INDIA FALLING SHORT OF POTENTIAL IN AFRICA,

C O N F I D E N T I A L SECTION 01 OF 05 NEW DELHI 001325

SIPDIS

SIPDIS

DEPT. FOR SCA, EAP, EB, AND AF

E.O. 12958: DECL: 03/18/2017
TAGS: PREL PGOV PINR IN CH ECON ENRG EPET EAGR
SUBJECT: INDIA FALLING SHORT OF POTENTIAL IN AFRICA,
COMPETING WITH CHINA FOR RESOURCES AND INFLUENCE

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


1. (C) Summary. Indian strategic thinkers agree that China
is leading India in involvement with Africa by almost all
economic and political measures. Not only does China have a
greater volume of bilateral trade with Africa, but China is
also pouring development aid and concessional loans into
Africa at levels that India can at best only fractionally
match. India has a two million-strong diaspora in Africa and
U.N. peacekeepers deployed in several countries, but
otherwise has a markedly weak diplomatic presence in the
continent. While many in India may wax philosophical about
India's cultural, historical, and colonial linkages with
Africa or find it difficult to operate in French-speaking
environments, China apparently encounters few obstacles.
Lacking any strategy or push for meaningful engagement with
Africa, Indian strategists feel India is well behind China in
any competition over Africa, real or existential, with little
chance of catching up in the near-term. India's ambivalence
and pessimism toward competing with China for the resources
of the African continent belies its own stated aspirations to
be a world power in the near- or long-term. End summary.

India in Africa: The Aid Numbers
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2. (U) India's level of trade with Africa stood at $9.14
billion in 2005, with 68% of that purely with South Africa.
(Note: By comparison, two-way U.S.-Africa trade was $60.6
billion in 2005. End note.) India has shown a desire to
pursue a free trade agreement (FTA) with the Southern African
Customs Union. However, given the pace of India's other FTA
negotiations and the fact that GOI negotiators are already
stretched thin in discussions with the EU, ASEAN, Japan, and
others, little movement can be expected on this initiative in
the foreseeable future. In terms of official assistance to
Africa, the Export-Import Bank of India has extended over
$550 million in lines of credit to sub-Saharan Africa, of
which $250 million was earmarked for the Economic Community
of West African States (ECOWAS) Bank for Investment and
Development in May 2006. The Bank has also offered lines of
credit to several countries directly, such as $102 million to
Ghana, $31 million to Burkina Faso, $27 million to Cote
d,Ivoire, and $20 to Mozambique. India's Techno-Economic
Approach for Africa-India Movement (TEAM-9) initiative (with
ten participants, actually: India, Burkina Faso, Chad, Cote
d,Ivoire, Equatorial Guinea, Ghana, Guinea Bissau, Mali,
Niger, and Senegal) has a $500 million concessional credit
facility for African member countries. The largest projects
include $30 million for rural electrification in Ghana and
$15 million for drinking water in Equatorial Guinea.

Investment, Peacekeeping, and Diaspora
--------------


3. (U) India is active in Africa in other ways besides
developmental assistance and loans. The Tata Group operates
in eight different African nations and has a stake in South
Africa's telecommunications industry. In 2003, India's Oil
and Natural Gas Corporation (ONGC) purchased a 25% stake in
Greater Nile Petroleum Oil Company in Sudan for $750 million.
A 2005 attempt by ONGC to buy a 45% stake in Nigeria's Akpo
Field (valued over $2 billion) was blocked by the Indian
government as being "too risky," and was subsequently

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purchased by the Chinese. India is contributing about 1,400
military personnel to U.N. peacekeeping operations in Eritrea
and Ethiopia and 3,000 troops in the Democratic Republic of
Congo. In addition, there is an estimated two million-strong
Indian diaspora throughout Africa as a legacy of India's
shared colonial heritage with many African nations.

India Versus China: No Contest
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4. (U) India's Africa and China watchers alike, who bemoan
China's rising influence in Africa, note that China-Africa
levels of bilateral trade quadrupled to $40 billion between
2000 and 2005. In 2005, China overtook the U.K. to become
Africa's third largest trading partner behind the U.S. and
France. China's oil imports from Africa (primarily Nigeria,
Sudan, Angola, and Equatorial Guinea) account for 30% of
China's external oil dependence, with Angola as China's top
supplier since 2006. By mid-2006, Chinese foreign direct
investment in Africa totaled $1.18 billion. In 2000, China
wrote off $1.2 billion of African countries, debt, and
pledged yet another $750 million in write-offs in 2003. The
Chinese Export-Import Bank has an accumulated commitment of
$800 million in concessional loans for 55 projects spread
between more than twenty different African nations. China
committed $8.1 billion in loans to Nigeria, Angola, and
Mozambique in 2006 alone.

Competition with China Denied, Yet Already Underway
--------------


5. (C) Poloff spoke with Param Jit Mann, MEA Director for
West Africa, on March 9. Mann said that some in the media
and academia inaccurately talk about opportunities for India
and China in Africa as if it were the next "Gold Rush." He
said that India was moving at its own pace on bilateral,
regional, and pan-African levels, and not acting in any way
"directly related" to China's moves. He continued, "India
does not base its decisions on the level, speed, or methods
with which China is interacting with the African nations."
He said that India had indeed proposed a large India-African
Union summit well before the Forum on China-Africa
Cooperation took place in Beijing in November 2006. A
working group has been established to discuss an
India-African Union summit, which is scheduled to meet for
the first time during the week of March 12. He gave no
prospective date as to when the actual summit might take
place, however, saying, "It's extremely difficult to
coordinate that many people's schedules."


6. (C) The Nigerian Embassy's Senior Political Counselor
U.A. Gur also dismissed ideas of Indian-Chinese competition
in Africa, but on different grounds--that India simply cannot
compete. In a meeting with Poloff on March 13, Gur
acknowledged that the Indians have had connections with
Nigeria for decades while the Chinese came to Nigeria in only
the last 10-15 years. He said that it is readily apparent
that the Chinese are there solely to do business, and not
otherwise "interfere." He found that whatever advantage
India may have had in Nigeria twenty years ago has
disappeared; "China has surpassed India and is so far ahead
that India cannot keep up," he said.


7. (C) Prof. Sanjukta Banerjee of Jadavpur University,

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Kolkata said at an India-Africa seminar at New Delhi's
Jawaharlal Nehru University (JNU) on February 22 that India
and China are indeed competing for "more than a mere
foothold" in Africa. Both are involved in infrastructure
projects throughout Africa, but China has concentrated in
extractive industries, thus making it the target of both
Western and African criticism. She pointed to the presence
of thousands of Chinese workers in Sudan since the mid-1990s
as one example. Peacekeeping, long a specialty of India, is
also being increasingly taken up by China after it deployed
troops to Liberia in 2003. While India sees Africa as a
platform to promote its U.N. Security Council seat bid, China
is using its economic clout to coerce African nations into
supporting the One-China Policy, she said. She added that
only five African nations have not yet agreed, and thus
remain ineligible for Chinese aid.

India Trying to Branch Out Through Technology and TEAM-9...
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8. (C) Ever since January 2006, when National Security
Advisory Board member C. Raja Mohan wrote an oft-quoted op-ed
saying that India is "sleepwalking through new opportunities"
in Africa, there has been growing awareness that India needs
to do more to establish more meaningful economic and
diplomatic ties with Africa. MEA Director Mann, whose office
handles relations with 25 African nations with only six
Indian embassies between them, said India has considered new
embassies in more African countries; he provided no
prospective locations or time frames, however.


9. (C) Mann lauded Indian efforts through the TEAM-9
(Techno-Economic Approach for Africa-India Movement)
initiative He emphasized that it allows India to deal with
member countries (Burkina Faso, Chad, Cote d,Ivoire,
Equatorial Guinea, Ghana, Guinea Bissau, Mali, Niger, and
Senegal) on a bilateral level and use the $500 million
concessional credit facility to "focus on whatever those
countries want." TEAM-9 loans have a span of twenty
years--five-year moratorium, fifteen years of repayment--and
avoid "India assisting with information-technology just
because India is good at it." He viewed Niger's new
membership in TEAM-9 (as of 2006) as a sign of "great
appreciation" within Africa for the initiative. In addition
to a plethora of development projects, Mann said India is
also financing the construction of a presidential residence
in Ghana. On the IT side, however, he mentioned the
Pan-African e-Network, India's joint effort with African
Union as a means of technological capacity building. India
is investing $1 billion over five years in this project to
connect select Indian universities and hospitals with African
counterparts with high-speed telecommunications links
throughout 53 African nations. The African Union is
currently developing a plan to sustain the program's
operations beyond India's five-year commitment, he said.


10. (C) Dinkar Khullar, MEA Joint Secretary (West Africa),
called the cooperation with the West African TEAM-9 member
countries "significant," and said that of the $500 million
committed so far, already $280 million is being used in
current projects. What was a "small initiative in 2004" has
been a great success, and now Gambia, Central African
Republic, and several other nations are interested in
participating, he said. Khullar called it a gratifying trend

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that many high-profile visitors from India are traveling to
Africa, and not just from the energy sector, but also from
the transportation (railroad),financial, and IT industries.
He highlighted Indian agricultural assistance, humanitarian
schemes and these visits as "signs that relations will be
upgraded in the future." Not to overlook the pragmatic,
however, he said that Africa's hydrocarbons, minerals, and
other resources are not only of interest to India, but also
China.

...But Falling Short Because of Linguistic and Domestic
Considerations
--------------


11. (C) The Joint Secretary then addressed the political
context of India's relationship with Africa. Countries that
were once "lukewarm" in supporting India's bid for a
permanent seat on U.N. Security Council are now becoming
"more supportive." He said that the sub-Saharan member
countries of the Organization of the Islamic Conference (OIC)
tend to be more moderate, which "may be useful" to India
considering its differences of opinion with OIC over Kashmir.
Saying that many African countries had long been unknown, or
ignored by, Indian public servants, businesspeople, and
academics, Khullar encouraged track-two diplomacy efforts
targeted at Africa. He added that India lacks a substantial
diaspora presence in western and central (francophone) Africa
and thus India's diplomatic and economic pursuits have almost
exclusively focused on the Commonwealth countries in Africa.
"India has simply not done enough in French," he said.


12. (C) Former MEA Foreign Secretary Shashank, however,
took a more pessimistic view of India's relations with Africa
vis--vis China and directed blame at India's domestic
considerations. Like India, the African nations emerged from
colonization, but unlike India, many have not succeeded and
been "let down" by India's lack of leadership and
involvement. While India kept away from Africa, others
crowded in, he said. "The Chinese can offer billions of
dollars right now, but India cannot do that. There would be
a huge outcry in India if it showered money on special,
privileged groups throughout Africa. India must consider its
interests in the long run; but how does the Indian government
interest Indian companies and banks in forming partnerships
in Africa?" he asked. Continuing his comparison with China,
he said that African nations are reluctant to cast their lot
completely with China because of their collective fear of
renewed colonialism. Yet they realize that India cannot do
much, he warned. Prof. Sanjukta Banerjee added, however, "In
the very least, people in Africa and elsewhere question
Chinese motives, but nobody worries about India."

India's Windows of Opportunity Closing?
--------------


13. (C) Nigerian Embassy Counselor Gur said that his
country could learn from the experiences and expertise of
Indians, particularly as India is a multi-ethnic,
multi-lingual nation, like Nigeria, with a thriving
manufacturing sector, unlike Nigeria. He lamented that
Nigeria relies on imports for many manufactured goods, while
India has built up a level of self-sufficiency, e.g. having
several automobile manufacturing companies. Gur found that
Chinese companies are doing much to bolster Nigeria's

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construction, food, and oil industries, but that occurs
without any transfer of technology and little transfer of
wealth. Indeed, Chinese products, such as low-cost textiles
and garments, are putting Nigerian companies out of business,
which contributes to the growing problem of unemployment in
Nigeria. Gur saw opportunities for India to be helpful in
the areas of IT, agriculture, and automobile production--all
areas in which he saw India as successful.


14. (C) Dr. Vandita Ray of Jamia Millia Islamia University,
New Delhi still sees India as having a window opportunity
"before China closes it." She said Africa had become
"marginalized" by the developed countries, which "did little
really to help the continent." She criticized the Indian
government for making language barriers an excuse for not
pursuing wider engagement with Africa. African nations have
started to look towards other "South" countries, however,
India being chief among them. She recommended that India use
its skills in the agricultural sector to help diversify
African crops and expertise in IT to lessen Africa's
technology gap with the rest of the world. She warned, and
former MEA Foreign Secretary Shashank concurred, that if
India does not play to its strengths in Africa soon, then
China will encroach even there.

Comment: India May Have A Silver Lining, But Lacks Strategy
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15. (C) Comment: To meet its own stated aspirations to be
a political and economic world power, India's active
engagement with Africa should be a no-brainer. Yet there
appears to be a significant disconnect between Indians' own
perceptions about what they can do and they are doing to
bolster ties. India's IT expertise and common cultural and
linguistic heritage with some African nations may be its
silver lining, but issues of language and culture differences
have certainly not been insurmountable hurdles in the way of
the Chinese. While MEA officials boast of success with
Indian initiatives with Africa, Jadavpur University's Prof.
Banerjee complained that African heads of state are still not
being taken seriously within MEA. It is just as well that
MEA officials say India and China are not competing, because
even African diplomats are saying that China is too far
ahead. As Mauritius Ambassador to India M. Choonee also told
the audience at the February 22 JNU event: "India simply
cannot compete economically with China in Africa as things
are."


16. (C) A better Indian strategy toward India-Africa
relations would benefit the United States. As a rising,
stable, and open democracy, India has "street creds" with
many African countries. At the same time, India offers a
better role model for governance than some others who court
the continent. An India more proactively engaged with Africa
while remaining cognizant of human rights and other
humanitarian concerns in Africa would provide the U.S. a
valuable partner for African initiatives in the long-run,
particularly given India's advanced position in the IT,
agricultural, and pharmaceutical industries. As the U.S.
seeks ways to leverage the global partnership with India,
Africa offers a potential opportunity to advance our shared
values. End comment.
PYATT