VZCZCXRO7413
PP RUEHBI RUEHCI RUEHCN
DE RUEHCI #0495/01 3051235
ZNR UUUUU ZZH
P 011235Z NOV 06
FM AMCONSUL CALCUTTA
TO RUEHC/SECSTATE WASHDC PRIORITY 1235
INFO RUEHNE/AMEMBASSY NEW DELHI PRIORITY 1105
RUEHCG/AMCONSUL CHENNAI 0434
RUEHBI/AMCONSUL MUMBAI 0434
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RHMFIUU/CDR USPACOM HONOLULU HI
RHHMUNA/HQ USPACOM HONOLULU HI
RHEFDIA/DIA WASHINGTON DC
RUEAIIA/CIA WASHINGTON DC
RUEHCN/AMCONSUL CHENGDU PRIORITY 0031
RUEHBJ/AMEMBASSY BEIJING PRIORITY 0077
RUEHKA/AMEMBASSY DHAKA 0268
RUEHKT/AMEMBASSY KATHMANDU 0268
RUEHIL/AMEMBASSY ISLAMABAD 0205
RUEHGO/AMEMBASSY RANGOON 0181
RUEHLM/AMEMBASSY COLOMBO 0102
RUEHCI/AMCONSUL CALCUTTA 1519

UNCLAS SECTION 01 OF 04 CALCUTTA 000495 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR SCA/INS, EAP/C 
PACOM FOR POL/AD 
 
E.O. 12958: N/A 
TAGS: ECON CH ETRD ENRG PBTS IN PGOV PREL
SUBJECT: INDIA'S COMMUNISTS LOBBY FOR CHINA 
 
CALCUTTA 00000495  001.2 OF 004 
 
 
¶1.  (SBU) SUMMARY:  In anticipation of Chinese President Hu 
Jintao's November 20-24 visit to India, Communist Party of 
India-Marxist (CPM) has been pressuring the GOI to conduct a 
more conciliatory foreign policy towards China.  In its 
September Central Committee meeting, the CPM criticized the 
ruling United Progressive Alliance (UPA) for a perceived 
pro-U.S. foreign policy and outlined the Party's intent to 
advocate for a more pro-China foreign policy.  The CPM's efforts 
at pushing its pro-China agenda have been comprehensive, with 
key leaders like Politburo Member Sitaram Yechury traveling to 
Beijing for discussions with Chinese officials and CPM General 
Secretary Prakash Karat meeting recently-appointed MEA Foreign 
 
SIPDIS 
Secretary Menon.  Contacts indicate that the agenda for Jintao's 
 
SIPDIS 
visit will likely include three critical issues for the Eastern 
region:  borders, market liberalization, and water-sharing. 
The issue of water-sharing is a concern following recent press 
reports that China may dam rivers on the Tibetan plateau for 
large hydro-power projects similar to projects already 
undertaken along the Mekong.  A Calcutta-based MEA 
Representative noted CPM's lobbying for China but dismissed it, 
saying officials in the MEA still view China with suspicion. 
The CPM is apparently using China to stake out a more assertive 
foreign policy position, one that is more than simply negating 
closer Indo-U.S. ties but ostensibly offering an alternative. 
Historic sympathies may be a factor, but the CPM also sees 
potential economic and financial benefits from increased Chinese 
investments.  The tone and results of Hu Jintao's visit will be 
a good barometer of how effective the CPM can really be in 
influencing India's foreign policy.  END SUMMARY. 
 
¶2.  (U) During its September Central Committee meeting, the CPM 
leadership criticized the ruling UPA, which the party supports 
from outside the coalition, for conducting a pro-U.S. foreign 
policy.  The Committee's minutes cited India's voting for the 
International Atomic Energy Agency (IAEA) resolution to refer 
Iran to the United Nations (UN) Security Council for IAEA 
violations; joint military training exercises, and the Indo-U.S. 
civil nuclear agreement as a few examples of this pro-U.S. tilt. 
 The CPM outlined an effort to pressure the UPA to implement a 
more pro-China program, as part of its desire to see India 
become part of a new "multipolar" world order that it envisions 
will replace the current "unipolar" set-up.  (Note:  The CPM 
historically has maintained a pro-China bias following its split 
in the 1960's from the Communist Party of India (CPI), which was 
generally pro-Soviet Union.  End Note.) 
 
------------------------------------------ 
CPM's Full Court Press For China 
----------------------------------------- 
 
¶3.  (SBU) In recent weeks, CPM leaders have been aggressively 
conducting its pro-China advocacy.   October 16-24, CPM 
Politburo Member Sitaram Yechury led a five-member CPM 
delegation, which included Northeast Tripura state Chief 
Minister Manik Sarkar to Beijing for discussions with Communist 
Party and government officials.  The delegation went to China at 
the invitation of the Communist Party of China (CPC) and met 
with Foreign Minister Li Zhao Xing and CPC Central Committee's 
Standing Committee Member Lou Gan.  According to media reports, 
Chinese officials sought to elevate relations with India from 
"strategic cooperation" to "strategic partnership" and indicated 
that Hu Jintao's visit would serve as a landmark in moving 
forward the Indo-Chinese relationship.  CPM leaders emphasized 
that India would not be a part of a U.S.-led global strategy to 
contain China.  (Comment:  With this travel and engagement with 
Chinese officials, Yechury appears to be building on his recent 
efforts negotiating with Nepal's Maoists to further position 
himself as the CPM's "Foreign Minister."  Other CPM members have 
reportedly spoken derisively of Yechury who, while serving as an 
appointed Member of Parliament in the upper house, has never had 
to run for public office; calling him a "Prima Donna."  End 
Comment.) 
 
¶4.  (U) In an October 26 article in the CPM's mouthpiece 
 
CALCUTTA 00000495  002.2 OF 004 
 
 
newspaper "Ganoshakti" CPM General Secretary Prakash Karat wrote 
that India needed to increase its cooperation with Russia and 
China and give "due importance" to the Shanghai Cooperation 
Organization.  Karat went on to add,  "All these steps, however, 
do not contribute to an overarching framework of an independent 
foreign policy, as the trend of accommodating to U.S. interests 
remains dominant."    He also wrote that External Affairs 
Minister Pranab Mukherjee and Defense Minister A.K. Antony were 
aware of New Delhi's traditional foreign policy based on 
non-alignment and protecting India's vital interests.  "Assuming 
their new responsibilities, it would be expected that the UPA 
(United Progressive Alliance) government will reappraise the 
foreign and security policies so that a proper direction can be 
given in these spheres during the UPA government's remaining 
term in office."  This message was apparently pushed by Karat in 
his meeting on October 19 with newly appointed MEA Foreign 
Secretary Shiv Shankar Menon.  In addition, Menon again 
 
SIPDIS 
discussed border relations and China on October 28 in Calcutta 
with West Bengal CM Bhattacharjee.  On October 29, Politburo 
Member and former West Bengal Chief Minister Jyoti Basu demanded 
that Hu Jintao speak at a joint session of Parliament.  The CPM 
vehemently objected to President Bush speaking to Parliament 
during his March visit to India. 
 
¶5.  (U) CPM's China advocacy has also included defending Chinese 
investment.  While opposed to U.S. and other foreign investment 
in public corporations, insurance, agriculture, retail and other 
sectors, the CPM sees no irony in supporting Chinese investment 
in port facilities.   In October the CPM publicly supported 
Chinese plans to invest USD 13.5 billion in 13 Indian ports, but 
Indian security agencies balked at the Chinese initiative, 
pointing out that the Chinese Harbor Engineering Company was 
building a strategic port already at Gwadar Deep Sea Port in 
Pakistan, and that it could pose a serious threat to India's 
maritime security.  The Indian Intelligence Bureau (IB), 
Research and Analysis Wing (RAW) and the Defense Ministry were 
unanimous that Chinese entry in the Indian Ocean is a serious 
national security threat.  CPM General Secretary Prakash Karat 
publicly pressured the GOI to spell out the security 
considerations for blacklisting the Chinese companies wanting to 
invest in Indian ports.   Karat asked to the media, "What are 
these security considerations?  We would like to know why [there 
is] this old mind-set.  George Fernandes had called China enemy 
number one.  I am sure the Congress does not think on these 
lines...why are Chinese companies being blacklisted?" 
 
--------------------------------------------- ----------- 
Chinese Economic Ties Strong In West Bengal 
--------------------------------------------- ----------- 
 
¶6.   (U) The CPM-led Left Front Government in West Bengal has 
been eager to bring greater Chinese trade and investment in the 
state and has requested that it be brought into the loop on 
future bilateral trade talks between India and China regarding 
the Nathu La pass in Sikkim.  West Bengal's economic ties with 
China are strong and growing.  The Chinese company Dongfang is 
working with West Bengal Power Development Corporation Ltd 
(WBPDL) on the Sagardighi thermal power project.  Boilers in 
public sector power plants like the Durgapur Projects Ltd (DPL), 
which were initially supplied by American or European companies, 
are currently of Chinese make.  A DPL 300 MW plant to be 
commissioned by 2007 is being built with Chinese technology.  An 
industrial park to be converted to a Special Economic Zone (SEZ) 
exclusively for investors from China will be set up soon in 
Haldia, 150 km south of Calcutta.  On September 4, an expression 
of interest (EoI) was signed between the state government and 
Jiangsu Overseas Group Corporation (JOGC) of Nanjing province of 
China.  A proposed manufacturing complex will be set up on 250 
acres, purchased by JOGC at market price, and JOGC will be 
responsible for identifying Chinese companies from different 
manufacturing areas to set up shop.  The Chinese companies 
products manufactured in West Bengal would then be marketed in 
India and exported abroad.  Sectors identified for this complex 
include specialty chemicals and pharmaceuticals, textile yarn, 
 
CALCUTTA 00000495  003.2 OF 004 
 
 
steel, marine, and process food items. 
 
¶7.   (U) The CPM has also been lobbying in support of Indian 
companies working with China.  Reliance Industries Limited CEO 
Mukesh Ambani, who had announced significant investments in West 
Bengal, received the CPM's support in successfully pressuring 
the GOI to loosen visa restrictions on 1,800 Chinese 
technicians, who will work on the 1,400-km long Kakinada-Bharuch 
pipeline. 
----------------------------------- 
...And the Rest of India Too 
------------------------------------ 
¶8.  (U) Chinese investments are not restricted to just West 
Bengal.  A thermal power project in Andheri, Mumbai, and Grasim 
and Ultra Tech Cement projects in collaboration with the China 
National Machinery Company are planned.  The Wuhan Research 
Institute of Post and Telecommunication has joined with Himachal 
Exicom Communications for "in-building and tunnel projects" for 
the Delhi Metro Rail Corporation.  The proposed Chennai monorail 
project, too, will involve significant Chinese participation. 
The National Highways Authority of India (NHAI) has tied up with 
at least two Chinese companies -- China Coal Construction Group 
and Longjian Road and Bridge -- for building National Highway 2 
and the East-West corridor.  The China Petroleum Pipeline 
Company, a subsidiary of CNPC, is building a 1,000-km-long gas 
pipeline from Kakinada to Bharuch for Reliance Gas Pipelines, a 
Mukesh Ambani company.  Chinese telecom major ZTE Corp has 
connections with government telecom companies BSNL and MTNL as 
well as the Tatas and Reliance Infocomm in India's fast-growing 
telecom sector.  Even in Northeastern states like Manipur, which 
is still deemed sensitive, Chinese firms are bidding for, and 
winning contracts.  (Comment:  PM Manmohan Singh's government 
plans to showcase this recent economic cooperation with China to 
counter the CPM's allegations of discrimination against China. 
Notwithstanding the new and increasing Chinese investment in 
India, the total Foreign Direct Investment (FDI) flow from China 
between August 1991 and July 2006 amounted to USD 3.53 million 
which is 0.01% of total FDI flow to India in this period.  It is 
this imbalance that the CPM wants to reverse in its ideological 
battle with the "Capitalist West."  End Comment.) 
 
--------------------------------------------- ------- 
The Northeast Being Sold Down the River? 
--------------------------------------------- -------- 
 
¶9.   (SBU)   Recent press reports also note that China may be 
planning to dam the Yarlung Zangbo River in Tibet, which flows 
into the Brahmaputra River in India's Northeast.  The 
Bramaphutra is one of the largest rivers in the world in terms 
of water volume and irrigates the northern plains of Assam 
before flowing through Bangladesh and emptying into the Bay of 
Bengal.  On October 27, ConGen discussed this possibility with 
President of Alstom-India Sunand Sharma.  Alstom is a French 
company specializing in power generation and engineering with 
significant commercial interests in hydro-power projects in 
Northeast India.  In 2005 the company was awarded a USD 302 
million contract to supply 8 turbines for the 2000 MW mega hydro 
power project on the Assam-Arunachal Pradesh border.  Sharma 
noted that any Chinese dams or diversions of the rivers in the 
Tibetan plateau would have significant consequences for NE 
states such as Assam and Arunachal Pradesh.  Assam's Chief 
Minister has requested PM Singh to raise this issue with Jintao, 
and Arunachal Pradesh's governor has said that he is "very 
worried" about this situation.   However on October 24, Chinese 
Foreign Ministry Spokesman Lui Jianchao denied reports of 
China's plans to dam up-river from the Brahmaputra. 
 
------------------------------------- 
Still Much Suspicion of China 
------------------------------------ 
 
¶10.  (SBU) The CPM's pressure on the UPA and GOI officials will 
face significant opposition within the bureaucracy.  ConGen 
asked local MEA representative whether the CPM would be 
 
CALCUTTA 00000495  004.2 OF 004 
 
 
successful in influencing the UPA to adopt a more pro-China 
position at the expense of relations with the US.  The MEA 
representative responded that within the MEA, China remained a 
strategic concern.  CPM leaders could make pro-China statements 
but the GOI would still view China with suspicion, given ongoing 
disagreement over borders and past hostilities.  Even within the 
CPM, China is not uniformly viewed in a positive light.  In an 
October 19 meeting with ConGen, West Bengal Finance Minister 
Asim Dasgupta expressed a view contrary to his Party's position, 
saying that China was a potential strategic and commercial 
threat to India. 
 
¶11.  (SBU) COMMENT:   The CPM is clearly using the Chinese 
President Hu Jintao's November visit to India to flex its 
muscles in foreign policy.  The CPM has been successful in 
tempering the UPA's efforts at implementing economic 
liberalization, forcing the GOI to back down on opening various 
sectors to investment, privatizing public enterprises and other 
policy reforms.  With Bengal Congress Leader Pranab Mukherjee as 
the new Foreign Minister, the CPM will have a sympathetic ear. 
Many political observers believe Mukherjee has been able to 
retain his Parliamentary seat in the CPM's heartland and his 
political position only because of his sensitivity and close 
relation with the CPM.  The CPM may be motivated by residual 
sympathies for China for its lobbying, but China also appears to 
be another useful stick to batter the UPA and by extension, the 
USA.  The CPM proposal welcoming Hu Jintao's address to a joint 
session of Parliament is an easy slap in the face to the USA by 
the Communists, as the press will be quick to draw parallels 
between the Hu Jintao visit and that of President Bush, who was 
unable to address the Lok Sabha because of widespread 
opposition.  The Communists endorsement of China blatantly 
ignores its dismal human rights and environmental record, its 
ongoing occupation of Tibet, and its ongoing relationship with 
nuclear rogue state North Korea, all issues which have raised 
hackles in India.  The Indian common man remains deeply 
suspicious of Chinese motives, seeing the country as a 
non-democratic rival which has little in common with India, 
making the Communist love-fest a hard sell.  In addition, there 
appears to be a strong financial incentive in the CPM's 
calculus, whether through investment or because of local 
businesses with links to China.  The tone and results of Hu 
Jintao's visit will therefore serve as a good indicator as to 
how effective the CPM can be in extending its influence from 
domestic matters to foreign policy.JARDINE