C O N F I D E N T I A L SECTION 01 OF 04 NEW DELHI 009205

SIPDIS

SIPDIS

E.O. 12958: DECL: 12/06/2015
TAGS: PREL ECIN ETRD ENRG TRGY KNNP CH JA IN ASEAN
SUBJECT: INDO-JAPANESE INTERESTS CONVERGING AHEAD OF EAST
ASIA SUMMIT

REF: A. TOKYO 6376


B. TOKYO 6236

C. TOKYO 5850

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


1. (C) Summary: Prime Minister Singh is heading to Kuala
Lumpur for the December 14 East Asian Summit (EAS) at a time
of rapid improvement in Indo-Japanese relations that may
finally overcome the sense on both sides of unfulfilled
potential. In a December 2 meeting with PolCouns, MEA's Asia
Coordinator Ashok Kantha emphasized the positive changes in
Japanese attitudes that New Delhi perceives following
Koizumi's re-election. In addition to a shared approach to
the East Asian Summit (Refs A and B), Kantha and Japanese DCM
Ryoichi Horie noted other factors driving this India-Japan
rapprochement, including changes in the GOJ Foreign Ministry,
booming corporate interest in India and a gradual Japanese
turn around on nuclear issues. In a recent speech to a World
Economic Forum meeting in New Delhi, PM Singh outlined his
vision for an Asian economic grouping "which could be the
third pole of the world economy" after the EU and NAFTA.
India views closer relations with Japan and a Japanese role
in South Asian security as a means to take advantage of
economic opportunities and balance Chinese influence in
ASEAN. According to DCM Horie, Tokyo still resists full
civil nuclear cooperation with India, but the Japanese
Foreign Ministry and business leaders are waking up to the
advantages of closer relations with New Delhi. End Summary.

India and Japan EAS Buddies
--------------


2. (C) Amidst an increasing sense of shared interests, India
and Japan are working together over the East Asian Summit's
role in building a regional architecture. As Embassy Tokyo
has detailed (Refs A and B), the GOI sees the EAS as a
building block for a

future East Asian Community, and is
adamant that this new architecture include a prominent role
for India. Noting that China was initially "not enthusiastic
about India's participation in the EAS," MEA Joint Secretary
(East Asia) Ashok Kantha told PolCouns and Poloff in a
December 2 meeting that China was more comfortable with the
ASEAN Plus Three format, "where they could dominate." He
relayed that many ASEAN countries have stressed to India the
need for better geopolitical balance in the region, but
admitted that these countries are not comfortable voicing
their opinion in multilateral fora where China is present.
Kantha listed Singapore, the Republic of Korea, and Thailand
as examples of countries that tell the GOI privately that
India needs to be involved to "prevent China from
dominating," but are afraid to articulate this in other ASEAN
formats. Japan has been most supportive of the Indian
position on the Summit, he commented, but wants the EAS to
meet every other year while the GOI is pushing for an annual
event. In a December 5 meeting, Japanese DCM Ryoichi Horie
told us that Japan is supporting India's challenge to China
because it has greater confidence in India's positive,
democratic influence in Asian stability. Since India joined
the ASEAN Plus One group, it has become "intensively"
involved in the region, he observed.

The Flag Follows Trade
--------------


3. (C) Looking beyond the EAS, Prime Minister Singh lauded
the advantages of an Asian economic grouping in a recent
speech to a World Economic Forum meeting in New Delhi. He
suggested that a Pan-Asian Free Trade Zone could be the
"third pole of the world economy" after the European Union
and the North Atlantic Free Trade Area, and would open up
"new growth avenues" for the Indian economy. The PM's Media
Advisor Sanjay Baru is a big-time advocate of this Asia push,
and has spoken in the past of GOI hope that the EAS could be
the foundation for a regional free trade zone. This long
term plan raises the stakes on Indian participation in
architecture building through the EAS. MEA's Kantha also
told PolCouns that India is open to US participation in this
notional economic grouping.

Closer Relations Across the Board
--------------


4. (C) In addition to GOJ support of India's approach to the
EAS, Kantha also praised Japan's stronger commitment to
bilateral relations with India. He indicated that the
changes have started with Koizumi and are "percolating down
the system" following the Japanese election. DCM Horie noted
that Japan's new Foreign Minister, Taro Aso, is a strong
proponent of Indo-Japanese ties going back to his tenure as
Communications Minister, and plans to visit New Delhi in
January in his new capacity. Kantha was optimistic that the
Foreign Ministry finally understands where India is heading,
and "starting to change the entrenched stereotypes in the
bureaucracy." Kantha credited the common EAS alignment,
stronger economic ties and the joint UNSC effort for driving
Japan's changing perception of India. He added that the
Japanese business community still believes that India needs
better infrastructure, but noted that India would welcome
further Japanese investment in this area.


5. (C) Horie listed several other factors which have led to
stronger Indo-Japanese ties, including Tokyo's evolving
position on civil nuclear cooperation, the booming Japanese
interest in India's economy, and the selection of Taro Aso as
the new Foreign Minister. The Japanese concurrence on Indian
participation in ITER is the most substantial sign of greater
leeway for civil-nuclear cooperation, Horie commented, since
non-proliferation is historically a bone of contention in
Indo-Japanese relations. After the Keidanren group of
business leaders (Ref C), led by Toyota President Hishiro
Akuda, met with Finance Minister Chidarambam and PM Singh in
November, they declared that India was the "last remaining
big market for Japanese business." Mid-size and small
companies have also become more interested in doing business
with India, leading to a major "India boom" in Japan, and
Horie listed several upcoming visits by prominent business
leaders.

Tokyo "Will Come Around" On Civil Nuclear Cooperation
-------------- --------------


6. (C) Kantha expressed appreciation for USG efforts to
persuade Japan to "come around" on allowing India to join the
International Thermonuclear Experimental Reactor (ITER) as a
partner, and predicted that once Nuclear Suppliers Group
policies are changed to accommodate civil nuclear cooperation
with India, Japan would again "come along" there too. DCM
Horie explained that he and Japanese Ambassador Enoki support
greater civil nuclear cooperation with New Delhi, and believe
that Japan needs to treat India as a de-facto nuclear power
in order to avert an impending energy crisis. However, he
explained that the GOJ had its own "non-proliferation
ayatollahs" who resist the Indo-US civil nuclear agreement.
Horie reported that Ambassador Enoki had used his recent
consultations in Tokyo to "send signals" that it was time to
change Japanese policy towards India's nuclear program.
According to Horie, the GOI has indicated that they are
looking towards Japan and France as the front runners to
supply civil nuclear technology. Nevertheless, he commented
that Japanese businesses that export this technology have not
begun to lobby the GOJ to loosen its regulations, and thusfar
all discussions have been government to government. Although
Tokyo had agreed to support India's participation in ITER, he
predicted that Japan would be one of the last countries to
support the Indian civil nuclear agreement in the NSG.

Comment: A Historic Realignment
--------------


7. (C) While the GOI has proactively reached out to Japan on
the economic front, the two countries' converging interests
on China's role in Asia, the future of the UNSC and evolving
nuclear cooperation have occurred more spontaneously, as both
countries look for a more prominent role and greater
stability in Asia. Horie indicated that the Japanese would
like to expand the next Japan-India Symposium to be held in
Tokyo next February or March to include trilateral
cooperation with the US. Closer Indo-Japanese interests are
in America's interest, and we will keep an eye on how the
GOI's stronger ties with Japan and FS Saran's recent public
comments about India's role as a "balancing power" in Asia
will play out in upcoming regional meetings.


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