PM SINGH EMPHASIZES MUTUAL BENEFITS OF NUCLEAR

UNCLAS SECTION 01 OF 06 NEW DELHI 000397

SIPDIS

SIPDIS

SENSITIVE
WHITE HOUSE FOR HAGIN
NSC FOR HAINES

E.O. 12958: N/A
TAGS: PREL PGOV MNUC ENRG PTER ETRD EINV KDEM OVIP
OREP, IN
SUBJECT: PM SINGH EMPHASIZES MUTUAL BENEFITS OF NUCLEAR
DEAL TO CODEL GILLMOR


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1. (SBU) SUMMARY: Prime Minister Manmohan Singh told
visiting US Representative Paul Gillmor (R-OH) and his
delegation January 13, 2006 that the future of US-India
relations was extremely promising, that India and America
shared common values, that both would benefit from successful
passage of legislation to operationalize the US-India
civilian nuclear energy agreement, and that India had high
hopes to expand annual growth as long as it could rely on
reliable and environmentally-friendly sources of energy. END
SUMMARY.

SHARED VALUES DEFINE OUR SHARED DESTINY
--------------


2. (SBU) The PM started the discussion by remembering how
warmly he had been greeted in the US in July 2005, and the
great courtesy extended to him by the US Congress. He
affirmed that all indications remained positive for
strengthened bilateral relations thanks to the fact that "our
two great democracies" share common values such as rule of
the people, rule of law, protection of human and minority
rights, and freedom of speech and conscience. In addition,
significant numbers of Indians had settled and flourished in
the US. The PM recounted how pleased he had been to see so
many young Indian-Americans working in Congress when he
visited in July. The new linkages, he emphasized, were
creating ties that would endure. "Hardly a middle class
family exists nowadays in India that does not enjoy a link to
a son, daughter, brother or sister in the US," explained the
PM. India, with its multi-ethnic, multi-religious society,
offered an example to the world as a "special case" where all
could live harmoniously in a democratic, pluralistic society.


AND THE BEST IS YET TO COME
--------------


3. (SBU) The PM recounted how, when he met the President in
July, he told him that "the best was yet to come" in US-India
relations, and how he continues to believe that to be true.
If the July 18 Joint Statement was fully operationalized,
insisted the PM, it could provide the basis for extensive
development of bilateral relations in fifteen major areas of
cooperation. The civilian nuclear energy agreement was the
cornerstone of that agreement, said the PM. However, India
and the US would also work together to propagate human
rights, democracy, and rule of law, cooperate to enhance
scientific and technical cooperation, and work in
collaboration to ensure economic development. The PM
reminisced about how the Ford Foundation, Rockefeller
Foundation, and American universities had been of such great
assistance to India in its early years as an independent
country. Ohio State University, he recalled, had partnered
with Punjab Agricultural University in Ludhiana to develop

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"miracle seeds" that had sparked a Green Revolution. The PM
recounted that he and the President had decided to use
science again to ensure a second Green Revolution.

SUSTAINED ECONOMIC GROWTH A POLICY PRIORITY
--------------


4. (SBU) India today had a well-functioning market economy
thanks to the economic reforms of the 1990s, noted the PM.
Not many states could point to 15 successive years of
following a sustained policy to open markets and spur broad
reform. India's economic policies that had sparked current
growth had been followed through three major changes of
political leadership over the past 15 years without suffering
a reversal. India, announced the PM, welcomed foreign
portfolio and direct investment, sought liberalized trade
regimes, lowered tariffs, and strengthened patent laws to
respect intellectual property rights enshrined in WTO
agreements. The President and the PM had established a CEO
Forum to seek further advice on ways to make trade,
technology cooperation, and investment work even better. If
growth increased to 8 or 9 percent, the PM speculated, the
opportunities for bilateral trade and investment would be
enormous. With the US as India's largest trading partner, it
was ideally situated to benefit. Already, Indian private and
public airlines had places staggeringly large orders for
American aircraft, even though the PM admitted consternation
that India's airport infrastructure had failed to keep pace
with growth in the aviation sector. Rep. Walden appealed to
the PM for a further lowering of agricultural tariffs so
Oregon apples, pears, and cherries would have a chance in
Indian markets, to the benefit of consumers and exporters.

A QUANTUM LEAP IS AT HAND
--------------


5. (SBU) Singh said he fervently believed that US-India
relations were about to take a quantum leap in importance.
The most important element of that leap, he stressed, was
securing the legislative remedies in Congress required to
help India meet its burgeoning energy needs. Annual economic
growth, asserted the PM, was currently in the 7-8 percent
range. India's ambition, however, was to achieve 10 percent
growth. Such a step was possible, thought Singh. India's
savings rate was 28 percent of GDP, so capital was ample; it
was also growing, because India's demographics meant the size
of the working age population was growing, too, unlike in the
West and in Japan. Productive jobs for that demographic
segment would, in the PM's view, boost the GDP growth rate
and the savings rate. In order for the government to meet
their expectations, India required a growing supply of
commercial energy.

BUT WE NEED PLENTIFUL, SECURE ENERGY

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


6. (SBU) Were India to continue to access increasingly rare
hydrocarbons and fossil fuels to trigger this dramatic
growth, the damage to the inter-connected global environment
would be significant, cautioned the PM. Instead, India
sought an energy profile that would be less damaging. It
also sought a more secure and predictable source of energy
than hydrocarbons, the bulk of which India continued to
import from the Middle East, triggering price and security
concerns. The PM recounted how he and the President had
agreed that, were competing demands for shrinking hydrocarbon
resources to push oil above USD 100 per barrel, setbacks to
US and Indian growth would occur. However, if Indian demand
were curbed through the use of other options, especially if
India could economically expand its civilian nuclear energy
production capacity, such a scenario could be avoided.

THAT'S WHERE THE US COMES IN
--------------


7. (SBU) Since 1974's initial Indian nuclear test, Singh
complained that the US and the rest of the world had treated
India in a "discriminatory" manner that had limited its
ability to expand nuclear power production despite a surfeit
of qualified scientists and technicians due to the fear that
technology might be diverted to strategic programs. As a
result, India had failed to realize the great potential
inherent in nuclear power. The President and he agreed,
noted the PM, that unlocking India's potential to develop
nuclear power needed to be a key, shared ambition for both
countries. Securing Congressional support for the
legislative changes required to undo decades of delay would
be critical, insisted the PM, and he expressed his hope that
the delegation would support such legislation. Undoing the
restrictions in place since 1974, emphasized the PM, would do
away with the Indian sense of grievance that the rich world
had placed unfair restrictions on a poor country that stifled
its growth even as China had been allowed unfettered ability
to develop its capability and export its know-how. If India
were to remain stifled, cautioned the PM, then only China in
this part of the world would remain unrestricted. This,
opined the PM, would not be in America's interests.

BUT INDIA WILL ALSO DO ITS PART
--------------


8. (SBU) To facilitate passage of necessary US legislation,
the PM said India had firmly committed itself to the
separation of its civilian and military nuclear assets.
India had also decided that, once separated, its civilian
sites would become fully safeguarded. India was not an
adherent of the Nuclear Non-Proliferation Treaty (NPT),
mentioned Singh, but it had undertaken obligations that were

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similar to those enshrined in the treaty by imposing a
moratorium on further tests, ensuring an "impeccable" record
of thwarting onward proliferation, tightening its export
control laws to ensure no unauthorized transfers of
technology or materials, and working in the multilateral
arena and with the US to work out controls on fissile
materials. In order to secure US help to expand its civilian
nuclear energy production capacity, insisted the PM, India
would do its part. On this point, underlined the PM, the
world was entitled to have India's assurances. The US should
have no doubt, he declared; India would not be the source of
any proliferation of sensitive nuclear technologies or
materials.

GILLMOR: THIS NUCLEAR DEAL IS IN OUR INTERESTS
-------------- -


9. (SBU) Rep. Gillmor thanked the PM for his statement,
arguing that his visit to Washington had been a great success
thanks to his character and leadership. Gillmor added that
the nuclear agreement sketched out by the PM was in our
mutual interests as large democracies, but also in the
environmental interest of the entire world. Gillmor
acknowledged the "strong and positive" message from the PM
about the nuclear agreement, and promised to convey to
Congress the importance of the matter. Gillmor explained
that the proposed agreement with India signified "a big
change in policy" that would require careful planning,
although he stressed that he was in no way implying the deal
could not be approved. Gillmor also mentioned Ohio's
tremendous coal reserves, and how delighted he was that India
and the US would work together on clean coal technologies.

JINDAL: NUCLEAR DEAL AVOIDS COMPETITION FROM MIDDLE EAST
-------------- --------------


10. (SBU) Rep. Jindal commended the PM for the success of his
economic policies as Finance Minister that had yielded such
prosperity for India. Jindal also thanked India for its
support in the IAEA on Iran. Jindal agreed that Indian and
American strategic interests were in harmony, but stressed
the even greater importance of shared values, which transcend
the issues of the day. He added that there was no need to
convince him of the inherent logic of the nuclear agreement;
India and America could either compete for scarce
hydrocarbons from an unstable Middle East or follow the path
charted by the President and PM. Jindal said he was
gratified to know that the PM was so focused on the future
potential of the US-India relationship, which he thought
would evolve in an historic fashion.

KUCINICH: NEED TO CONVINCE THE CONGRESS
--------------


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11. (SBU) Rep. Kucinich lauded India for having proven its
trustworthiness in matters of onward proliferation, but added
that Congress needs to understand clearly how a change in the
nuclear architecture for India might change the entire global
nuclear framework. Would it, he asked, be viewed as
proliferation, or a step to enhance non-proliferation? The
NPT, he reminded, had called for the abolition of nuclear
weapons. The PM noted that India had a firm "no first use"
policy despite facing two nuclear neighbors; America had to
take note of the "nuclear blackmail" facing India. Rep.
Costello said there were many friends of India in the
Congress, but the success of the vote would depend on its
details, not on the size of the India caucus. Since Under
Secretary of State Burns would be in India in a few days,

SIPDIS
Costello urged India to work closely with him to explain such
a "major shift in policy."

INDO-PAK
--------------


12. (SBU) Rep. Kucinich reminded the PM of the Nunn-Lugar
Comprehensive Threat Reduction Initiative between the US and
USSR during the Cold War, and offered it as a possible model
for India and Pakistan to diminish tensions and build trust
and confidence. Such a step, if adopted, argued Kucinich,
would bolster Congress' confidence in the nuclear deal.

PSEUDO-EPHEDRINE
--------------


13. (SBU) Rep. Walden raised his concern about Indian
manufacture and export of pseudo-ephedrine, a legitimate
pharmaceutical product which, if used illegally, contributed
to the manufacture in the US of toxic methamphetamine, a drug
with devastating effect on the people of the rural US.
Walden appealed to the PM to work to establish export
controls to curb abuse of the drug. The PM readily committed
to looking into establishing such a protocol with the US to
prevent any abuse of Indian exports of pseudo-ephedrine.

DEFENSE COOPERATION
--------------


14. (SBU) Rep. Granger mentioned that the Bell 407 is
manufactured in her district, and expressed her hope that
India would consider the Bell 407 in replacing the Cheetak
helicopter. The PM said that US-India defense relations had
caught a favorable tide, with a new Framework Agreement for
Defense Cooperation, as well as numerous joint exercises and
a healthy dialogue.

PARTICIPANTS
--------------


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15. (SBU) INDIA:

Prime Minister Manmohan Singh
Foreign Secretary Shyam Saran
National Security Advisor MK Narayanan
PM's Media Advisor Sanjay Baru
PM's Office Director Venkatesh Verma
PM's Office Joint Secretary Sujata Mehta
PM's Principal Secretary TKA Nair
MEA Joint Secretary for the Americas Dr. Jaishankar

USA:

Ambassador Mulford
Rep. Paul Gillmor (R-OH)
Rep. Jerry Costello (D-IL)
Rep. Sam Johnson (R-TX)
Rep. Kay Granger (R-TX)
Rep. Dennis Kucinich (D-OH)
Rep. Greg Walden (R-OR)
Rep. Bobby Jindcl (R-LA)
Chris Walker, Assistant to the Speaker for Policy
Atul Keshap, Deputy Political Counselor (notetaker)


16. (U) CODEL Gillmor reviewed this cable prior to its
transmittal.


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