CODEL KERRY PROBES FOR AN INDIAN BOTTOM LINE ON

C O N F I D E N T I A L SECTION 01 OF 04 NEW DELHI 000264

SIPDIS

SIPDIS

E.O. 12958: DECL: 12/02/2015
TAGS: PREL KNNP ENRG PTER ECON IR PK CH IN
SUBJECT: CODEL KERRY PROBES FOR AN INDIAN BOTTOM LINE ON
NUCLEAR SEPARATION

Classified By: Ambassador David Mulford for Reasons 1.4 (B, D)


1. (C) Summary: In a January 11 meeting with visiting Senator
John Kerry, Prime Minister Singh underlined India's intention
to fulfill the terms of the July 18 civil nuclear
understanding, but rebuffed the Senator's effort to explore
enhancements to the deal that might help to minimize
Congressional resistance. Singh offered a strong defense of
our bilateral relationship, highlighting execution of the
civil nuclear deal as the single most important step that we
could take to capitalize on Indians' favorable attitudes
towards the US. Asked about retail market opening, Singh
reiterated his support for liberalization, but cautioned that
progress would be difficult in the next three to four months
leading to state elections. Responding to Senator Kerry's
expression of appreciation for India's rapprochement efforts
with Pakistan, Singh highlighted recent acts of terrorism
against India and lamented that President Musharraf has not
yet delivered on his promise to end the use of Pakistani
territory to foment terrorism. Singh appeared anxious about
the looming crisis over Iran, noting that Muslim voters would
play an important role in upcoming state elections. He
offered a cautious assessment of China's future role in the
international system. End Summary.


2. (C) A relaxed and well prepared Prime Minister Singh met
Senator Kerry for 50 minutes at his personal residence.
Joined by most of his PMO team, Singh offered both a
historical reflection on the progress in Indo-US relations
and an up-to-the-minute review of developments in our civil
nuclear discussions. Reprising a familiar theme, Singh
emphasized his goal of delivering development for the Indian
masses and "writing a new chapter in our bilateral
relationship" that takes advantage of the fact that there are
"no bilateral issues that divide us." The PM pointed to the
CEO forum, the US-India Democracy Initiative and our newly
launched Energy Dialogue as examples of a new relationship
that is based not on aid but convergent interests. Singh
noted that many thinking Indians still "nurse a grievance
over the restrictive regimes that denied India access to
technology" and underlined that if we can put that issue
behind us "the sky's the limit" in terms of "knitting our two
countries together."

Nuclear Limits
--------------


3. (C) Senator Kerry offered a strong endorsement of Singh's
vision for India and US-India relations, but also noted his
long involvement on issues of nuclear proliferation before
the Senate, and asked for the Prime Minister's ideas about
how the July 18 framework might be strengthened to maintain a
consensus within the Nuclear Suppliers Group and win
Congressional backing. The Prime Minister reiterated India's
commitment to civil military separation and cited the WMD
bill as an example of the GOI's strong commitment to export
controls. India's record on onward proliferation, he added,
is stronger than some NPT members. Unlike other states in
Asia, the PM pointed out, India does not enjoy a nuclear
umbrella provided by the US, and "has to maintain a strategic
program to defend itself." Nonetheless, the PM concluded, it
is reasonable for the international community to demand that

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assistance provided to India's civilian program is not
diverted to military purposes and does not undermine the
global non-proliferation regimes.


4. (C) Senator Kerry underlined that he is not among those
who believe that India can be forced into the NPT framework.
"India is a nuclear state," he added, with "clear security
concerns vis-a-vis Pakistan and China." But how do we deal
with Iran and North Korea? How, the Senator asked, might the
July framework be adapted to "diminish this moral ambiguity?"
Could India do more, for instance, on fissile material? And
what are India's long-term intentions for its weapons
program? The PM shot back that India would support a global
fissile material cut off as promised in the July 18 joint
statement. India's nuclear doctrine is transparent and
fundamentally defensive. Already, he noted, India has
adopted a unilateral moratorium on testing and committed to
no first use. "What we can place under safeguards will be
clear," the PM underlined, pointing to the upcoming visit by
Undersecretary Nick Burns.


5. (C) Senator Kerry pressed again, asking what more might be
done to ensure that dual use commodities are not diverted to
India's weapons program. Also relevant, he added, is the
question of what exactly India had in mind when it pledged on
July 18 to behave as "a responsible state with advanced
nuclear technology." The Prime Minister underlined that
these questions would be addressed through India's safeguards
commitment. India also should be judged on its past record,
the PM advised, appealing for the Senator to trust the GOI's
solemn assurance that international assistance will not be
misused. Responding to Senator Kerry's concern about
precedents for Pakistan, Iran or North Korea, Singh
emphasized that India is "a different case, with an open
society, a parliamentary system and all great religions
living together." Look at China's record, the PM asked,
arguing that "India has been a victim of discrimination."
"We will not be a source of proliferation," the Prime
Minister concluded, underlining that at certain times "in
human affairs relations have to be based on an act of faith."

Questions over China
--------------


6. (C) Responding to Senator Kerry's question about China,
the Prime Minister reflected on his recent meetings with the
PRC leadership to conclude that the challenges of development
"will keep them busy for the next 15-20 years." What the
leadership stance will be beyond then "is a question mark."
China's capabilities, he noted, are a fact, whereas "its
intentions are speculation." As China emerges as a major
global player, India wants to ensure that the PRC complies
with a "rule based" international system. But for now, Singh
reiterated, "no one knows what the actions of the new Chinese
leadership will be" and India must weigh all possibilities.
The GOI is trying to build bridges to Beijing. Trade is
increasing and border talks are proceeding. But the fact is,
the PM added, China provided the major source of support for
Pakistan's nuclear weapons program and continues to offer
strong political backing to Islamabad.

Spreading Terrorism

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--------------


7. (C) Turning to the Indo-Pak peace process, the Prime
Minister outlined his goal of "making borders irrelevant" to
the bilateral relationship. Reviewing India's history with
partition, the PM emphasized the unacceptability of
"redrawing borders" yet again. Beyond that, he argued, there
is broad scope for easing cross border communication.
Highlighting the linkage that India draws to terrorism, the
PM remarked that "if Pakistan lives up to its commitment" not
to allow its territory to be used for terrorism, "then we can
move forward." However, citing the October 29 bombings in
Delhi and the recent terror attack in Bangalore, Singh
complained that groups like LET and Jaish-e-Mohammed continue
to operate from Pakistan. Now, he added, "they have come up
with a new face, distributing relief to gain new
respectability," but they have not abandoned terrorism. In
this context, the PM said, he has pressed Musharraf to live
by his commitments and has outlined a future where the two
countries live in peace. Elaborating on his recent feelers
to the Kashmiri opposition, the PM explained J&K's special
place in the Indian constitution, pointing to the 2002
elections as evidence of GOI commitment to ensuring
representative government.


8. (C) Responding to Senator Kerry's question about why
Musharraf was not coming down harder on terrorism, Singh
cited Pakistan's lack of civil society institutions.
Lamentably, he added, the country's strongest institution is
the Army, and the basic problems in bilateral relations
reside in "the mindset of the armed forces."

Anxious Over Iran
--------------


9. (C) Responding to Senator Kerry's appreciation of India's
support on Iran, Singh underlined India's opposition to
Tehran's nuclear ambitions. That being said, India is a
country with 150 million Muslims and 25 million Shia.
Moreover, he cautioned, elections are coming up in three to
four months in states with significant Muslim populations
(West Bengal, Kerala and Assam). "I have to be sensitive to
this," the PM warned, while also reiterating that India has
"no difficulty with the broad principle" that Iran must
comply with its NPT obligations. Asked how India might vote
if the issue moves to the Security Council, the PM pledged
that India "will work towards an international consensus."
On the basic principles, he concluded, "there will be no
compromise."

Prospects for Economic Reform
--------------


10. (C) Responding to Senator Kerry's question about how to
accelerate economic ties, the Prime Minister ticked off a
series of recent reform steps, including "a major opening in
railways" (to allow private ownership of containers),the
existing liberal regime for food processing, and his personal
interest in moving ahead with liberalization of the civil
nuclear sector "to allow Americans to invest in nuclear
power." The PM explained that the government is looking hard
at retail market opening, but faces stiff resistance from

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small shopkeepers. He argued that the best answer to this
"fear of the unknown" is to create a situation where overall
employment is growing rapidly. Recalling a recent meeting
with Wal-Mart's CEO, Singh remarked that "elections are
coming up in the next three to four months so I don't know if
we can advance, but I'm still hopeful."

Civil Nuclear Linchpin
--------------


11. (C) Responding to Senator Kerry's question about the most
important step we could take to fulfill the potential of
US-India relations, the PM responded instantly operationalize
our nuclear treaty." The PM reiterated that among "thinking
Indians" there is lingering resentment that the US thwarted
New Delhi's nuclear ambitions while abetting China's. In
that context, the civil nuclear deal is "the biggest single
step to convince people that the US now has a different
mindset." India, he noted, has benefited enormously from US
generosity over the years, including an important US role in
establishing the GOI's agricultural universities and
launching the green revolution. After the 1974 nuclear
tests, he lamented, this relationship was lost. My goal, the
PM concluded, "is to put it back on the rails."


12. (U) Visit New Delhi's Classified Website:
(http://www.state.sgov.gov/p/sa/newdelhi/)
MULFORD