RUSSIA AND INDIA SEEK TO IMPROVE ECONOMIC TIES;

UNCLAS MOSCOW 005512

SIPDIS

SENSITIVE

SIPDIS

C O R R E C T E D C O P Y (Adding caption)

E.O. 12958: N/A
TAGS: PGOV PREL ECIN ENRG MASS IN RS
SUBJECT: RUSSIA AND INDIA SEEK TO IMPROVE ECONOMIC TIES;
SECURITY COOPERATION LIMITED

REF: MOSCOW 5435


1. (SBU) Summary: In official briefings on Indian Prime
Minister Singh's November 11-12 visit, Russian and Indian
diplomats confirmed reftel assessment of bilateral relations
as politically healthy but in danger of appearing "emaciated"
should the countries fail to expand economic ties. The
diplomats candidly portrayed Russia-India trade as dependent
on military sales and said both sides sought to remove
barriers to trade and establish mechanisms to promote
investment. No date was set for signing a delayed agreement
for Russia to provide India with four additional nuclear
reactors, but the Indians assured the GOR it would be signed.
Indian diplomats told us PM Singh invited Putin to India in
2008 and said India prefers Putin remain Russian President
for a third term. India would like to join the Shanghai
Cooperation Organization (SCO),but will remain an observer
for the near future. End summary.

Indians Praise Putin for Reviving Ties
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2. (SBU) During separate briefings held for the diplomatic
corps the week of November 19, the MFA and Indian Embassy
provided additional details on PM Singh's November 11-12
Moscow visit. In contrast with an earlier MFA assessment of
the "modest" visit (reftel),the Indians were more effusive
in proclaiming Singh's trip a success. Indian Embassy
Counselor Ramesh Chandra said the annual summits, begun in
2000, are a sign of a relationship brought to "new heights"
under Putin after ties waned following the collapse of the
USSR.


3. (SBU) Chandra noted that PM Singh invited Putin to India
in 2008 to inaugurate the "Year of Russia" in India, a major
cultural exchange that will be followed by the "Year of
India" in Russia in 2009. When Putin declined the
invitation, citing upcoming Presidential elections, Singh
responded that India would like to see Putin remain for a
third term.

Relations Politically Healthy, Economically "Emaciated"
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4. (SBU) Diplomats described Russia-India relations as
politically healthy but lacking in economic and trade ties.
MFA India Desk Chief Aleksandr Hozin said that the current
low level of trade between Russia and India was a "sensitive"
issue for the GOR and the expansion of economic ties is a top
priority. Chandra said Russia and India enjoy strong
political relations that have not translated into "equitable"
business ties. He warned that failure to expand economic
ties would make the relationship appear increasingly
"emaciated" as Indian trade with other international partners
increase.


5. (SBU) Economics and trade were a focus of the Singh visit,
during which the GOR and GOI agreed to establish a joint
working group on expanding trade that would seek to remove
barriers such as tariffs and incompatibility between the
Russian and Indian banking sectors. Russia and India will
also explore establishing a center based in Moscow to promote
the transfer of new technology to compliment three high-tech
development centers already set to open in India and Russia
(reftel). The Russians and Indians agreed, however, that
expanding trade needed to go beyond intergovernmental efforts
and would depend on the private sector.

No Timeline for Russia-India Nuclear Agreement
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6. (SBU) Hozin expanded on his earlier remarks on the
Russia-India nuclear agreement (reftel),which he said was
finalized and simply awaiting signature. No timeline was
set, but Singh had given his "assurance" the agreement would
eventually be completed. Hozin said "no direct link" was
made between the Russia-India nuclear agreement and the
U.S.-India 123 Agreement, although Russia did ask India to
negotiate with the IAEA to reach a safeguards agreement that
would allow Russia to sell India the four reactors. The GOR
predicted that the process would not be easy but nuclear
restrictions on India would ultimately be lifted. Hozin said
the GOR "felt strongly" that India had met its "international
obligations" to protect its civilian nuclear program and keep
it separate from its military program.

Limited Security Cooperation
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7. (SBU) In their briefings, Russian and Indian diplomats
explained how defense cooperation had evolved from a simple
seller-buyer relationship to one in which Russia and India
worked on joint military production projects (reftel).
Defense cooperation did not translate into security
cooperation, which remained limited. Putin and Singh agreed
the Russia-India Joint Working Group on Terrorism, which
Hozin termed as not more than a forum for exchanging
information, would go from annual to biannual meetings.


8. (SBU) During their meeting, Singh told Putin India placed
great importance on trilateral Russia-India-China relations
and would like "enhanced participation" in the SCO. The GOR
supports no SCO enlargement at this point and offered an
increased Indian role in the SCO's economic and energy
activities.

BURNS