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 NEW DELHI 00007935 001.2 OF 005 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. -------------- PIPELINE POLITICS -------------- ¶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 NEW DELHI 00007935 002.2 OF 005 ever to be built. -------------- PAKISTAN STILL A HUGE HURDLE -------------- ¶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." -------------- THE PRICE IS RIGHT -------------- ¶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. -------------- "A NUCLEAR FREE MIDDLE EAST" -------------- NEW DELHI 00007935 003.2 OF 005 ¶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. -------------- CRITICISM OF THE U.S. - IRAQ AND AFGHANISTAN -------------- ¶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 NEW DELHI 00007935 004.2 OF 005 U.S. when he said "the language of threats does not work any more." -------------- REGIONAL COOPERATION AND RELIGIOUS TIES -------------- ¶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." -------------- COMMENT: JUST GOING THROUGH THE MOTIONS -------------- ¶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 NEW DELHI 00007935 005.2 OF 005 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