CHIRAC VISIT PUSHES US AGENDA ON CIVIL NUCLEAR

C O N F I D E N T I A L SECTION 01 OF 07 NEW DELHI 001321 SIPDIS SIPDIS E.O. 12958: DECL: 02/22/2016 TAGS: PREL ENRG TRGY MASS TSPA KNNP FR IN SUBJECT: CHIRAC VISIT PUSHES US AGENDA ON CIVIL NUCLEAR AGREEMENT REF: A. NEW DELHI 699 ¶B. 05 NEW DELHI 6598 Classified By: PolCouns Geoff Pyatt for Reasons 1.4 (B, D) ¶1. (C) Summary: President Chirac's February 19-21 trip to New Delhi, which focused on political, economic, defense and energy cooperation, served as a preview for President Bush's upcoming visit. In a program and agenda very similar to our President's, the GOF made progress on "soft power" issues including education and space cooperation, but there was little movement on the high profile issues such as commercial openings and nuclear cooperation. The GOI revealed little new -- holding the big ticket items in reserve for POTUS. The visit raised expectations about French support for civil nuclear cooperation (Ref A),but the "Declaration on the Development of Nuclear Energy for Peaceful Purposes" effectively hinged any future benefits to the adjustment of international civil nuclear cooperation framework, and therefore the successful conclusion of a civil-nuclear separation plan that the Nuclear Suppliers Group (NSG) can support. The French President's second visit to New Delhi, accompanied by four ministers and a large business delegation, was somewhat overshadowed by continued coverage of the preparations for President Bush's upcoming visit and hijacked by the controversy over Indian-owned Mittal Steel's bid to take over Arcelor, a European steel company. The visit did nonetheless result in nine agreements covering defense, business, space cooperation, educational links and an Indian Airlines Airbus purchase. In general, the French have moved ahead of us on space cooperation and educational linkages, where they managed to bypass the isolationist bureaucrats of the Ministry Of Human Resources. The French visit actually helped us by pushing an agenda that parallels our own on civil nuclear cooperation and economic market openings. End Summary. Nuclear Declaration: Big Hype, Little News -------------- ¶2. (C) Leading up to Chirac's February 19-21 visit, the GOI was pushing for a landmark agreement to commit France to begin civil nuclear cooperation before international restrictions were relaxed (Ref A). The French have consistently been the most forward leaning on civil nuclear cooperation since India's 1998 nuclear tests, but were nonetheless firm in urging New Delhi to develop a credible separation plan to pave the way for collaboration with the international community. Unable to conclude an "agreement," the two governments settled on a "declaration," which lists areas for cooperation but hinges future cooperation to the adjustment of the international civil nuclear framework. Chirac's message followed that which Putin delivered during Prime Minister Singh's December 2005 visit to Moscow, namely that French or Russian support for civil nuclear cooperation is not an alternative to working with America to relax US and NEW DELHI 00001321 002 OF 007 international restrictions. By tying cooperation to the adjustment of international civil nuclear cooperation framework, the Indo-French declaration maps out areas for cooperation but says little beyond the September 12 Indo-French agreement signed in Paris (Ref B). The French DCM told us there was little substantive discussion of the issues during the Chirac visit, with the groundwork laid during Special Representative of the President Maurice Gourdault-Montagne earlier visit. ¶3. (C) In the resulting "Declaration by India and France on the Development of Nuclear Energy for Peaceful Purposes," "India and France confirm that they are engaging in discussions to conclude a bilateral cooperation agreement on the development of nuclear energy for peaceful purposes, subject to their respective international commitments and obligations. India and France look forward to adjustment of international civil nuclear cooperation framework with respect to India and confirm their intention to work to that end so that the agreement can be implemented fully. The "declaration" reflects a concerted effort to stay in lock-step with the US on the civil nuclear issue. While the French Embassy detailed the discussions leading to the Declaration, they also sought assurance from the US that a civil nuclear-related announcement would not occur during Chirac's visit. (Note: Full text of declaration in paragraph 13.) ¶4. (C) Reacting to media reports that France was left "waiting for the US green light" on civil nuclear cooperation, French Ambassador to India Dominique Girard emphasized to us that the problem is "not an American green light but rather a NSG green light for a new Indian nuclear status" that allows international cooperation. He observed that French policy is in "perfect harmony with our American allies." Noting that France pioneered the movement to support civil nuclear cooperation with India, he stressed that the US and India are cooperating on this "common strategic objective." ¶5. (SBU) Indian media also emphasized that the declaration lends even greater importance to GOI conclusion of the Indo-US Civil Nuclear Agreement. In a February 21 Indo-Asian News Service Article, K. Subrahmanyam, the head of Prime Minister Singh's Task Force on Global Strategic Developments, commented that the declaration "underscores the point that India-US civil cooperation and the one between India and France are complementary. It has created a positive atmosphere ahead of the visit of US President George Bush in March." C. Raja Mohan, a leading strategic analyst on Indo-US relations, wrote in an Indian Express editorial that "no one in Delhi should be under the illusion that either France or Russia, which has also supported the case for making a nuclear exception for India, are ready to brake ranks with the US." Regarding the areas for cooperation, K.P.Nayar, the Telegraph's Diplomatic Correspondent in NEW DELHI 00001321 003 OF 007 Washington, noted that "What Chirac and Singh agreed is exactly what India and the United States will agree once the impediments in the way of their White House deal in July are ironed out." Strategic consultant G. Balachandran echoed these views. "There is nothing unusual in the declaration," he told us, adding that it only strengthens the incentive for the GOI to conclude a separation plan. Arcelor Takeover Steals the Economic Headlines -------------- - ¶6. (SBU) The controversy over the hostile takeover bid made by Mittal Steel Company, owned by India-born Lakshmi Mittal, for its European rival, Arcelor SA, hijacked the economic headlines away from Chirac's focus on improving French and Indian business ties. In an interview with India Today before his trip, Chirac protested that Mittal Steel and Arcelor have nothing to do with Indo-French relations. In order to deflect India's criticism of the French government's anti-takeover stance in this matter, Chirac declared in a joint press conference with Prime Minister Singh that his government had nothing in principle against a non-European taking over a European company, but he was concerned about the employment ramifications. Inconveniently for Chirac, Lakshmi Mittal (along with Bill Clinton) landed in Delhi for a society wedding on the weekend of the French visit, thereby ensuring an even brighter media on Mittal's face off with the Europeans. Dr. Ummu Salma Bawa, a professor of European relations at Jawaharlal Nehru University, indicated that this business issue has generated "emotional responses" in France and India that "reverse globalization is bringing Indian businesses into the European space." ¶7. (SBU) Addressing the Indo-French "Economic Conference," President Chirac spoke to a selected group of business leaders and Parliamentarians to encourage India to open up the retail market and allow French retail giants to "have the opportunity to grow in India." In support of the effort announced in September 2005 to double bilateral trade within five years, he listed nuclear energy, aerospace, tourism, environmental protection, small and medium enterprises sector, banking, insurance, agro-foods and luxury goods as areas for growth. (Note: Indo-French trade reached a paltry USD 4.3 billion in 2005 contrasting with USD 27 billion between the US and India. End Note.) Chirac also announced that French car maker Renault would be manufacturing a new vehicle known as the Logan in a joint venture with the flourishing Indian truck company Mahindra & Mahindra. Indian Airlines also signed an agreement with Airbus for the purchase for 43 Airbus aircraft for USD 2.2 billion. Ambassador Girard noted that the GOF is trying to expand economic ties to reach the same height as the rapidly expanding political relationship, and cited retail opening for chains like Carrefour as a priority. ¶8. (SBU) The Indian PMO reported that in Chirac's meeting NEW DELHI 00001321 004 OF 007 with Prime Minister Singh, National Security Advisor M.K. Narayanan told a group of top French business leaders that French companies would be able to participate in feasibility studies to implement proposed projects for setting up 1000 megawatt capacity nuclear power plants once the Nuclear Supplier Group restrictions are removed. He noted that a French company was already engaged in pre-feasibility studies for a nuclear power plant to be located in Maharashtra. French Ahead on Soft Power Topics -------------- ¶9. (C) Chirac's visit showcased French success in concluding two new educational linkages and further cooperation on satellite joint ventures, both areas where France is leading the way. India and France signed two Memorandum of Understanding for partnerships between the Indian Institute of Management in Ahmedabad and ESSEC Business School in Paris and the Indian Council for Cultural Relations (ICCR) and Sciences Po in Paris. In this endeavor, the French were able to navigate around obstacles from the Ministry of Human Resource Development, which generally blocks any opportunity for Indian institutions to partner abroad. French Ambassador Dominique Girard noted that the GOF "launched an offensive" a year and a half ago to facilitate connections between the education institutions and encourage them to create the linkages without government involvement. The joint degree program with ESSEC and the IIM is a landmark in this regard, and surpasses what US universities have achieved. ¶10. (SBU) The French company EADS Astrium also signed an agreement with ANTRIX Corporation, an affiliate of the Indian Space Research Organization (ISRO),to jointly develop and market satellites, starting with Eutelsat's W2M. According to Girard, this is the first successful Indian experience in joint marketing for the international market. Girard also noted that India and France are jointly building the Megatropic satellite to be launched on an Indian vehicle in 2009 and used in the study of tropical weather and monsoons. He flagged space cooperation as a French priority for the years ahead. Formalizing Defense Cooperation -------------- ¶11. (SBU) Girard also highlighted that India had signed its third major formal Defense Cooperation Agreement with France (coming after Russia and the US),which does not include any new avenues of cooperation but will encourage "more sophisticated management" of the defense relationship. The Joint Statement noted that the Agreement on Defense Cooperation "is an important element of the Strategic Partnership between the two nations, building upon and expanding cooperation in the defense and military fields, defense industry, production, procurement, research and development of defense material, joint exercises, NEW DELHI 00001321 005 OF 007 professional exchanges and training. The French military hopes to increase the number of joint exercises, stimulate the development of joint technology and facilitate procurement purchases, Girard commented. For once, French and Russian Support -------------- ¶12. (C) Comment: Both Russia and France, strong supporters of civil nuclear cooperation with India, have emphasized to the GOI that the collective effort to relax international restrictions hinges on its successful conclusion of the July 18 agreement. Despite New Delhi's best efforts, there is no way around the requirement for a civil-military separation plan that is credible to Congress and the NSG. The lack of progress on nuclear cooperation and economic ties leaves these areas ripe for POTUS picking. Ultimately, the French visit was helpful in pushing an agenda that parallels our own on civil nuclear cooperation, economic market openings, space cooperation and educational linkages. End Comment. Declaration of Nuclear Energy for Peaceful Purposes -------------- -------------- ¶13. (U) Full text of the "Declaration by India and France on the Development of Nuclear Energy for Peaceful Purposes:" India and France, recalling their deep ties of friendship and cooperation and the importance of the Strategic Dialogue established between them in January 1998, recognize that nuclear energy provides a safe, environmental friendly and sustainable source of energy. They underline the need to further develop international cooperation in promoting the use of nuclear energy for peaceful purposes. They believe that nuclear energy will provide an indispensable source of energy to future generations. India and France consider that proliferation of nuclear, chemical and biological weapons, as well as their means of delivery, constitutes a threat to international peace and security. They share common concerns and objectives in the field of non-proliferation of weapons of mass destruction and their means of delivery including in view of possible linkages with terrorism. India and France recall their past exchanges on civilian nuclear energy. They stress with satisfaction the development, since the creation of the Strategic Dialogue, of a fruitful bilateral dialogue on civil nuclear cooperation and on nuclear safety and, in accordance with their respective international obligations and commitments, the joint projects that are taking place as a result of this dialogue. They recall that the joint statement issued by the President of the Republic of France and the Prime Minister of the NEW DELHI 00001321 006 OF 007 Republic of India on 12 September 2005 stated that India and France would work towards the conclusion of a bilateral nuclear cooperation agreement. India and France affirm their willingness to further develop their cooperation in the use of nuclear energy exclusively for peaceful purposes under that agreement including in nuclear power generation, with a view to achieving sustainable development. India and France recall the framework of the bilateral working group on Energy established in January 1998, of the France-India Joint Committee for Atomic Energy created by the 16 September 2002 MoU signed between AEC (Atomic Energy Commission),India, and CEA (Commissariat a l'Energie Atomique),France, and of the dialogue between their Nuclear Safety Authorities launched by the 29 July 1999 Arrangement, renewed by the 24 October 2005 Arrangement between AERB (Atomic Energy Regulatory Board),India, and DGSNR (Direction Generale de la Surete Nucleaire et de la Radioprotection), France. They express their willingness to expand and strengthen their bilateral dialogue on peaceful uses of nuclear energy. In accordance with the principles governing their respective nuclear policies, India and France confirm that they are engaging in discussions to conclude a bilateral cooperation agreement on the development of nuclear energy for peaceful purposes, subject to their respective international commitments and obligations. India and France look forward to adjustment of international civil nuclear cooperation framework with respect to India and confirm their intention to work to that end so that the agreement can be implemented fully. In this respect, India and France share the same understanding of the following: ¶1. Cooperation under the future agreement may cover the following areas: basic and applied research not requiring the supply of uranium enriched to twenty (20) per cent or greater in the isotope U235; development and use of nuclear energy applications in the fields of agronomy, biology, earth sciences and medicine, and in industry; application of nuclear energy to power generation, including setting up of power projects; nuclear fuel management; nuclear waste management; nuclear safety, radioprotection and environmental protection; prevention of, and response to, emergency situations resulting from radioactive or nuclear accidents; public awareness and acceptance of the benefits of the use of nuclear energy exclusively for peaceful purposes; and in any other field as jointly agreed by the Parties to that agreement. ¶2. Cooperation under the future agreement may take the following forms: exchange and training of scientific and technical staff; exchange of scientific and technical information; participation by scientific and technical staff of one Party in research and development activities conducted NEW DELHI 00001321 007 OF 007 by the other Party; joint conduct of research and engineering activities, including joint research and experimentation (that is to say for which the two Parties are providing equivalent resources); organization of scientific and technical conferences and symposiums; provision of material, nuclear material, equipment, technology, facilities and services; consultations and cooperation in relevant international fora; and any other form of cooperation jointly agreed by the Parties to that agreement. ¶3. Agreements already signed between the concerned institutions of both countries such as DAE (Department of Atomic Energy) and CEA; BARC (Bhabha Atomic Research Centre) and IRSN (Institut de Radioprotection et de Surete Nucleaire); AERB and DGSNR in the field of atomic energy will become a part of this framework agreement and will continue to be implemented as at present. ¶4. India and France will ensure that cooperation pursuant to the future agreement shall be exclusively for peaceful purposes and covered where applicable by appropriate safeguards agreements with the IAEA. The cooperation agreement, and as appropriate, subsequent specific agreements, will also address issues relating to inter alia confidentiality of information, third party nuclear SIPDIS liability, intellectual property, measures relating to physical protection and retransfers to third States. Done at New Delhi on this twentieth day of February 2006 in English and French languages. For the Republic of India: Dr. Anil Kakodkar, Chairman, Atomic Energy Commission For the French Republic: Mr. Philippe Douste-Blazy, Minister of Foreign Affairs ¶14. (U) Visit New Delhi's Classified Website: (http://www.state.sgov.gov/p/sa/newdelhi/) MULFORD