C O N F I D E N T I A L SECTION 01 OF 03 NEW DELHI 005447

SIPDIS

E.O. 12958: DECL: 07/13/2015
TAGS: PTER PREL ENRG ETRD KDEM IN PK INDO PAK
SUBJECT: INDO-PAK RAPPROCHEMENT CONTINUES DESPITE TERROR
SPIKE

REF: A. NEW DELHI 5446


B. NEW DELHI 5226

C. NEW DELHI 4689

D. NEW DELHI 4449

E. NEW DELHI 3745

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


1. (C) Summary: In a July 14 meeting, MEA Joint Secretary
Dilip Sinha reassured us that Indo-Pak rapprochement would
continue despite indications Islamabad is ramping up
cross-border infiltration and terrorism. The Composite
Dialogue round is half-way through but there has been no
progress in the three most recent sessions. Bad luck in
Pakistan, in the form of rising food prices and a damaged
Internet cable, have led to ad hoc progress on very specific
trade issues. Taking a cue from our forthcoming democracy
initiative and the Secretary's democracy remarks in Cairo,
Sinha asked if Musharraf would be held to the same standard.
End Summary.

Pakistan's Prime Export: Terror
--------------


2. (C) Remarking on the recent spike in terrorist
infiltration and attacks (Ref B), Sinha told us that the
tempo was "back to business as usual." For example, he said
that one of the Babar Khalsa terrorists apprehended after the
Delhi cinema bombings (Ref E) had spent time in Lahore. He
remained cautious regarding the Ayodhya attack, saying only
that the police had not yet made any definite connections.
Remarking on the upsurge in attacks in both India and
Afghanistan (Ref A), he asked rhetorically, "If Musharraf is
not in control, how was he able to quiet terrorism before the
Afghan presidential election?"


3. (C) Bilateral relations can only normalize if the
violence stops, Sinha continued. The availability of
advanced weapons and undetectable explosives has changed the
entire atmosphere in India; in the 1980s the President and
the PM could safely take evening strolls without security
cordons, which is impossible today. To PolCouns' question,
Sinha offered in principle to renew his predecessor J/S AK
Singh's practice of arranging intelligence-based briefings on

cross-border terrorism trends (Ref D).

Composite Dialogue Crawling Along
--------------


4. (C) The Composite Dialogue will continue despite the
increase in terrorism, Sinha told us. Three sets of talks are
coming up -- on friendly exchanges (in late July), trade
(early August), and terrorism/drug trafficking (mid-August)
-- followed by the Foreign Secretaries' meeting in September.
Also, the GOI and GOP are locking in dates for a meeting of
the private sector Joint Business Council to intensify
bilateral trade that figured prominently in the April 18
Joint Statement. Without speculating on how useful these
talks might be, he reported that the there was no progress at
all in the three sets of talks he attended:

-- On Siachen Glacier, Sinha "understood that it was a
zero-sum game," and progress there would inevitably be slow
at best.

-- Sir Creek (May 28-29) "should have been easy," Sinha told
us, but "Pakistan's attitude was unhelpful." The sides had
agreed on the land border based on the pillars that were
surveyed in January, but Islamabad refused to delineate
either the creek itself or the maritime boundary from the sea
to the mouth of the creek.
-- On Wullar Barrage/Tulbul Navigation Project (June 28-29),
the two sides again failed to move the issue forward, though
that suited Islamabad's agenda of stalling the project itself.


5. (C) GOI Interlocutor on Kashmir NN Vohra separately
confirmed that talks continue, but asserted that the Pakistan
side is under instruction to commit to nothing while running
out the clock. He speculated this was perhaps so Musharraf
could claim credit as a deal maker when he next meets Prime
Minister Singh.

Some Good Indo-Pak News
--------------


6. (C) Sinha underlined that there was some recent positive
movement between New Delhi and Islamabad, which came from two
problems that Pakistan had recently experienced. Rising food
prices in Pakistan led the GOP to drop import duties and to
authorize direct imports of five important food staples from
India: potatoes, tomatoes, onions, garlic and wheat. Also,
after a cable fault knocked out Pakistan's sole Internet
link, Islamabad inquired about running a fiber-optic cable
from Lahore to Amritsar to connect with India's network. The
cable has since been repaired, but talks on connecting to
India's network continue with both the Indian government
operators and IT behemoth Reliance Industries. Sinha was
hopeful this Internet project would go ahead, despite the
passing of the emergency requirement.


7. (C) Sinha also commented favorably on recent political
developments in J&K. The separatists' visit to Pakistan and
Pakistani Kashmir (Ref C) went well -- "they did not follow
ISI's script." He was also cautiously upbeat on pro-Pakistan
hardliner SAS Geelani being sidelined by Islamabad. That
said, he was frustrated by tight GOP limits on the number of
travelers on the Kashmir bus, and noted that visas have also
been restricted for some other categories of Indian visitors
(the Hindustan Times's Manoj Joshi, for instance, was
recently denied a visa because of offending articles).

Promoting Democracy: Did You Forget About Musharraf?
-------------- --------------


8. (C) Closing, Sinha remarked on the fate of democracy in
Pakistan, observing that "dictators prefer local elections
over national democracy," and that there were no signs that
Musharraf would permit the return of Pakistan's three exiled
political party leaders (Nawaz Sharif, Benazir Bhutto, and
Altaf Hussain). "Pakistan seems exempt from the requirement
that nations must embrace democracy to gain favor with the
US," he lamented. In light of our upcoming bilateral
democracy initiative, Sinha expressed the hope that
Washington will remember this element of its Pakistan policy.

Comment: Peace Still the Flavor of the Season
--------------


9. (C) Sinha's cautious optimism about the Indo-Pak peace
process, despite the recent uptick in terrorism underlines
that Delhi is staying the diplomatic course set by the PM and
that the MEA remains measured in its assessments. However,
the frustration Sinha expressed about Pakistan's lack of
movement towards democracy reflects a widening concern here
that the GOI has still to find a sustainable formula for
stabilizing its relationship with Pakistan.
BLAKE