GOI CONSIDERING RUSSIAN THRUST IN CENTRAL ASIA

C O N F I D E N T I A L SECTION 01 OF 05 NEW DELHI 007494

SIPDIS

E.O. 12958: DECL: 09/26/2015
TAGS: PREL EPET ETRD MOPS CN PK AF IN
SUBJECT: GOI CONSIDERING RUSSIAN THRUST IN CENTRAL ASIA

REF: A. NEW DELHI 4353


B. ALMATY 3075

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


1. (C) Summary: As India perceives a shift by Central Asian
nations toward their Soviet roots and increased competition
from China, the GOI is taking a new look at how to orient its
foreign policy in the region. Frustrated with the slow
progress expanding influence in its extended neighborhood and
concerned about being edged out by Sino-Russian
consolidation, the GOI is considering whether to parlay its
historically strong relationship with Russia into a quiet,
but influential, partnership. After India's first turn as an
observer in the Shanghai Cooperation Organization (SCO),the
GOI hopes for full membership in the Central Asian group.
Indian analysts have a variety of perceptions about the US
role in what some call (erroneously) a new "Great Game", but
all agreed that India is happy to benefit from its close
relationship with Russia for greater influence in Central
Asian trade, energy and counterterrorism efforts, especially
as they perceive that US deference to Pakistan will limit
greater GOI involvement in Afghanistan. Central Asia is of
growing importance to US and Indian foreign policy,
especially in Iran and Afghanistan, and we should look for
additional ways to engage the GOI in this area with a view to
avoiding any revival of the old Delhi-Moscow axis. End
Summary.

India Feels Benched
--------------


2. (C) India was invited for the first time to participate
in the July 5 SCO as an observer, but aspires to early
membership. Nivetida Das Kundu from the MOD supported
Institute of Defense Studies and Analysis explained that the
GOI indicated it was not content with the observer role, but
sent Foreign Minister Natwar Singh anyway to mingle with top
participants, including Pakistani Prime Minister Aziz and
Iranian Vice President Arif. MEA Deputy Secretary for
Eurasia Sandeep Chakravorty told Poloff in an August 3
meeting that India wants to be a full SCO participant, but
understands the organization does not yet have rules for
admitting new members. He clarified that domestic
engagements on July 5 and the G-8 in Scotland on July 6
prevented the Prime Minister from attending the Astana
meeting. Chakravorty indicated that India's SCO priorities
are counterterrorism and energy cooperation, but as an
observer, the delegation had not been able to participate in
decision making. Noting that the discussions about US bases
in Central Asia had taken place in a private meeting closed
to India, he said that the GOI had not been involved in the
SCO's deliberations on US presence and considered it a
bilateral matter between Washington and governments of the
region. Other senior officials have expressed GOI support
for continued US military presence in Central Asia,
especially insofar as this helps preserve stability in
Afghanistan and prevent a resurgence of Pakistani/ISI
influence.
Struggling for Energy and Trade
--------------


3. (C) Despite top level speeches about the importance of
Central Asia and a 2003 "Focus CIS" MEA policy (Ref A),India
has enjoyed only limited success. As Das Kundu summarized
recently, "India had high expectations for trade and energy
deals with Central Asia, but has been disappointed with what
it found." Nirmala Joshi, the Director of the India-Central
Asia Foundation, complained that India "hasn't made a dent"
because MEA "can't implement their vision for the region and
the government's priorities are elsewhere." MEA's
Chakravorty elaborated on the "barriers" to India's
relationship with Central Asian countries. Since these
countries were relatively closed until the breakup of the
Soviet Union, India got a "late start and has a long way to
go" in forging closer ties. Unlike Russia and China, which
have natural frontiers with Central Asia, India's lack of
direct transportation links complicate people to people
contacts and potential energy trade.


4. (C) ORF's Unnikrishnan observed that India's energy
options have been narrowed to Turkmenistan and Kazakhstan,
where any eventual energy trade will require problematic
pipelines. According to Professor Joshi, India is now
considering a more complicated "oil swap," through which
India would pay Kazakhstan to send its oil via the Caspian
Sea to refineries in Northern Iran, after which Iran would
send an equivalent amount of oil from southern wells by sea
to India. After entering the markets of Central Asia, some
Indian businesses have struggled to make profits. Ajanta
Pharma, a mid-size Indian pharmaceutical company, recently
pulled out from its joint ventures with the governments of
Uzbekistan, Kazakhstan, Kyrgystan and Tajikistan.
Unnikrishnan noted that while some businesses are continuing
to invest, instability has affected the investment climate
negatively. Jawaharlal Nehru University Professor Gulshan
Sachdeva agreed that these countries are facing a "serious
perception problem" in India due to their lack of
institutions, law and stability.

Indian Outpost in Tajikistan
--------------


5. (C) India has been quietly developing a small military
facility in Tajikistan since 2002. Located between Pakistani
Kashmir, Afghanistan and Central Asia, it represents a
strategic forward location for GOI foreign policy. JNU's
Professor Sachdeva explained that the GOI has never
"officially mentioned" the base, so information about it
varies widely among the strategic community in Delhi. Most
accounts describe a hospital in Farkhor which was used to
support the Northern Alliance and later converted into a
small military facility. Other experts say that India was
awarded a contract to upgrade and use an air strip, which may
be Russian, in Aini. We would welcome any recent information
Embassy Dushanbe can provide.

China and Russia Get Into the Action
--------------


6. (C) Central Asian analysts in Delhi worry that the
perceived Russian and Chinese consolidation in the area
threatens GOI foreign policy goals in economics and energy.
Despite lingering Indian suspicion of Russian and Chinese
intentions, Professor Sachdeva speculated that Central Asian
regimes have become even more suspicious of US influence.
Analysts in New Delhi fear that Russia and China are making a
power play to regain influence by playing on Central Asian
fear of US-sponsored democratic movements. According to
Sachdeva, the combination of Russian military might and
Chinese economic power makes India both uncomfortable and
more determined not to lose out in what some have been quick
to christen a new "Great Game." India-Central Asia
Foundation Director Joshi argued that Central Asia was more
or less united under the "War on Terrorism," but is now being
pulled in multiple directions. As a result, India is having
trouble competing against US, Chinese and Russian influences.
"India," she forewarned, "is going to have to make some very
difficult choices in the region" about how to regain
influence.


7. (C) India is unable to compete against China's effective
combination of money, access and proximity. Professor K.
Warikoo, the Director of the Central Asian Studies Program at
JNU, worried that India's inaction has left more room for
China's expanding influence. Beijing spends so much money
building infrastructure such as railways and pipelines, he
observed, that India can't keep up. Assistant Editor for the
"Himalayan and Central Asian Studies" Dr. Sharad Soni
suggested that Chinese money, used to pay off local officials
and businessmen in energy rich Central Asian countries, gives
them an edge over Indian businesses in securing oil and gas
deals. Warikoo added that close ties between China and
Pakistan have "cornered India out."

India Looks for a Clubhouse Leader
--------------


8. (C) As it grows frustrated with trends in Central Asia,
Indian analysts speculate that the GOI is looking for a quiet
partner, most likely Russia, to preserve and expand influence
in the region. Professor Sachdeva believes MEA has realized
that India is not yet strong enough to have an effective
independent policy and should instead look to play a
partnering role. Concerned about Central Asian regimes'
negative attitudes about American influence and Chinese
positioning, Sachdeva suggests that the GOI "has chosen
Russia as a partner in Central Asia." Das Kundu agreed that
there has been a "policy shift to draw on the strong
relations with Russia." (Note: This thinking may have
contributed to the flurry of Indian visits to Russia in May
and June of this year as described in Ref B. End note.)
When asked about Indo-Russian cooperation in Central Asia,
MEA's Chakravorty replied that Indian policy is always
independent but the GOI is looking for ways to "develop
policy in conjunction with Russia." India "would like"
closer cooperation but doesn't have any concrete proposals in
the region yet.


9. (C) ORF's Unnikrishnan predicted that in the short-term,
India sees the greatest trade and energy advantages in a
Russian partnership. JNU's Joshi agreed, saying that India
understands that Russia dominates the energy field, and
realized that "if they want a greater role, it will have to
be with Russia." However, Unnikrishnan is worried that the
GOI has sacrificed a "holistic approach" in exchange for
immediate gains in these areas. With this in mind, the ORF
has launched a "Task Force on India-Central Asia" to
determine "whether India has sufficient commonality of
interests with Russia" and "whether the association carries
negative or positive baggage." Sachdeva commented that this
partnership was not a sustainable policy, because in his
opinion Central Asia's long term interests do not coincide
with those of Russia.


10. (C) The only dissent we heard came from SAPRA's
Banerjee, who observed that closer Russian cooperation would
actually bring significant disadvantages. He cited Central
Asian resentment towards Russia, competition over energy
supplies, and Russian dissatisfaction with the Indian base in
Tajikistan as examples. Nevertheless, Joshi predicted that
India will downplay its US ties in the region in order not to
upset Russia or hurt its chances of SCO membership. JNU's
Sachdeva stressed the positive effects of a stronger US role
in Central Asia, but admitted he was of a minority opinion in
this regard.

Indian Oil Venture Cries Foul and Asks Russians to Referee
-------------- --------------


11. (C) As an indication of Russia's expanded influence, an
Indian oil venture between state-owned ONGC and the private
company Mittal Energy asked the Russians for help in its
latest energy bid. When the Chinese National Petroleum
Corporation (CNPC) won the takeover of Canadian-based
PetroKazakhstan Inc. on August 22, Delhi-based newspapers
claimed foul play, alleging that the Indian company was not
given a chance to rebid after CNPC upped the price. The deal
is waiting for GOK approval. Almaty has supported Russia's
Lukoil in the past (Ref B) and the "Times of India" reported
on August 25 that the company's partnership in
PetroKazakhstan gives it the right to block the deal. The
GOI has thus far stayed out of the affair, but ONGC officials
reportedly traveled to Russia to try to persuade Lukoil to
block the CNPC deal.

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


12. (C) Indian partnership with Russia in Central Asia is a
short-sighted policy, induced by Delhi's frustration with
Chinese and Russian consolidation, unsecured energy deals, a
deteriorating business environment, barriers to trade through
Afghanistan and increasing Chinese infrastructure projection
into Central Asia. As we create an expanding Indo-US agenda,
we should look for ways to improve policy coordination on
Central Asia, building on our successful partnership in
Afghanistan and converging interests on issues of terrorism,
democracy and radical Islam.


13. (U) Visit New Delhi's Classified Website:
(http//www.state.sgov/p/sa/newdelhi)
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