INDIA AGREES TO BILATERAL TALKS ON PROPERTY TAX

UNCLAS USUN NEW YORK 000240 SIPDIS SIPDIS DEPT FOR IO/UNP; L/DL, M E.O. 12958: N/A TAGS: OFDP PREL IN UN SUBJECT: INDIA AGREES TO BILATERAL TALKS ON PROPERTY TAX REF: STATE 26684 ¶1. As instructed reftel, Ambassador Wolff met with Indian DepPermRep Ajai Malhotra March 14 to deliver reftel talking points and ask that the Indian Mission consider engaging in bilateral talks on the issue of New York property tax rather than bringing the issue before the UN Committee on Relations with the Host Country or the ICJ. Malhotra responded that the USG proposal was "eminently sensible", that India wanted to resolve the issue in a friendly manner, and that India had not mentioned possible referral of the issue to the ICJ in its letter to the Committee Chair. (It turns out that the ICJ reference originated with the Committee Chairman Mavroyiannis himself, based on his conversations with other interested delegations.) Malhotra mentioned that like India, the Chinese Mission owned a mixed-use office/residence tower, but did not pay taxes because the Consular Convention between the US and China exempted the Chinese staff residences. He implied that negotiation of a bilateral agreement to exempt diplomatic and consular property from real estate taxes would be of possible interest to India - noting that it would be best if it could be made retroactive. He stressed that it is in our joint interest to find a solution in order to avoid reciprocal action which would be more costly to the U.S. than to India given the extent of U.S. diplomatic and consular properties there. Malhotra also confirmed that India would appeal the District Court's February 2008 decision in favor of New York City, and that the Indians would like to move forward quickly on the bilateral track, preferably either in New York or in New Delhi. Ambassador Wolff requested, and Malhotra agreed to inform the Committee Chairman (subject to almost certain approval from Delhi over the weekend of March 15-16) that India would pursue bilateral talks on the issue and that an emergency meeting of the Committee need not take place until further notice. ¶2. USUN Host Country and Legal MinCouns had met with Chairman Mavroyiannis earlier on March 14 to inform him of our upcoming approach to the Indians. Mavroyiannis agreed not to announce a meeting of the Committee (in the unlikely event it were to take place, the new date would be March 24 vice March 20) pending confirmation from the Indian Mission that it did not see a need for an emergency meeting. Following the meeting with Malhotra, Host Country MinCouns told the Chair that the Indians had accepted the USG proposal in principle and that it was very likely that India would confirm that on Monday morning, March 17. ¶3. USUN plans to meet with the Mongolian PermRep as early as Monday, March 17, but requests amended talking points for use with that Mission. KHALILZAD