DELHI DIARY, JUNE 6 - 13

C O N F I D E N T I A L SECTION 01 OF 03 NEW DELHI 002766 SIPDIS SIPDIS E.O. 12958: DECL: 06/13/2017 TAGS: PREL PREF PHUM PGOV MASS MARR KOMC KSTC RS CH, IN SUBJECT: DELHI DIARY, JUNE 6 - 13 Classified By: Acting Deputy PolCouns Joel Ehrendreich for Reasons 1.4 (A,B,D) ¶1. (U) Below is a compilation of political highlights from Embassy New Delhi for June 6 - 13, 2007 that did not feature in our other reporting, including: POL-MIL: -- India, China announce joint military exercises -- Russian Ground Force commander visits India -- Russia continues to gouge India in military sales -- Corruption allegations may complicate helicopter deals, to U.S. advantage -- New Delhi nominates Indian companies as offset partners OTHER: -- Backlash against Gujjars, Meenas in Rajasthan -- Update on India DHS adjudications INDIA, CHINA ANNOUNCE JOINT MILITARY EXERCISES -------------- - ¶1. (U) General JJ Singh, India,s Army Chief, announced to local media on June 6 that 100 Indian Army troops will participate in joint military exercises together with Chinese troops for the first time later this year. The cooperation in these exercises will focus on counter-terrorism An Indian Ministry of Defense spokesman anonymously added that a similar exercise is likely to be held in India next year. RUSSIAN GROUND FORCE COMMANDER VISITS INDIA -------------- ¶2. (C) Russian Army Ground-Force Commander-in-Chief General Alexei Fedorovich Maslov arrived in India June 4 for a five day visit. Despite some sensationalist Indian news reports that Maslov was negotiating the large defense deals currently on the table with New Delhi, contacts confirmed our assessment that Maslov is not authorized to negotiate procurement deals. Maslov,s visit was solely intended to facilitate general defense cooperation and to remind India of the long-standing close relationship between the two states, armed forces. Specifically, one source told us, Maslov might oversee Indian Army exercises demonstrating Russian military hardware. Indian and Russian paratroopers are due to participate in the land part of their biennial war games INDRA-2007 in Pskov in north-western Russian in September. The naval portion of INDRA 2007 was in the Sea of Japan in April 2007. RUSSIA CONTINUES TO GOUGE INDIA IN MILITARY SALES -------------- -------------- ¶3. (C) The Russians continue to be bad-faith partners with India as far as military sales are concerned, by arm-twisting for cost-increases on existing sales, breaking delivery deadlines, and causing cost-overruns. Moscow announced the first week of June that it wants India to pay up to USD two billion above-and-beyond the contract cost of 138 additional SU-30 jet fighters. Russia and New Delhi had earlier signed a contract in US dollars, with a cost-escalating percentage of 2.5 percent, for delivery of 238 SU-30 fighters to New Delhi. Now that 60 fighters have been delivered and another 40 promised at the original terms, Moscow wants to renegotiate the contract in Euros with an increase to five percent cost escalation for delivery of the remaining 138 aircraft, to make up for the dollar's falling value. The Indians are squirming and reportedly trying differing negotiating tactics, agreeing to convert the deal's currency to Euros, and have asked for a lower cost increase, but Moscow seems immovable, knowing that it has Delhi by the bootstraps. Nandan Unnikrishnan, Senior Fellow at the New Delhi think-tank Observer Research Foundation told Poloff on NEW DELHI 00002766 002 OF 003 June 6 that the Russians have calculated carefully how far they can squeeze New Delhi without stepping beyond the contract boundaries. ¶4. (C) The Russians are to blame for the delay, now predicted to last until 2010, for delivery of the aircraft carrier Admiral Gorshkov, as well as cost-overruns for the ship's refurbishment that will stick New Delhi with paying an additional USD 113 million, a cost that was not included in the original contract. On Saturday, Indian naval chief Admiral Sureesh Mehta publicly announced that the Gorshkov will be inducted into the Indian navy in late 2008; but Unnikrishnan and Sujan Dutta, defense correspondent for "The Telegraph," told us that this was an attempt to put a happy spin on a bitter story, and that if true, the Gorshkov will be inducted with at least one more year's worth of work remaining before it is operable. Neither Unnikrishan or Dutta believes the Gorshkov will be delivered on time, as it is already two years late, and Unnikrishan added that the GOI may even exercise its option to slap Russia with a fiscal penalty for the delay, which would be a first. Yet Dutta noted that the Indian military makes it clear to the GOI that it cannot afford to do without the Russians, given that much of its existing hardware originated in Russia/U.S.S.R. He went on to note that the Indian military is increasingly trying to &hybridize8 its equipment ) for example, installing Israeli radar in Russian airplanes. CORRUPTION ALLEGATIONS MAY COMPLICATE HELICOPTER DEALS, TO U.S. ADVANTAGE -------------- ¶5. (U) New Delhi defense journal defensenews.com reported June 11 that the Ministry of Defense has &chosen8 Russia's Kazan Helicopter manufacturer to build 200 medium multi-role helicopters for India,s military, at a proposed cost of USD 2.8 billion. The contract has not been signed yet, but the article noted that Kazan was picked as the &preferred bidder.8 In May an Austrian firm, Rite Approach Group Ltd, filed a Public Interest Litigation (PIL) with the Indian Supreme Court against Kazan, alleging that Kazan had illegally paid a large commission to a rival agent for its help in clinching the helicopter deal. ¶6. (C) Perhaps not coincidentally, Post received a copy of a letter dated May 25, from Member of Indian Parliament Brijbhushan Sharan Singh, (Baratiya Janata Party, Uttar Pradesh state) addressed to GOI Defense Minister A.K. Antony, alleging impropriety and "malpractice" in the Ministry's choosing of Eurocopter over Bell in the recent single-engine helicopter competition. Singh alleges that the Eurocopter actually had more shortcomings in the trials than Bell's entrant, and that Bell's helicopters were less expensive; he states that "the trial report was manipulated such that Bell was excluded for commercial bid opening." NEW DELHI NOMINATES INDIAN COMPANIES AS OFFSET PARTNERS -------------- -------------- ¶7. (U) India,s Ministry of Defense intends to award a small group of private Indian companies special status to bring them on par with defense public sector units, allowing private Indian companies to be eligible to bid for contracts to manufacture defense platforms or - important to software companies such as Wipro - as "system integrators." In addition to this permission to compete with the public, state-run companies such as DRDO and HAL for large defense contracts, these RUR ("Raksha Udyog Ratna" or "defense industry jewels") companies will immediately become attractive potential offset partners for foreign bidders. Defense Minister Antony stated to Indian media that with the USD 10 billion expected to flow into the country in the next decade in the form of the Ministry,s contract-mandated offset requirements, the current private sector units lack the capacity to absorb such a vast amount of capital. Currently, 13 out of 41 private companies have been granted NEW DELHI 00002766 003 OF 003 this status as part of a Ministry of Defense drive to broaden its supply base. Larsen-Toubro, which has manufactured rocket casings for the BrahMos missile, and Tata Power have been named as sure candidates for this prestigious status MISCELLANEOUS COMMENTS FROM OUR DEFENSE ANALYST SOURCES: -------------- -------------- ¶8. (C) Though much bitterness has been expressed by Indian defense writers over Moscow's apparently broken promise to not allow re-export of Russian-made RD-93 MiG engines to Pakistan, neither Unnikrishnan or Dutta could confirm if any JF-17s with these engines actually have been transferred to Pakistan from Russia via China. ¶9. (C) According to Dutta, the Indian Air Force will send out a &large RFP8 for U.S.-produced Predator unmanned aerial vehicles (UAVs). He added that the Indian Air Force is currently using UAVs to patrol over Sri Lanka, at the request of the GOSL. BACKLASH AGAINST GUJJARS AND MEENAS IN RAJASTHAN -------------- -- ¶10. (SBU) On June 5, the Supreme Court (SC) condemned the just-concluded violent Gujjar demonstrations as a "national shame." Citing a Kerala High Court judgment that held violent strikers liable for the damage they cause, the SC demanded that police take action against violent Gujjars in Rajasthan, Uttar Pradesh, Haryana, and Delhi. The violence which began in Rajasthan on May 31 spread through northern India, landing in the capital on June 4. Angry demonstrators torched police stations, trains, and public buses; to halt transit, they set fire to vehicles, dug up national highways, and destroyed railway tracks. In response to the SC order, the Rajasthan police on June 7 filed criminal charges against Gujjar leader Col. Kirori Singh Bhaisala, holding him liable for the murder of a police constable by the demonstrators. Rajasthan Chief Minister (CM) Vasundhara Raje also cracked down on her own BJP party members who dared undermine her, suspending two Gujjar Members of the Legislative Assembly (MLAs) and issuing warning letters to 20 other Meena and Gujjar MLAs, including four Rajasthan government Ministers. ¶11. (C) Though elections in Rajasthan are not scheduled until November 2008, Gujjars have already declared they will do what it takes to unseat CM Raje. Tempers are cooling, violence has ended, and CM Raje has regained control of her state, but she remains in the hot seat both in Rajasthan as well as at BJP headquarters. UPDATE ON INDIA DHS ADJUDICATIONS -------------- ¶12. (U) On June 8, the International Catholic Migration Commission (ICMC) team presented seven cases (13 people) to DHS. All were approved, making for 13 cases (24 people) tentatively approved to date. Background: Earlier this year, the State Department Bureau of Population, Refugees and Migrants (PRM) officially transferred responsibility for processing refugees in India for US resettlement to ICMC ) Istanbul. ICMC staffers arrived in Delhi in mid-May to begin setting up operations. On May 23, ICMC began processing the existing refugee caseload in India, which consists largely of Afghan refugees referred by UNHCR as well as Burmese Chin with qualifying relatives in the US. In total, there are 175 P-1 cases (455 people) and 40 P-3 cases (169 people). Embassy will provide regular caseload updates in the Delhi Diary. MULFORD