SPECIAL ENVOY SARAN SAYS NUCLEAR SUPPLIERS

UNCLAS SECTION 01 OF 04 NEW DELHI 002297

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: PREL PARM TSPL KNNP ETTC ENRG TRGY IN
SUBJECT: SPECIAL ENVOY SARAN SAYS NUCLEAR SUPPLIERS
EXCEPTION SHOULD STAY WITHIN EXISTING AGREEMENTS


1. (U) Assistant Secretary Richard Boucher cleared this
report.


2. (SBU) SUMMARY. The Prime Minister's Special Envoy for the
Civil Nuclear Initiative Shyam Saran reviewed with visiting
Assistant Secretary Richard Boucher and Ambassador Mulford
progress toward an India-specific exception in the Nuclear
Suppliers Group and fulfilling India's commitments pursuant
to a Presidential Determination of the conditions in the Hyde
Act. Boucher and Mulford pushed for flexibility on the
exception and early implementation of India's
non-proliferation commitments. Saran made a pitch for a
clean exception and said that a review mechanism could be
phrased positively in the sense of a partnership with the
Nuclear Suppliers Group "to advance non-proliferation goals."
He cited India's commitment not to share enrichment and
reprocessing technology, that already went beyond a number of
Group members. He said countries with concerns about testing
have every right to cease cooperation in the event of a test
and added that existing Nuclear Suppliers rules already
address this issue. He allowed that countries could express
their concerns in the Chairman's Summary or in bilateral
agreements negotiated by those countries that hope to engage
in cooperation with India.


3. (SBU) SUMMARY CONTINUED. Responding to Boucher's push,
Saran understood that progress on the Hyde Act Presidential
Determination items would help Supplier countries feel more
comfortable with India's nonproliferation commitments in
advance of an anticipated vote at the second Suppliers Group
plenary on September 4-5. But, he gave little ground. He
agreed that how IAEA Director General El Baradei
characterizes India's progress on negotiating an Additional
Protocol is most important, but was vague on India's plans to
continue discussions. Saran said incorporating some
forward-looking formulation in the Indian-drafted letter on
adherence could be possible in principle, but not necessarily
before the Suppliers Group approves that draft text that
contains a consultation mechanism. Saran was disinclined to
re-engage with reluctant Supply Group members at the
political level, saying, "We have already conveyed what we
thought was important." END SUMMARY.

Nuclear Suppliers Group Plenary Airs Concerns
- - -


4. (SBU) The Prime Minister's Special Envoy for the Civil
Nuclear Initiative Shyam Saran characterized the August 21-22
Nuclear Suppliers Group extraordinary plenary in Vienna to
consider an India-specific exception to the Group's
full-scope safeguards requirement to engage in civil nuclear
trade as useful "if you take the positive view" to display
"the universe of concerns." Saran characterized the proposed
amendments to the exception text as falling into three
categories: (1) clarifications of language in the text,
mostly of a technical nature, which Saran thought could be
addressed; (2) "killer amendments" that were known to be
impossible for India to accept and, if accepted, would be
inconsistent with NSG member claims that they support the
Initiative (he mentioned the Comprehensive Test Ban Treaty or
accepting the non-nuclear weapon state designation derived
from the Nuclear Non-Proliferation Treaty); and (3)
implementation requirements added to the operative portion
(paragraph 3) of the text. This third group is most
difficult, according to Saran, because the proposed
amendments go beyond what Prime Minister Singh has already
agreed in the July 2005 Joint Declaration, the May 2006
Indian Separation Plan, the agreed 123 Agreement text, and
the IAEA Safeguards Agreement.


5. (SBU) Saran shared that during India's outreach, capitals
had expressed concerns, but not to anything approaching this
level of specificity. He also said that some countries, such
as Ireland, felt they had to air some positions that they
knew would be regarded as killer amendments because they are
official positions. New Zealand said the amendments they
proposed were hand-written by Prime Minister Helen Clark and
had to be regarded by their delegation as "set in stone."
Others (Austria, Switzerland) said their guidance was issued
in cabinet decisions, and any change would require new
guidance. Saran was clear that, when India pointed out what
it regarded as killer amendments, "no one contested" that

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point.

Worrisome Exception Amendments
- - -


6. (SBU) Saran said he was "worried" about the third category
of amendments, which included a mechanism to review India's
sustained nonproliferation commitment, a prohibition on the
transfers of enrichment and reprocessing technology (ENR),
and a response to a possible future Indian nuclear test.
Boucher pressed for flexibility, saying that on each item
political leaders will need something to point to, showing
that their concerns had been considered. On a review
mechanism, Saran said uncertainty about the "longevity" of
India's exception would inhibit commercial relationships.
Saran suggested that a review might be made acceptable if
phrased "positively" in the sense of "a partnership with the
NSG to advance nonproliferation objectives through a process
of dialogue." Treating India like a "reformed criminal on
probation," however, "was not sellable" domestically.


7. (SBU) On enrichment and reprocessing technology, Saran
observed that India has already committed in the July 2005
Joint Declaration not to transfer this technology itself and
to support global efforts to prevent its transfer by others.
Saran said the IAEA Safeguards Agreement recognized that
India already developed this technology indigenously, so
limiting its transfer to India "does not serve any
nonproliferation objective." He also observed that the
Nuclear Suppliers Group has not yet reached a consensus on a
prohibition on the transfer of this technology as a common
objective, observing that members such as Brazil and South
Africa remain opposed to such a prohibition. India's
commitment therefore goes beyond that of many Nuclear
Suppliers Group members on this issue. Boucher said that
might be a start, but leaders would need to see some
reference to this area in the text. Saran said that the
India-specific exception should not be the place to hash out
the Group's on-going deliberations. Saran observed that if
the Group were to come to such a decision in the future,
India's exception text includes a consultation mechanism to
discuss it with India.


8. (SBU) The response to a possible future nuclear test by
India is "difficult," according to Saran. There is nothing
to stop any country from halting cooperation immediately on a
bilateral basis in the event of a nuclear test if they so
choose, according to Sara, but India could not accept a
condition making such a response "automatic." He said
Nuclear Suppliers guidelines already mandate meetings and
action if a nation tests, and said this provision was not
being waived. Boucher proposed that perhaps this could be
explicitly acknowledged in the exception text. Saran allowed
that concerns about testing could "perhaps" be addressed by a
reference "in national statements or the Chairman's Summary."

Presidential Determination: Need Progress Before Second
Plenary
- - -


9. (SBU) Boucher pressed Saran on the importance of rapid
progress on the Presidential Determination items listed in
Section 104b of the Hyde Act not only to satisfy U.S.
Congressional requirements, but also to address doubts in
Vienna about India's commitment to nonproliferation prior to
the next Suppliers Group plenary. Saran said he clearly
understood that progress on these items would help Supplier
countries in their vote at the second plenary on September
4-5.


10. (SBU) Department of Atomic Energy Chairman Dr. Anil
Kakodkar will be in touch with International Atomic Energy
Agency Director General El Baradei next week to make further
progress on the Additional Protocol, according to Saran, but
he was vague about whether Kakodkar would hold a meeting or
talk about a text. Saran agreed that how El Baradei
characterizes India's progress matters to the U.S. Congress
and to Nuclear Suppliers Group members. Saran justified lack
of further progress by explaining the phased approach to
populating the annex of the IAEA Safeguards Agreement and the
complexities of transitioning reactors under existing
bilateral safeguards arrangements to the new umbrella

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safeguards. India circulated its Separation Plan as an
official IAEA document (INFCIRC/731) because "you needed it
sooner, and that should be sufficient." Boucher pressed that
Congress will need to hear that India has called it a
"declaration" of some sort. Saran replied, "We do not see
why your administration cannot certify that we have complied,
but we will see what we can do." Saran was reluctant to
discuss India's commitment to file an IAEA Separation Plan
Declaration because he had not yet received a full read-out
from the August 25 meeting between Menon and Burns.


11. (SBU) Boucher pressed for some kind of forward-looking
commitment on adherence to Nuclear Suppliers Group and
Missile Technology Control Regime export control guidelines
in addition to the list of India's existing export control
mechanisms. Saran replied that the draft Suppliers Group
exception text includes a provision for consultation with
India. Boucher said we need a forward-looking formulation be
included in the Indian-drafted letter on adherence indicating
a desire to work with these groups and keep up to date.
Saran said this may be possible in principle as it is covered
in the exception. But it would be hard to include before the
Suppliers Group approves that draft text. Saran also
stressed that India's export control lists are already
broader than Nuclear Suppliers guidelines.


12. (SBU) Boucher said the current version of India's letter
of intent makes the application of the 123 Agreement
conditional on the prior negotiation of a separate
reprocessing agreement. Boucher said the U.S. is willing to
reference this requirement as described in Article 6, Section
3 of the 123 Agreement, but not accept that such an
arrangement is a precondition of inking deals on nuclear
commerce with India. Saran signaled his understanding and
seemed to lack an answer for why the latest version of the
letter that Foreign Secretary Shiv Shankar Menon shared with
Under Secretary Burns in Washington on August 25 preserved
this conditionality.

Indians Reluctant to Engage Further At Political Level
- - -


13. (SBU) Boucher stressed the need to engage again at
political levels while giving the politicians adequate cover.
Saran expressed appreciation for U.S. efforts, calling the
Initiative a "major enterprise." The Indian Government had
no plans to gear up high level approaches to reluctant
governments, according to Saran, but he explicitly rejected
the thesis proffered in recent articles in The Hindu
newspaper that moving the exception through the Nuclear
Suppliers Group is solely the responsibility of the U.S.
Boucher and Ambassador Mulford stressed that "there is still
work to do" and pressed Saran on the importance of India
making another push at political levels to stress how
important the Initiative is to those country's relationships
with India. The Ambassador observed that the "Group of 6"
countries that proposed most of the new conditions for
India's exception would be harder to break as long as Japan
and Canada remain supportive of their amendments. Saran
replied, "We have already conveyed what we thought was
important." (Note: Tarun Das later told Boucher that in
fact governments were being reminded that the bigger
political and economic relationships would be affected by
whether countries offered their support.)


14. (SBU) In a prior meeting with Foreign Ministry Joint
Secretary (Americas) Gaitri Kumar, Boucher went
point-by-point through the Presidential determination items,
stressing the importance of completing each one quickly, not
only for the purpose of delivery to the U.S. Congress, but
also in order to persuade Nuclear Suppliers Group members
that India is pursuing key non-proliferation goals. Boucher
stressed in particular the importance of making substantial
progress on an Additional Protocol, stating that a text must
be on the table. Kumar maintained that each of India's
special envoys, deployed to Nuclear Suppliers Group and
International Atomic Energy Agency member capitals, carried a
brief explaining how India would complete the seven required
Presidential Determination items. Boucher assured her that,
while member countries appreciated India's overall policy
stance, it was critical to act on each item before the
September 4-5 meeting of the Nuclear Suppliers Group to give

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countries recent actions to cite in justifying their support.
MULFORD