U/S BURNS IN HYDERABAD: A NEW CONSULATE, MORE

UNCLAS SECTION 01 OF 04 CHENNAI 002607

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TAGS: PREL PGOV AMGT ABLD CMGT ECON KISL IN
SUBJECT: U/S BURNS IN HYDERABAD: A NEW CONSULATE, MORE
VISAS AND LIMITLESS GROWTH


1. (SBU) Summary: A busy series of December 9 meetings and a
wide-ranging &windshield tour8 provided Under Secretary for
Political Affairs Nicholas Burns a quick but thorough
introduction to one of India,s leading boom towns and the
planned site for the fifth U.S. post in India. While hi-tech
driven economic growth, Indo-U.S. relations, and the new
consulate dominated most of Burns, interactions, a
discussion with leading members of Hyderabad,s Muslim
community revealed a city still steeped in its largely Muslim
heritage and allowed him to respond to a community suspicious
of U.S. actions and goals. End summary.

The New Economy: U.S. Company, Business School
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2. (U) A tour and briefing at the offices of U.S. company
Computer Associates (CA),located in Hyderabad,s &Hi-Tech
City,8 provided Ambassador Burns and his delegation with
insights into a fairly typical American IT company experience
in India. Started in 1997, CA India now has operations in
six Indian cities, including its India Technology Center
(ITC) in Hyderabad, established in 2003. With the ITC and
its now 1,400 employees, CA has moved beyond providing
technical support and software development from India to also
doing new product and process development. This step is
common for foreign companies, many of whom started in India
with &back office8 operations, but have added more complex,
higher value processes. From the roof of the building where
CA currently leases space, Ambassador Burns could see offices
of a &who,s-who8 of American and other IT companies, as
well as large-scale construction in every direction. CA
itself plans to establish its own office campus in the
rapidly developing &Cyberabad8 area where Microsoft already
has its largest operation outside of its Redmond, Washington
headquarters.


3. (U) Asked how many of CA,s 1,400 Hyderabad-based
employees would need U.S. visas, site manager Joga Ryali, a
U.S. citizen who recently returned to his native India after
22 years in Silicon Valley, said most of the employees will
need to go to the U.S. for training or customer meetings. He
expressed gratitude for the recent improvements in visa
processing at Chennai (the nearest visa processing post,
Chennai is almost 400 miles and an overnight trip away),and
he welcomed the prospect of even speedier and more convenient
service from a U.S. consulate in Hyderabad. As evidence of
the growing demand for visas, Ryali and his colleagues noted
that one of every four IT professionals in Silicon Valley is
from India and that one of every four of those Indians hails
from the state of Andhra Pradesh. They also pointed out that
on the heels of the past year,s 78% growth in IT exports
from Andhra Pradesh, a further 51% is expected in the coming
year.


4. (U) Ambassador Burns, subsequent visit to the Indian
School of Business (ISB),located adjacent to the Microsoft
facility, told the tale of India,s economic boom from a
different perspective. Established in 2001 in collaboration
with the Kellogg School of Management, The Wharton School and
the London Business School, and totally privately funded, ISB
seeks to meet the need for a world-class business school in
Asia. President Bush visited ISB during his March visit for
his roundtable with young Indian entrepreneurs, and Indian
Prime Minister Singh had attended ISB,s fifth anniversary
celebration just a few days prior to Ambassador Burns,
visit. ISB currently has 418 students from all across India.


5. (U) Speaking to students during ISB,s annual business
plan competition, Ambassador Burns, termed India the current
&it8 country in the U.S., and he noted the emerging
partnership between the U.S. and India as symbolized by the
just-approved civil nuclear agreement, the boom in trade and
investment, the number of Indian students in the U.S., the
highly successful Indian-American community, and the
popularity of Indian popular culture. Ambassador Burns also
noted the Mission,s efforts to expedite U.S. visa processing
and the plans for a consulate in Hyderabad. During an
off-the-record Q and A session, Ambassador Burns responded to
questions about the civil nuclear agreement, U.S. aid for
development, and the free flow of human capital. Asked about
the prospects for Indian membership on the U.N Security
Council, Ambassador Burns said that regional representation,
effectiveness and a country,s ability to contribute will be
important criteria for Security Council expansion.

Political Leaders Endorse Indo-U.S. Ties
--------------


6. (SBU) Meetings with Andhra Pradesh (AP) Congress Party

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President K. Kesava Rao and former AP Chief Minister and
current state opposition leader N. Chandrababu Naidu provided
Ambassador Burns with political perspective. Rao, who also
is a member of the upper house of India,s Parliament, said
good Indo-U.S. relations enjoy &nation-wide, people-based8
approval among the Indian population as well as &general
support8 in the Parliament. The new Hyderabad consulate is
&the best thing the U.S. has done,8 commented Rao, who
fondly reminisced about Hyderabad's American Library (since
closed) where he spent many happy afternoons as a student.
Rao also promised to help finalize all pending paperwork
between AP and Delhi for the permanent consulate site. Rao
noted that investment in AP has increased eight-fold in the
past 30 months, and he touted Special Economic Zones (SEZ)
and public-private partnerships as ways to move forward.
Asked about the controversy over agrarian lands being taken
for SEZs, Rao said the government is working on guidelines to
ensure valuable agricultural property is not taken. He added
that the Congress government has worked hard on rural
outreach to address poverty and to ease the Naxalite threat.
Responding to a question about foreign university interest in
India, Rao said there &still are issues,8 and that adequate
regulation must be in place before foreign institutions are
allowed to open campuses in India.


7. (SBU) Ambassador Burns told Rao that Indo-U.S. relations
have never been stronger, noting successes on the civil
nuclear agreement, trade development, and military
cooperation. He added that the U.S. believes more needs to
be done with India on counter-terrorism and agriculture. Rao
agreed that stronger bilateral relations should be the goal,
adding that the majority of Indians support the UPA
coalition,s &line8 on improved ties with the U.S. On the
civil nuclear agreement, Rao noted that a &few
technicalities8 remain to be resolved, but news of it,s
passage by the U.S. Congress was &overwhelming.8
Ambassador Burns rejoined that any issues can be overcome and
that the good negotiations on the civil nuclear agreement had
built confidence between the two governments.


8. (SBU) Chandrababu Naidu, former Chief Minister of AP and
acknowledged architect of Hyderabad,s economic take-off,
opened by asking Ambassador Burns for his views on India.
Burns replied that he is not an expert on India, but he could
speak to Indo-U.S. relations, saying that the bilateral
relationship is set to be one of our most important. He
added that the civil nuclear agreement had become the symbol
of the emerging relationship and &now it is done.8 Naidu
agreed that relations are good, adding that he is &very
pleased8 in that regard. He said India is very strong on
the technology front, but it needs to concentrate more on
infrastructure. He continued that now the important question
for India is how to take the benefits of the country,s
economic reforms to the common man, adding that &trickle
down,8 while occurring, may not be fast enough. Naidu said
&all (political) parties talk this line; the question is
implementation.8 Two things about India are certain, Naidu
said: coalition governments at the Center and economic
growth. &All agree8 that growth must continue. Naidu
commented that a decade ago Andhra Pradesh produced only
8,000 engineering and computer sciences graduates a year, and
many left for the U.S. Now, he said, the annual number is
100,000, resulting, ironically, in a &brain gain.8 Most
importantly, the psychology of those graduates has been
transformed into a
&can do8 culture that has helped India recover its national
pride and its sense that challenges can be met. Naidu said
with satisfaction that Hyderabad had won its friendly rivalry
with Bangalore, besting it in every dimension, including
roads, airports, education, biotech, and governance.


9. (SBU) Moving to the international scene, Naidu asked
Ambassador Burns if he &prefers8 India or China. Common
values make the U.S. and India natural partners, Ambassador
Burns replied, adding that the U.S. is concerned about
China,s military build-up. He explained that the world has
changed, and that it would be foolish to think we can contain
China as we once did the Soviet Union. The new Indo-U.S.
relationship shows China that it has an incentive to
cooperate, Ambassador Burns concluded. Naidu said the
Iran-Iraq situation is the &world,s biggest problem,8 to
which Ambassador Burns rejoined that Iran is the more
worrisome. Iran,s radical government, its belief that it
will be the region,s greatest power, and its potential to
block an Israel-Palestine solution all are very serious
concerns. Iran with nuclear weapons would be unacceptable to
the U.S., Ambassador Burns concluded. Bidding farewell,
Ambassador Burns invited Naidu to visit the State Department
the next time he travels to the U.S.

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Muslim Leaders Air Views
--------------


10. (U) The 120-year old Nizam Club, a sharp contrast to
modern, hi-tech Hyderabad, was the venue for Ambassador
Burns, lunch and roundtable discussion with leaders from the
large Muslim community (about 40% of the city,s population).
Hosted by Zaheed Ali Khan, chief editor of The Siasat
newspaper, a moderate, widely read Urdu daily, roundtable
guests included an AP government minister, academics from
secular and religious educational institutions, and a former
AP Chief Justice, among others. Although virtually all of
the participants have ties to the U.S. through family,
education or travel and all professed positive attitudes
about the country, they were not reticent in expressing
varying degrees of unhappiness about U.S. policies in the
Muslim world. Although the pointed but respectful questions
included topics such as Guantanamo detainees and Iraq, the
questioners, strongest points concerned Israel-Palestine.
One questioner,s comment that Palestine is &the central
issue to lift the hearts of Muslims around the world8
brought applause from several of the participants.
Acknowledging the importance of progress on Palestine and the
disaffection caused by Iraq, Ambassador Burns said the U.S.
is proud of what it has done and is doing to support and
assist Muslims, such as in the Bosnia conflict and elsewhere.



11. (U) Roundtable participants clearly appreciated the
opportunity to meet and talk with Ambassador Burns.
Subsequently, one academic wrote to Consulate General
Chennai,
&Ambassador Burns, special gesture of taking time out to
meet Muslims from Hyderabad and ascertain their views about
American policies is a welcome one and demonstrates
unequivocally the intentions of the U.S. government to reach
out to sections of the international community which are
ostensibly unhappy, with American policies. It is a
gesture I as an Indian and a Muslim appreciate
wholeheartedly.8

Consulate Sites: The New Frontier
--------------


12. (U) Ambassador Burns also briefly toured the agreed upon
site for an interim U.S. consulate in Hyderabad, the &Paigah
Palace8 heritage compound that currently houses AP
government offices. The AP government protocol and heritage
officials who conducted the tour clearly were delighted by
the prospect of a U.S. consulate in their city and the
planned use of the site. Enroute to the Indian School of
Business Ambassador Burns also was driven by the proposed
site for construction of a purpose-built consulate building,
located near the mammoth Microsoft campus and the new
headquarters for Computer Associates, Hyderabad presence.
Ambassador Burns also spoke to TV channel ETV, which
broadcasts in all of south India,s vernacular languages,
about the new consulate, noting that it is one manifestation
of the U.S. government,s commitment to the bilateral
relationship. (Presently, Iran is the only country with a
consulate in Hyderabad.)

Comment: Opportunities Await
--------------


13. (SBU) Hyderabadis were delighted that Ambassador Burns,
the U.S. &star8 of the civil nuclear negotiations and a
very familiar face from media coverage of that process, chose
to visit their city. They expressed unanimous support for
the agreement, they proudly touted the growth and development
of their booming city, and they showed great enthusiasm for
the prospect of a U.S. consulate. Indeed, Ambassador Burns,
visit encapsulated the need for a consulate and some of the
challenges it will face in Hyderabad ) a city of seven
million with close ties to the U.S. and a booming economy,
thus generating an enormous demand for U.S. visa services.
Also apparent are the opportunities for American companies to
take advantage of the growing economy, including its energy
needs, and the scope for outreach and public diplomacy,
especially with the city,s large Muslim community. End
comment.


14. (U) For his Hyderabad visit Ambassador Burns was
accompanied by SCA/INS Director Marcia Bernicat, P Special
Assistant Anja Manuel, Embassy New Delhi Political Officer
Atul Keshap, and Chennai Principal Officer David Hopper.
This message was coordinated with Embassy New Delhi and
cleared by P.

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HOPPER