India,s
entry into the Proliferation Security Initiative Core Group
at the time of the G-8 summit provided India has agreed to
support the PSI principles and has a significant operational
proposal to table that underscores its capacity to be a
player in PSI; and

We recommend the President:

-- re-emphasize the US objective of helping India become a
world power in the 21st century;

-- tell Natwar that in return for what we expect will be a
promise by him that India will submit its export control
legislation as soon as Parliament reconvenes on April 18, we
will take the steps necessary to prepare to conclude Phase 2
of the NSSP once we have had a chance to review the draft
legislation.

End Summary.

Maintaining Momentum
--------------


2. (S) The MEA has indicated to us that Natwar is willing to
visit Washington only if he can (1) show at least some
progress in India's quest for UNSC membership and (2) launch
a US-India Energy Dialogue. Progress on these two issues
would enable Natwar to tell Parliament when it reconvenes on
April 18 that the US-India Strategic Partnership is quickly
producing results. This will also lay the groundwork for
additional progress during PM Manmohan Singh's expected visit
to Washington in July. The following are the Embassy,s
explanations for these recommendations for progress.

UNSC Reform
--------------


3. (S) The GOI,s top foreign policy goal is to become a
permanent member at what is often referred to here as ""The
High Table,"" the UNSC. The MEA is in the middle of a major
diplomatic campaign to achieve this objective. Despite our
attempts to persuade the GOI that much larger issues of UN
reform are at stake, the MEA considers some progress on this
issue the other most important objective of Natwar's visit.
If a forward leaning statement can be made by the Secretary
in her joint press appearance with Natwar, it is his opinion
that he can return to India as Parliament reconvenes with the
prospect of demonstrating that the Secretary,s initiatives
are genuine and worthy of active engagement by the
Government. If the Secretary also announces that Dr. Shirin
Tahir-Kheli will travel to Delhi for discussions on UNSC
reform, momentum will be strongly reinforced.

Energy Dialogue
--------------


4. (S) The MEA has made it clear that the launch of the
Energy Dialogue is one of Natwar's two highest priorities for
his visit. Although the energy dialogue has been the most
active track of the Economic Dialogue with numerous bilateral
activities across a broad spectrum (Refs A and C),greater
strategic focus is required. Increased and higher level USG
attention to the Energy Dialogue would be a sign that we want
to be part of the solution to India's energy needs. The four
areas that hold the greatest potential for cooperation are
energy security, civil nuclear activities, natural gas, and
cleaner/more efficient energy. India wants Cabinet-level
sponsorship for the Dialogue, and would also like to see a
timeline for action. We recommend that Secretary Bodman
chair the Energy Dialogue. If this is possible, we believe
Deputy Planning Commissioner Montek Singh Ahluwalia would
agree to anchor the Indian side. (Four Indian Ministers
divide up energy responsibilities making Montek the logical
choice to lead the Indian side.) We recommend Secretary Rice
invite Secretary Bodman to attend the Rice/Singh meeting so
Secretary Rice can announce Secretary Bodman will lead the

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US-India Energy Dialogue and a date or at least a tentative
timeframe for Secretary Bodman to visit India.


Strategic Dialogue
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5. (C) We recommend the Secretary cast her meeting with
Natwar as the launch of the Indo-US Strategic Dialogue, and
ask the President to express his support for it during his
meeting. In terms of substance, we recommend the creation of
a Defense Production Cooperation Group (DPCG) under the
U.S.-India Economic Dialogue that would lay further
groundwork for our emerging strategic defense relationship.
Such a DPCG could streamline and subsume existing defense
industry dialogues under the High Technology Working Group
and Senior Technology Security Group.


6. (C) Establishing the DPCG would encourage direct
bilateral commercial interaction on the basis of corporate
partnerships for defense cooperation. The group,s
objectives would be to remove political and bureaucratic
barriers, and facilitate maximum private sector involvement.
Military sales as the platform for cooperation will propel
development of India's defense sector, spin off new
industries, spur economic growth, and create jobs.

Space Working Group
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7. (S) To invigorate US-Indian space cooperation, we propose
the implementation of a Space Working Group led by the NASA
Administrator and the Chairman of the Indian Space Research
Organization. We recommend the Secretary announce a trip by
the NASA Administrator to India to meet with ISRO Chairman
Nair to formally launch the Space Working Group.

Civil Nuclear
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8. (S) In view of India,s critical energy needs, and the
highly sensitive nature of cooperation in this area with a
nuclear weapons state that is not party to the NPT, we
recommend the establishment of a Civil Nuclear Working Group
(CNWG) under the Energy Dialogue to discuss what steps India
must take to demonstrate its unequivocal support for the
principles of the NPT so that the US can then consider ways
to expand our cooperation in this area. This group could
look at broader ways the US could support nuclear safety of
Indian power plants, review our policy of blocking India's
efforts to acquire uranium for civil nuclear power from other
countries, and pursue additional US-India cooperation on
fusion research and safe reactor designs. By moving our
civil nuclear relationship forward within the constraints of
our NPT and NSG obligations, we believe we can move Indian
policy on other issues of importance to us, and fold civil
nuclear issues into the broader matrix of cooperative energy
and economic efforts. The GOI would welcome the naming of a
senior official such as Counselor Zelikow to anchor the US
side.

Rural electrification and clean coal technologies
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9. (U) With a large portion of India's rural population
lacking access to electric power, and a political imperative
to spur rural development, the GOI has evinced strong
interest in the US experience in electrifying America during
the early/mid 20th century through the USDA Rural Utilities
Service (RUS). An innovative partnership program that
USAID/India has established pairs RUS with the GOI Rural
Electrification Corporation (REC). The travel of senior REC
staff and GOI power sector officials to the US in April and
May to learn about possibilities for developing cooperatives
in Indian conditions provides an opportunity to increase our
attention on this area.


10. (U) Clean Coal: India is one of the world's largest
users of coal and a major emitter of greenhouse gases. DOE,
USAID and EPA have a robust set of cooperative activities
with India to encourage the use of clean, efficient,
renewable energy. Although these activities have been
generally successful, we need to raise their profile and
broaden and deepen our efforts in energy efficiency,
demand-side management, and distribution reform. Announcing
a Clean Coal Initiative in conjunction with DOE, USAID, and
EPA would signal that we are upgrading energy and environment
activities already underway.

Economic Dialogue
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11. (C) We have agreed with the GOI that the existing track
structure of the Economic Dialogue should remain (trade,
commerce, finance, environment, energy). We have not yet
discussed with India our idea to break the energy dialogue
out into a free- tanding Energy Dialogue, but we expect the
GOI would agree given the importance India attaches to
enhanced energy cooperation with the U.S. We have also
agreed on the need for high-level involvement by US and
Indian CEOs in priority sectors. This would involve the
convening of an informal group of CEOs from both countries
which would meet once or twice to identify the most important
impediments that require high level attention at the PM or
White House level. The Embassy is now prepared to begin
contacting US CEOs who would act as counterparts for India,s
Investment Commission. Announcement of White House support
for this initiative during the Foreign Minister's visit would
assure robust participation by US CEOs and the high level
attention we require on the Indian side to gain traction on
key issues, push forward structural economic reforms, and
resolve remaining ""legacy"" issues.

Restoring GSP Benefits
--------------


12. (SBU) In recognition of recent significant improvements
in India's patent system, which will have a resoundingly
positive impact on US interests, we believe the time is ripe
to reconsider India's status under the GSP. Despite some
shortcomings in the law passed by the Indian Parliament on
March 23, we believe the step India took merits recognition,
and that the pharmaceutical product benefits suspended in
1992 because of India's weak IPR protection should be
restored. With tariffs on most of those products now near or
at the zero level, the economic importance of such a step
would be limited, but an announcement would have political
significance and carry with it a message of encouragement for
further Indian efforts to strengthen its IPR regime. In the
past, amendment of the Indian Patent Law has been considered
the defining moment to review the GSP issue, so the timing
could not be more appropriate.

PSI
---


14. (C) In order to anchor India,s participation in the
international non-proliferation enforcement regime, we must
resolve the long-running impasse over India,s participation
in the Proliferation Security Initiative (PSI) Core Group.
India,s exclusion from the Core Group has led to the GOI
refusing to join the PSI initiative. We recommend the
Secretary tell Natwar that the US will propose that India be

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incorporated into the PSI Core Group provided India has
agreed to support the PSI principles and has a significant
operational proposal to table that underscores its capacity
to be a player in PSI. Formal entry could be recognized at
the time of the G-8 Summit.

Natwar,s Meeting with the President
--------------


15. (C) We recommend the President use his meeting with FM
Singh first to re-emphasize the US objective of helping India
become a world power in the 21st century. We also understand
from the MEA that Natwar hopes to be able to tell the
President that the GOI will submit its export control
legislation early in the session of Parliament that begins on
April 18. In return, the President should tell Natwar the
USG will take the steps necessary to prepare to conclude
Phase 2 of the NSSP once we have had a chance to review the
draft legislation.

MULFORD
MULFORD
"