VZCZCXRO5970
OO RUEHBI RUEHCI RUEHNEH
DE RUEHNE #0796/01 1121212
ZNR UUUUU ZZH
O 221212Z APR 09
FM AMEMBASSY NEW DELHI
TO RUEHC/SECSTATE WASHDC IMMEDIATE 6288
RHEHNSC/NSC WASHDC IMMEDIATE
INFO RUEHBI/AMCONSUL MUMBAI 3656
RUEHCG/AMCONSUL CHENNAI 4617
RUEHNEH/AMCONSUL HYDERABAD 0505
RUEHCI/AMCONSUL KOLKATA 3831

UNCLAS SECTION 01 OF 04 NEW DELHI 000796 
 
SENSITIVE 
 
STATE FOR P (WEST), SCA (BOUCHER/OWEN), SCA/INSB (KELLY), NSC FOR 
CAMP 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PREL MASS ENRG EFIN CVIS AMGT IN
SUBJECT:  U.S.-INDIAN RELATIONS:  CLEARING THE BRUSH 
 
¶1. SUMMARY: (SBU) In advance of the April 24 Interagency Meeting to 
discuss India policy, Mission offers its views on the next steps 
that should be taken to move the relationship forward in the near 
term.  We are focused on high priority items whose resolution will 
lay the groundwork for a stronger and more comprehensive 
relationship that furthers cooperation on a host of bilateral, 
regional and global issues.  This is one of two cables; the other 
cable will assess the existing bilateral dialogues.  End summary. 
 
 
REACHING BOOST PHASE 
-------------------- 
 
¶2.  (SBU)   The U.S.-India relationship has undergone a rapid 
transformation that will have a profound positive impact on global 
security, stability, and prosperity in the 21st century.  Our two 
democracies share a wide range of values and interests which have 
laid the basis for a dynamic political and economic partnership. 
While India's election and the shape of the next government will 
affect the pace of development of bilateral ties, there is a 
momentum in the relationship that should carry it forward.  We will 
need to be patient not just as India's new coalition government 
sorts out its priorities, but also because India rarely shares 
Americans' sense of urgency to close deals, large and small. 
Therefore, we need to engage as early as we can on select 
initiatives to achieve results.  We believe that broadening and 
deepening our ties will help the U.S. and India to work together to 
address issues of shared concern including terrorism, nuclear 
nonproliferation, climate change and economic growth and 
opportunity. 
 
LEGACY ISSUES 
------------- 
 
¶3.  (SBU) During recent years, progress in building cooperative 
relationships was made across-the-board in areas as diverse as 
agriculture, military sales and public health.  While the successful 
U.S.-India Civil Nuclear Agreement received the lion's share of the 
attention, scores of other diplomatic dialogues took shape and 
concrete results were achieved in a wide range of sectors.  However, 
in order to capitalize on existing gains while seeking new avenues 
for cooperation, we need to focus on resolving several items of 
unfinished business immediately.  In each case outlined below, we 
identify the outstanding issue, describe the state-of-play and what 
actions are pending, and suggest channels for resolution.  The 
prompt settlement of these issues will clear the way to focus on the 
next stage of closer bilateral ties. 
 
Six Month Plan 
-------------- 
 
¶4.  (SBU)  In order of priority, these issues require attention: 
 
-- Defense Technology Transfer (EUM) 
 
An End Use Monitoring (EUM) Agreement is a congressionally mandated 
requirement for U.S. high tech defense sales that restricts the use 
of weapons in broad terms and prevents unauthorized technology 
transfer through inspections.  The Indian side has resisted 
agreement terms that address use or inspection of transferred items. 
 We have clearly notified the Indians that we have reached our red 
lines, and that it is up to them to either accept the language for 
an agreement that we have offered, or formulate language which they 
can use.  However, any language the GOI comes up with must be 
consistent with U.S. law, i.e., it needs to have explicit language 
to permitting the U.S. to "see" items if asked and preventing 
transfers of items from intended use/purchaser to another without 
prior permission.  In recent months, we have seen a growing 
acceptance on the Indian side that the U.S. cannot and will not 
negotiate away these legal requirements.  However, Foreign Secretary 
Menon signaled that because this is such a sensitive matter of 
national pride, we cannot expect a resolution until the next Indian 
government has settled in. 
 
Action:  The ball is in India's court with Ministry of Defense's 
Director General (Acquisition) and Ministry of External Affairs 
[MEA] Joint Secretary (Americas) for action.  Will require Cabinet 
Committee on Security [CCS]-approval/concurrence. 
 
 
-- Civil Nuclear Agreement Implementation 
 
Full implementation of bilateral civil nuclear cooperation will 
require progress on four issues. 
 
NEW DELHI 00000796  002 OF 004 
 
 
 
(1) Safeguards Agreement:  India must (i) bring the Safeguards 
Agreement into force (by sending a letter notifying the IAEA that 
its constitutional requirements for entry into force have been met), 
and (ii) make a declaration of safeguarded facilities that is not 
"materially inconsistent" with the 2005 Separation Plan.  The 
President must certify to Congress that these two conditions have 
been met before the Nuclear Regulatory Commission (NRC) can issue 
export licenses to U.S. firms. 
 
Action: The MEA could choose to do this at any time.  We have not 
yet heard a compelling rationale for the delay and will press in New 
Delhi for early action. 
 
(2) Liability Protection:  India needs to ratify the Convention on 
Supplementary Compensation for Nuclear Damage. 
 
Action:  Indian Officials say it will be taken up by the next 
Parliament, probably in June-July. 
 
(3) Reactor Park Site Designation:  FS Menon has privately shared 
that U.S. firms will get one site in Andhra Pradesh and another site 
to be determined, though not in West Bengal. 
 
Action:  Indian officials say they must complete a politically 
complex process of consultations with states, which are competing to 
host sites, and that there is little appetite to do this prior to 
elections. 
 
(4) Reprocessing Arrangement:  Dick Stratford (ISN) is in touch with 
MEA Joint Secretary Gitesh Sharma about consultations on 
reprocessing "arrangements and procedures" under article 6 Section 3 
of the 123 Agreement.  The negotiation must begin by August 3 and 
conclude within one year. 
 
Action:  Further progress will require agreement by both the U.S. 
and GOI on the consultation process.  We are committed to concluding 
formal consultations with India on a reprocessing arrangement within 
the timeline established by the 123 Agreement. 
 
-- Mumbai New Consulate Compound (NCC) Construction: 
 
Work on the last new structure on the NCC compound, now scheduled 
for completion in December 2009 (nearly two years late), has stopped 
for lack of a "joint plinth inspection" from the Mumbai municipal 
authorities.  According to our municipality contacts, the MEA has 
instructed them to stonewall routine technical procedures for the 
construction of the NCC.  The Chief of Protocol and Joint Secretary 
of the Americas at the MEA have openly linked further progress at 
the NCC with resolution of the New York property tax case against 
India and settlement of a dispute over utility bills and tax 
assessments in Mumbai.  Senior managers in State  have found an 
administrative solution to the New York case, but it was not 
approved prior to the end of the Bush Administration.  Clearance 
within the new administration is underway. 
 
The tax case is scheduled to be heard on appeal on May 18, at which 
time legal briefs from all parties will be required.  Meanwhile, the 
NCC contractor is now assessing penalties against the USG of an 
estimated $10,000/day.  Conversely, any cost to the GOI from taxes 
is only "theoretical", since it will not pay tax whatever the 
outcome of the New York case (only if the GOI tried to sell its 
building in Manhattan would the city have leverage to collect).  We 
find the "reciprocal" actions of the MEA to be grossly unbalanced, 
heavy-handed.  We need the MEA to give the green light to the Mumbai 
authorities so that w can complete the NCC. 
 
Action:  Action is with State.  The Under Secretary for Management 
is seeking to have the administrative solution approved prior to the 
May 18 hearing.  We are also pressing here to break the 
inappropriate linkage between the Mumbai construction and the New 
York taxes. 
 
-- US-India Bilateral Investment Treaty 
 
Two-way investment has risen significantly in recent years and India 
is emerging as a source, as well as a destination, of foreign 
investment in the world.  Both sides view the Bilateral Investment 
Treaty (BIT) as an important step in further facilitating investment 
flows between the countries.  Exploratory talks on a Treaty were 
held in 2008, during which both sides saw merit in proceeding to 
formal negotiations -- even though our initial positions and model 
texts are quite different.    After a policy review in January and 
February by the new Administration, USTR and Department of State's 
 
NEW DELHI 00000796  003 OF 004 
 
 
Economic Bureau (co-leads on bilateral investment treaty 
negotiations) informed the Government of India of their readiness to 
launch negotiations on a bilateral investment treaty as soon as 
possible.  We are waiting to hear from the Ministry of Finance, 
which leads a multiple-agency group for India, how soon dates could 
be scheduled to launch talks.  We would like to begin negotiations 
as soon as possible; MOF recently told us negotiations will likely 
have to wait until after the national elections are completed in 
mid-May. 
 
Action:  USG should propose dates for negotiations for sometime 
between mid-May and mid-June. 
 
-- US-India Commercial Space Launch Agreement (CSLA) 
 
With the exception of implementing the U.S.-India civil nuclear 
agreement, the CSLA is the one remaining item uncompleted from the 
Next Steps in the Strategic Partnership (NSSP).  After a two-year 
hiatus in consultations, the U.S. and India held a video conference 
on April 16 to discuss a roadmap for completing an agreement.  Both 
sides agreed to consider an exchange of letters that would allow us 
to immediately implement the Technical Safeguards Agreement (TSA) 
that would permit India to launch U.S.-origin satellites or 
satellites with U.S.-origin components for non-commercial purposes. 
At the same time, we would begin negotiations on a CSLA to extend 
the agreement to launches of commercial satellites, as well as 
regular consultations on commercial satellite markets in the U.S. 
and India. 
 
Action:  USG should prepare and present proposed side letter to GOI 
before the end of April. 
 
-- VISAS Mantis 
 
This is an issue that has been both a bilateral irritant, and is a 
significant impediment to cooperation between the U.S. and India. 
Nowhere in the world are person-to-person ties more important to the 
United States than in India, whose economy forms a significant part 
of the world's growth, whose students are the largest from any 
country, and whose U.S. visa operation is the second largest in the 
world (after Mexico). 
 
Visa processing requirements implemented in the wake of 9/11 have 
made our country safer, but with an associated opportunity cost. 
Despite our best efforts, legitimate travelers are sometimes 
delayed.  In India, we are working hard to give all travelers prompt 
and predictable access to visa services.  But there are limits to 
what we can do - particularly in key industries.  For example, 
because India is a nation of proliferation concern, additional 
clearances are required for almost all Indian travelers who work in 
high-technology fields or have high-tech backgrounds. 
 
The result of these restrictions is that important travelers are 
being delayed and critical meetings cancelled.  There is no doubt 
that we are losing friends and business opportunities because of our 
lengthy clearance procedures. 
 
While the State Department's visa processing system can deal with 
the vast quantities of data in just minutes, some other agencies who 
review visa clearances do so manually.  Routinely, travelers' cases 
have been held up for months and years awaiting resolution. 
Processing times for VISAS Mantis cases right now are being held up 
for two or three months. 
 
Action:  The ball is in the US court - State/CA and interagency 
process needs to find a resolution. 
 
-- Communications Interoperability Security Memorandum of Agreement 
(CISMOA) 
 
We need this Agreement to sell or transfer encrypted communications 
equipment, such as military-specifications Global Positioning 
Systems [GPS], radars, radios, etc, legally.  Acceptable language 
was included in draft document agreed to with the Defense Ministry 
and initialed.  The draft can be signed by a Joint Secretary-level 
individual on the Indian side and a Colonel/Navy Captain-level on 
our side. 
 
Action:  Ball is in India's court with the need for a signature by 
Ministry of Defense Joint Secretary (Planning & International 
Cooperation).  This would require a Cabinet Committee on Security 
approval/concurrence. The GOI is well aware of what the agreement 
covers, but have been squeamish about the perception of entering 
into a "security agreement" with the U.S.  Some contacts have 
 
NEW DELHI 00000796  004 OF 004 
 
 
suggested this will be the second security agreement India will 
sign, after EUM. 
 
-- Logistics Support Agreement 
 
This Agreement has been frozen for years, but in theory should be 
easy for the Indians to accept.  It is essentially authorizes an 
accounting process to allow for shared military support services and 
supplies.  A misconception which has existed on the Indian side -- 
that LSA somehow give the U.S. access to Indian bases and the like 
-- has perpetuated opposition to LSA.  There is agreed language in 
draft document with the Defense Ministry which has been initialed. 
An agreement can be signed by a Joint Secretary-level individual - 
Colonel/Navy Captain-level signs on our side. 
 
Action:  Ball in India's court with Ministry of Defense's Joint 
Secretary (Planning & International Cooperation) for signature. 
Signature will require Cabinet Committee on Security 
approval/concurrence.  Supposedly this will come after EUM and 
CISMOA. 
 
-- Nonproliferation:  Proliferation Security Initiative (PSI) 
 
Indian officials have confirmed that they are ready to engage with 
us on President Obama's nonproliferation agenda and that the ball is 
in our court to tell them specifically what we want to talk about, 
where, and when.  Indian officials in Delhi have been dropping hints 
the last few months that they may be willing to sign up for the 
Proliferation Security Initiatives (PSI).  PSI is fundamentally a 
set of principles about maritime interdiction of nuclear materials. 
India became a member of the Global Initiative to Combat Nuclear 
Terrorism (GICNT) last year, but has refrained from joining PSI due 
to its basis in the Safety of Life at Sea (SOLAS) Convention and the 
lack of U.S. ratification of the UN Convention on the Law of the 
Sea.  India will not change its position before the new government 
is in place, but given the international makeup of PSI, it should 
not be controversial for the Indians in the end. 
 
Action:  Embassy New Delhi.  We will engage the Indians on PSI and 
press for their joining. 
 
BURLEIGH