Identifier
Created
Classification
Origin
06NEWDELHI1699
2006-03-10 14:58:00
CONFIDENTIAL
Embassy New Delhi
Cable title:  

INDIA AND AUSTRALIA SEEING EACH OTHER IN A NEW

Tags:  PREL MOPS ENRG ECON ETRD MNUC TRGY TSPL ASEAN 
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FM AMEMBASSY NEW DELHI
TO RUEHC/SECSTATE WASHDC IMMEDIATE 1157
INFO RUCNASE/ASEAN MEMBER COLLECTIVE
RUCNARF/ASEAN REGIONAL FORUM COLLECTIVE
RUEHZU/ASIAN PACIFIC ECONOMIC COOPERATION
RUEHAN/AMEMBASSY ANTANANARIVO 0003
RUEHBJ/AMEMBASSY BEIJING 0831
RUEHBY/AMEMBASSY CANBERRA 0856
RUEHNR/AMEMBASSY NAIROBI 0144
RUEHSA/AMEMBASSY PRETORIA 0494
RUEHWL/AMEMBASSY WELLINGTON 0142
RUEHCI/AMCONSUL CALCUTTA 2327
RUEHCG/AMCONSUL CHENNAI 2179
RUEHBI/AMCONSUL MUMBAI 1405
RHEHNSC/NSC WASHDC
RUEIDN/DNI WASHINGTON DC
RHHMUNA/CDR USPACOM HONOLULU HI
RUCNDT/USMISSION USUN NEW YORK 9595
RHMFISS/HQ USCENTCOM MACDILL AFB FL
RUEHGV/USMISSION GENEVA 1813
RHHMUNA/HQ USPACOM HONOLULU HI
RHMFISS/HQ USSOCOM MACDILL AFB FL
RUEKJCS/JOINT STAFF WASHDC
C O N F I D E N T I A L SECTION 01 OF 05 NEW DELHI 001699 

SIPDIS

SIPDIS

E.O. 12958: DECL: 01/18/2015
TAGS: PREL MOPS ENRG ECON ETRD MNUC TRGY TSPL ASEAN
XO, AS, IN
SUBJECT: INDIA AND AUSTRALIA SEEING EACH OTHER IN A NEW
LIGHT FOLLOWING HOWARD'S VISIT

REF: A. NEW DELHI 1656

B. CANBERRA 00361

NEW DELHI 00001699 001.2 OF 005


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 05 NEW DELHI 001699

SIPDIS

SIPDIS

E.O. 12958: DECL: 01/18/2015
TAGS: PREL MOPS ENRG ECON ETRD MNUC TRGY TSPL ASEAN
XO, AS, IN
SUBJECT: INDIA AND AUSTRALIA SEEING EACH OTHER IN A NEW
LIGHT FOLLOWING HOWARD'S VISIT

REF: A. NEW DELHI 1656

B. CANBERRA 00361

NEW DELHI 00001699 001.2 OF 005


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


1. (C) Summary: Australian Prime Minister John Howard on
March 9 concluded a successful four-day visit to Delhi,
Chennai and Mumbai and signed six agreements on a range of
issues, including a Memorandum of Understanding (MOU) on
Defense Cooperation that will bury lingering Indo-Australian
suspicion and could facilitate U.S.-India-Australia
cooperation in the Indian Ocean Basin. The Australian High
Commission believes the visit heralded a clear desire to
partner with Australia -- a GOI position the Australian High
Commission tells us only began to materialize since July when
PM Singh visited Washington. On exports of uranium, PM
Howard invited some confusion by initially indicating
openness to a change in policy, before having to pull-back
and spend the better part of the visit reaffirming the
current GOA prohibition of uranium export to non-NPT
countries. The GOA will carefully review the U.S.-India
agreement, and the High Commission believes that a positive
Nuclear Supplier Group (NSG) position may open the door to
overcoming Australian domestic opposition to uranium sales.
The agenda of the visit mirrored in many ways that of
President Bush, underscoring the common interests and
opportunities of the U.S. and Australia collaborating with
India. End Summary.

INDO-AUSTRALIA RELATIONS ALSO TRANSFORMING
--------------


2. (C) Despite the long shadow cast by President Bush's
recent and successful visit, Australian PM John Howard's

visit to India signaled an important shift in Indo-Australia
relations that were once perceived as icy and marked by
rivalry for dominance in the Indian Ocean. Moreover, the
visit maintains the momentum of India's emergence as a world
power, increasingly engaging the countries with which it has
identified strategic interests. Given Australia's huge
natural resource base, geographic position and sizable
non-resident Indian (NRI) community, the transformation in
Indo-Australia relations comes as a welcome development.


3. (C) While overshadowed in the press by the issue of
uranium exports to India, the breadth of Indo-Australia
cooperation evidenced during the visit is wide and, in some
regards, substantive. Specifically, the two countries
entered into a MOU on Defense Cooperation, a MOU on
biotechnology, a MOU on customs, a Trade and Economic
Framework, an Agreement on Air Services, and a Letter of
Intent on an India-Australia Strategic Research Fund.
Moreover, PM Howard announced the opening of a new Australian
consulate, in Chennai.


4. (SBU) Indo-Australia ties are emerging from a
relationship that was described by Australian High
Commissioner John McCarthy, in his post-visit briefing to New
Delhi based diplomats, "as having its ups and downs."
Retired Assistant Naval Chief of Staff and leading Indian
security analyst Raja Menon explained in a discussion with
PolOff how sensitive the nuclear issue remains in Australia,
as is the subject of chemical and biological weapons, since
India has never joined the Australia Group. Indeed, the
relationship has often been seen through the prism of these
two issues.

DEFENSE COOPERATION TAKING OFF
--------------

NEW DELHI 00001699 002.2 OF 005




5. (C) D/PolCouns talked privately to David Holley,
Australian Deputy High Commissioner, and was struck by the
enthusiasm that Holley exhibited about the level of military
cooperation achieved during the visit. The Defense MOU was
considered by the Indian Cabinet and is, therefore, more
substantive than a Framework Agreement within the Indian
system. Regardless of the diplomatic format, the MOU (reftel
A) is still drafted in very general terms, but does note the
common interest of the two governments "in the stability of
the Asia-Pacific region, non-proliferation of weapons of mass
destruction, combating international terrorism, and security
of sea lanes of communication." Its stated purpose "is to
promote cooperation and understanding between the
Participants in defense strategic dialogue, defense industry,
production, education, training and acquisition of defense
equipment, research and development management," and creates
an India-Australia Joint Working Group on Defense. On
maritime cooperation, which High Commissioner McCarthy
described in his briefing as the focus of defense
cooperation, the MOU specifically provides for "extending
cooperation in this sphere in the context of common interest
in the security of the Indian Ocean and other areas of mutual
interest and benefit...(and may) include activities such as
joint naval exercises, ship visits and professional
exchanges." On defense material cooperation, the MOU speaks
only of "mutually beneficial exchanges between the defense
organizations in various areas of mutual interest including,
inter alia, acquisition of defense equipment, services,
training, technology, research and development and
management. There is no specific mention of provisions of
equipment sales, Holley notes, due to "Pakistan
sensitivities" and the relatively small defense sector in
Australia.


6. (C) Interestingly, Holley informed us that the Indians
characterized similar talks on defense in April 2005 "a waste
of time." Even on maritime cooperation, India had previously
been quite negative on what it had formerly viewed as
Australian efforts to "intrude in their ocean." Since July
of 2005 (PM Singh's visit to Washington),however, the
Indians have proven far more receptive to cooperation in this
field. In fact, Holley believes the GOA is "overwhelmed" by
Indian ideas and suggestions and can not possibly fulfill all
the Indian expectations.


7. (C) Menon was also positive on the Indo-Australia MOU,
though far less exuberant than Holley. For one, he believes
it shares some of the weakness inherent in U.S.-India defense
cooperation, which is a lack of "functional operability."
Menon does not believe defense cooperation between Australia
and India or between the U.S. and India can be simply a
series of increasingly complex joint exercises. He looks
forward to inter-operability "being put to use," "and to
reflect foreign policy." Specific to this MOU, he notes that
Indian responsibility for the Joint Working Group will remain
within the Ministry of Defense, which he describes as "weak
on policy."

URANIUM EXPORTS: "A POLICY CAN'T CHANGE AT A PRESS CONFERENCE"
-------------- --------------


8. (C) Although PM Howard and Australian Foreign Minister
Downer quickly came out in favor of the U.S.-India nuclear
deal, Howard invited some confusion on the issue by initially
stating, on the subject of uranium exports, "I think we would
like to talk about it," and signaling continued strong
support of the U.S.-India civil nuclear agreement early in
his visit. He stated in New Delhi on March 6: "There are a

NEW DELHI 00001699 003.2 OF 005


lot of good things about that agreement, including the fact
that for the first time India's civilian nuclear facilities
will come under international inspections." While it was
inevitable that the subject of uranium exports would figure
prominently -- PM Singh himself raised the issue in direct
terms with Howard -- FM Downer, publicly and undiplomatically
ruled out selling uranium to India only days before the
visit, even if the NSG made an exception for India. The
tempest in Australia that resulted from Howard's positive
signals forced the PM into something of a public about-face,
as he then had to reaffirm repeatedly throughout his trip the
GOA's current policy only to export to NPT countries with
whom it has a bilateral safeguards agreement. In this, he
was not assisted by PM Singh who made no effort to downplay
the issue. High Commissioner McCarthy reported that the
Indian PM made a direct request for uranium exports to
Howard, and, answering questions at the joint press
conference, Singh said India was deserving of an
international exception, given that it abides by the NPT's
rules and was committed to a moratorium on nuclear testing.


9. (C) Australia is estimated to possess nearly 40 percent
of the world's known uranium exports, and by the measure of
some local trade analysts, opening these exports to New Delhi
could nearly double the value of Australia's current exports
to India.


10. (C) Despite the pressure from Australia's political
opposition and strong anti-nuclear lobby, PM Howard did
manage to remain flexible on future uranium exports.
Australian High Commission Political Counselor and Press
Chief John Fisher (PROTECT),while conceding that the
shifting public sentiments indicated that the GOA had not
done its homework prior to the visit, described to D/PolCouns
the challenge for the PM as one of "not saying to the Indians
we're closed to supply, but not hinting at an immediate
policy change that would cause domestic political
turbulence." To that end, Deputy High Commissioner Holley
believes the PM was successful, "remaining ambiguous while
sticking to the official line." The Australian High
Commissioner, in his briefing to diplomats, described the
PM's position as "constructive ambiguity," and in response to
questions on the potential for future uranium sales to India,
he said: "It might go against, it might go in favor." Deputy
High Commissioner Holley was a bit more revealing in private,
and believes "there could be a way around the problem -- by
using the NSG for political cover." "But it will take some
time." Moving forward, the GOA set up an experts group to
gather details on the U.S.-India agreement as a possible
first step toward uranium sales. The GOA, say their
diplomats in New Delhi, will also watch NSG signal very
carefully.

TRADE AND INVESTMENT, LIBERALIZED AIR SERVICES
-------------- -


11. (U) The Indians also got down to business on expanding
further the burgeoning trade relationship between the two
countries. India is already ranked as Australia's sixth
largest export destination, and trade between the two nations
currently stands at $7 billion, and is growing 20 percent per
year. However, the levels of direct investment have remained
comparatively low. The Trade and Economic Framework aims at
enhancing cooperation in the fields of energy, mining,
infrastructure, food and beverages, textiles, clothing,
footwear, and agriculture. The PM was accompanied by a
top-flight delegation of Australian business leaders,
including the directors of energy majors Geodynamics and
Hydro Tasmania, the Group President of mining giant BHP

NEW DELHI 00001699 004.2 OF 005


Billiton and representatives of Rio Tinto and One Steel, and
the CEO of Qantas Airways. High Commissioner McCarthy noted
that it is uncommon for a business delegation formally to
join the PM on his travels, underscoring the importance of
the economic relationship. The comprehensive Agreement
Relating to Air Services expands the access of each country's
carriers to the other's aviation market. Moreover, Qantas is
currently engaged in talks with India's largest domestic
airline, Jet Airways, for a code-share agreement and
marketing tie-up, and Qantas was meanwhile signaling in India
its intent to expand its coverage beyond Mumbai.


12. (U) The Framework takes on additional importance in
light of India's intentions to pursue separate Free Trade
Agreements (FTA) with ASEAN countries and with Thailand
within the next few months. While Australia and India did
not announce plans for an FTA, some Indian business analysts
view the Framework as a precursor to an FTA and an eventual
free trade area covering nearly all of Asia, and extending to
Australia and New Zealand. High Commissioner McCarthy did
not accept that rosy view at his briefing, noting the
particular difficulties India and Australia would have
negotiating on agriculture, but he did not rule it out for
the future.


13. (C) While no formal announcement was made, another clear
signal of the intent by Australia to expand its relations
with India -- and one that may have a significant impact on
foreign trade and investment -- is the likely extension to
Indians of access to Australia's on-line "e-visa" scheme when
it comes into effect later this year. The PM did, however,
signal a strong desire to foster increased Indo-Australia
exchanges and partnerships by announcing -- in another echo
of President Bush's trip -- the intent to open a new
consulate, in Chennai.

A GROWING DESTINATION FOR INDIAN STUDENTS
--------------


14. (U) Already the third-largest destination for Indian
students, the extension of on-line visa application is also
expected to give a further boost to the number of Indian
students studying in Australia. Year-on-year, this number is
growing 35 percent, and some analysts expect it to jump 50
percent in 2006. Under the new procedures, any student
holding a valid Indian passport can submit an application
on-line, with the entire procedure usually taking only 7
days. Australia remains competitive in India due to its
universities' relative affordability, English-medium
instruction and emigration opportunities for skilled Indians.


SCIENCE AND TECHNOLOGY
--------------


15. (U) High Commissioner McCarthy was enthusiastic about
the work done on science and technology, where the GOA and
GOI each committed AUD $20 million (USD $17.4 million) to an
Australia-India Strategic Research Fund for collaborative
research between the two countries. In addition, the GOA is
setting aside AUD $5 million for research fellowships and
professional development for Indian scientists and
researchers. The two nations also signed an MOU on
biotechnology, including the creation of a Joint
Biotechnology Committee (managed on the GOI side by the
Ministry of Science and Technology) to identify priority
areas and develop successful collaborative projects. That
MOU contains no specific funding mechanism.


NEW DELHI 00001699 005.2 OF 005


U.S.-INDIA RELATIONS FUELING THE UPSWING IN INDO-AUSTRALIA
TIES
--------------
--------------


16. (C) MEA's Under Secretary, South Division, Kesar Alam,
was positive in his discussion with PolOff of Howard's visit.
On uranium exports, he believes the Australian line "has
softened." Speaking on the MOU on Defense Cooperation, he
shares the assessment of the Australian High Commission that
cooperation is substantive, but emphasized the strong
Australian desire for cooperation, whereas our High
Commission contacts emphasized the Indian push. In any case,
he likens the expansion of Indo-Australia relations to the
growth in U.S.-India ties, and shared his personal view that
relations between the two countries really began to take off
in July 2005, as U.S.-India relations went into high gear.

COMMENT: OPPORTUNITY ABOUNDS
--------------


17. (SBU) Comment: PM Howard's successful trip to
Australia, coming only days after the visits of French
President Chirac and President Bush is another potent symbol
of India's emergence on the world stage. Given the U.S. and
Australia's shared values and priorities, this
"transformation" in Indo-Australia relations is welcome. We
are also struck by the openness of the GOA to the U.S.-India
civil nuclear deal despite the strong anti-nuclear sentiment
at home. The budding Indo-Australia partnership owes a lot
to the U.S. effort to push India onto the world stage, and we
should look for opportunities to partner with Australia as we
move India along on key issues, such as proliferation,
maritime security and missile defense. End Comment.





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