RUSSIAN PM,S VISIT UNLIKELY TO REVIVE DECLINING

C O N F I D E N T I A L SECTION 01 OF 02 NEW DELHI 001974 SIPDIS SIPDIS E.O. 12958: DECL: 03/21/2016 TAGS: POV ETRD PGOV PREL TSPA MASS TRGY EPET ENRG IN, RS SUBJECT: RUSSIAN PM,S VISIT UNLIKELY TO REVIVE DECLINING INDO-RUSSIAN TIES REF: 2005 NEW DELHI 9133 NEW DELHI 00001974 001.2 OF 002 Classified By: DCM Robert Blake, Jr. for Reasons 1.4 (B, D) Subject: Russian PM's Visit Unlikely to Revive Declining Indo-Russian Ties ¶1. (C) Summary: Russian Premier Mikhail Fradkov's visit to New Delhi (March 16-17) was intended to reinvigorate the declining India/Russia relationship, but there is little indication that the visit broadened Indo-Russian relations or injected much forward momentum. The delegation included the head of the Russian Federal Space Agency and leading businessmen, and met with Prime Minister Singh, President Kalam, and representatives of India's key business groups, CII, FICCI, and Assocham. Although the two sides signed seven agreements, on civil space cooperation, enurgy, trade, banking, and commerce, the discussions were overshadowed by global press coverage of Moscow's sale to New Delhi of low enriched uranium to fuel the safeguarded reactors at its Tarapur nuclear power plant. The array of agreements included nothing on defense. End Summary. It's About History, Trust -------------- ¶2. (SBU) Jawaharlal Nehru University Professor Gulshan Sachdeva told Poloff on March 21 that the timing of Prime Minister Fradkov's visit was not coincidental, coming so closely on the heels of the POTUS visit. Dr. Sachdeva maintained that the visit was about "reassuring each other that the (bilateral) relationship is intact," despite all practical indications that it has been on the decline for years. He opined that there is a sense among a broad swath of Indians that, when India needed something, the Soviet Union, and then Russia, was there, and this nostalgic attitude, held by leftists, civil society and the masses alike, continues to inform the GOI's stance. In Sachdeva's view, the GOI must not only reassure Moscow, but also its own domestic constituency, that it is not dropping Russia for the USA. Reassuring Agreements -------------- ¶3. (SBU) The various economic agreements signed by the two sides included a new credit line for trade between the EXIM Bank of India and Russia's Vneshtorg Bank and an MOU on cooperation on energy infrastructure projects between the Indian Oil Corporation and Russia's Stroytransgaz. Two of India's top business groups, CII and FICCI, also concluded agreements with counterpart groups in Russia, as did India's privately-run ICICI bank (Comment: In our view, the agreements were meant to reassure both Indians and Russians concerned about the decline in the bilateral relations, but are unlikely to stem the decline. End comment). The official Ministry of External Affairs press comments announced the intention to raise bilateral trade to USD 10 billion in five years, a decrease from the USD 14 billion figure that New Delhi proposed just last December (REF 2005 NEW DELHI 9133). Meanwhile, total trade was less than USD 2 billion in FY 2004-05. Dr. Sachdeva suggested that the NEW DELHI 00001974 002.2 OF 002 rationale behind these agreements from the Indian side is "why not?" In his view, the UPA government has nothing to lose by concluding these agreements and could gain in terms of public opinion, and its relationship with the Left Front, even if it fails to inject momentum into its ties with Russia. Continued Cooperation in Energy, Space -------------- ¶4. (SBU) While New Delhi and Moscow are winding down relations in a number of areas, mutual efforts in energy and space are continuing unabated. Russia's improperly sequenced provision of low enriched uranium to India's Tarapur I and II safeguarded reactors, pursued under the Nuclear Suppliers Group's safety exception but not briefed to the NSG beforehand, received significant press coverage, particularly in the context of the U.S.-India civil nuclear cooperation initiative. The two agreements on space cooperation, allowing India to launch GLONASS-M navigational satellites, and joint development of GLONASS-K navigational satellites, were largely concluded during Prime Minister Singh's visit to Russia in December. Comment: Upholding the Image of a Tried and Tested Friend -------------- -------------- ¶5. (C) Comment: GOI efforts to sustain strong ties with Russia will have little impact on the bilateral relationship, as much of what once bound the allies has moved out of government control into the private sector. This is particularly true of economic ties, as India's private sector is not particularly interested in working in Russia. Even in areas that are still significant, namely defense purchases, Moscow is losing ground. The GOI now holds amounts of hard currency that were unimaginable in the heyday of Indo-Soviet relations, is diversifying its sources of imports, and increasingly is seeking out top quality. One reflection of the dearth of deliverables for Fradkov's visit was that the Russians felt the need to bypass the NSG in announcing the Tarapur fuel sale. While politically expedient for the visit, this transfer may pose longer term problems for India as the U.S. Congress and NSG consider the proposed civil nuclear agreement. Despite the obvious downturn in Indo-Russian relations, Indian officials will stick to the historical image of the relationship, finding Russia a useful balance in the region and ally in its quest for global power, particularly given its invitation for India to attend the G-8 Summit in St. Petersburg in July. ¶6. (U) Visit New Delhi's Classified Website: (http://www.state.sgov.gov/p/sa/newdelhi/) MULFORD