U.S.-INDIAN RELATIONS: NEXT STEPS IN THE STRATEGIC

UNCLAS SECTION 01 OF 07 NEW DELHI 001649 STATE FOR P (WEST),SCA (BLAKE/OWEN),SCA/INSB (MAHONEY),NSC FOR GOEL SIPDIS E.O. 12958: N/A TAGS: PREL MASS ENRG EFIN CVIS AMGT IN SUBJECT: U.S.-INDIAN RELATIONS: NEXT STEPS IN THE STRATEGIC DIALOGUE ¶1. SUMMARY: (SBU) Following on the August 5 Interagency Policy Committee meeting to discuss the Strategic Dialogue, Mission offers its views on next steps in the run up to the Prime Minister's November visit. We spell out dialogue goals, describe ways to move forward, flag pitfalls and propose potential deliverables. End summary. TURNING THE STRATEGIC DIALOGUE INTO ACTION -------------- ¶2. (SBU) The U.S.-India Strategic Dialogue announced during Secretary Clinton's July visit to India highlights the areas we will focus on to broaden and deepen our strategic partnership. Turning what is in essence a broad outline into specific action items will depend on our ability to work with the Government of India to make existing talks productive and get new dialogues off the ground. ONE of the biggest across-the-board constraints we face in the short term is the lack of funding for activities. We will be seeking support and resources from parent agencies, but the time before the Prime Minister's visit is short. The Government of India will judge our seriousness about the Strategic Dialogue in part by our ability to match funds that can build real partnerships. In this context, we need to recognize that while we may seek to incorporate into the dialogues existing plans for bilateral cooperative programs that would be launched during this period, we run the risk that the GOI will hesitate to endorse projects that were not developed through the bilateral dialogue process, or view "repackaging" of pre-existing projects as lack of U.S. commitment. We also note that 1) science and technology; 2) women's empowerment; and, 3) development partnerships are cross-cutting themes in many of the pillars and need to be consistently addressed in the interagency. STRATEGIC DIALOGUE: THE NEXT FOUR MONTHS -------------- ¶3. (SBU) -- STRATEGIC COOPERATION Strategic Security Dialogue (SSD): This dialogue addresses India's strategic weapons program (such as risk reduction measures with Pakistan),explores areas of nonproliferation cooperation (such as port security),and gains bilateral coordination on global nonproliferation issues (such as Fissile Material Cutoff Treaty and CTBT). The first Strategic Security Dialogue meeting should meet in early fall 2009 prior to PM Singh's November 24 visit. After conversations with MEA, the GOI leans towards holding the meetings in Washington or New York on the margins of UNGA because of the likely sensitivity of early discussion of issues like nonproliferation. MEA is also determining who will represent the GOI because Additional Secretary Katju is moving on to a new position. The goal of the meeting would be to produce a joint statement underlining areas of agreement on nonproliferation issues. Post will also renew its efforts to encourage India to accept a team to discuss the Secure Freight Initiative/Megaports this fall. Global and Regional Security Dialogues: This dialogue will focus on foreign policy issues in South and Southwest Asia, including Afghanistan-Pakistan and Iran, the Gulf, Indian Ocean and East Asia including China. Special Representative Holbrooke plans to visit Delhi in mid-August, if schedules allow. Post supports the MEA's interest in arranging meetings with Assistant Secretary for East Asia and Pacific Affairs Kurt Campbell and Special Advisor to the President and NSC Senior Director Dennis Ross. These meetings could take place on the margins of other multilateral meetings or the MEA would consider hosting these visits in Delhi in the next several months. Global Issues Forum: The last meeting of the Global Issues Forum took place in New Delhi in 2008. The Forum is designed to coordinate U.S. and Indian views on multilateral issues such as the promotion of democracy, health, environmental protection and human rights. No date has been set yet for another Forum meeting. The MEA will provide us with suggested dates in the near future. Post flags that efforts to promote a publicly coordinated approach to governance in a third country will have to be carefully handled because of GOI sensitivities on sovereignty issues. Defense Policy Group Dialogue: This annual set of dialogues and working groups focuses on military-to military cooperation, including training, cooperative operations, doctrinal development and military sales. The Defense Policy Group (DPG) meeting in Delhi November 2-3 will seek agreement on humanitarian assistance and NEW DELHI 00001649 002 OF 007 disaster relief operations, information sharing, maritime security cooperation through combined operations, repatriation of remains of U.S. service members, expanded multilateral exercises, and the signing of two remaining foundational documents regarding communications equipment interoperability (CISMOA) and logistics support (LSA). The MEA and Indian MOD are currently consulting on the GOI agenda for the meetings. The Defense Procurement Policy Group (DPPG) meeting the week before will be focused on a range of military hardware sales. Agreement in July on End Use Monitoring language in Letters of Offer and Acceptance will boost this effort. Joint Working Group on Counterterrorism: This existing bilateral mechanism to coordinate counterterrorism efforts has been focused post-Mumbai on intelligence and law enforcement cooperation and increased training. A proposed visit by Home Minister Chidambaram in September (tentative window September 8-13) will facilitate greater cooperation. The MEA pledged to provide Post with a list of the specific areas of cooperation the GOI wants to pursue. Post will encourage GOI participation in a U.S.-sponsored regional CT conference in Bangladesh in September and the regional conference on informal money transfers (hawala) scheduled for Mumbai in early FY ¶2010. The MEA pledged to provide Post with a list of the specific areas of cooperation the GOI wants to pursue. High Technology Cooperation Group: This existing dialogue has added working groups on civil aviation, civil nucler, and strategic trade. The Group focuses on cooperative steps to create economic, legal and structural environments for successful trade in high technology goods and controlled dual-use technologies. According to the MEA, a full HTCG plenary may not be possible until December, but the biotech working group should meet on August 26 and the MEA hopes for discussions on strategic trade in September. Potential deliverables in the dialogue include several focused trade missions, resolution of a long-standing dispute over licensing of the export of zirconium technology, and a discussion of the results of a top-to-bottom review of the entities list and time bound action plans from each of the existing and new working groups. Specific trade promotion initiatives under the HTCG include: a Commerce Aerospace Supplier Development Trade Mission, November 2009; a Civil Nuclear delegation, December 2009; a USA Pavilion at Aviation Expo, March 2010; and a Medical Technology Trade Mission, March 2010. These events are designed to establish new commercial and joint venture partnerships between U.S. and Indian firms, especially SMEs. In addition, the events will be used to engage in policy and regulatory roundtables to offer U.S. ideas on reforms that will increase bilateral trade and investment and economic growth. Promising Working Group Action Plans resulting from the Plenary will focus on cooperating in the development of India's general and business aviation industry and increased clarity on India's medical devices and drug regulations, and implementation of IPR provisions to control counterfeit and spurious drugs. Information and Communications Technology Dialogue: The purpose of the ICT Working Group is to serve as a public-private forum to facilitate bilateral trade and investment in information technology, telecommunications, and media and broadcasting. It works well -- for both sides. From the U.S. perspective, it has helped persuade the GOI to increase in the level of Foreign Direct Investment (FDI) in the telecommunications sector from 49 to 74 percent; to liberalize VoIP services, to permit Mobile Virtual Network Operators and allow competitive carrier selection; eliminate the Access Deficit Charge on the provision of international long distance services and move forward with plans for a 3G auction. The GOI proposed the next WG for September. The MEA has also raised whether a cyber security dialogue should be incorporated into the ICT. Due to the delay in confirmation of the U.S. lead, we understand the USG preference may be to hold the next ICT WG in New Delhi in December in connection with a trade show. It is not clear to Post whether this has been communicated officially to the Embassy. Post would welcome EEB/CIP views on potential deliverables. Real progress on the 3G auction would be one. -- ENERGY AND CLIMATE CHANGE Energy Dialogue: MEA described this pillar to us as "the star of the dialogue process." The purpose of this dialogue has been to facilitate the deployment of clean, low-carbon energy technologies, promote increased clean energy trade and investment, enhance mutual energy security, and advance our non-proliferation goals, including the safe use of nuclear power. This has been ONE of the most robust and successful of the ongoing dialogues and has spawned a separate Dialogue on Global Climate Change. NEW DELHI 00001649 003 OF 007 Moving forward, the Energy Dialogue will continue to expand private sector participation to promote a green economic recovery, seek to engage in transformational activities such as carbon capture and storage (CCS),and place an increased emphasis on civil nuclear power, renewables, and clean coal technologies as well as energy efficiency. Several USTDA and Commerce initiatives actively support Energy Dialogue cooperation priorities. The Steering Committee (SC) held its last meeting in April 2008 in New Delhi during a week when all four non-nuclear WGs held meetings. It is the United States' turn to host the next meeting. The SC has historically met on an almost annual basis but there is no fixed schedule. The five Working Groups meet twice a year to chart progress, discuss and launch new activities and engage in policy dialogue. a. Power and Energy Efficiency WG. The WG last met in April 2008 in New Delhi. It is likely the next meeting will be held in New Delhi this November in conjunction with the Nov. 16-17 Energy Efficiency Conference and Trade Mission cosponsored by DOE, USAID, Commerce, India's Ministry of Power, USIBC, CII, and others. Actions could include: an Integrated Gasification Combined Cycle feasibility study; R&D cooperation on an R&D technology center; an exchange program with India's Ministry of the Environment and Forests and DOE's NETL; and India joining the International Partnership for Energy Efficiency Cooperation (IPEEC). b. Oil and Gas Working Group. This WG last met in April 2008 in New Delhi although there was also a Ministry of Petroleum and Natural Gas (MPNG) Secretary visit to DOE in the spring of 2009. The next WG has not yet been scheduled. Actions could include: a Roundtable on Increasing U.S. Participation in India's Upstream Oil and Gas Sector; additional cooperation on methane hydrates; USTDA grants to introduce advanced safety, inspection and maintenance technologies in India's refinery sector; a USTDA grant to promote oil rig safety and spill avoidance; India's participation in the October 2009 IEA Ministerial, including the IPEEC and steps towards coordinating its strategic petroleum reserve within the IEA emergency response framework. c. Coal WG. The WG last met in April 2008 and is expected to meet in the fall, likely in the United States. Actions could include: an MOU between DOE's NETL and India's Central Institute for Mining and Fuel Research on underground coal gasification; dry coal beneficiation programs; cooperation on assessment of reserves and enhanced energy recovery; a USTDA-funded grant with Reliance for a feasibility study and pilot project for co-processing of lignite and refinery bottoms to produce high grade liquid fuel in Gujarat; and a USEPA/USTDA Coal Mine/Coal bed Methane Clearinghouse to encourage the recovery and utilization of coal mine methane. d. New Technology/Renewable WG. The WG last met in April 2009. Plans are underway for a September meeting; DOE staff will visit Delhi in August to lay the groundwork. The MEA has stressed the importance of the working group "thinking big," particularly in the areas of solar energy and biofuels, with solar being a top priority for the Singh government with huge potential for public benefit and a strong funding commitment from the GOI. The GOI is keeping a close eye on our Strategic and Economic Dialogue with China to determine whether India is receiving similar treatment. Actions could include: next steps on Biofuels MOU; possible MOU on advanced solar development; DOE/Commerce plans for a February 2010 Solar Energy Trade mission; a possible Wind energy MOU; exchanges in municipal waste and waste-to energy; demo geothermal projects with DOE's Oak Ridge National Lab; promotion of zero energy buildings and communities; and India taking steps to be an "active partner" in President Obama's renewable energy initiatives. India's Minister of Renewable Energy plans to visit the United State in the fall. e. Civil Nuclear WG. The WG last met at DOE's Idaho Lab in April ¶2009. The next meeting is planned for the week of December 14, 2009 in Mumbai. In order for India's 123 Agreement to become effective, it needs to declare those civilian facilities it will make subject to IAEA safeguards. These actions will open the door to deeper U.S. commercial and scientific engagement, with India and DOE is engaging India on these issues. The goal of the December meeting is to complete an Action Plan to guide further collaboration in areas such as: materials for high temperature reactors; passive safety features in reactor design; TRISO fuel development; nuclear hydrogen generation technologies; and fusion energy research. DOE is also seeking to expand cooperation on nuclear and radiological security. In order to promote opportunities for U.S. firms in India's nuclear power sector, the GOI needs to notify Parliament of the designation NEW DELHI 00001649 004 OF 007 of two nuclear parks where U.S. firms could build nuclear power plants; it has already designated parks for France and Russia. U.S. nuclear suppliers also insist that India ratify the Convention on Supplementary Compensation for Nuclear Damage before they do business in India, which may take place in the next session of Parliament. Finally, U.S. technology transfer requirements may impact business development. Global Climate Change Dialogue: This new dialogue is designed to intensify collaboration on combating climate change by fostering increased cooperation in reducing greenhouse gas emissions and promoting sustainable, efficient, low-carbon development. The GOI considers the meeting between Special Envoys Stern and Saran on July 21 as the first meeting of the dialogue, but are looking forward to a continuing conversation. The MEA leans to having at least ONE meeting in conjunction with the Energy Dialogue. Post recommends establishing an Indo-U.S. Partnership for Climate Change Cooperation to be funded jointly by both countries as a climate change deliverable for President Obama's meeting with PM Singh. Encompassing all aspects of climate change cooperation, the partnership would serve as an umbrella for a wide range of projects and programs such as agricultural research, renewable energy projects, cultural exchanges, and black carbon reduction through use of efficient cook stoves. In order to meet a compressed deliverable deadline, initial USG funding for the partnership could be in the range of a relatively modest USD 5 million in FY2010 to be matched by GOI funding. As USG funding for climate change ramps up in out years, the Indo-U.S. Partnership for Climate Change Cooperation could serve as an already established vehicle to promote bilateral interests under the Global Climate Change Dialogue. USAID will support the Dialogue goals of reducing the negative impacts of climate change through innovations in clean and renewable energy, agriculture, and better environmental impact analysis. In the short-term, USAID will launch: 1) a 6 MW solar project in Andaman and Nicobar (October 2009); and a private sector loan guarantee for a 25 MW biomass power plant in Maharashtra (September 2009). Two additional opportunities to further develop the climate change dialogue with India ahead of the Singh visit are: 1) Minister of Environment and Forests Jairam Ramesh plans to travel to New York to attend the September 22 UN Climate Change Conference and requested meetings with S/E Stern in Washington the same week, and 2) the GOI has invited Energy Secretary Chu to attend the "Delhi High Level Conference & Exposition on Climate Change: Technology Development and Transfer" October 22-23. Post recommends an early decision on his participation. If Secretary Chu is unable to attend, we quickly should identify appropriate USG representation. -- EDUCATION AND DEVELOPMENT Education Dialogue: The dialogue will focus on the desire of both nations to prepare coming generations for the knowledge economies of the future and to address issues of shared priority, with participation from government, educators and the private sector. No date has been set yet for the first Dialogue meeting. The MEA would welcome a visit from the Under Secretary for Public Diplomacy and Public Affairs before November. MEA reports Human Resources Development Minister Kapil Sibal will not be able to engage on the education issue bilaterally until January because of his responsibility to shepherd an education bill through the Indian Parliament in November-December. Activities within this dialogue could include: cooperation in the development and support of the Higher Education Council under the aegis of our existing bilateral U.S.-India Education (Fulbright) Foundation to connect U.S. and Indian universities; convening of an Education meeting at the time of the annual U.S.-India CEO Forum to explore partnerships supporting U.S.-India education programs, including the use of corporate offset programs to promote cooperation; and enhancing the 2008 Fulbright-Nehru agreement to support direct university to university partnerships and faculty development in priority fields for the bilateral relationship. Potential deliverables could include establishing a joint USD 10 million (USD 5 million each) fund to support university linkages and junior faculty development in areas of shared priority, additional USD 2 million (USD 1 million each) in funding for Fulbright exchanges, and proposed private contributions to Fulbright exchanges. USAID would strongly support basic education being included within the Dialogue to improve the quality and relevance of education for India's marginalized children and youth. In the short-term, USAID plans to launch a new Education and Skill Development for Disadvantaged Program (October 2009) and fund research into the variables determining school dropouts and the development of "pilot" projects to address this major drag on India's development (October 2009). Women's Empowerment Dialogue: This new dialogue led on the U.S. NEW DELHI 00001649 005 OF 007 side by Ambassador-at-Large for Global Women's Issues is designed to foster relationships with the government and civil society on common interests involving women. No date has been set yet for the first Dialogue meeting. The MEA is working with the Ministry of Women and Child Development to get a sense of the Ministry's plans for co-chairing this dialogue. USAID can support the Dialogue in its efforts to address gender inequalities in India through promoting transparent policies and legal frameworks that protect the rights of women. To this end, USAID will be launching a new Rule of Law and Reproductive HEALTH Program for Women (October 2009). -- ECONOMICS, TRADE AND AGRICULTURE U.S.-India Economic Dialogue: This was conceived as the umbrella mechanism under which the other economic dialogues would be coordinated. There has been no stand-alone meeting under this dialogue for a number of years. Post recommends that Principals and deputies (when possible post-confirmation) meet early to reinvigorate and set priorities for all the economic dialogues. The MEA is also interested in reactivating the discussions. Along these lines, ONE issue Washington agencies need to determine is whether or not Commerce still wants to pursue its Commercial Dialogue, which we understand was not included within the new Strategic Dialogue structure. Trade Policy Forum: The purpose of the Forum is to reduce and remove barriers to bilateral investment and trade. The Forum has largely succeeded at getting the right players to the table from both the USG and GOI sides - except in the agricultural sector where we are concerned that the GOI is not taking seriously our requests for an Agriculture Focus Group dialogue at the appropriate level. Achievements have been a mixed bag, and progress has waned since the TPF last met in February 2008. There has been some progress on IPR. The first round of bilateral investment treaty negotiations takes place in New Delhi in early August. The GOI, however, did not address any of the tariff concerns in its recent budget that we had raised and, despite hopes that the new government would take action, the insurance law was not taken up during the summer parliament session. We will work to encourage Minister of Industry and Commerce Sharma to accompany Prime Minister Singh in November in order to convene a TPF with Ambassador Kirk. We look to utilize the upcoming visit of DUSTR Marantis to encourage a November TPF and to establish a tentative agenda for the TPF so both sides can work to lay the groundwork for real progress. Holding the TPF itself could be seen as a deliverable. We would encourage USG TPF participants to identify any potential policy successes that could be announced during the PM's visit, including progress on the afore-mentioned issues and or other initiatives that could enhance bilateral cooperation generally and in specific sectors. Finance and Economic Forum: The purpose of the FEF is to provide a forum for bilateral discussion of economic and financial sector regulatory issues, and from the USG perspective, to encourage India to be a constructive and responsible player in global financial fora. This forum is considered by both sides to be an effective dialogue. It has also achieved some success in improving a level playing field for American financial firms. Treasury has proposed to add macroeconomic issues to the FEF to broaden our bilateral engagement to the full range of current discussions that occur within the G20 process. In addition to infrequent senior-level meetings, the FEF regularly includes technical-level exchanges every year between the United States and India on issues affecting the banking, securities, commodities, insurance, and pension markets, as well as financial regulatory matters facing U.S. firms doing business in India. The next meeting is proposed for late October ¶2009. The MEA is looking at dates. Possible deliverables could be assurances of progress in the Indian insurance, banking, and pension sectors promoting greater liberalization, bilateral technical cooperation on regulatory matters, and identification of common objectives in the G-20 Finance Ministers agenda. CEO Forum: The purpose of the CEO Forum is to provide senior-level private sector input to the U.S.-India economic relationship through recommendations for action by each government to improve the bilateral trade and investment relationship. The CEO forum has been very successful at getting senior-level MNC private sector and government officials together. The follow-through on these recommendations has been limited and some private sector participants have criticized the government participants for dominating the proceedings with speeches - and not following through on recommendations. The CEO Forum has not been as effective in providing a voice for SMEs and its current composition is seen as heavy on the financial services sector. The GOI has recommended that CEO Chair and Forum membership be reconstituted before the next NEW DELHI 00001649 006 OF 007 meeting. While ordinarily the CEO Forum has been held in September in New York on the margins of the UN General Assembly, we understand that timing could be difficult this year due to NSC's concurrent involvement in the G-20 meetings in September in Pittsburgh and possible delays in reconstituting the Forum under new USG requirements for Forum membership. The CEO Forum should strive to meet either ahead of the PM's visit - so that recommendations could be presented during the visit - or use the visit to jump-start a revitalized CEO Forum with mechanisms to ensure follow-through on recommendations. Agriculture Dialogue: The Dialogue aims to develop a productive, internationally competitive and diversified agriculture sector in India that maximizes opportunities for food security, poverty alleviation and income generation. To this objective in the short-term, relevant USG agencies and departments will: sign a Memorandum of Understanding with National Horticulture Mission of the Ministry of Agriculture (September, 2009); launch the Revitalizing Education for Agriculture Development Program with U.S. and Indian universities (October 2009); convene a seminar between bodies regulating international standards and Indian partners as part of the Indian Horticulture Knowledge Network (November 2009); release the first biotechnology crop - eggplant (March 2010); and sign a new bilateral Agriculture Project Agreement with GOI (September 2010); identify new opportunities for expanding the prestigious Norman Borlaug Fellowship program (September 2009) and co-host a seminar with the Indian private sector on international norms (UN/CODEX) for food safety standards (August 2009). In the long-term, this assistance will alleviate hunger; improve agricultural productivity; improve soil and water resource management; and, improve the flow of goods and services through strengthened value chains. To achieve these ambitious results, there will need to be a major increase in funding for USAID and USDA agricultural programs. There is a concern that the Indian Council for Agriculture Research, which manages India's research and education agenda, may try to orient the science, technology and education working group solely towards pure agricultural research. Next steps at Post include development ("flesh on the bones") of the five key working groups: a) Farm-to-Market Links; b) Regional and Global Food Security Cooperation; c) Science, Technology and Education; d) Environmental Sustainability; and e) Rural Financial Systems (i.e. rural savings, credit, insurance and micro-finance). The MEA will be exploring with Post possible dates in September-October for an invitation to the Under Secretary of State for Economic, Energy and Agricultural Affairs to visit India and begin discussions. The MEA is also interested in inviting Secretary Vilsack to India and will look for dates. -- SCIENCE, TECHNOLOGY, HEALTH AND INNOVATION Science and Technology Dialogue: The Dialogue will assist in harnessing the great potential for S&T collaboration between the U.S. and India in areas of scientific endeavor ranging from outer space to nanotechnology. A cornerstone of this collaboration is the recently signed Indo-U.S. S&T Endowment, a highly visible vehicle intended to boost bilateral cooperation efforts. While we do not envision a major S&T Endowment deliverable for the Singh visit, it is imperative that the Endowment rapidly become fully functional. Both countries are in the process of filling the 18 member Endowment Board with qualified individuals from government, academia and the private sector. Ideally, the President and PM would be able to refer to the constitution of the Board as tangible demonstration of progress in S&T cooperation. Health Dialogue: This dialogue will allow for greater cooperation on health issues between the U.S. and GOI. No date has been set yet for the first Dialogue meeting, but the MEA is interested in getting the dialogue going as soon as possible. Currently, the U.S. Department of HEALTH and Human Services maintains 10 bilateral agreements with the Ministries of HEALTH and Family Welfare and Science and Technology, through its agencies: National Institutes of Health (NIH),Centers for Disease Control and Prevention (CDC) and Food and Drug Administration (FDA). HHS's key objectives are to conduct and promote collaboration in the areas of science and technology, HEALTH sciences, product safety, and public HEALTH programs. Working with academia, government, civic society, and industrial partners, HHS's objectives are realized through "Four D's of Global Health, which involves focus on Discovery, Development, Delivery, and (health) Diplomacy". Two possible deliverables from HHS are: 1) establishment of a Global Disease Detection (GDD) program with the Ministry of HEALTH and Family Welfare by CDC. The GDD program will promote collaborations in emerging infectious diseases, influenza, zoonotic diseases, influenza, laboratory systems strengthening, and communication; and 2) establishment of a bilateral agreement with the Ministry of HEALTH and Family Welfare NEW DELHI 00001649 007 OF 007 on cancer bioinformatics by NIH. The agreement will allow collaboration in detection, treatment, and prevention of cancers using information exchange via electronic grid that connects Indian and U.S. cancer specialists. HHS/NIH will host four Joint Working Group meetings with the Ministries of HEALTH and Family Welfare and Science and Technology during the week of November 16, 2009 which can be highlighted during the Prime Minister's visit. USAID's goal in support of the HEALTH Dialogue is to assist the Government of India (GOI) in achieving the HEALTH Millennium Development Goals. In the near term to support the HEALTH Dialogue, USAID will launch a new HEALTH of the Urban Poor Program (October 2009). ROEMER