AHLUWALIA: INDIA RESPONSIBLE NUCLEAR POWER, FAVORS

C O N F I D E N T I A L SECTION 01 OF 02 NEW DELHI 001395 SIPDIS SIPDIS E.O. 12958: DECL: 02/22/2015 TAGS: MNUC PREL ENRG EPET OVIP IR IN SUBJECT: AHLUWALIA: INDIA RESPONSIBLE NUCLEAR POWER, FAVORS CIV-NUKE DEAL NEW DELHI 00001395 001.2 OF 002 Classified By: DCM Robert O. Blake for Reasons 1.4 (B, D) ¶1. (C) Summary: The civil-nuclear deal continues to be a political "hot-button," but Deputy Chairman of the Planning Commission Montek Singh Ahluwalia stated to Congressman Joseph Crowley (D-NY) on February 20 that the UPA Government supports the July 18 agreement and hopes a viable separation plan can be finalized prior to the POTUS visit. The CEO Forum has been a success, Ahluwalia noted, and hoped that over the next year its suggestions would be implemented. Ahluwalia also maintained that while FDI regulations need to be relaxed, and likely will be over time, political realities have retarded deregulation. Ahluwalia concluded that Bangladesh, while doing many things right, is on a dangerous path and fundamentalist activity in the country is troubling. End Summary. Hopes for the Civil Nuclear Deal -------------- ¶2. (C) Ahluwalia asserted to Congressman Crowley that India has never been a proliferator of nuclear technology and needs nuclear energy to avoid being a "chimney belching out smoke" while meeting its growing energy needs. Noting that he is fully in favor of the civil-nuclear deal, Ahluwalia acknowledged that he is not directly involved in the decision making process and that it appears to him to be a very sensitive political issue. He explained that, domestically, US demands that certain reactors be listed as civilian could be interpreted as GOI giving in to USG control over Indian military options. Ahluwalia noted that, while the BJP has expressed doubt about the nuclear plan, if the Government approves an agreement, it will pass through parliament. ¶3. (C) "The debate within the GOI on the nuclear deal has been more informed in the last three months than over the last ten years" Ahluwalia commented, indicating there is a serious effort underway to finalize it before the March 1 POTUS visit. He opined that he hoped U/S Burn's February 24 visit would pave the way to a civil-nuclear deliverable for the President's trip. ¶4. (C) Congressman Crowley noted that, while the July 18 agreement was "received in a surprised way" in Congress, he hoped to support it when the GOI and USG formulate a viable separation plan. He also suggested that, just as the USG should understand Indian domestic concerns, the GOI should not underestimate the ability of U.S. domestic politics to influence the vote in the US. Ahluwalia concluded that, while the BJP will "make noises and claim they could have done better," they will not oppose the deal. CEO Forum Progressing Nicely -------------- ¶5. (C) "A lot is happening on the economic agenda," Ahluwalia remarked, however, the role of governments is "less than before." He stated that the CEO Forum is especially important because, while governments still control policy issues, it is the private entities that drive economic progress. He noted that he is pleased with the work done by the CEO Forum, and looks forward to the release on March 2 of the group's report. He theorized that "if your President and the Prime Minister could meet a year after the release of the NEW DELHI 00001395 002.2 OF 002 report and state that its recommendations were met, we could point to real economic successes." FDI: Still Work to be Done -------------- ¶6. (C) Ahluwalia acknowledged that politics have, so far, thwarted efforts to increase FDI from 26% to 49%. Opposition from the left and "irresponsible behavior by the BJP" have limited progress in this area. He suggested that banking regulations need to be relaxed, allowing foreign banks to take over "sick" banks in India, and that more transparency is needed. He indicated that such banking issues will likely be discussed in the CEO Forum. Ahluwalia opined that by 2009, foreign banks will be able to own 79% of domestic banks. Bangladesh: Trouble on the Horizon -------------- ¶7. (C) Congressman Crowley, stating that he would visit Dhaka next, noted that he plans to share USG concerns regarding corruption and fundamentalism with the Government of Bangladesh (GOB). Ahluwalia asserted that the rise of fundamentalism in Bangladesh was troubling. Acknowledging that Bangladesh has "done a number of things well that many Islamic countries fail to do," such as providing education for women, he noted that the GOI remains concerned over recent events. Ahluwalia indicated that the GOB would be receptive to pressure from abroad, because they rely heavily on donor aid. Crowley agreed, stating that he will tell the GOB that if they continue down the current path, they could become "unaidable." ¶8. (U) Visit New Delhi's Classified Website: (http://www.state.sgov.gov/p/sa/newdelhi/) MULFORD