GOI PROMISES MILITARY SUPPORT TO SRI LANKA AND

C O N F I D E N T I A L SECTION 01 OF 03 NEW DELHI 000583

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E.O. 12958: DECL: 01/25/2016
TAGS: PREL MASS MOPS ENRG EPET IR CE IN
SUBJECT: GOI PROMISES MILITARY SUPPORT TO SRI LANKA AND
DEBATES IRANIAN PIPELINE DURING U/S BURNS VISIT

REF: A. NEWDELHI 000027

B. CHENNAI 000062

NEW DELHI 00000583 001.2 OF 003


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


1. (C) Summary: During U/S Burns' January 21 consultations
on regional issues, the GOI relayed its concerns over the
increasingly possible return to war in Sri Lanka and the
conflict between the need for Iranian gas and the looming
crisis over Tehran's nuclear program. Indian Foreign
Secretary Shyam Saran emphasized that the GOI advised

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President Rajapakse during his December 27-30 trip to be
flexible on moving forward the peace process and to take all
possible steps to prevent a return to war. However, if
hostilities do break out, India has committed to a
"significant program of upgrading" the Sri Lankan military,
including training programs, air defense capability and
patrolling equipment. In a meeting later that day, Planning
Commission Deputy Chairman Montek Singh Ahluwalia told U/S
Burns that India is moving forward on the proposed
Iran-Pakistan-India pipeline, and the GOI faces strong public
pressure to resist any US influence on this issue. He
indicated that India's biggest obstacle is finding financial
backing for the risky and expensive project. Burns noted
that Tehran's recent decision to break the IAEA seals at the
Natanz enrichment facility reinforces US concern about Iran's
WMD plans and the proposed pipeline. End Summary.

GOI: Be Flexible and Stop Dissing Norway
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2. (C) During a January 21 working lunch, Foreign Secretary
Saran told U/S Burns that the GOI counseled new Sri Lankan
President Mahinda Rajapakse to prevent greater violence by
maintaining flexibility towards the LTTE and supporting
Norway's role as facilitator in the peace process. The GOI
shared its concern with Rajapakse about the strain on the
ceasefire agreement and the possibility that hostilities
would break out soon in Sri Lanka. Saran shared his
assessment that the Sri Lankan Armed Forces were "not in good
shape" to meet the threat posed by Liberation Tigers of Tamil
Eelam (LTTE). Therefore, Saran told him, the best strategy
is to do everything within his power to prevent greater
violence. Saran emphasized that Rajapakse should be flexible
on holding talks with the LTTE, even if it meant politically
challenging compromises.


3. (C) Noting that there were no other countries which could
effectively facilitate the peace process, Saran said he also
advised Rajapakse to allow Norway to continue with its role
with the co-chairs. India has no contact with the LTTE since
PM Rajiv Gandhi's assassination, so it was unsuitable for the
facilitator role (Ref A). He acknowledged that Sinhalese
attitudes towards Norway were very negative, and offered to
talk to Oslo about Sri Lankan complaints. In response,
Rajapakse agreed to invite Norway to stay on and to tone down
public GSL complaints. Saran commented that he had also
spoken to Norway's Special Advisor on Sri Lanka, Eric
Solheim, ahead of his visit to Sri Lanka.

But If That Doesn't Work, We Are Here For You

NEW DELHI 00000583 002.2 OF 003


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4. (C) Saran explained that if hostilities do break out in
Sri Lanka, the GOI has privately committed to a "significant
program of upgrading the military's training, air defense and
patrolling capabilities." India also agreed to increased
economic aid, including funding for small economic assistance
programs to benefit Sri Lankan communities at the local
level. Saran stressed that much of this assistance would go
to the northeastern sections of the island in order to
highlight that India's opposition to the LTTE does not extend
to the Tamil people. He commented that the GOI is still
looking at a Comprehensive Economic Partnership Agreement
with Sri Lanka, but "needs to iron out the elements."
India's involvement in Sri Lanka is politically constrained
by the UPA government's Tamil coalition partners, Saran
added, particularly ahead of elections this spring in Tamil
Nadu (Ref B). However, he speculated that Rajapakse had
returned happy with New Delhi's military and economic
support.

Saran: "Rajapakse is a Different Type of Leader"
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5. (C) Sharing his impressions from GOI meetings with the
new Sri Lankan president, Saran observed that Rajapakse is
much more "street savvy, direct and open" than the previous
Bandaranaike family. Both Kumaratunga and Wickremasinghe
came from the aristocratic elite, whereas Rajapakse comes
from a "grassroots" background. Despite his hardliner image,
Saran noted that the President was very worried about the
LTTE and the perception that he is a failed leader taking the
country back to war. Saran also mentioned that India was
encouraging other Sri Lankan party leaders to work with
Rajapakse for peace rather than portray him as an incompetent
president for their own political gain.

Pressure to Proceed on Iran, but No Financial Backing
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6. (C) In a meeting later that day, Deputy Chairman of the
Planning Commission Montek Singh Ahluwalia told U/S Burns
that the GOI remains intent on buying Iranian gas but still
needs financial backing for the proposed Iran-Pakistan-India
pipeline to proceed. In response to U/S Burns' question on a
timeline for the deal, Ahluwalia said there is strong public
pressure to resist any US influence on this issue. He added
that the GOI is not planning to make any investments in Iran
but is intent on buying Iranian gas if it makes commercial
sense. Despite ongoing talks, the GOI is still very
skeptical that commercial financing can be obtained for the
project given the risk and high project cost -- an issue that
has not been addressed in media reports.


7. (C) Ahluwalia reported that Indians are continually
asking the Government whether the US is asking the GOI to
turn its back on any economic dealings with Iran. Burns
stressed that the USG will oppose any gas pipeline deal with
Iran should it appear that India and Pakistan are going
through with the plan. Ahluwalia inquired whether the US
objected only to Indian investment in the pipeline or also to

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the purchase of Iranian gas. Burns responded that Iran's
support for international terrorism and effort to acquire
nuclear weapons means that there can be no business as usual.
"You would expect that from us," he added.


Burns Highlights Possibility of Future Sanctions on Iran
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8. (C) Burns noted that Iran made a miscalculation last week
in breaking the IAEA seals and proceeding with nuclear
enrichment. He explained that he has spoken with Chinese and
Russian officials who are also worried about Iran's behavior.
Burns predicted that if Iran does not negotiate with Russia
and/or the EU, they may face sanctions sometime in 2006.
Ahluwalia conceded that UNSC sanctions would make it very
difficult to obtain financing for the gas pipeline. MEA
Joint Secretary (Americas) S. Jaishanker noted that India is
not yet in violation of any ILSA provisions (which require a
USD 14 million threshold investment in Iran). Ahluwalia
again stressed that India will buy gas and oil from any
possible seller to sustain the economy's growth here.


9. (U) U/S Burns cleared this cable.


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