FS MENON DESCRIBES HARDENED POSITIONS,

1. (C) Foreign Secretary Shivshankar Menon described for the
Ambassador on June 26 a hardening of positions on the part of
the Left and within the Congress Party on whether to take the
next step in advancing the U.S.-India Civil Nuclear
Cooperation Initiative. The Left ultimately rejected
submission of the draft IAEA safeguards agreement to the
Board of Governors under any circumstances, according to
Menon. Congress coalesced around moving the deal forward and
continued working to address the concerns of its allies and
ensure a parliamentary majority. Menon said the Left's
Politburo and the Congress Working Committee each plan to
meet internally within the next few days to take final
political decisions on the issue. Menon was disdainful of
rampant media speculation, saying the real action was within
Congress and its private discussions with its allies, which
remained loyal but concerned about election prospects. Menon
said Australian PM Kevin Rudd signaled to FM Mukherjee his
country's support in the Nuclear Suppliers Group (NSG), and
Menon agreed with the need to elevate an NSG lobbying
campaign to the highest political levels as soon as the
government makes a clear decision to move forward with the
IAEA. He expressed gratitude for U.S. restraint in public
comments and said the G8 summit has focused the government on
resolving the impasse, saying PM Singh is "sick" at the
prospect of facing President Bush in Tokyo without a deal.
Finally, on Zimbabwe, Menon confessed to having been too deep
in the nuclear deal deliberations to focus on the ongoing
crisis there, but promised to look into India's position.

Discussions Yield Hardened Positions, Internal Party Unity
- - -



2. (C) Foreign Secretary Shivshankar Menon told the
Ambassador on June 26 that the outcome of talks between the
United Progressive Alliance (UPA) and its allied Left parties
on advancing the U.S.-India Civil Nuclear Cooperation
Initiative over the past two weeks has yielded a gradual
hardening of positions. The Left first asked for assurances
from the government that submission of the draft IAEA
safeguards agreement to the Board of Governors would not lead
inexorably to the operationalization of the deal with the
U.S. Then the Left asked for a public commitment that after
the IAEA the government would not proceed to the Nuclear
Suppliers Group (NSG), according to Menon, and then finally
demanded public commitments from Congress Party President
Sonia Gandhi and Prime Minister Manmohan Singh to this
effect. Finally, at a 9 am meeting on the morning of the
June 25 UPA-Left Committee meeting, Communist Party (CPI-M)
leader Prakash Karat told Foreign Minister Pranab Mukherjee
that the Left could not support any steps forward, including
with the IAEA under any condition. Menon said the Left was
"playing its politics."



3. (C) Within the last two weeks the Congress Party,
according to Menon, has also coalesced around support for
moving ahead with the deal. Menon explained Congress had to
be seen making these exhaustive effort with the Left in order
to build consensus within and with its allies. Early
elections is no longer an unmentionable topic. Menon said
the Left's Politburo and the Congress Working Committee each
plan to meet internally within the next few days to take
final political decisions on the issue.



4. (C) Menon also laid to rest rumors of a "sense of
Parliament" deal, which he described as "rubbish." At one
point in the negotiations, Congress had offered to take a
'sense of the House' before signing and fully
operationalizing the 123 Agreement, which according to Menon
could mean anything from informal inquiries among members to
a full floor vote. Ultimately, Karat said he viewed going to
the IAEA as operationalizing the deal and so regarded the
current process as one and the sam.

Too Many Scenarios, Real Action is Within Congress
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5. (C) Menon outlined a scenario in the event that the UPA

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goes ahead with the deal and the Left calls for a
no-confidence vote. Karat has said that the Left would give
President Patel a letter indicating they have withdrawn
support for the government. She would be obliged to summon
the Prime Minister and require him to prove that the
government commands a majority; at most, he would have up to
two weeks. Menon said one scenario would be a majority
comprised of the UPA with the support of the Uttar
Pradesh-based Samajwadi Party (SP), but without the Left or
BSP Party, the latter of which officially withdrew from the
UPA earlier in the week. Menon said that the government
could choose when to hold the "motion of trust," and it would
need a majority of those present and voting. "The rest is
speculation," Menon said, but reminded the Ambassador that
previous governments have survived no-confidence votes before.



6. (C) Menon cautioned against putting too much stock in
media reports based on speculation about possible winning
formulae, saying "the noise-to-signal ratio has gone up
tremendously in the last two weeks." Each media outlet will
be promoting its narrow point of view. The real action,
according to Menon, is within Congress and its private
discussions with its allies, which "are more on board than
before," but still concerned about their election prospects.



7. (C) Helping to shape the timeline, Samajwadi Party leader
Mulayam Singh Yadav has called for a July 3 meeting of the
United National Progressive Alliance (UNPA), the coalition of
"third parties" that he helped form. While the SP is
expected to make their position on the nuclear deal known at
that time, Menon opined that political meetings leading to
July 3 will determine the SP,s position before then.



8. (C) In the event that the government were unable to
demonstrate a majority, the Election Commission would decide
on the date for a general election. The election code of
conduct would then apply. Under these circumstances it is
not clear whether the government could submit the safeguards
agreement to the IAEA, according to Menon, but the
prohibition "would not be clear or categorical." Menon
divulged that MEA officials have started looking into
precedents for continuing to allow the government to advance
the nuclear initiative while acting as a caretaker.

Prepare for the NSG, Australia on Board
- - -



9. (C) Menon agreed with the necessity of preparing to gain
acceptance of the NSG for an India-specific exemption as well
as the need to elevate this issue to the highest political
level immediately after the government takes a decision on
going ahead with the IAEA safeguards agreement. Menon
revealed that during FM Mukherjee's visit to Australia on
June 22-23, Australian Prime Minister Kevin Rudd cleared the
room and told Mukherjee privately "when it comes to the NSG,
we're on your side."



10. (C) Menon said the government is focused on the nuclear
deal and that the G8 Summit in July is helping focus
attention on resolving the issue. Menon canceled his planned
trip to the UK on June 27 in order to focus on resolving the
impasse. Moreover, Mukherjee has shortened his July 1-3 trip
in Egypt order to spend only one full working day in Cairo,
Menon revealed. He said PM Singh is "sick" at the prospect
of facing President Bush without moving on the nuclear deal.

Maintain Radio Silence
- - -



11. (C) Menon thanked the Ambassador for U.S. restraint at
this sensitive time, saying "what you have done is exactly
right; I am impressed and grateful for the way you have
maintained radio silence." He added that the one or two
errant messages have only been instructive in showing how
complicating our public involvement could be at a time of
delicate internal negotiations. Menon also mused about how
far the U.S.-India relationship has developed, saying "we've
managed to come so far with the U.S.; we have not done
anything like this with anyone else, ever."

Shifting Focus to Zimbabwe
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12. (C) The Ambassador asked Menon about the Indian position
on Zimbabwe in light of the current crisis, saying it is
perceived as weak. Menon confessed that he "has not been
deeply involved" due to recent developments on the nuclear
deal. He said India's UN bureaucrats have been managing the
issues, but that he would check into the matter. The
Ambassador also cautioned, in response to some newspaper
headlines suggesting movement on the Iran-India energy
pipeline as a quid pro quo for advancing the nuclear deal,
that the status of the pipeline could impact the ultimate
Congressional vote on the nuclear deal.



MULFORD