Identifier
Created
Classification
Origin
08NEWDELHI2078
2008-07-30 09:52:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy New Delhi
Cable title:  

SCENESETTER FOR VICE ADMIRAL WIERINGA DPPG AUGUST

Tags:  IN MASS MOPS PARM PREL XD 
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O 300952Z JUL 08
FM AMEMBASSY NEW DELHI
TO SECSTATE WASHDC IMMEDIATE 2825
INFO AMEMBASSY COLOMBO
AMEMBASSY DHAKA
AMEMBASSY ISLAMABAD
AMEMBASSY KATHMANDU
AMEMBASSY LONDON
AMEMBASSY MOSCOW
AMEMBASSY TOKYO
AMCONSUL CHENNAI
AMCONSUL KOLKATA
AMCONSUL MUMBAI
CDR USPACOM HONOLULU HI
HQ USPACOM HONOLULU HI
HQ USCENTCOM MACDILL AFB FL
JOINT STAFF WASHDC
ODC NEW DELHI IN
USMISSION GENEVA
USMISSION USUN NEW YORK
PACOM IDHS HONOLULU HI
UNCLAS NEW DELHI 002078 


SENSITIVE
SIPDIS

FOR VICE ADMIRAL WIERINGA FROM CHARGE D,AFFAIRES STEVEN
WHITE

E.O. 12958: N/A
TAGS: IN MASS MOPS PARM PREL XD

SUBJECT: SCENESETTER FOR VICE ADMIRAL WIERINGA DPPG AUGUST
2008 VISIT TO INDIA

UNCLAS NEW DELHI 002078


SENSITIVE
SIPDIS

FOR VICE ADMIRAL WIERINGA FROM CHARGE D,AFFAIRES STEVEN
WHITE

E.O. 12958: N/A
TAGS: IN MASS MOPS PARM PREL XD

SUBJECT: SCENESETTER FOR VICE ADMIRAL WIERINGA DPPG AUGUST
2008 VISIT TO INDIA


1. (SBU) The Country Team and I warmly welcome you to India.
Your visit comes at an important juncture in our military
relationship with India. The commanding position that the
Soviet Union and later Russia enjoyed on military sales to
India is weakening, the Ministry of Defense is progressing in
its struggle to reform a heretofore convoluted and opaque
procurement system, there is strong interest within the
Services in high-tech US equipment, and funds are available
for very substantial purchases. Within the bounds of a well
thought-out disclosure policy, we strongly support a robust
military sales program with India and look forward to the day
when the United States supplants the Russians as India,s
vendor of choice. A strong military sales program will build
on the robust exercise program we enjoy with the Indian
Military and provide substantial benefits in terms of
interoperability and access. There are, however, substantial
unresolved issues including Transfer of Technology (TOT),End
Use Monitoring and Enhanced End Use Monitoring (EUM/EEUM),
and India,s failure to sign basic agreements such as the
Classified Information Security Memorandum of Agreement
(CISMOA). We anticipate all these issues and specifics about
ongoing and planned purchases will be discussed during your
calls on government officials and during the DPPG Mid-Year
Review. We look forward to working with you and DSCA to move
these issues toward resolution.
--------------
U.S.-India Relations
--------------

2. (U) Long term prospects for a closer, abiding bilateral
relationship with a vibrant, prosperous India are very strong
- and remain of strategic importance to the U.S. With India
expected to surpass China as the fastest growing economy in
2015, this may well become our most important bilateral
relationship within 20 years. Your visit helps demonstrate
the vitality and breadth of our relationship, which now
touches on almost all areas of human endeavor. Our Embassy
is trying to put out the public message that there are
numerous natural complementarities and deep linkages between

our two countries. We hope that the more these linkages
bring visible benefits to ordinary Indians, the more the
outdated socialist ideology of the Left and still formidable
protectionist forces will be seen as incurring heavy costs to
India and its people. The recent confidence vote in the
Indian Parliament, which saw the Congress-party led
government survive after its former coalition partner
(Communist-party) pulled out over the U.S.-India civil
nuclear deal, was an encouraging sign. The bright spot
remains the private sector's exponential growth and
people-to-people ties between the U.S. and India, to which
government-to-government ties ultimately must catch up.
--------------
The Civil Nuclear Cooperation Initiative
--------------

3. (SBU) President Bush and Prime Minister Singh pledged in
July 2005 to take a series of reciprocal steps that would
culminate in the opening of India's formerly sanctioned civil
nuclear market. India completed the first milestone on March
2, 2006 by releasing a plan to separate its civilian and
strategic nuclear programs in a phased manner, and pledging
to place its civilian facilities under International Atomic
Energy Agency (IAEA) safeguards. An overwhelming, bipartisan
majority in the U.S. Congress then approved in December 2006
the Hyde Act, which set forth the terms under which the U.S.
and India could engage in civil nuclear trade. The U.S. and
India then concluded an Agreement for Peaceful Nuclear
Cooperation, also known as the 123 Agreement, in July 2007.
The Communist parties, part of India,s Congress Party-led
United Progressive Alliance (UPA) coalition government,
obstructed the implementation of the 123 Agreement by
threatening to withdraw support from the government if it
were to proceed with the Agreement because they felt it would
bring India too close to the U.S. The opposition Bharatiya
Janata Party (BJP) which had initiated the process leading to
the 123 Agreement under the previous government - also
opposed the initiative because it claimed that the terms of
the Hyde Act and 123 Agreement placed additional constraints
on India's nuclear weapons program. This impasse was broken
when Prime Minister Manmohan Singh threatened to resign
rather than face President Bush at the G8 Summit this past
July without being able to demonstrate progress on the
initiative. His party and much of the governing coalition
backed him, but the Communists withdrew their support and
called for a confidence vote in the government. The
government cobbled together a new coalition and prevailed by
a narrow margin in the dramatic July 22 confidence vote,
which was viewed as much as a vote ON the nuclear initiative
as for the government. The UPA government,s victory
provides it with the opportunity to push through several
additional steps necessary to complete the U.S.-India Civil
Nuclear Cooperation Initiative. The Indian government and the
USG are pressing the 35 Board members of the nuclear
watch-dog International Atomic Energy Agency (IAEA) to
approve of India,s safeguards agreement at its meeting on
August 1. The 45 members of the Nuclear Suppliers Group
(NSG),which licenses trade in nuclear technology, will then
meet in August to consider granting a special India-specific
exemption to allow India, as a non-signatory of the Nuclear
Non-Proliferation (NPT) treaty, to engage in civil nuclear
commerce globally. The USG is also working with India to
meet its nonproliferation obligations as set forth in the
Hyde Act. Once the President determines that all these steps
have been completed, the Administration will submit the 123
Agreement to the U.S. Congress for an up-or-down vote of
approval. Civil nuclear cooperation between the U.S. and
India will benefit both countries through enhanced energy
security, more robust nonproliferation efforts, greater
economic opportunities, and a clean energy source to fuel
India,s growing economy without carbon emissions.
--------------
MILITARY TO MILITARY
--------------

4. (SBU) The trend in the U.S.-India security relationship
is positive, despite irritants such as unsigned agreements on
logistics support and the sharing of classified information,
which have lingered for years. The Indian military -
particularly the Navy - generally is more willing to push the
envelope on closer relations than any other GOI body.
Malabar 2007 brought Japan, Australia and Singapore together
with the U.S. and India for the first time for naval
exercises. Red Flag 2008 (9-22 AUG 08) in the Nevada desert
marks the Indian Air Force,s (IAF) first deployment to the
CONUS to participate in a coalition exercise. The first ever
U.S.-India cooperation under the Global Peacekeeping
Operations Initiative (GPOI) took place in April 2008 when
India sent forces to participate in the GPOI capstone event
Shanti-Dooti in Bangladesh. With India as a significant
player in PKO participation and training, there is hope for
expanding GPOI cooperation. Secretary Gates visited India
February 26-27, the first visit by the U.S. Secretary of
Defense since Secretary Rumsfeld signed the Defense Framework
Agreement in June 2005, and solidified gains in mil-to-mil
relations.

5. (SBU) Defense sales, dormant for over 40 years, have
begun to take off, with a billion-dollar deal for six C-130Js
finalized in January as the latest breakthrough. We're
hoping to finalize a separate billion dollar deal for P-8I
maritime patrol aircraft, and both Boeing and Lockheed Martin
are competitors for the estimated USD 10 billion Medium
Multi-Role Combat Aircraft (MMRCA) bid expected to be decided
in 2009. The technical bids, which include transfer of
technology (ToT) requirements, for the MMRCA are currently
under review by the Indian Air Force (IAF) Technical
Evaluation Committee (TEC). During recent meetings to review
clarifications sought by the TEC, the U.S. competitors were
both told that the IAF required all the compliance and
restriction documents to be signed as part of the deal (at
least in draft language) so that all requirements could be
understood. As you know, future military sales to India are
dependent on Indian acceptance and implementation of EUM/EEUM
requirements. Although India agreed to the language for the
Boeing VVIP aircraft presented by Mr. Shivers, our sense is
that there is still considerable misunderstanding and
distrust of EUM/EEUM requirements. Senior IAF Officers have
told us they would not have proceeded with the Boeing VVIP
aircraft purchase had they understood the EEUM requirements.
The IAF,s recent request for all EUM/EEUM language relating
to MMRCA is an attempt to determine the impacts and
implications such agreements will have. The unwillingness of
the Indian Navy to agree to EUM verification of their NVD,s
is but one example of their continued resistance. Another
issue which begs further discussion and understanding is ToT.
During the recent TEC meeting on the MMRCA proposals; it was
clear that the HAL representative felt that the level of ToT
was not sufficient. We believe it would be useful during your
discussions to raise the issue to fully understand the Indian
expectations on this topic. Such a discussion will at a
minimum, aid us in our technology release debates as the
MMRCA process continues. The recent Indian requests for
assurances on technology release approval, is the most recent
indicator from the Indian side that this issue is a point of
contention. We fully expect that your counterparts will
insist on maximum release of all the technologies for the
aircraft and its avionics/subsystems to enable the Indian
Defense Industry the ability to indigenously produce,
maintain and repair components. Such a capability is their
stated goal/requirement.

6. (U) Through the IMET program, India currently sends
exceptional officers to attend our War Colleges and Post
Graduate Schools. In fact, we have preprocessed "stand-by"
candidates should end-of-year funds become available. This
was not always the case. When the IMET began here in the
1980s, there was little interest in sending officers to the
U.S. for training and almost half of the allocated funds were
not spent because the Indian military did not make officers
available. Of the three Service Chiefs, the Air Chief
Marshall attended the APCSS Senior Executive Course, and the
present Vice Chief of Naval Staff is a Naval War College
graduate. Returning students universally report a positive
experience in America and excellent training. We recently
wrote to the Joint Secretary (Training) & Chief
Administration Officer, Ministry of Defense (MoD),to
recommend that the Government of India begin paying for the
travel of students going to the U.S. This would allow us to
stretch IMET funds and send more students to training. We
ask that you encourage your Indian MoD counterparts to fund a
portion of IMET training and expand their program
accordingly. This would be in line with the Government of
India,s recent decision to match U.S. Fulbright scholarship
funds to increase the number of students attending schools in
the U.S.
--------------
TERRORISM/COUNTERTERRORISM
--------------

7. (SBU) India continues to rank among the world's most
terror-afflicted countries. The conflict in Jammu and
Kashmir, attacks by extreme leftist Naxalites and Maoists in
eastern and central India, assaults by ethno-linguistic
nationalists in the northeastern states, and terrorist
strikes nationwide by Islamic extremists took more than 2,300
lives in 2007. There were several major attacks linked to
Islamic extremists in 2007 and 2008. Indian officials claim
that the perpetrators of these attacks have links to groups
based in Pakistan and Bangladesh, particularly
Lashkar-e-Taiba, Jaish-e-Mohammad, and Harkat-ul-Jihad
Islami, among others. The violence in Jammu and Kashmir
abated somewhat in 2007, but attacks are expected to increase
in the lead up to State elections in October 2008. Officials
have not yet pointed to suspected perpetrators of last
week,s bombings in Bangalore and Ahmedabad, which killed at
least 40 people, but an e-mail from a group calling itself
Islamic Mujahedeen claimed responsibility for the Ahmedabad
attacks. Prime Minister Singh has called leftist extremist
(Maoist or agrarian Naxalite) groups, "the greatest threat to
India's internal stability and democratic culture." Leftist
extremist groups are very active in wide areas of
impoverished rural eastern and central India; and also
operate in parts of southern India. Ethno-linguistic
separatist groups carried out deadly attacks in Northeastern
India; particularly in the states of Assam, Nagaland,
Manipur, Tripura, and Meghalaya. Several proscribed terrorist
groups operate in the northeast, including the United
Liberation Front of Assam (ULFA) and the People's Liberation
Army.

8. (SBU) The lack of security, remoteness, and inhospitable
terrain combine to prevent the government from providing
security and other basic services in many of the areas in
which the leftist extremists and the northeastern separatist
groups operate. The Indian government's counterterrorism
efforts are hampered by its outdated and overburdened law
enforcement and legal systems. The Indian court system is
slow, laborious, and prone to corruption; terrorism trials
can take years to complete. Many of India's local police
forces are poorly staffed, lack training, and are
ill-equipped to combat terrorism effectively.

9. (SBU) The United States cooperates with India under the
Counter Terrorism Joint Working Group, which meets annually.
Our Anti-Terrorism Assistance program provides training to
India's law enforcement officials. One area of concern is
that the program will be cut significantly in FY 2009, which
is in the beginning stages of developing regional programs in
key areas of India. The Office of Defense Cooperation also
provides counter terrorism courses to a small number of
military and civilian officials.
--------------
INDIAN FOREIGN POLICY
--------------

10. (SBU) India's current foreign policy can best be
summarized as "be friends with everyone," as we can see Delhi
keeping one foot squarely inside the Non-Aligned Movement
camp, while at the same time increasing engagement with the
U.S., China, Russia, EU, and Japan. This has been
exemplified recently by India accepting visits from Iranian
President Ahmadinejad and Syrian President Assad while
considering moving ahead with the civil-nuclear deal and
attending the G8 Summit in Hokkaido. The top priorities for
India's Foreign Ministry would include: 1) maintaining
healthy relations with all neighbors in order to promote
Indian interests of stability and access to resources,
particularly energy, with Pakistan/Kashmir seen as the most
immediate threat and China as the long-term strategic one; 2)
completing the US-India civilian-nuclear deal; 3) and
pursuing a permanent seat on the UN Security Council, as part
of a broader strategy of becoming a more respected global
player. Prime Minister Singh recently put his government on
the line to move forward on the civil-nuclear deal. We would
like to see that strategic decision applied to other areas of
cooperation. You may wish to ask your interlocutors what
specific steps India plans to take in order to improve the
mil to mil relationship.

11. (SBU) In addition to the burgeoning U.S.-India
relationship, Pakistan and China are the two most immediate
issues in Indian foreign policy. U.S. policy in Pakistan is
an enigma for India. Delhi shares our belief that stability
in Pakistan is in everyone's interest; however, the Indian
have serious concerns about terrorist attacks allegedly
emanating from Islamabad/ISI - not to mention the legacy of
four wars since independence - can't be overrated. As India
seeks to attain global power, it has placed greater emphasis
on looking beyond conflict with Pakistan and more toward
economic growth and power projection.

12. (SBU) India has a complex relationship with China.
While bilateral trade is booming (China is on track to soon
surpass the U.S. as India,s largest trading partner),
building a healthy interdependence, political rivalry
continues to manifest itself in areas ranging from
decades-old border disputes to competition for influence in
Burma. Recent feel-good summits between the two countries'
leaders were tarnished somewhat by controversies over the
border immediately before/after the summits took place with
Chinese border incursions are regularly reported in the
Indian media. However, the Indian government downplays the
instances, noting that the border is not definitively marked
and mechanisms are in place to deal with the incursions
peacefully. While India has been a welcoming refuge for
Tibetan refugees, including the Dalai Lama, in a gesture to
Beijing, it does not condone "political activities" by
resident Tibetans.
--------------
INDIA'S ECONOMIC TRAJECTORY - ONE OF TRANSFORMATION
--------------

13. (SBU) You are well aware of India's economic performance
that has seen an average annual Gross Domestic Product (GDP)
growth rate of almost nine percent over the past five years,
making India the second fastest growing major emerging
economy after China. While some question whether this growth
is simply cyclical, we perceive fundamental structural
changes underway that are reshaping India's socio-economic
landscape. These include the significant rise in savings and
investment, the declining share of agriculture in GDP
replaced by services, and to a lesser extent industry, and
the "market-seeking" flows of foreign direct and portfolio
investment into the country. The central bank's tightening
monetary policy over the last year, partially a response to
higher global commodity prices, is adversely affecting
consumer demand in some sectors. This is expected to
moderate India's growth in the coming fiscal year, with many
economists projecting 7.5 to 8% GDP growth.

14. (SBU) Savings have risen over the past decade to roughly
34 percent of GDP, a combination of more corporate saving and
less government dis-saving (debt financing). While corporate
savings may ebb a bit in the next few years, household
savings are also beginning to rise and to become more fluid,
moving from government subsidized post office savings
deposits to commercial banks and mutual funds. Investment has
also grown significantly in recent years, nearing 37 percent
of GDP - again, mainly a function of corporate expansion
plans, but the government's infrastructure goals are boosting
public investment levels as well. Indian economists have
noted that many Asian economies hit a "take off" stage in
their growth once investment crossed the threshold of 40
percent of GDP. The savings-investment gap is clearly
financed through imports and a trade deficit, but other
inflows, including the FDI and portfolio investment noted
above, have kept the balance of payments in surplus for three
years, and boosted foreign exchange reserves to USD 300
billion.

15. (SBU) At the same time, India's manufacturing sector is
finally showing signs of expansion and global attention.
Manufacturing, stuck at roughly 14 percent of GDP for nearly
two decades - a stark contrast to many Asian economies'
growth trends - grew to 17 percent of GDP last year, and with
recent growth, appears likely to continue its increasing
contribution to GDP.
--------------
BILATERAL TRADE GROWING
--------------

16. (SBU) India-U.S. two-way merchandise trade touched USD
42 billion in 2007. Last year, the U.S. trade deficit with
India went down 42 percent. Despite this strong growth in
the trade relationship, a number of impediments persist and
could impact future trade in both directions. U.S. exporters
continue to encounter tariff and non-tariff barriers, despite
Indian economic reforms and autonomous (non-WTO) reductions
in duties applied to industrial goods.

17. (SBU) Once again, we look forward to welcoming you back
to India and to working with your staff to ensure a
successful and productive visit.
WHITE