BAD VIBES BEFORE HU JINTAO'S INDIA VISIT?

C O N F I D E N T I A L SECTION 01 OF 03 NEW DELHI 007764 SIPDIS SIPDIS DEPT. FOR SCA AND EAP E.O. 12958: DECL: 11/13/2026 TAGS: PREL PGOV PINR PBTS IN CH SUBJECT: BAD VIBES BEFORE HU JINTAO'S INDIA VISIT? NEW DELHI 00007764 001.2 OF 003 Classified By: Political Counselor Ted Osius for Reasons 1.4 (B, D) ¶1. SUMMARY: (C) China's presidential visit to India may not culminate in any major breakthroughs in Sino-Indian relations. Despite Chinese claims that a momentous announcement will be made during President Hu's possible address to a joint session of the Indian Parliament on his upcoming visit, respected Indian journalists and think tankers are doubtful of any substantive advancement in the relationship. They cite lack of synergy on boundary disputes and free trade as their reasons for forecasting a forgettable visit. In addition, the mutually agreed and sudden cancellation of border talks today between the two countries' special representatives, National Security Advisor M.K. Narayanan and Dai Bingguo, has cast a pall over the visit. Coupled with the prevalent threat here regarding China's aggressive Western Development campaign to build up the infrastructure along its Indian borders, in combination with its "string of pearls military projection strategy, recent murmurings in the press that the Chinese may be contemplating the signing of a nuclear deal with Pakistan to complete a second plutonium production reactor near Khushab as well as a free trade accord on his 23-30 November visit to Islamabad have aroused Indian suspicions that are never far from the surface when engaging China. What may be more likely than any landmark deal is more smiles, more formulaic espousals and oaths of friendship, and some efforts to increase burgeoning two-way trade and investment. END SUMMARY. -------------- An opportunity to "enhance political trust" or "highlight asymmetrical interests"? -------------- 2.(U) India will host Chinese President Hu Jintao from 20-23 November for the first visit by a Chinese head of state in a decade. The visit is a culmination to the "India-China Friendship Year." Hu will meet with Prime Minister Manmohan Singh and President Abdul in New Delhi and will also likely address a joint session of the Indian Parliament, a significant honor for a foreign dignitary. Hu also plans to travel to Agra and Mumbai, where he will address a China-India economic forum. Cui Tiankui, China's Assistant Foreign Minister, told the press that the visit is billed as an opportunity to "enhance political trust." However, the visit, which only a few days ago was billed as "momentous" is losing steam. The Government of India (GOI) has been pushing for progress to resolve the long-standing border disputes in the western and eastern border regions, but it appears that "China is not interested addressing political questions", according to Professor Mira Sinha Bhattacharjea of the Institute for Chinese Studies. Addressing a 10 November roundtable at The Institute of Peace and Conflict Studies in New Delhi, Prof. Bhattacharjea contended that the two sides "maintain asymmetrical interests. India must push for border resolutions now before opinion groups form through slow democratization in China and freeze the process." But, as Major General (retd.) D. Banerjee pointed out, "China has no interest is settling political NEW DELHI 00007764 002.2 OF 003 differences. They are solely focused on economic progress and pushing for the Free Trade Agreement." The GOI has little to gain from a free trade agreement with China, as the majority of its exports "are low value-added products such as iron ore, iron, and steel with low duties or IT-based services with no duty. However, Chinese exports are comprised of primarily manufactured goods with comparatively high import duties," according to Dr. Aditya Bhattacharjea of the Delhi School of Economics. 3.(U) Perhaps nothing highlights Sino-Indian asymmetrical interests more than the report in the 30 October issue of "The Hindustan Times" that more substantive decisions are likely to be reached. "As underscored by General Pervez Musharraf's two visits to Beijing this year, Pakistan is seeking greater strategic assistance from China, including to complete a second plutonium-production reactor near Khushab. Whether the deal comes to fruition or not, GOI policy makers and the public find the notion unnerving, as they attribute Pakistan's ascendance to the nuclear club to Chinese assistance. -------------- The "string of pearls" as a noose -------------- 4.(U) Threat perceptions continue to color India-Chinese relations. Srikanth Kondapalli, a prominent Indian Sinologist points out that, "China's Western Development Campaign of building infrastructure projects in Tibet, Sichuan and Yunnan border areas is aimed at connecting its land-locked western region with Indian Ocean sea ports such as Calcutta, Haldi and Chittagong." The Chinese have also invested heavily in road, railway, and airfield construction in Tibet--assets that have military as well as commercial value. The 30 October issue of the "Hindustan Times" (HT) notes that China is "assembling a 'string of pearls' in the form of ports, listening posts and naval agreements stretching from Pakistan and Sri Lanka to Bangladesh and Burma. C. Raja Mohan revealed during the recent visit of Assistant Secretary of State Richard Boucher that the Chinese are seeking to build a military base in the Maldives. The HT reports that one of the highlights of Hu's visit to Pakistan will be the opening of the Chinese-built Gwadur port, close to the Strait of Hormuz, through which 40 percent of the world's oil supply passes. In addition, China is endeavoring to develop Sri Lanka's Hambantota harbor to gain better access to the port it helped build at Chittagong in neighboring Bangladesh. The HT contends that China is also planning a "bigger role for Chinese security agencies at its Burmese ports, including Kyaukypu." "The perceived encirclement of India has contributed to a certain paranoia in the GOI's policy making circles," according to Prof. Bhattacharjea. -------------- Unclear fences make uneasy neighbors -------------- 4.(U) The 5 November issue of "The Times of India" (TOI) reported that the two appointed special representatives, Dai NEW DELHI 00007764 003.2 OF 003 Bingguo and M.K. Narayanan, were scheduled to meet prior to the Hu visit to provide momentum to the resolution of the border disputes that date back to the 1962 border war. The opening of the Nathu La border in July this year had given an impetus for the two sides to finalize outstanding border issues and open more trading posts, as contentious areas on the Line of Actual Control (LAC) had been reduced. However, any momentum gained recently was lost when the talks were abruptly canceled on 13 November. The panel members of The Institute of Peace and Conflict Studies noted on 10 November that the Chinese position on the Western border actually had hardened, with China now claiming the entire Tawang district in Arunachal Pradesh. China points to "historical evidence" and national sentiment to illustrate Tawang's importance to China, often citing it as the birthplace of the sixth Dalai Lama in the 17th century. According to TOI, India wants to "swap" a few parts of Arunachal Pradesh for Chinese-occupied Aksai Chin, but "both sides have drawn a blank on this." China has stated that the Indian state of Sikkim, which it claimed India was "illegally occupying" until 2003, is no longer in dispute, but the GOI wants to see definitive changes in Chinese official documents and maps before it is satisfied. -------------- A visit of plentiful platitudes, little substance -------------- 5.(C) COMMENT: The GOI's primary goal of resolving the boundary disputes and exchanging maps on the eastern and western sectors appears out of reach given the special representative talks cancellation. Now, the GOI will cautiously approach the Chinese front burner agenda issue and discuss forward momentum on a free trade agreement. The GOI may even make gestures of headway by ostensibly pursuing a trade and investment pact and/or other trade facilitation measures. However, Prime Minister Singh is visiting India's other Asian suitor, Japan, in December to entertain a "sexier" invitation to join a quadrilateral dialogue with Japan, the U.S., and Australia. Whether shared democratic ideals and complementarities in trade are enough to seduce the GOI remains to be seen; however, it is probably enough to hold the GOI back from making any dramatic moves with China in the short-term. The visit will likely consist of smiles, diplomatic niceties, and economic platitudes aimed at maintaining the current trade momentum. However, lingering doubts over Chinese intentions in the region and the general lack of mutually advantageous trade positions will probably dilute the substance of the visit. END COMMENT MULFORD