IRANIAN FM MOTTAKI REACHES OUT TO PM SINGH, THE

C O N F I D E N T I A L SECTION 01 OF 05 NEW DELHI 007935

SIPDIS

SIPDIS

DEPT FOR EB/ECS, SCA/IN, NEA
DEPT OF ENERGY FOR DAVID PUMPNREY, TOM CUTLER, KAREN
HARBERT, MIRIAM SALERNO, RAJ LUHAR

E.O. 12958: DECL: 11/20/2026
TAGS: PREL PGOV EPET ELTN ENRG KNNP KISL IR IN
SUBJECT: IRANIAN FM MOTTAKI REACHES OUT TO PM SINGH, THE
ENERGY SECTOR, AND INDIAN MUSLIMS

REF: NEW DELHI 6877

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Classified By: PolCouns Ted Osius for Reasons 1.4 (B,D)


1. (C) SUMMARY: In his first visit to India since becoming
Foreign Minister, Iran's FM Mottaki invited PM Singh to Iran,
discussed the proposed Iran-Pakistan-India (IPI) natural gas
pipeline, the proposed Liquefied Natural Gas (LNG) deal, the
IAEA and Iran's nuclear program, Iraq and Afghanistan in
meetings with PM Singh, External Affairs Minister Pranab
Mukherjee, Minister of Petroleum and Natural Gas Murli Deora
and National Security advisor MK Narayanan November 16-17.
Originally slated to attend the Regional Economic Cooperation
Conference on Afghanistan, Mottaki opted out, sending
Ministry of Foreign Affairs Director General Eslami instead.
In addition, Mottaki addressed the Indian Islamic Cultural
Center and the Indian Council of World Affairs, where he
announced that Iran would like to join the South Asian
Association for Regional Cooperation (SAARC). Contrary to
press accounts, Minister of Petroleum and Natural Gas
Additional Secretary Anil Razdan (protect) told visiting
South and Central Asia Senior Advisor Robert Deutsch that no
substantive progress was made during Mottaki's visit either
on the LNG issue or on the IPI natural gas pipeline.
Overall, the Indians were very careful not to greet Mottaki
with open arms -- infuriating the U.S. -- or to give him the
cold shoulder -- infuriating the Left and Muslims. END
SUMMARY.

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PIPELINE POLITICS
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2. (C) Iranian Foreign Minister Mottaki used his first visit
here since becoming Foreign Minister as an opportunity to
strengthen bilateral relations between the two countries and
to talk about the proposed Iran-Pakistan-India (IPI) natural
gas pipeline. In a meeting November 16, Mottaki extended an
invitation to PM Singh, on behalf of President Ahmedinejad,
to visit Iran. A primary focus of discussions with PM Singh,
as well as External Affairs Minister Pranab Mukherjee and
Minister of Petroleum and Natural Gas Murli Deora was the IPI
project, which has been hampered by pricing, security and
political issues. On the LNG negotiations, Iran has offered
to sell LNG at US$7.20 per million British Thermal Units
(mmBTU),while India is prepared to pay no more than
US$3.00-4.00 per mmBTU. Mottaki reportedly offered to work
out an agreement and to sell LNG at a lower price to the
Indians. While the press has enthusiastically touted this
news as the solution to the problems hindering the IPI,
journalists continue to tell Post that the IPI is unlikely

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ever to be built.

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PAKISTAN STILL A HUGE HURDLE
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3. (C) Getting a pipeline across Baluchistan to India is too
difficult, says "Times of India" journalist Indrani Bagchi,
who spoke with Mottaki November 16, citing security issues as
a hindrance, while others tell us that the Indians find
negotiating with Iran "impossible." "No one knows who is in
charge," said "Hindustan Times" journalist Pramit Pal
Chaudhury, likening it to "negotiating with the shadow of a
shadow of a shadow." Political issues also contribute to
the pipeline's lack of feasibility. Anytime Indo-Pak
relations break down, Pakistan can essentially pull the plug
on the deal in retaliation - "who will then pay the Iranians
for LNG that isn't reaching India?" questioned Chaudhury.
Still, the Indian government gives no public indication that
the IPI is not being pursued. "India will continue to talk
about it. If they nix the deal, it will look like they did
it for the Americans," opined Chaudhury, continuing "No one
wants to be the one who pulls the plug on the pipeline."

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THE PRICE IS RIGHT
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4. (C) Mottaki was quoted by the press as stating that the
June 2005 LNG deal with India would be revised. The two
sides will reportedly "establish a formula" to finalize
pricing soon, according to "The Hindu." Mottaki welcomed
investment by Indian oil companies in Iranian oil and gas
sectors, and remained positive that an agreement would be
reached on LNG pricing. (Note: There has been no movement
on the LNG deal since September 2005, when India voted
against Iran at the International Atomic Energy Agency
(IAEA),at which time Iran called the deal off. End Note.)
Regardless of the viability of the IPI pipeline, the fact
that Iran is willing to bring down price of LNG is important
to India. Sandeep Dikshit of "The Hindu" tells us that LNG
shipment costs have been declining to the point where, in the
near future, it will be possible to ship LNG for the same
price as operating the pipeline. "Natural gas prices are
expected to fall by next summer or fall, and when they do,
everyone will forget about the pipeline," says Dikshit.

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"A NUCLEAR FREE MIDDLE EAST"
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5. (C) Iran's nuclear program has been a hot button issue in
India, since the GOI voted twice against Iran's nuclear
program at the IAEA. Mottaki was quoted as saying, "We
believe that not only a nuclear free Middle East but also a
nuclear-free world will benefit the entire humanity," but in
his interview with Bagchi, he entirely avoided questions
regarding the IAEA and the issue of sanctions. Despite that,
Bagchi is convinced that Iran has accepted India's position
on the IAEA, noting that after the Nonaligned Movement Summit
in Havana, PM Singh referred to the votes as "a thing of the
past." Mottaki reportedly said that Iran was closely
cooperating with the IAEA and its inspections teams, while
respecting international laws and regulations - "hence, there
is no reason for us to yield to the illogical demands made
and the double standards applied by certain powers."


6. (C) Related to the GOI's position on Iran's nuclear
program, PolCouns requested a readout on the Nov. 1-8 visit
of UK Foreign Secretary Margaret Beckett, who met with
Foreign Minister Mukherjee and Minister of State Anand
Sharma. Beckett told Mukherjee that there is absolute
consensus among the P5 Germany: a nuclear Iran is
unacceptable. The only differences within the group concern
the degree of sanctions to be imposed. While no one wants a
military solution, the P5 1 have gone the extra mile,
placing numerous options on the table, Beckett said. Iran's
refusal to take up those offers suggests a lack of interest
in a negotiated solution. Iran, Beckett added, is making
trouble throughout the Middle East. Mukherjee replied that
India wants a peaceful resolution to the issue. In a
separate meeting, Sharma acknowledged that India faces a
quandary on Iran. Beckett pushed him, describing how far the
P 5 1 have gone in trying to induce the Iranians to
negotiate seriously. The only possible interpretation for
Iran's refusal, Beckett continued, is that the Iranians don't
want a negotiated solution.

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CRITICISM OF THE U.S. - IRAQ AND AFGHANISTAN
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7. (C) Raising Afghanistan and Iraq in the Bagchi
interview, Mottaki was critical of the U.S., saying "America
should acknowledge its mistakes in Iraq and Afghanistan." He
noted that America should have a timeline on Iraq, and said
there is no doubt the Iraqis can govern themselves. When
asked by Bagchi if Iraq would remain as one single entity,
Mottaki did not reply. Taking questions after addressing the
Indian Council of World Affairs, Mottaki said the time of
"unilateralism" and using force is over, according to "The
Hindu," which also reports that Mottaki was referring to the

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U.S. when he said "the language of threats does not work any
more."

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REGIONAL COOPERATION AND RELIGIOUS TIES
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8. (C) Mottaki had been the only Foreign Minister slated to
head his country's delegation to the Regional Economic
Cooperation Conference on Afghanistan, but he sent Minister
of Foreign Affairs Director General Eslami instead. Regional
integration remains high on the agenda, however, as Mottaki
announced at the Indian Council of World Affairs that Iran is
seeking observer status in the South Asian Association for
Regional Cooperation. Iran would later seek full membership
to the group, Mottaki reportedly stated. In a show of
solidarity to India's Muslim population, Mottaki also
addressed the Indian Islamic Cultural Center at a seminar
entitled, "The Importance of Cultural and Religious
Interaction Between India and Iran," where he stated that
"Disunity and separation are against the spirit of Islam and
other religions," and warned, "(Muslims) should be attentive
and alert against all sorts of intrigues, including those
originating outside of the country." He also remarked, "when
we look to our east, we consider India as a potential and
natural ally...it is hoped that in the near future we shall
find this mutual cooperation materializing, not only inside
the region, but also beyond it."

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COMMENT: JUST GOING THROUGH THE MOTIONS
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9. (C) Although Mottaki continues to talk up the LNG and IPI
proposals in his press statements -- as have other visiting
Iranians over the last year -- we still see no movement on
the proposed IPI natural gas pipeline and only new public
posturing by Iran on the LNG deal. (Reftel provided detail
on the negotiations on both proposals.) Mottaki's statements
to the Indian press during the visit suggest that, in his
discussions with Petroleum Minister Deora, he had offered
more flexibility in the pricing formula for the proposed sale
of 5.0 million tons of LNG to India. However, MPNG
Additional Secretary Anil Razden (protect) told visiting SCA
Senior Advisor Robert Deutsch that no definitive progress was
made during Mottaki's visit on the LNG issue or on the IPI
pipeline. Razdan said the GOI "would have to wait and watch"
how the negotiations with Iran would proceed on the LNG
proposal. MPNG officials have noted to us that they do not
believe Iran would have the domestic engineering capability
or access to foreign technology to build LNG liquefication

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plants.


10. (C) Mottaki's presence created complications for his
Indian hosts, who have to balance domestic sympathy for Iran
among vociferous Leftists and Muslims with international
condemnation of Iranian nuclear intentions. In what one
journalist condemned as a "strategy of appeasement," India
has a constituency to accommodate, while it tries to align
itself with an international community critical of Iran's
nuclear ambitions. India will have to continue to balance
the two. Officially opposed to the use of "coercion" against
Iran in favor of finding a resolution through dialogue, the
GOI had a chance to push that approach in New Delhi, but,
from what we can gather, most of the conversation centered
around energy.


11. (C) The timing of Mottaki's visit coincided with the
passage of the Indo-U.S. civilian-nuclear deal, and he didn't
miss any opportunities to criticize the U.S. publicly. The
fact that such a high-level visitor took the time to visit an
Islamic cultural center, yet missed the regional economic
conference on Afghanistan (allegedly his reason for
visiting),suggests that Mottaki's real agenda may have been
to raise Iran's profile as the Indo-U.S. relationship appears
to be growing stronger. Given the UPA's domestic political
tightrope act, and its desire to keep friendly relations with
Tehran and Washington, it more or less succeeded in managing
this hot-potato visit without offending the U.S. or its vital
Left and Muslim supporters. END COMMENT.
MULFORD