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