DELHI DIARY, JUNE 6 - 13

C O N F I D E N T I A L SECTION 01 OF 03 NEW DELHI 002766

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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
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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
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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

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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
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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

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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