NEW DELHI EXPECTS INDIA-AUSTRALIA RELATIONS TO

C O N F I D E N T I A L SECTION 01 OF 03 NEW DELHI 000501

SIPDIS

SIPDIS

E.O. 12958: DECL: 02/15/2022
TAGS: PREL PGOV ECON SENV AS IN
SUBJECT: NEW DELHI EXPECTS INDIA-AUSTRALIA RELATIONS TO
CONTINUE TO FLOURISH UNDER RUDD

REF: NEW DELHI 0322

Classified By: PolCouns Ted Osius for Reasons 1.4 (B, D)


1. (C) Summary: India-Australia relations under Prime
Minister Rudd should continue to move forward on the positive
path set by the Howard administration, according to the
Ministry of External Affairs, the Australian High Commission
and contacts in Delhi. However, while greater engagement in
bilateral and multilateral agreements looks likely, a ban on
uranium sales (a long standing Labor Party position),and an
explicit lack of enthusiasm for quadrilateral
U.S.-India-Australia-Japan dialogue has caused a stutter.
Contacts here believe the GOA is keen to see the relationship
move beyond the traditional pillars of &cricket, curry and
the Commonwealth,8 especially in the areas of economic
engagement, climate change and coordination in multilateral
fora. End Summary.

A Valued Friend in Howard
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2. (C) India-Australia relations under Prime Minister Howard
ranged from a complete freeze following India,s 1998 nuclear
tests to Howard claiming in 2004 that India was set to become
one of Australia,s most important regional and bilateral
partners. From trade (over USD$7.2 billion in 2006) to
defense cooperation (including participation in the erstwhile
U.S.-India naval exercise Malabar in 2007) to support for the
civil-nuclear deal, relations flourished, with rivalry over
who had the better cricket team and worse cricket
sportsmanship being among the top irritants. Given the
closeness which had developed, New Delhi was delighted to
hear Kevin Rudd label India-Australia relations an "urgent
priority" for his administration.

No Uranium/No Quad No Problem for Delhi
--------------


3. (C) However, one of the first signals the new government
in Canberra sent was on January 15 when it told Special Envoy
Shyam Saran that Australia would, as characterized by Indian
media, &reverse8 PM Howard,s offer to sell uranium to
India. (Note: More accurately, as Embassy Canberra notes,
the Howard government was supportive but only indirectly.
Howard said Australia would consider exporting uranium to
India if it met certain conditions, including fulfilling the
requirements of the 123 Agreement. End Note.) At the same
time, Canberra maintained the Howard administration's
non-committal position on support for an Indian exemption for
civil-nuclear cooperation in the Nuclear Suppliers Group,
simply noting the GOA &understands how important this issue
is to the United States.8 The uranium decision was widely
expected, as it had been a campaign promise, and New Delhi
has not interpreted the move as portending any hiccups in the
relationship. Ministry of External Affairs Director (South)

D. Ramamoorthy told Poloff that the offer to sell uranium was
purely an initiative of PM Howard, something New Delhi had
never asked for, and given the public position Rudd had taken
during the campaign, the reversal was a development India was
prepared for. &It does not signal any conflict, as far as
we're concerned,8 Ramamoorthy said.


4. (C) Shortly after the uranium announcement, on February
5, Australian Foreign Minister Stephen Smith sent the Indian
intelligentsia a chill by announcing Australia would no
longer be a part of the quadrilateral dialogue. Seen as a
signal of the Mandarin-speaker Rudd,s desire to get closer
to China, the move was met with worry in the Indian public.
Institute for Defense Studies and Analysis associate fellow
Abanti Bhattacharya described the decision as an indication
of China,s &crafty policies8 to break coalitions, while
one headline characterized it as &China scores over India as
Australia quits strategic dialogue.8 Retired General and
frequent Embassy contact Ashok Mehta assessed the
announcement by saying &This is a complete U-turn. It,s a
completely maverick move. They won't give us uranium and now

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we are out of the dialogue.8 However, the MEA,s
Ramamoorthy downplayed the announcement's significance.
&The quad was all Australia and Japan,s doing,8 he said.
&The U.S. and India just went along. We are not concerned.8

Crean Visit Signals Commitment to Relationship
--------------


5. (C) Sandwiched between the two major announcements, and
receiving much less attention despite probably carrying more
significance, Australian Minister for Trade, Simon Crean,
concluded the first India visit by an official in the newly
elected Australian government on January 20. With the
exception of his trip to the Bali climate change conference,
India was Crean,s first destination since taking office.
Crean,s main message to the GOI was that the Rudd government
is committed to pursuing a more comprehensive relationship,
according to Australian High Commission Poloff Murray Harris.
Economic cooperation will be a top priority, Harris
reported, noting that exports to India had just surpassed
those to the USA for third place on Australia,s list of
trade partners, with bilateral trade growing at around thirty
percent per year. (Note: Harris was likely referring to 2006
merchandise export figures. The trade balance is
significantly in Australia,s favor. Embassy Canberra points
out that, if services are included, the U.S. is still ahead
of India as an Australian export destination. In terms of
total trade, the U.S. was Australia,s third largest trade
partner, while India was tenth. End note.) Crean and Indian
Commerce Minister Kamal Nath announced the start of a Free
Trade Agreement study between Australia and India.

Expect More Multilateral Cooperation...
--------------


6. (C) Crean also emphasized that another focus of the Rudd
administration will be to work more cooperatively with India
in multilateral settings. Crean conveyed to both the GOI and
Indian industry the high priority Australia places on
bringing the WTO Doha round to a successful conclusion and
his desire to cooperate with India on the agricultural
subsidy issue. He reaffirmed Australia,s commitment to
having India invited to become a member of the Asia-Pacific
Economic Cooperation (APEC),and criticized the Howard
government for not working hard enough to secure India,s
membership. Poloff Harris noted numerous other multilateral
venues where Australia intended to leverage its friendship
with India, listing the Commonwealth, Indian Ocean
Rim-Association for Regional Cooperation (IOR-ARC),ASEAN
Regional Forum (ARF),East Asian Summit Plus Three (EAS 3),
Indian Ocean Naval Symposium (IONS),and the Asia Pacific
Partnership on Climate and Clean Development (APP).
Additionally, with India,s blessing, Australia intends to
pursue observership in the South Asian Association for
Regional Cooperation (SAARC).


7. (C) Reinforcing the multilateral message, Smith delighted
India,s foreign policy community on February 11 when he told
Australia,s ABC Television that not only should the United
Nations take a more central focus in international affairs,
but also that the Rudd government explicitly supported a
permanent UN Security Council seat for India.

...And Mil-Mil Engagement
--------------


8. (C) The Rudd administration intends to continue
military-to-military expansion, Harris said. Australia plans
to remain in the Malabar exercises, assuming it is invited,
as well as other exercises which include India, such as
Milan. The Rudd government will likely also pursue more
bilateral exercises, Harris stated.

More Than Cricket, Curry and the Commonwealth
--------------


9. (U) Harris also stressed the potential for one of the

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fastest growing aspects of the Australia-India relations,
people-to-people contact. From 2006 to 2007, India was the
third largest immigrant source country for Australia, after
the UK and China, with over 13,000 Indians moving Down Under.
India was second only to the UK in providing skilled workers
to Australia during that span, with over 15,000 Indians
getting skilled worker visas. Over 40,000 Indian students
studied in Australia in 2007, up 60 percent from the previous
year. Referring to the oft-used phrase to describe the
relationship, Harris said Australia intends to encourage
greater people-to-people ties to move beyond the &cricket,
curry and the Commonwealth8 stereotype.

Differences Still on Climate Change
--------------


10. (U) Rudd,s move to ratify the Kyoto Protocol on climate
change was welcomed in India, as were reports of Rudd,s call
to Beijing where he was alleged to have offered to act as a
bridge between the developing and the developed world in
negotiations on cutting greenhouse gas emissions. However,
Harris noted, Australia and India still have different
perspectives on several issues related to the environment,
and Australia does not support a per capita emissions concept
India advocates. Despite the differences, Harris said that
Australia has found India to be helpful on climate change
issues, and intends to remain closely engaged.

Comment
--------------


11. (C) Comment: Uranium and the quad aside -- and as
Ramamoorthy indicated, MEA is willing to put those quickly
aside -- all indications are that India-Australia relations
will continue to progress. In just a few short weeks,
Canberra has addressed India,s concerns over top foreign
policy issues such as the UNSC seat, multilateralism and
climate change. Harris revealed that more attention should
follow soon, as both PM Rudd and FM Smith are expected to
travel to Delhi early in the administration. Still, if both
sides indeed wish to move beyond cricket, curry and the
Commonwealth and on to commerce, climate change and
multilateral cooperation, we can expect difficult choices
ahead. Post also expects that while New Delhi will be
willing to let the quad concept drop for now, it will watch
Rudd,s approaches to China extremely closely, assessing
whether his attention to that relationship will have any
zero-sum consequences for India-Australia ties. Or for
India,s rivalry with China for power and influence in the
region. End Comment.


12. (U) This message has been coordinated with Embassy
Canberra.
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