MENON ND CHAVAN ASSURE U.S. FIRMS OF NUCLEAR

C O N F I D E N T I A L SECTION 01 OF 02 NEW DELHI 005335 SIPDIS SIPDIS E.O. 12958: DECL: 12/17/2017 TAGS: PREL PARM TSPL KNNP ETTC ENRG TRGY BEXP EINV ETRD, IN SUBJECT: MENON ND CHAVAN ASSURE U.S. FIRMS OF NUCLEAR BUSINESS WITH INDIA Classified By: Charge d'Affaires Steven White for Reasons 1.4 (B and D) ¶1. (SBU) Summary: Foreign Secretary Shivshankar Menon and Minister of State in the Prime Minister's Office Prithviraj Chavan assured a visiting trade mission of nuclear-related firms December 10-11 that India would purchase U.S. reactors. Menon recognized that a "letter of intent" would help the U.S. government push the 123 Agreement through the U.S. Congress. Menon also downplayed the likelihood of concluding the Iran-Pakistan-India pipeline, though he cautioned that political necessity required India to consider all energy options. Chavan asserted that the Indian government remains committed to completing the nuclear deal, and cited recent progress in talks with the Left. Menon requested more information about the U.S. nuclear industry to counter critics who claim that the U.S. lags behind other countries in nuclear technology. End Summary. Chavan Asserts Political Support - - - ¶2. (SBU) In a December 10 meeting with a U.S.-India Business Council (USIBC)-sponsored delegation of representatives from U.S. nuclear-related firms, Prithviraj Chavan, Minister of State in the Prime Minister's Office (PMO),assured that the GOI was fully committed to seeing the deal through to completion. Chavan felt that they had made significant progress towards consensus-building since July of 2005, specifically citing the support of the once-reluctant scientific community and recent "very fruitful" meetings with the Left. The delegation asked about a special "carve out" for American companies in Indian nuclear commerce, explaining that it was difficult to conduct the heavy-lifting on Capitol Hill without a guarantee of the deal's intended benefits. The Minister responded by noting that there was plenty of work for international companies through partnerships with the Indian private nuclear sector and encouraged those present to engage with these companies during their time in India. The delegation also questioned Chavan on the topic of a government-to-government memorandum of understanding which would allow for expedited plant construction and planning. Chavan indicated that until there was a waiver from the Nuclear Suppliers Group (NSG),such a prospect was "up in the air." But he noted that such a memorandum was in place between India and Russia and appreciated that it would be beneficial when moving forward in nuclear commerce with American companies. ¶3. (SBU) Fletcher Newton, president of Uranium One, warned that world uranium consumption was outstripping supply and cited recent reports of China attempting to "lock up" sources of uranium throughout the world. The Minister responded to these concerns by assuring the delegation that India has started investigating all possible sources of uranium, including indigenous mines and international sources. The energy representatives also asked Chavan about the identification of future reactor sites. The Minister reported that India had recently identified a site in Maharashtra, a demonstration of progress in moving plans forward. Chavan added that other potential sites in the pipeline await final approval from government entities. Menon Understands Need for Letter of Intent - - - ¶4. (C) Meeting with the delegation December 11, Foreign Secretary Shivshankar Menon underlined the government's SIPDIS determination to move ahead with IAEA negotiations in spite of the combative words from Communist leader Prakash Karat. "I cannot think of one initiative that has this level of popular support," he claimed, noting that every state wants nuclear reactors. He recalled that eight months earlier U.S. and Indian negotiators despaired over the stalled negotiations of a 123 Agreement, but both sides showed the ability to accomplish it. "We want to get this done, and done quickly," he stressed. Asked about the status of nuclear liability legislation, Menon reported that the Department of Atomic Energy (DAE) has started working on the draft text. ¶5. (C) Asked about the letter of intent that would promise NEW DELHI 00005335 002 OF 002 Indian purchases of U.S. reactors, Menon said that he understood that the U.S. government did not want to go to the U.S. Congress "empty-handed." He expected that U.S. firms "would have to be involved in the nuclear industry in India," and reported that the letter of intent was currently in the political process. While the Russians already have the option of adding four reactors in the Kudankulam site under the 1992 agreement, Menon promised the U.S. firms "you will have first entry; there is no questions in anyone's mind." Westinghouse's Rao Mandava urged Menon to list particular sites in the letter. Menon noted that the Indian government would sign a general letter today, but has decided to wait for the government to approve the specifics that U.S. firms sought. Menon asked the firms to provide more material about what the status of the nuclear industry in the U.S. in order to counter Indian skeptics who claim that the U.S. has not built a reactor for decades. ¶6. (C) USIBC President Ron Somers cautioned Menon that India's continued engagement on the Iran-Pakistan-India (IPI) pipeline could hurt support in the U.S. Congress. Menon noted that the prefeasibility study had occurred in 1993 and questions about pricing and security remained outstanding, which meant "there is little risk of building the pipeline." However, Menon continued, the Indian government could not dismiss an energy source, particularly with its energy needs growing four percent annually. "Please do not expect me to say that the Indian government will never do this," he stated. Comment: Indian Government Gives U.S. Industry the Time - - - ¶7. (C) The attention paid to the nuclear industry visitors, even at a sensitive moment in India's safeguards negotiations and battles with the Left, shows that the Indian government has given thought to the actual opening of India's nuclear sector. Coupled with the productive meetings in Mumbai, Menon's forward-leaning comments about a letter of intent help assuage concerns that the Russians and French have already pushed their way to the front of the line in India's nuclear market. While this visit transpired with little media attention, once India's political turmoil settles, we should take on Menon's suggestion and prepare a public information campaign that dispels the popularly held notion that U.S. nuclear technology is outdated and the industry moribund. In the meantime, we will keep pushing for a liability law and letter of intent, while quietly spreading information on the nuclear renaissance in the U.S. WHITE