SARKOZY'S VISIT TO INDIA LONG ON DRAMA, SHORT ON

C O N F I D E N T I A L SECTION 01 OF 03 NEW DELHI 000338

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E.O. 12958: DECL: 02/01/2018
TAGS: PGOV PREL MARR MASS KNNP KOMC KUNR FR IN
SUBJECT: SARKOZY'S VISIT TO INDIA LONG ON DRAMA, SHORT ON
SUBSTANCE

REF: NEW DELHI 277

Classified By: POLCOUNS Ted Osius for reasons 1.4 (a,b,d)


1. (SBU) SUMMARY: President Sarkozy made a two-day stop in
India amid a whirlwind of media speculation regarding
whether his famous girlfriend, supermodel Carla Bruni,
would accompany him. Sarkozy's visit stimulated both
governments to officially confirm that they have finalized
their civil nuclear agreement, and generated the signing of
significant corollary agreements for joint Indo-French
civilian nuclear research. Paris and New Delhi pledged to
triple bilateral trade to USD 18 billion within five years,
and with the GOI's blessing, France announced the opening
in 2008 of new consulates in Kolkata and Bangalore and the
formal establishment of the Agence Francaise de
Developpement (AFD) in India. The French left without
inking any of the large defense deals which had been
rumored, but the CEO of Dassault (manufacturer of the
French Rafael, a competitor of Boeing and Lockheed Martin
for the MRCA) made a tantalizing offer of full transfer of
sensitive technology that if put into effect could prove
too tempting for the GOI to refuse. END SUMMARY.

-- FRANCE AND INDIA ANNOUNCE FINALIZED CIV-NUKE DEAL --


2. (C) MEA Undersecretary (West Europe/France) Biraja
Prasad asserted to PolOff January 30 that the Indo-French
agreement on civilian nuclear cooperation has been
completed and that implementation could proceed after
negotiations with the IAEA have been finalized and the
exemption granted from the NSG. Hugues de Longevialle,
Nuclear Affairs Officer with the French Embassy in New
Delhi, clarified to PolOff that the French agreement hardly
differed from the 123 Agreement, since, he said, the Indian
side relied on the 123 to push their positions. The
agreement is quite similar to other bilateral agreements
that the French have done, de Longevialle noted, with the
exception of the fuel supply assurance and strategic
reserve clauses, which mirror the 123. When asked if the
French agreement would allow for fuel cycle assistance
(i.e. enrichment and reprocessing technology [ENR]
transfers),de Longevialle attested that ENR transfers are
neither allowed nor forbidden, since the agreement, like
the 123, is only a framework arrangement. De Longevialle
underlined that the French agreement is in complete
compliance with France's international agreements, and that
it remains contingent upon not just IAEA and NSG approval
but also the EC under the EURATOM agreement. Sandeep
Dixit, Hindustan Times reporter, revealed to PolOff that
during Sarkozy's visit the Areva subsidiary Framatome had
urged the GOI to sign an agreement for France to build
additional reactors in India but that this offer had been
rebuffed.

... WHILE ADVANI SNIPES AT THE US-INDIA 123 AGREEMENT


3. (C) First Secretary Guillaume Bazard of the French
Embassy related to PolOff that BJP Leader L.K. Advani
responded to President Sarkozy's query about why the BJP
did not support the US 123 Agreement by saying that the
negotiation process was "unacceptable" and the deal itself
"contrary to India's sovereignty." He added that the
Indian government had not sufficiently consulted with the
BJP before agreeing to the deal.

-- INDIA BUYS INTO FRENCH RESEARCH REACTOR PROGRAM --


4. (C) The GOF and GOI signed an agreement for
collaboration on the Jules Horowitz research reactor in
Cadarache, France. De Longevialle explained that India has
purchased three percent access rights to conduct research
on the reactor by financing three percent of the
construction cost, and will send scientists from India's
Department of Atomic Energy (DAE) to France for this
research. The agreement, expected to be completed by 2014,
will not result in any transfer of technology or materials.
De Longevialle stated that India was eager to engage in
such cooperation because it can test new types of fuel for
the next generation of reactors. Currently, India uses its
reactors only for the three-stage program research. He

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speculated that the Indians view the research agreement as
elevating their nuclear status.

-- IN DELHI, FRANCE WELCOMES INDIA WITH OPEN ARMS --


5. (C) The GOF expressed its strong support for India's
inclusion as a permanent member of the United Nations
Security Council and G8 negotiations. Citing President
Sarkozy, Bazard told PolOff that France called for an
enlargement of the G8 to the G13 including emerging
countries India, China, Brazil and South Africa, stating
that India was not given as much credit as it should
receive within the international community. The GOI
welcomed France's announcement to open two new French
consulates in Kolkata and Bangalore in 2008 and an
agreement to formally establish the Agence Francaise de
Developpement (AFD) in India.

...AND OPEN POCKETBOOKS


6. (U) Bilateral trade stood at USD six billion in
2006-2007, putting France as India's eighth largest trading
partner. With France's upcoming Presidency of the EU, the
two countries reinforced their aim to achieve an ambitious
target of USD 18 billion in bilateral trade by 2012 and
significantly stepping up investments which to date have
been modest. France is India's eight largest foreign
investor, with cumulative Foreign Direct Investment (FDI)
through October 2007 of USD 661 million.

-- DESPITE EUROCOPTER'S AGONY, DEFENSE COOPERATION MOVES
FORWARD --


7. (C) After announcing in February 2007 that the
French-German aircraft consortium Eurocopter had won the
competition to supply the Indian army with 197 new military
helicopters, the GOI scrapped the USD 600 million deal in
December, citing irregularities in the selection process.
The GOF immediately delivered a demarche of protest to the
GOI in December, but as related to us by Bazard, President
Sarkozy stuck a more conciliatory tone during this visit,
expressing his understanding for the Indian authorities'
decision. Both countries reiterated their aspirations to
consolidate their relationship by increasing the frequency
of their military joint-operations and cooperation, and
signed an agreement for the Protection of Classified
Information and Security.

-- DASSAULT MAKES STRONG PITCHES FOR RAFAEL, MIRAGE JETS --


8. (C) Despite predictions by much of the Indian press
prior to Sarkozy's visit, India did not sign an agreement
with France for a multi-million dollar upgrade for its
Dassault-made Indian Air Force Mirage jets. Dassault,
which is fielding its Rafael in the ongoing USD 10 billion
competition to supply India with multi-role combat aircraft
(MRCA),sent its CEO Charles Edelstenne to accompany
Sarkozy and pitch the Rafael. Dixit relayed that
Edelstenne has promised New Delhi complete and
unconditional transfer of sensitive technology (ToT) if
Dassault wins the competition, in contrast to the U.S.,
which, Edelstenne reportedly asserted, has cumbersome
strings attached to its defense sales. Edelstenne also
described the Lockheed Martin F-16 as "one generation
behind" the Rafael, and that problems with Russian
equipment (alluding to the MIG-29, another competitor)
"always exists."

-- COMMENT: MODEST GALLIC GAINS FOR NOW; MORE DOWN THE
ROAD, PEUT-ETRE --


9. (C) COMMENT: Unfortunately for Sarkozy, the Indian
public seemed more seized on sordid speculation whether his
famous girlfriend Carla Bruni would accompany him to Delhi
and the Taj Mahal, and if so what sort of diplomatic
protocols the GOI would afford her, than on the substance
of the visit. Ms. Bruni stayed home, and Sarkozy was left
with a group of around 300 businessmen and scientists to
accompany him. In the end, Sarkozy was able to walk away
with a few deliverables, but in comparison to the huge
public relations bounce President Putin received as last

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year's Republic Day Guest of Honor, or the impressive
public diplomacy PM Gordon Brown achieved here earlier in
the week, this visit generally fizzled. The agreement to
offer India a share of the advanced Jules Horowitz reactor
was the most notable immediate takeaway from this visit,
although MOUs on nuclear cooperation have the French teed
up to pounce on the Indian civil nuclear market once the
IAEA and NSG actions take place. French defense giants
also went home essentially empty handed, having failed to
ink the lucrative Mirage upgrade deal, which the Israelis
could still snatch away on price, and having given up on
overturning the GOI decision to trash the Eurocopter deal
-- although we can expect an all-out effort from the French
on the rebid, which now includes over 100 air force
helicopters in addition to the nearly 200 army helos. Both
the French Embassy here and MEA labeled this visit a grand
success, but to us it seemed more like a petit success.
END COMMENT.

MULFORD