Identifier
Created
Classification
Origin
05NEWDELHI9592
2005-12-20 13:24:00
CONFIDENTIAL
Embassy New Delhi
Cable title:  

GOI'S TAKE ON CHINA'S ROLE IN DEVELOPING THE

Tags:  PINR PREL KDEM MOPS CH IN PK RS 
pdf how-to read a cable
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C O N F I D E N T I A L SECTION 01 OF 04 NEW DELHI 009592 

SIPDIS

SIPDIS

E.O. 12958: DECL: 12/20/2015
TAGS: PINR PREL KDEM MOPS CH IN PK RS
SUBJECT: GOI'S TAKE ON CHINA'S ROLE IN DEVELOPING THE
SHANGHAI COOPERATION ORGANIZATION (SCO) (C-AL5-00794)

REF: TASHKENT 3347

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

C O N F I D E N T I A L SECTION 01 OF 04 NEW DELHI 009592

SIPDIS

SIPDIS

E.O. 12958: DECL: 12/20/2015
TAGS: PINR PREL KDEM MOPS CH IN PK RS
SUBJECT: GOI'S TAKE ON CHINA'S ROLE IN DEVELOPING THE
SHANGHAI COOPERATION ORGANIZATION (SCO) (C-AL5-00794)

REF: TASHKENT 3347

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


1. (C) Summary: In a December 16 meeting on India's
relationship with Central Asia and the Shanghai Cooperation
Organization (SCO),MEA J/S Jaimini Bhagwati (Eurasia)
suggested that India and the US should look for opportunities
to advance our shared interests in the region. Bhagwati
speculated that China advocates the SCO in order to keep the
US out of Central Asia. The GOI is uncomfortable with
Chinese demographic pressure, the Russian political legacy
and Pakistani influence on Islam in the area, and would
prefer to have a democratic Central Asia with strong civil
society and transparent economic institutions. The GOI wants
to play a greater role in energy cooperation, business and
counterterrorism efforts in Central Asia, but compared to
China and Russia, India "doesn't know how to work the
system." As a result, New Delhi is "groping about how to
secure its vital interests there," and is "happy to work with
the US in a transparent matter" on these issues, Bhagwati
concluded. End Summary.

China Eyes Economic and Demographic Opportunities
-------------- --------------


2. (C) MEA Joint Secretary for Eurasia Jaimini Bhagwati
emphmsized in a December 16 meeting with PolCouns and PolOff
that China is looking to Central Asia for opportunities for
economic and demographic growth, and uses the SCO to keep the
US out of the region. With China's huge population, Bhagwati
assessed that the Chinese government is eyeing the vast and
largely empty Central Asian landscape for growing room. He
brought up the example of Kazakhstan, which is 85 percent the
size of India but has only 12 million people compared to
India's over one billion. Chinese workers are coming across
the borders to sell cheap goods, Bhagwati continued, and soon
they'll "bring the whole kitchen sink." He suggested that
China was much more comfortable with Central Asian rulers

than the US, and was willing to work with these leaders
through the SCO to minimize US influence in the region. As
an Observer to the SCO, India was not privy to the talks on
the timeline for the US to leave its Central Asian bases.
However, he commented that Kyrgyzstan has a financial
incentive to continue allowing an American presence while
Uzbekistan's leader is "cozying up to Russia."

Russia Looks for Energy Resources
--------------


3. (C) Bhagwati argued that Russia's interest in the area
revolves around the continued need for access to energy
resources. He pointed out that the increase in oil prices
and Putin's centralization of power have dramatically

NEW DELHI 00009592 002 OF 004


improved Moscow's profile in Central Asia. Russia has
developed its human resources in the west and its energy
sources in the east, Bhagwati explained, and has realized
that it is imperative to maintain control of its eastern
hydrocarbons even while eyeing Central Asian reserves. Like
China, Russia is insecure about losing influence on its
southern border, especially to the United States.

How Can India Work with These Leaders?
--------------


4. (C) Bhagwati lamented that India has been unsuccessful
navigating the corruption, lack of democracy and competing
influences in Central Asia because the GOI "doesn't know how
to work the system" like the Russian and Chinese do. India's
economic interests in the area include energy, biotechnology
and pharmaceuticals, but despite the relatively short
distances, there is a huge lack of effective transport
linkages. He noted that the Indian capital is about a 4 hour
flight from most Central Asian capitals, which is a similar
flight time from New Delhi to its southern city of Chennai.
With Pakistan and China blocking access to the region,
overland trade is not economically viable. He remarked that
the North-South Corridor through Iran and Afghanistan would
not be enough to overcome the financial constraints to
business, and India is wary of closer trilateral cooperation,
especially with China. India's best prospects lie in
services and commodities like pharmaceuticals that can be
easily transported by air. Bhagwati complained that Indian
companies, with their auditors and public shareholders, do
not have the resources or the leeway to offer large bribes to
win business deals, nor the networks to beat out the Chinese
on energy bids. As a result, the GOI would prefer democratic
systems with transparent financial institutions and judicial
oversight, but does not really know where to start.


5. (C) Bhagwati stressed that another of India's primary
concerns in Central Asia is the growth of Islamic extremism,
and argued that democracy in the region would decrease this
threat. Calling the region's relative inequality, poverty
and growing religious sentiment the "ingredients of an
explosive cocktail," Bhagwati said the GOI is especially
concerned about the Islamic Movement of Uzbekistan. An Indian
professor working under the GOI's funded "Fulbright-type"
program at the University of Osh from Kyrgyzstan has warned
New Delhi of the change from a "relaxed" type of Islam to an
increasingly "intolerant" form.

India's Closest Ties in Central Asia
--------------


6. (C) When asked about the GOI's closest partners in
Central Asia, Bhagwati responded that India is culturally
most similar to Uzbekistan, but economically connected to

NEW DELHI 00009592 003 OF 004


Khazakhstan and militarily linked to Tajikistan. The Kashmir
region shares Uzbekistan's cultural heritage, but Bhagwati
did not see much room for growth in that relationship (Ref
A). In terms of economics, India has the most ties with
Khazakhstan, which benefits from abundant energy reserves.
Nevertheless, transportation obstacles hamper energy deals
and Indians describe business in Khazakhstan as "a hassle."
Speaking for the first time on India's military outpost in
Tajikistan, Bhagwati (strictly protect) reported that India
has helped restore, and is now running a small Russian base
in Aini. After the bombing of the Indian parliament in 2001,
the GOI went looking for an alternate location west of
Pakistan, and found the opportunity to do civil
reconstruction work on a Russian base. While the base
offered a good "listening post," Bhagwati observed that New
Delhi only has enough resources to maintain a small presence
there. However, he maintained that it is a "good learning
opportunity for the armed forces" who are serving in India's
"first overseas base experience." Asked about the possible
Turkmenistan/Afghan pipeline, Bhagwati reiterated that the
GOI remains deeply skeptical about whether the Turkmen have
gas to sell.

Indo-US Cooperation in Central Asia
--------------


7. (C) Although India faces certain political "constraints,"
Bhagwati was open to ideas for Indo-US initiatives in Central
Asia that would build on the July 2005 US-India Democracy
Initiative. He commented that India and the US have a
"natural" overlap of interests in the region, but questioned
how Pakistan and China would react to any effort. He noted
that the GOI's main conduit for training in Central Asia is
through its Indian Technical and Economic Cooperation (ITEC)
program, which provides primarily technical assistance and a
monthly stipend to Central Asians students in New Delhi.
Bhagwati warned that when Indian "initiatives reach beyond
English training, Central Asian leaders become
uncomfortable." He also cautioned to avoid using the term
"democracy promotion" in any joint initiatives because of the
suspicions that have emerged after the recent "color
revolutions." However, given the current "vacuum of
leadership, ideas and system," India wants to be part of the
movement to shape the future of the region.

Comment: Opportunity Ripe for a POTUS Deliverable
-------------- --------------


8. (C) Bhagwati, who spent several stints away from the MEA
working for the World Bank in Washington, represents a new
wave of GOI thinking on Central Asia. Instead of an old
Soviet-phile, Russian speaking bureaucrat, Bhagwati is
relatively young, economically oriented, and open to new
ideas. While we have to be sensitive to GOI fears on raising

NEW DELHI 00009592 004 OF 004


third-country suspicions about democracy promotion, we have
an opportunity to find a way to expand Indo-US consultations
and shared interests to a new region. In light of the
upcoming South and Central Asian Bureau reorganization, the
timing couldn't be better to consider a joint initiative,
perhaps tied to the President's India visit.


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