AMBASSADOR, INDIAN DEFENSE MINISTER DISCUSS

C O N F I D E N T I A L SECTION 01 OF 02 NEW DELHI 004832

SIPDIS

SIPDIS

DEPT FOR EEB/CIP - DAVID GROSS, FSAEED, NFETCHKO
DEPT FOR EEB/CBA - JFMERMOUD, TGILMAN
DEPT PASS TO USTR - DHARTWICK/CLILIENFELD/MANAND
USDOC FOR U/S LAVIN/HVINEYARD/LDROKER/ASTERN
USDOC FOR NTIA (GALLAGHER)
USDOC FOR 6000/TD/AC/BLOPP

E.O. 12958: DECL: 11/01/2027
TAGS: PREL PGOV MARR PARM MNUC ECPS BEXP ENRG PK IN
SUBJECT: AMBASSADOR, INDIAN DEFENSE MINISTER DISCUSS
TRANSPARENCY, MARITIME PATROL AIRCRAFT, BANDWIDTH AND
CIV-NUKE

Classified By: Ambassador David Mulford for Reasons 1.4 (B, D)


1. (C) Summary. In a November 1 meeting between Ambassador
Mulford and Minister of Defense A.K. Antony, the Ambassador:

-- stressed the probity and accountability of American
business practices in the context of defense sales to India,
providing Antony with a copy of the Foreign Corrupt Practices
Act;

-- praised Antony for comments supporting the continuation of
the defense relationship no matter what the outcome of the
civil-nuclear deal, while warning that failure to complete
the deal could have a negative consequences on issues such as
the transfer of technology;

-- advocated for the P8 maritime surveillance aircraft; and

-- Urged the MoD to release third generation (3G) spectrum
for wireless mobile technologies.

Antony:

-- reiterated his commitment to anti-corruption in MoD
procurements, noting India plans to revise its Defense
Procurement Policy in 2008;

-- acknowledged the potential negative impact on the broader
relationship should the civil-nuclear deal not move forward;
and

-- stated the issue of spectrum release was currently being
debated in the Cabinet Committee on Security, adding his
ministry was willing to release 3G provided it was guaranteed
of a dedicated spectrum for defense purposes. End Summary.

Antony Finds Comfort In American Anti-Corruption Practices...
--------------


2. (C) Ambassador Mulford, following up on a previous
meeting, provided Defense Minister A.K. Antony with a copy of
the Foreign Corrupt Practices Act and explained how America's
legal system and business practices complement Antony's
stated desire to remove corruption from the Ministry of
Defense's procurement practices. Noting American companies
were currently competing for several MoD procurements,
including the multi-billion dollar Medium Multi-Role Combat
Aircraft (MMRCA),the Ambassador stressed that working with
American companies provides a comfort level that isn't
available with less scrupulous competitors. Antony,
acknowledging that MoD had a record of corruption
controversies, stated he has been clear with his staff that
he does not want any corruption in the procurement system.
Antony revealed that MoD is planning to amend the Defense
Procurement Policy in 2008, and is currently discussing other
countries' best practices, including anti-corruption
techniques.

...Acknowledges Failure on Civ-Nuke Could Negatively Impact
Relationship...
--------------


3. (C) Citing recent comments by Antony which assured the
U.S.-India defense relationship would continue regardless of
the fate of the civil-nuclear deal, the Ambassador praised
Antony for his support of the bilateral relationship.

NEW DELHI 00004832 002 OF 002


However, the Ambassador warned, the sense of trust that has
been built during two years of negotiating the deal will
inevitably be negatively impacted if it does not go forward.
Antony assured the Ambassador that the GOI, which has been
out of the global mainstream for 30 years, understood what
was at stake if the deal was not completed. Noting that
India was a vibrant democracy and that such an important deal
required a long process, Antony underlined the importance of
broader ties, saying "In the last 10-15 years there has been
a remarkable difference in the relationship. We are clear we
must continue this close relationship....It is clear this
deal is good for both countries." Antony said politics had
posed problems for the government in getting acceptance for
the deal, and that the government needed wide acceptance to
avoid political instability, but added the GOI had "a
pipeline" to the opposition in discussing a way forward.
Antony said he hoped the upcoming session of parliament would
address the civ-nuke deal, avoiding the disruptions caused by
the opposition at the monsoon session in August.

...Listens Quietly to P8 Pitch...
--------------


4. (C) The Ambassador advocated for Boeing's P8 maritime
surveillance aircraft, the bid for which is reportedly due to
be opened in mid-November, stressing the advanced stage of
development when compared to the Airbus competitor, the
sophisticated technology, the early projected
operationalization date, and the fact that the U.S. Navy had
committed to the P8 for the next several decades. Antony
offered no substantive reply.

...And Says Willing To Yield 3G Spectrum If MoD Guaranteed
Dedicated Band
--------------


5. (C) The Ambassador also raised the issue of license
spectrum for wireless technologies, stressing the benefit for
India's future economic growth, particularly in rural areas.
Antony seemed well aware of the issue, and stated that there
was currently a debate going on in the Cabinet Committee on
Security on releasing radio frequency spectrum to commercial
telecommunications. National Security Advisor M.K. Narayanan
has been tasked by the Committee to develop a solution, he
said. The Ministry of Defense is amenable to releasing
spectrum, even in the Third Generation (3G) band, Antony
said, but seeks assurances that there will be a dedicated
spectrum for defense.
MULFORD