UPA CABINET SHUFFLE GOOD FOR AMERICA

C O N F I D E N T I A L SECTION 01 OF 09 NEW DELHI 000657



SIPDIS



SIPDIS



USDOE FOR U/S DAVID GARMAN, DAS DPUMPHREY, RAJ LUHAR,

THOMAS CUTLER, STATE FOR EB/ESC



E.O. 12958: DECL: 01/30/2016

TAGS: PGOV, PINR, PREL, ECON, ENRG, EPET, EMIN, EAID, MASS,

IN, IR

SUBJECT: UPA CABINET SHUFFLE GOOD FOR AMERICA



REF: A. NEW DELHI 166

B. NEW DELHI 165

C. 05 NEW DELHI 9343

D. 05 NEW DELHI 8809

E. 05 NEW DELHI 8507

F. STATE 1151



NEW DELHI 00000657 001.2 OF 009





Classified By: Ambassador David C. Mulford, for reasons 1.4 (B,D)



1. (C) Summary: The UPA's January 28 cabinet shuffle

signifies a determination to ensure that US/India relations

continue to move ahead rapidly, and strengthens the cadre of

modernizing reformers at the top of the GOI. Removing

contentious and outspoken Iran pipeline advocate Mani Shankar

Aiyar from the Petroleum portfolio, the UPA replaced him with

the pro-US Murli Deora, who was one of several figures

inducted with long-standing ties to the Indo/US Parliamentary

Forum (IUPF) and the Embassy. The UPA also inducted a large

number of serving MPs, including seven from the IUPF who have

publicly associated themselves with our strategic

partnership. To ensure that there are no foreign policy

ripples before the President's visit, PM Singh retained the

critical MEA portfolio and is likely to hold on to it until

after the next session of Parliament concludes and Congress

has weathered crucial Assembly elections in Kerala and West

Bengal in May. Viewing the shuffle as a shift towards the

US, the left has become more alienated from Congress and more

determined to obstruct UPA economic liberalization and

foreign policy initiatives, all but ensuring political

fireworks in the months ahead. The net effect of the

reshuffle, however, is a Cabinet that is likely to be

excellent for US goals in India (and Iran). End Summary.



2. (U) After our analytical paragraphs, this cable includes

a full Cabinet list plus bios of new entrants. See paras

number 17 and 18.



An Eventful Weekend

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



3. (U) Prime Minister Manmohan Singh announced a major

cabinet shuffle and President Kalam swore in the new members

on January 29. Eighteen new personalities were inducted,

including 10 Ministers, one Minister of State with

Independent Charge, and 11 new Ministers of State. All the

new faces were from Congress, including three senior Congress

leaders from Maharashtra - Sushil Kumar Shinde (Power),AR

Antulay (Minority Affairs) and Murli Deora (Petroleum).

Although PM Singh retained the Foreign Affairs portfolio, he

announced that he would try to shuffle the Cabinet again

after the Budget Session of Parliament (the third week in

May.) Most expect him to name a new Foreign Minister at that

time. The two top names making the rounds are Finance

Minister P Chidambaram and Rajya Sabha MP and former Maharaja

of Kashmir Karan Singh. Longtime Embassy contact Anand

Sharma was named Minister of State for Foreign Affairs. In

the most significant development, the GOI replaced Petroleum

Minister Mani Shankar Aiyar with Murli Deora (Aiyar was

retained and was given Panchayati Raj, Youth Affairs & Sports

as a consolation prize.) The PM maintained on January 29

that regional considerations took priority, as Congress

wanted to provide opportunities to deserving individuals from

Maharashtra, Tamil Nadu and Andhra Pradesh. He also noted



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that there was a need to "accommodate MPs with a lot of

talent.



The Aiyar Controversy

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



4. (C) Our Foreign Ministry contacts welcomed Aiyar's

departure, commenting that his energy diplomacy had

encroached on MEA turf too many times, leading to MEA appeals

to the Prime Minister's Office to intercede. Despite the PMO

warning to back off, Aiyar's Ministry of Petroleum and

Natural Gas (MPNG) continued to interfere with MEA attempts

to craft policy, our contacts said, citing Pakistan, China,

Burma, Bangladesh, Iran and Sudan as areas of

intergovernmental conflict. Aiyar's unwillingness to step

back reportedly led to the PM's decision to remove him from

this high-profile portfolio, and cements MEA's position as

the lead bureaucracy on strategic policy making.



5. (C) Aiyar's dismissal as Petroleum Minister will leave

MEA officials breathing easier, and put MEA back in charge of

policy toward these energy suppliers, including the "problem

children" of Sudan, Burma and Iran. Unlike Aiyar, who

cultivated a reputation for anti-Americanism, Murli Deora has

been associated with the US/India relationship for years.

Lacking Aiyar's ambitions (or entrepreneurial zeal),he will

be a more cautious Minister. Clearing these lines of

authority should make the PM's job of coordinating India's

often-conflicting interests in energy security, trade,

investment, anti-terrorism and stronger ties with the West a

bit less muddled. His departure also weakens the holdouts

fighting a rear-guard action against stronger engagement with

the US, who would prefer that India hold true to its

non-aligned traditions. Local journalists speculate that

Aiyar's parting shot was the leak on January 28 of the USG

demarche (ref A) protesting Indian investment in Syrian oil

projects, spun by opponents of US-India engagement as another

attempt by the US to dictate policy to India.



6. (C) Our contacts (protect) in the Government-owned Gas

Authority of India Ltd. (GAIL) confirmed that Aiyar had vexed

the PMO and MEA by positioning the MPNG to usurp the lead on

India,s strategic posture for energy security issues,

inducting Additional Secretary Talmiz Ahmad, a senior career

diplomat, to lead on oil and gas diplomacy, and taking a

pro-active stance on the proposed Iran-Pakistan-India (IPI)

natural gas pipeline (Reftels B and C). Before Aiyar,s

ouster, a Planning Commission energy expert (protect) told us

that Aiyar,s international forays in search of oil and gas

equity had been taken as "fishing expeditions" at Aiyar,s

initiative, and that any significant deals would be subject

to Cabinet scrutiny before approval. The GAIL contact said

the MPNG,s civil bureaucracy had run a whispering campaign

against Aiyar calling him autocratic and disrespectful of IAS

officers, including a public criticism of MPNG Joint

Secretary (for International Cooperation) Prabh Dass in front



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of government-run entities.



7. (C) Aiyar's replacement as Petroleum Minister, Murli

Deora, is a stalwart supporter of stronger US-India ties, and

one of the few high-profile Congress leaders who embraces the

PM's vision of the bilateral relationship. He is currently

the Chairman of the India-US Forum of Parliamentarians, a



NEW DELHI 00000657 003.2 OF 009





non-partisan, industry-sponsored counterpart to the US

Congress's India Caucus that advocates closer political and

economic ties to the United States. Deora is a Gandhi family

loyalist and a wealthy Mumbai-based industrialist, and is

currently serving his fourth term as a member of the Lok

Sabha. Deora's only vulnerability, as a Mumbai politician,

is his long-standing connection to the Reliance industrial

group, which includes significant energy equities.



8. (C) One analyst at Petrowatch, an industry publication in

Mumbai, noted that Aiyar,s dismissal removes a powerful

supporter of the Iran Pipeline project and speculated that it

could signal a shift in the GOI's energy-related foreign

policy. Our GAIL contact said the private conglomerate

Reliance probably lobbied heavily for Deora, particularly in

view of Aiyar,s clashes with Reliance during the five year

rule of the National Democratic Alliance. Deora said his

priority is to strengthen the chronically loss-making public

sector oil firms and tackle the fuel subsidy issue, drawing

on his experience as chairman of the standing committee on

finance. While we expect Deora to more faithfully uphold the

PM's foreign policy vision, the MPNG Petroleum Ministry is

likely to be less pro-active and energetic in its drive to

acquire foreign oil and gas assets than it was under Aiyar's

globe-trotting leadership. New Delhi energy analysts have

questioned the wisdom of removing Aiyar, predicting that his

departure puts several nascent energy partnerships and deals

in doubt (including a much-trumpeted pact to cooperate with

China on energy purchasing signed during Aiyar's January

visit to Beijing). In the end, however, the high-profile

deals have all been of highly tentative nature, and Aiyar's

self-promoting maverick diplomacy was too much for PM Singh

to accommodate.



The New Minister of Power

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



9. (C) The new Minister of Power, Sushil Kumar Shinde, a

close political ally of Sonia Gandhi, fills the ministerial

slot vacated by the death last December of Minister PM

Sayeed, who was viewed more as a figurehead political

appointee. The power ministry is pivotal, in that the power

sector must attract huge investment, while being

politically-sensitive to needed price increases; and rapid

long-term growth in power generation capacity and production

is crucial to achieving the GOI goal of sustained 8% annual

GDP growth. The power sector,s reliance for growth on most

forms of generation - nuclear, hydroelectric, coal-thermal,

gas-thermal, wind, and solar - underscores the political

sensitivity of related issues outside the Power Ministry's

purview, such as seeking natural gas from Iran or alternative

foreign sources, civil nuclear energy cooperation with the

US, or social and environmental aspects of increasing coal

production.



10. (C) The UPA Government appointed Shinde as Governor of

Andhra Pradesh State after he led the Congress party to

victory in the 2004 State Assembly elections in neighboring

Maharashtra, where he had been elected Chief Minister in

2003. Shinde was Sonia Gandhi's election campaign manager

when she first contested for the Amethi Parliamentary

constituency in Lok Sabha. Shinde, age 65, was born into a

poor cobbler's family of the disadvantaged (scheduled) Dalit



NEW DELHI 00000657 004.2 OF 009





Caste in Solapur district. In 1971, he quit his job as a

sub-inspector in the state police intelligence wing to run

for and win a seat in Maharashtra,s legislative council. By

1981, he became Finance Minister in Maharashtra,s

Government, serving for nine years.



The New Minister of Coal and Mines

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



11. (C) A vindicated Shibu Soren, was re-inducted into the

Union Council of Ministers as Minister of Coal. The

thickly-bearded tribal leader had been forced to resign in

July 2005, both as Minister of Coal and as Chief Minister of

Jharkand State, after getting embroiled in a number of

criminal cases, including being arrested for inciting arson

and violence during a deadly rally in 1975. Earlier he was

acquitted of accepting bribes to support the minority

government of the late Prime Minister Rao. Soren was elected

to parliament in 1980 and to the Bihar State Assembly in

1981. He founded in 1972 the Jharkhand Liberation Front,

which successfully achieved Statehood for the coal-rich

tribal region of Jharkhand. He has been President of the JLF

since 1990.



12. (C) Coal now accounts for over 50% of India,s power

generation and is projected to remain at 52-55% for at least

20 years thereby requiring sustained production growth to

underpin rapid growth in India,s power sector, potentially

with close US. cooperation in clean coal technology. Greater

exploitation of India,s huge coal reserves faces issues of

environmental protection and social disruption in areas with

coal seams below tribal areas.



And Good News on Kashmir

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



13. (C) Another welcome addition to the cabinet is Kashmiri

Congress Party Rajya Sabha member Saifuddin Soz, a

long-standing contact of the Embassy's Political section.

Soz, a Sonia Gandhi confidant, worked discreetly and

diligently behind-the-scenes to help launch the PM's dialogue

with Kashmiri separatists such as the Mirwaiz, Yasin Malik,

and Sajjad Lone. For his loyal service and his successes on

Kashmir diplomacy, Sonia has elevated him to the Cabinet. In

doing so, she also ensured that a prominent and

well-respected Kashmiri Muslim would occupy the important

Water Resources portfolio. Kashmir has tremendous water

resources, including massive untapped hydroelectric

potential. Given the on-going dispute between India and

Pakistan over the construction of the Baglihar dam on the

Chenab river near Jammu, and Soz's new job's supervision of

the India-Pakistan Indus Waters Treaty, it is clear that Soz

will play a key role in Delhi's efforts in Kashmir and its

dialogue with Pakistan. Soz -- a professor -- is a moderate,

earnest gentleman who has been a good friend of the US. He

could potentially be Chief Minister of Kashmir one day, or

rise even higher in the Cabinet, if he does a good job as

minister.



Comment - A Boost to US Energy Interests

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



14. (C) Our initial assessment is that appointment of the



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three new energy ministers will boost USG interests by

enhancing bilateral cooperation under the US/India Energy

Dialogue (Reftel F) prior to US. Department of Energy Under

Secretary David Garman,s visit to New Delhi (expected Feb



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8-9). Aiyar,s dismissal, following on USG demarches against

oil and gas cooperation with Iran and Syria, will probably

disrupt the recent momentum built by Aiyar and MPNG

Additional Secretary Talmiz Ahmad in favor of the

Iran-Pakistan-India natural gas pipeline, as well as

cooperation with Syria, as Deora conducts a thorough review

of these transactions.



And a pro-US Shift

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



15. (C) The Cabinet shuffle contained lots of good news for

the USG, confirming the UPA government's determination to

maintain rapid progress in the India/US relationship. The

demotion of Aiyar was the most significant indicator. The

new entrants with strong pro-US credentials include Saifuddin

Soz, Anand Sharma, Ashwani Kumar, Kapil Sibal and Aiyar's

replacement Murli Deora. Seven of the new faces are also

members of the pro-American Indo/US Parliamentary Forum,

while the induction of so many entrants from the Rajya Sabha

reflects the declining importance of a mass political base.

The timing of the shuffle and the PM's retention of the MEA

portfolio were dictated by the impending POTUS visit, and

reflects the PM's commitment to ensure that there is no

foreign policy surprises before the visit.



That Angers the Left

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



16. (C) The undeniable pro-American tilt of the Cabinet

shuffle has infuriated the Left, which will view it as a

throwing down of the gauntlet and an invitation to open

warfare. The editorial comment of the pro-Left "Hindu" was

typical "Mr. Aiyar paid with his job for...going against the

Government's strategic pro-US policy and its increasing

acceptance of unilateralism and unipolarity." Increasingly

infuriated by what they view as Congress subservience to the

US, the Left is likely to become even more uncooperative in

the aftermath of this move. Congress hoped to pacify the

Left by bringing in Jairam Ramesh, who has been close to the

Communists while in the National Advisory Council and Vayalar

Ravi (Overseas India Affairs),who has been a consistent

critic of the UPA's economic liberalization and pro-US tilt.

These moves are unlikely to mend the growing rift between the

Left and Congress, however, making increased confrontation

more likely.



The New Cabinet

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



17. (U) After the Cabinet shuffle the current shape of the

Cabinet is as follows:



Cabinet Ministers



Manmohan Singh--Prime Minister, External Affairs

Pranab Mukherjee--Defense

Arjun Singh--Human Resource Development

Sharad Pawar--Agriculture, Food & Civil Supplies



NEW DELHI 00000657 006.2 OF 009





Lalu Prasad Yadav--Railways

Shivraj Patil--Home

P Chidambaram--Finance

Kamal Nath--Commerce & Industry

Ram Vilas Paswan--Chemicals & Fertilizers, Steel

Jaipal Reddy--Urban Development

PR Dasmunshi--Information & Broadcasting, Parliamentary

Affairs

Mahavir Prasad--Small Scale, Agro & Rural Industries

PR Kyndiah--Tribal Affairs, Development of North East

TR Baalu-- Shipping, Road Transport & Highways

Shankarsinh Vaghela--Textiles

HR Bharadwaj--Law & Justice

Sushil Kumar Shinde--Power

Mani Shankar Aiyer--Panchayati Raj, Youth Affairs & Sports



Sis Ram Ola--Mines

Meira Kumar--Social Justice & Empowerment

K Chandra Shekar Rao--Labor & Employment

A Raja--Environment & Forests

Dayanidhi Maran--Information Technology & Communications

Anbumani Ramdoss--Health & Family Welfare

Shibu Soren--Coal (new)

AR Antulay--Minority Affairs (new)

Vyalar Ravi--Overseas Indian Affairs (new)

Murli Deora--Petroleum (new)-IUPF member

Ambika Soni--Tourism & Culture (new)

Saifuddin Soz--Water Resources (new)

Santosh Mohan Dev--Heavy Industries & Public Enterprises (new)

Prem Chanda Gupta--Company Affairs (new)

Kapil Sibal--Science & Technology (new)



Ministers of State with Independent Charge





Oscar Fernandes--No Portfolio allotted yet (new)

GK Vasan-- Statistics & Program Implementation (new)

Renuka Choudhury--Women & Child Development (previously

Tourism & Culture)

Subodh Kant Sahai--Food Processing

Vilas Muttemwar--Non-conventional Energy Sources

Kumari Selja--Urban Employment & Poverty Alleviation

Praful Patel--Civil Aviation



Minister of State



E Ahamed-- External Affairs

Suresh Pachauri--Personnel, Parliamentary Affairs

BK Handique--Chemicals & Fertilizers (previously defense)

Mrs. P Lakshmi--Health & Family Welfare

D Narayan Rao--Coal & Mines

Shaqeel Ahmed--Information Technology & Communications

Rao Inderjit Singh--Defense (previously MEA)

Narainbhai Rathwa--Railways

KH Muniyappa--Road Transport & Highways

MV Rajashekharan--Planning

Kantilal Bhuria--Agriculture, Food and Civil Supplies

Manik Rao Gavit--Home Affairs

Sri Prakash Jaiswal--Home Affairs

Prithviraj Chavan--Prime Ministers Office

Taslimuddin--Agriculture, Food and Civil Supplies

Mrs. Suryakanta Patil--Rural Development, Parliamentary

Affairs



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A Narendra--Rural Development

Mohammed Ali Ashraf Fatimi--Human Resources Development

R Velu--Railways

SS Palanimanickam--Finance

S Regupathy--Home Affairs

K Venkatapathy--Law & Justice

Ms. S Jagadeesan--Social Justice & Empowerment

EVKS Elangovan--Commerce & Industry

Mrs. Kanti Singh--Heavy Industry

Namo Narayan Meena--Environment & Forests

Akhilesh Prasad Singh--Agriculture, Food & Civil Supplies

Pawan Kumar Bansal--Finance (new)

T Subbirami Reddy--No portfolio allotted yet (new)- IUPF

member

Anand Sharma--External Affairs (new)- IUPF member

Ajay Maken--Urban Development (new) - IUPF member

Pallam Raju--Defense (new) - IUPF member

CS Sahu--Labor (new)

Akhilesh Das--Steel (new)

Jairam Ramesh--No portfolio allotted yet (new)

Ashwani Kumar--Industry (new) - IUPF member

Ms. D Purandareswari--Human Resources Development (new) -

IUPF member

Dinsha Patel--No portfolio allotted yet (new)



Bios of New Entrants

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



18. (C)(All Bios):



Sushil Kumar Shinde - Minister for Power - A long time

Congress party activist and Gandhi family loyalist, Shinde

was the Governor of Andhra Pradesh until he took this

position. Prior to that, he was Chief Minister of

Maharashtra. He has held many positions in the Congress

party including General Secretary and Congress Working

Committee Member. He is a dalit and his inclusion in the

cabinet is seen as an attempt to reach out to the community.



Shibu Soren - Minister for Coal - Leader of the regional

party Jharkhand Mukti Morcha (JMM),Soren is considered to be

the father of the JMM movement that ultimately led to the

creation of Jharkhand state. He was a minister earlier in

the cabinet, quit after he was charged with arson and rioting

for acts he committed during the hey days of the JMM movement

in the 1980s. The charges have since been quashed and so

Soren comes back into the cabinet.



AR Antulay - Minister for Minority Affairs - Another Gandhi

family loyalist, Antulay is from Maharashtra and has been

Chief Minister of the state. He was infamous in the early

1980s for floating fictitious trusts and amassing money in

the name of Indira Gandhi that led to the fall of his

government in Maharashtra. Antulay has been in the political

wilderness since then, but as a Muslim was rehabilitated as a

concession to the Muslim community.



Vyalar Ravi - Minister for Overseas Indian Affairs - Another

old time party loyalist, Ravi is the first UPA Minister from

Kerala, and his induction was a concession to that state,

where the Congress government faces the voters this year.

Ravi also comes from a backward caste.





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Murli Deora - Minister for Power - Long considered as a key

fund raiser for Congress, Deora has been a parliamentarian

for many years, as well as President of the Mumbai District

Congress Committee. He is well-known as a friend to the

business community and pro-US. His son, Milind, is also a

member of the Lok Sabha.



Ambika Soni - Minister for Tourism & Culture - Having cut

her political teeth under the tutelage of Sanjay Gandhi, Soni

is a long term Gandhi family loyalist. Since Sonia Gandhi's

entry into active politics, Soni has been one of her close

confidants and supporters and was for many years the

Secretary in charge of the Congress President,s office.



SIPDIS

Always quick to defend the party and Sonia on any issue,

Soni,s induction into the cabinet is seen as a reward for

her loyalty.



Saifuddin Soz - Minister for Water Resources - A veteran

parliamentarian from the Kashmir valley, Soz was environment

minister in the Gujral government and his was the crucial

vote that brought down the Vajpayee government in March 1998.

Soz was expelled from the National Congress for defying the

party whip and voting against the BJP-led government. Soz,s

induction into the cabinet is a reward for his hard work to

promote the ongoing dialogue between the government and the

Kashmir separatist groups and allows Congress to claim credit

for appointing a Muslim and Kashmiri to the Cabinet.



GK Vasan - Minister of State for Statistics and Program

Implementation - Son of the veteran Congress leader GK

Moopanar, Vasan is from Tamil Nadu and is the President of

the state's Congress party. His induction is a concession

to Tamil Nadu, where Congress hopes to benefit in elections

later this year.



Pawan Kumar Bansal - Minister of State for Finance - A

Congress MP from Chandigarh, Bansal is a long time party

loyalist. He recently became the subject of controversy

after providing MP development funds to the Chandigarh Golf

Club in return for a privileged membership.



T Subbirami Reddy - No Portfolio - Another major fund raiser

for the Congress party, Reddy is an industrialist and film

producer. Known as the best party-giver in town, Reddy has

been in Parliament since 1989. He is from Andhra Pradesh.



Anand Sharma - External Affairs - A Congress spokesman,

Sharma is a former President of the Youth Congress and a

well-known Gandhi family loyalist. He is very friendly to

the US, where one of his two sons receives treatment for

autism. Sharma is a Rajya Sabha MP from Himachal Pradesh.



Ajay Maken - Urban Development - One of the younger MPs in

the Lok Sabha, Maken is serving his first term. He was

widely praised for his performance as Minister for Power and

Transport in the Delhi government and Speaker of the Delhi

Assembly. A tough task master, he is credited with

initiating power reforms in Delhi.



M Pallam Raju - Defense - Educated at Temple University,

Philadelphia, Raju is a Lok Sabha Member from Andhra Pradesh.

A member of the house from 1989-91 and an engineer by

profession, Raju worked in the US and Norway before coming



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back to India and joining politics.



CS Sahu - Labor - A first time member of the Lok Sabha, Sahu

has been in Congress politics for a long time, serving as

Mayor of Behrampur, Orissa. A lackluster politician, his

induction into the council is mainly to give representation

to Orissa.



Akhilesh Das - Steel - A member of the Rajya Sabha since

1996, Das is the publisher of a leading Hindi daily

"Jansatta, " and was Mayor of Lucknow. Das has a Ph.D. in

Management Studies from Agra University.



Jairam Ramesh - No portfolio - Along with Manmohan Singh,

considered one of the leading members of the Congress

Economics brain trust, Ramesh is a Rajya Sabha member. Close

to Sonia Gandhi, he is one of her key advisors on economic

issues.



Ashwani Kumar - Industry - A long standing Rajya Sabha

member, Kumar is another Gandhi family loyalist. He is a

very successful Supreme Court lawyer and strong proponent of

closer US/India ties.



D Purandareswari - Human Resources Development - A Daughter

of former Andhra Pradesh Chief Minister NT Rama Rao,

Purandareswari is serving her first term in the Lok Sabha.

She has been brought into the Cabinet as a reward for her

strong performance in the house.



Dinsha Patel - No portfolio - A member of the Lok Sabha from

Gujarat since 1996, Patel is a veteran Congressman. He was a

member of the state assembly from 1975 to 1996. He has been

brought in to give representation to the powerful Patel

community of Gujarat.



19. (U) Visit New Delhi's Classified Website:

(http://www.state.sgov.gov/p/sa/newdelhi/)

MULFORD