CHIRAC VISIT TO INDIA: FOCUS ON BUSINESS, NUCLEAR

C O N F I D E N T I A L PARIS 001330

SIPDIS

SIPDIS

E.O. 12958: DECL: 03/01/2016
TAGS: PREL ENRG TRGY MASS TSPA KNNP IN IR FR
SUBJECT: CHIRAC VISIT TO INDIA: FOCUS ON BUSINESS, NUCLEAR
ISSUES, IRAN

REF: NEW DELHI 01321

Classified By: Political Minister-Counselor, Josiah Rosenblatt, for rea
sons 1.4(b) and (d).


1. (C) SUMMARY. MFA India desk officer told us February
28 that Chirac's February 19-21 visit to India focused
primarily on further improving business relations and
exploring French-Indian nuclear cooperation; other issues
included military and space cooperation. While the two
countries delivered a joint declaration on the development of
nuclear energy for peaceful purposes, Vassy said that the GoF
was clearly looking to see what developed during President
Bush's visit to the country to determine how nuclear
cooperation between India and members of the NSG would
evolve. Vassy characterized Indian PM Singh's stance on Iran
as "courageous" in light of elections taking place in several
regions and India's significant Shi'a population. END
SUMMARY.


2. (C) MFA India deskoff, Louis Vassy briefed poloff
February 28 on Chirac's February 19-21 visit to India.
Vassy, who had been a member of Chirac's advance party and
stayed throughout the visit, said that a major focus of the
trip was promoting French-India business relations and
investment, which was successful despite the danger that
tensions over Lakshmi Mittal's take-over bid for the major
European steel producer Arcelor would upstage success stories
from the trip. Some 30 business leaders from major French
companies went to India with Chirac and the delegation
expressed interest in investing in diverse areas, including
infrastructure, IT, pharmaceuticals, food processing,
automobiles and aeronautics. New Delhi and Paris also agreed
to double bilateral trade over the next five years and to
boost the inflow of French direct investment to $1 billion in
the next three years. Vassy outlined a few of the major
commercial deals struck on the trip to include an agreement
to sell 43 passenger Airbus planes worth $2.5 billion and a
$270 million deal to sell 15 ATR 72-500 aircraft (used for
shorter commercial routes).


3. (C) Vassy said that nuclear cooperation was a priority of
both sides and that France and India came out with a joint
"Declaration of Nuclear Energy for Peaceful Purposes"
(faithfully reproduced and reported on along with Chirac's
trip in general in REF A). Vassy said that the GoF now
needed to see how other members of the NSG, prominent among
them the U.S., would work to bring India into the nuclear
fold. Vassy asked about progress being made on this front in
advance of President Bush's trip to India.


4. (C) Vassy said that India and France signed a Defense
Cooperation Agreement that would pave the way for more joint
exercises and training operations between the two countries
in addition to promoting defense industry cooperation. When
asked about a sale of Rafale aircraft, Vassy replied that it
had been discussed and that the two major areas of concern
regarding the potential sale of the French aircraft to India
were technology transfer and cost. He said that the Rafale
aircraft was much more sophisticated than its predecessor,
the Mirage, and that "sensitive" discussions took place over
technology transfer issues. The second area of concern,
according to Vassy, was price; the Rafale would cost
significantly more than the Mirage, and the French had to
justify the higher price tag. Until recently the Mirage was
being considered for GOI purchase until the manufacturer,
Dassault Aviation, informed the Indian Government of its
decision to stop making the jet.


5. (C) Vassy said that the importance of maintaining
pressure on Iran was also discussed during the visit. With
five Indian states due to hold elections in the coming month,
the high Shi'a population in India, and the communist party's
strategy of rallying against the government on foreign policy
issues, Vassy said the French praised PM Singh's "courageous"
decision to support the U.S. (and French) position on Iran's
nuclear program.


6. (C) Vassy also said that UNSC enlargement was discussed
briefly and that India had agreed to participate in the
International Conference on New Development Financing
Mechanisms currently taking place in Paris.


7. (C) Vassy said that Chirac's personal interest in
fostering relations with India was palpable at the MFA.
Contact between the MFA's regional bureau and the President's
office was frequent, which he described as both a blessing
and a curse. On one hand, he said, his office enjoyed the
attention of officials in more powerful positions while, on
the other, it experienced a loss of autonomy as decisions

usually made at lower levels were often addressed at higher
echelons in the government.



Please visit Paris' Classified Website at:
http://www.state.sgov.gov/p/eur/paris/index.c fm

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