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

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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.

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India's Stake in Tajikistan's "Decade of Water"
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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

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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.

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Will Tajik Power Ever Reach India?
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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.

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The SCO - Friend or Foe?
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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

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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.

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Rumors Fly Over Ayni Air Base
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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.

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Troublesome Borders Affect Security and Trade
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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

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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.

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COMMENT: IS INDIA MISSING THE BOAT?
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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