MENON HOSTS NSG AND IAEA REPRESENTATIVES TO PUSH

UNCLAS SECTION 01 OF 03 NEW DELHI 001959

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: IN PARM PK PREL TRGY TSPL
SUBJECT: MENON HOSTS NSG AND IAEA REPRESENTATIVES TO PUSH
FOR NUCLEAR DEAL


1. (SBU) SUMMARY. On July 14, Foreign Secretary Shiv Shankar
Menon hosted more than fifty representatives from countries
represented on the International Atomic Energy Agency (IAEA)
Board of Governors and Nuclear Suppliers Group (NSG). Menon
described the benefits "for India, for the IAEA and for your
nations" of swiftly approving the IAEA safeguards agreement
and supporting India in the NSG. Special Envoy for the
Nuclear Initiative Shyam Saran also asked representatives to
convey to their capitals the importance India attaches to the
initiative, and asked for assistance in arranging calls for
upcoming visits by Indian envoys to capitals. He also
reminded them that completion of the deal "will benefit
bilateral relations" with each country. It is clear from
reactions that participants took this to mean that India will
"take names" and monitor the positions of each IAEA and NSG
member.


2. (SBU) SUMMARY CONTINUED. Menon's smooth presentation
contrasted with an increasingly shrill domestic debate over
the U.S. India Civil Nuclear Cooperation Initiative. A
polemic issued by the opposition Bharatiya Janata Party (BJP)
excoriated the IAEA safeguards agreement for failing to give
India the full rights of the five nuclear weapon states under
the Nuclear Non-Proliferation Treaty (NPT). The Left Front
launched a "nation-wide campaign" against the UPA government
that appears indistinguishable from the Left's approach prior
to the campaign. Back-room political deal-making continued,
with the government preserving its slight majority. The
two-seat Jammu and Kashmir National Conference (J&KNC)
pledged to support the government and the eight-seat
Shiromani Akali Dal (SAD) regretfully announced its intention
to vote against the UPA government and its fellow-Sikh Prime
Minister in order to preserve its governing coalition with
the BJP in the state of Punjab. The Mumbai-based Shiv Sena
has openly declared its support for the nuclear deal, but it
remains unclear whether the party's twelve votes will be cast
against its BJP ally. END SUMMARY.

Menon Pitches Nuclear Deal to NSG and IAEA Representatives
- - -


3. (SBU) Ambassadors or Charges d'Affaires represented most
IAEA and NSG member nations at a glittery evening meal at
Hyderabad House, a former residence of the Maharaja of
Hyderabad, where Menon reviewed progress on the U.S.-India
Civil Nuclear Cooperation Initiative and talks with Russia
and France on bilateral civil-nuclear agreements. Describing
the IAEA safeguards agreement as a typical INFCIRC-66
arrangement "within the framework of the U.S.-India
understanding," he pledged that India will bring civilian
facilities under safeguards in a phased manner in accordance
with the March 2006 separation plan. The civil-nuclear
initiative, he offered, will enable India's full
participation in the international non-proliferation regime.


4. (SBU) Thanking the United States for bringing about "an
historic moment," Saran walked through next steps, noting
that the NSG will be asked to approve an India-specific
exemption, unusual for a non-NPT country in that not all
facilities will be under full-scope safeguards. He described
the initiative's benefits to the world, including reductions
in carbon emissions and new options for addressing global
energy security concerns, and reviewed India's policy changes
since 2005, when the GoI approved the Weapons of Mass
Destruction Act. Saran argued that India had earned an NSG
exception by developing indigenous technologies and enforcing
strict non-proliferation policies. Twice stressing the
importance of a "clean and unconditional" NSG exemption,
Saran stated that adding conditionalities would "bring us
back to square one" politically in New Delhi, where the
government has already staked its survival on the
initiative's success. Saran also highlighted the importance
of the U.S. Presidential determination, which signals India's
steps into the global non-proliferation regime, where India
is no longer a target.


5. (SBU) Pressed by the Swiss Ambassador during the Q and A
session on the likely results of next week's confidence vote,
Saran demurred. He urged quick movement after the August 1
IAEA Board meeting, saying the NSG could meet "the day
after," because arguments about the initiative's impact have
already been heard. Saran urged NSG representatives to

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summon political will to approve an exemption quickly, so
that components of the initiative -- including all elements
of the Presidential determination -- could be forwarded to
the U.S. Congress by early September. Responding to the
Dutch Ambassador's complaint that NSG member countries felt
"rushed," Saran acknowledged the difficulties of a
compressed timeline, then placed the onus on Ambassadors to
reflect to their capitals the initiative's importance and
noted that implementation of the initiative "will benefit
bilateral relations" with all the countries represented at
Hyderabad House. European diplomats at Polcouns' table
whispered their protests over Saran's "threat."


6. (SBU) Asked by Sweden's Ambassador about the importance of
a "clean" NSG exemption, Saran described India's reciprocal
obligations, including those enumerated in the Presidential
determination required by the Hyde Act. Although not an NSG
member and therefore not obligated by NSG rules, India has
voluntarily harmonized its export control standards, Saran
said. He described India's legislation protecting sensitive
technologies as "wider in scope than the NSG requires."
Saran pleaded for understanding of India's political
situation and urged member countries not to revive domestic
controversy by inserting political conditionalities in the
NSG exemption. Menon and Saran asked for participants' help
in arranging calls during upcoming visits by Indian envoys to
capitals.

Increasingly Shrill Debate Accompanies Deal-Making
- - -


7. (SBU) Back-room dealing continued with one week remaining
before the July 22 confidence vote that will determine the
future of the United Progressive Alliance (UPA) coalition
government and with it the nuclear initiative. Prime
Minister Singh met with industrialist Mukesh Ambani on July
14, ostensibly to discuss recent populist demands for a
"windfall tax" on oil companies. Asserting unnamed Mumbai
sources, The Asian Age wrote that Ambani offered help in an
effort to ensure Shiv Sena support for the UPA government.
The Mumbai-based Shiv Sena holds 12 Lok Sabha seats and has
openly declared its support for the nuclear deal. It remains
unclear whether the party will vote against its Bharatiya
Janata Party (BJP) ally, as in the most recent presidential
elections when it supported Congress Party candidate Pratibha
Patil.


8. (SBU) Two smaller parties, the Jammu and Kashmir National
Conference (J&KNC) with two members of parliament and the
Shiromani Akali Dal (SAD) with eight members, held party
meetings on July 15 to decide their positions. After the
J&KNC meeting, an Embassy contact said the party's vote would
be "favorable" for the UPA (presumably either a vote for the
government or an abstention). The SAD, however, announced it
will regretfully vote against the UPA government. The SAD is
an opposition National Democratic Alliance (NDA) member that
currently governs the state of Punjab in coalition with the
BJP. While the Sikh party members support the Prime Minister
personally, parting with the BJP could have cost it the
state.


9. (SBU) Educated guesses at this time show the government
maintaining its slim majority with the anticipated vote count
at about 276 in favor of the UPA government and its nuclear
deal, 250 opposed, and 17 undecided. (Charts showing how
post reached this assessment have been emailed to SCA/INS.)


10. (SBU) The opposition BJP issued a lengthy statement on
July 14 criticizing the substance of the IAEA safeguards
agreement almost a week after party leader L.K. Advani
rebuked the UPA government in a June 8 press conference for
its inept and deceitful handling of the process. The polemic
excoriates the safeguards agreement for failing to give India
the full rights of the five established nuclear weapon states
under the Nuclear Non-Proliferation Treaty (NPT) and keeping
India "in bondage as a non-Nuclear Weapon State in
perpetuity." The statement claims India would be more
vulnerable to inspections than North Korea. Making common
cause with those concerned that the safeguards agreement does
not go far enough, the statement labels the "corrective
measures" preambular language in the safeguards agreement as
"vague and non-specific." Media coverage of the statement

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has been minimal.


11. (SBU) Local media attention remained trained on the more
theatrical antics of the Left, which has continued to attack
the UPA government from every angle. Communist Party-Marxist
(CPI-M) general secretary Prakash Karat, together with other
Left parties, launched on July 14 a "nation-wide campaign"
against the UPA government over the nuclear deal and
inflation. Demonstrations promised by Karat over a week ago
to coincide with the launch of the campaign did not
materialize and so far the "campaign" appears
indistinguishable from the Left's approach until now. Karat
blamed the nuclear deal for a wide variety of capitalist
ills, claiming, "The nuclear deal will harm small traders and
farmers. It will be harmful to workers and sectors like
insurance and banks, too. To protect farmers, we have to
stop this deal. The nuclear deal is related to globalization
and market economy." Karat criticized the Congress Party for
being "hand-in-hand" with the U.S. and for its "shameful"
vote against Iran at the IAEA. Communist Party of India
(CPI) leader A.B. Bardhan alleged that the UPA was buying
votes, saying, "I am told they are paying Rupees 25 Crore
($6.5 million) each ... I am making this allegation because
this rate is being talked about in the market."

MULFORD