INDIA STILL TESTING THE WATERS IN TAJIKISTAN

C O N F I D E N T I A L SECTION 01 OF 04 NEW DELHI 007725 SIPDIS SIPDIS E.O. 12958: DECL: 11/09/2026 TAGS: PGOV PREL PBTS ECIN ENRG SNAR TI IN SUBJECT: INDIA STILL TESTING THE WATERS IN TAJIKISTAN Classified By: PolCouns Ted Osius for Reasons 1.4 (B, D) ¶1. (U) SUMMARY: In a recent visit to Dushanbe, New Delhi PolOff met with MFA and Ministry of Energy officials and local diplomats to explore Indo-Tajik relations. Indian rehabilitation and construction efforts include a small hydropower project, construction of a tunnel, rehabilitation of the air base at Ayni and joint ventures in fruit and pharmaceutical production. While Tajikistan has long term hopes to send electricity to India, many obstacles stand in the way, including security in Afghanistan, Indo-Pak relations and Tajik bureaucracy. Rumors abound that the Indians intend to establish their own air base in the country, and border issues plague trade and energy transmission projects between the two countries. Tajikistan offers a potential market for Indian products and source of electricity, but the mountains of red tape may be keeping India from plunging into investment here. END SUMMARY. -------------- -- India's Stake in Tajikistan's "Decade of Water" -------------- -- ¶2. (U) Tajikistan's President Rahmonov has declared 2005-2015 the "Decade of Water," and India promises to take part by helping to restore a hydropower plant outside of Dushanbe. Tajikistan's Ministry of Energy (MOE) told PolOff in an Oct. 20 meeting that Tajikistan's hydropower potential is 60,260 MW hours. Currently, only 6.5% of the country's resources are being tapped. The Soviets had big plans to build nine hydropower plants on the River Vaksh. Currently there are five, but the Tajiks plan to finish the projects - eventually. The Varzob River has three hydropower plants, known as the Varzob Cascade, which are subject to rehabilitation. With four of six generators operating, these plants (built in 1936) are too old to make a profit and sit idle much of the time. Maintenance on them is prohibitively expensive. Contributing to the problem is a diversion channel which is too narrow, causing the rushing river to bypass the cascade altogether. In 2003, an Indian delegation expressed interest in facilitating the rehabilitation project. According to the MOE, the Indians then disappeared until President Rahmonov visited India in August 2006. At that time, India promised a $13 million grant for the rehabilitation of one of the plants, known as Station #1. The US Trade and Development Agency has funded a feasibility study of Stations 1 and 2, but the Indians made clear to the Tajiks that they are not interested in working with a third party. They are, however, planning to complete this project using the services of Eurasia Link, the American engineering contractor conducting the USTDA grant. The Tajiks would prefer that this project be consolidated to include all three stations, some sub-stations and widening of the diversion channel. They plan to approach India for more money and a commitment to the project in its entirety, but an Indian Embassy official in Dushanbe tells us that India is only prepared to work on Station #1. Additionally, the MOE told PolOff that they plan to approach the USTDA for an additional $26M to complete the entire project. The Varzob Cascade is NEW DELHI 00007725 002 OF 004 just a drop in the bucket, however, with an estimated final output that will comprise a mere 0.5% of the entire country's energy supply. ¶3. (U) In addition to hydropower, India has invested in joint ventures with Tajikistan that include fruit juice production and pharmaceuticals, but bureaucratic hurdles and Dushanbe city corruption have prevented both enterprises from producing anything. An Indian five-star hotel is under construction but has faced serious problems with the city and has not set an opening date. According to the MFA, relations between the countries are good, with over 30 bilateral agreements in place as Tajikistan looks to increase trade with India. President Rahmonov's visit to India in August of this year was productive and strengthened ties between the two countries, which share a long cultural history. -------------- Will Tajik Power Ever Reach India? -------------- ¶4. (C) Tajikistan intends for its electrical power to reach the huge Indian market one day, according to the MFA. However, current plans have electrical power reaching Peshawar as an end-point no sooner than 2012, according to Dilshod Ismatulloev, Dushanbe representative of the multi-national power company AES Corporation. While Tariq Karim, political officer from the Pakistan Embassy, didn't think that Pakistan would be opposed to allowing power lines to stretch from Peshawar to northern India in the future, the MOE noted that transmission lines could bypass Pakistan in theory, as the Indian border is only 50 KM from Tajikistan at one point. The many obstacles to bringing a project of this magnitude to fruition include security in Afghanistan, hot and cold Indo-Pak relations and the Tajik web of bureaucracy, to name a few. India, along with China and Pakistan, is considered to be a potential market for Tajik power according to Ismatulloev, but he indicated that India, compared to China, has not been very active in the pursuit of power projects in Tajikistan. "They have not expressed a firm interest," he said, noting that it is "common practice to start small," as India is doing with the Varzob Cascade hydro-power plant. Other obstacles to completing such a grandiose project involve the Tajik government directly. "There are misunderstandings even with small projects," says Ismatulloev, who cited an instance involving a textile factory whose parts and supplies were blocked by Tajik customs from entry into the country. One contact from the Indian embassy admitted that the outlook for Tajik electricity to India is not great. -------------- The SCO - Friend or Foe? -------------- ¶5. (C) In an informal poll of opinions around Dushanbe on the Shangai Cooperation Organization (SCO),we found an overall positive reaction to the organization in general. The MFA referred to India's participation in the SCO as an NEW DELHI 00007725 003 OF 004 opportunity to increase Indo-Tajik relations. A Japanese Embassy official in Dushanbe saw the SCO as a positive force for cooperation in the region, while an Indian official describes joining such organizations as "fashionable." Back in Delhi, the MEA has expressed interest in full involvement in "SCO activities that promote economic, energy, cultural cooperation and those directed against terrorism and drug trafficking." On Sep. 15 of this year, Dushanbe hosted the SCO Heads of Government Meeting, to which PM Singh was invited. Having been conspicuously absent from the Beijing summit in June of this year, Singh sent his personal emissary, Shri Prithviraj Chavan, to the Dushanbe meeting. Some saw this as a bid to raise India's profile in the organization while appeasing Indian leftists. Others say Singh personally avoided the conference because India mistrusts the SCO's overall intentions. India maintains, however, that it is interested in associating itself fully with the organization in order to "mutually benefit and enrich ourselves by such association," stating that India shares SCO objectives, such as combating all forms of intolerance, extremism and fundamentalism in the region. -------------- Rumors Fly Over Ayni Air Base -------------- ¶6. (C) Rumors concerning Tajikistan's air base at Ayni suggest the Indian's plan to use it as a military base, though both governments say these reports are unfounded. Russian and Indian web-sites have reported that India is building a military base on the site and intends to deploy 12 MIG-29s to this airfield by the end of this year. Despite the swirling rumors, the MFA maintained that India's rehabilitation of the air base is nothing more than a "friendly act of assistance." Our Indian contact concurred with this assessment. On the other end of the spectrum, some say that Tajikistan is desperate to have someone maintain the air base once the Indians leave and suggest that the Tajiks will look to the French and/or the Americans for assistance. -------------- Troublesome Borders Affect Security and Trade -------------- ¶7. (C) Tajikistan's border issues with both Afghanistan and Uzbekistan have serious ramifications for India. Of paramount importance is stability in Afghanistan, which inQ the past has directly affected security in India, and through which India receives fruit and cotton from Tajikistan via Pakistan. Afghan Trade Attach in Dushanbe Dr. Ghaznawi stated that the Tajik border is unreliable, often opening at 11, instead of 8 a.m., for no apparent reason. "There is no accountability and no security in Tajikistan," opined Ghaznawi. He noted that when the U.S. funded Tajik-Afghan bridge at Nizhniy Pyanj and its feeder roads are completed, China and India will essentially be connected. This will only be useful if the security situation in Afghanistan improves, however. Distant plans for transmitting power to India via Afghanistan and Pakistan are clearly affected by NEW DELHI 00007725 004 OF 004 the security situation in the region. Uzbekistan, a major transit point for trade, has put up barriers on the transport of goods in and out of Tajikistan. Indian export of pharmaceuticals, textiles, parts and machinery is seriously hindered by these border problems. ¶8. (C) The Afghan-Tajik drug trade is another problem affecting security in the border region. Tajikistan serves as a transit route for Afghan drugs, and some rumors suggest that Dushanbe's growing prosperity stems from narcotics trafficking. The drug trade remains a potentially destabilizing factor for legitimate trade in the region. -------------- COMMENT: IS INDIA MISSING THE BOAT? -------------- ¶9. (C) India is not pushing too hard to dive into Tajikistan. While they may be put off by the bureaucratic struggles of doing business with the Former Soviet Union (FSU),China, Russia, Iran and richer FSU states like Kazakhstan are forging ahead despite the red tape. India has been burned on a few projects and seems to be taking a small-step strategic approach to its investment and engagement. Given the geographical and bureaucratic barriers, it is likely India will stay engaged in smaller, focused ways without trying to compete with Tajikistan's more aggressive neighbors and allies. Only once power lines to Pakistan have been successfully constructed can India seriously consider Tajik electricity for its energy needs. END COMMENT. MULFORD