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Cablegate: Pm Tells Secretary Gutierrez U.S.-India Relation

VZCZCXRO8487
RR RUEHBI RUEHCI
DE RUEHNE #0768/01 0460918
ZNR UUUUU ZZH
R 150918Z FEB 07
FM AMEMBASSY NEW DELHI
TO RUEHC/SECSTATE WASHDC 3057
RUCPDOC/USDOC WASHDC
INFO RUEHIL/AMEMBASSY ISLAMABAD 2062
RUEHCG/AMCONSUL CHENNAI 8887
RUEHKP/AMCONSUL KARACHI 6800
RUEHCI/AMCONSUL KOLKATA 8608
RUEHBI/AMCONSUL MUMBAI 8062
RUEKJCS/SECDEF WASHDC
RUEHRC/DEPT OF AGRICULTURE WASHDC
RHEHAAA/WHITE HOUSE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RHEHNSC/NSC WASHDC
RHEBAAA/DEPT OF ENERGY WASHINGTON DC

UNCLAS SECTION 01 OF 03 NEW DELHI 000768

SIPDIS

SENSITIVE
SIPDIS

SCA/PPD FOR KVANDEVATE
ECA FOR DAS TFARELL
ECA/A/E FOR JE SEDLINS AND LKUYUMCU
STATE PASS USTR

E.O. 12958: N/A
TAGS: AF BEXP EAGR ECON EFIN ETRD IN KPAO MASS PK
PREL, PTER, SCUL, SENV, TPHY
SUBJECT: PM TELLS SECRETARY GUTIERREZ U.S.-INDIA RELATION
"LIKE NO OTHER"


1. (SBU) SUMMARY. Commerce Secretary Carlos Gutierrez met
Indian Prime Minister Manmohan Singh February 14. The two
agreed to explore means to strengthen cooperation in science
and technology, clean energy and education, and with regards
to education, the Secretary mentioned his initiatives and the
P.M. expressed his desire to resolve lingering problems that
U.S. academics are having obtaining GOI research clearances.
Singh stressed that his vision of a globalizing India
included a "pragmatic and principled" partnership with the
U.S., and spoke at some length about the challenges he faces
trying to extend the benefits of impressive economic growth
to India's 600 million rural poor. He cautiously predicted
that maintaining current growth rates should be possible
provided the GOI does not "mess up" the balance of payments
situation or allow inflation to run out of control. The P.M.
underlined his commitment to peace with Pakistan, but flagged
terrorism from "the neighborhood" as an impediment. END
SUMMARY.

--------------------------------------------- ------
SINGH: INDO-U.S. TIES LIKE "NO OTHER RELATIONSHIP"
--------------------------------------------- ------

2. (SBU) Indian Prime Minister Manmohan Singh opened his
February 14 meeting with Commerce Secretary Gutierrez by
labeling Indo-U.S. links as strong and multi-faceted. He
described the relationship as a partnership based on
pragmatism and principle, like no other India has with other
nations. Sec. Gutierrez agreed, and described growing ties
as one the most important future developments in the world.
Singh said, given the role the U.S. plays in international
fora and international business, the bilateral partnership is
key to globalization, as well as critical to India's own
development. Gutierrez noted how final 2006 trade figures
just out show bilateral trade climbing to 32 billion dollars,
and he emphasized President Bush's commitment to double total
trade in three years.

--------------------------------------------- --
GUTIERREZ: SHOULD ALSO EXTEND TO DEFENSE TRADE
--------------------------------------------- --

3. (SBU) Sec. Gutierrez said he hoped the trade would extend
to new deals for the U.S. defense industry. Singh said that
the GOI wanted to diversify its defense purchases to acquire
the best possible materials and equipment. He said that U.S.
industry can look forward to getting its share of defense
contracts in the coming years. Singh also predicted strong
growth and opportunities for U.S. firms in the aircraft and
aviation fields.

---------------------------------
P.M.: "WOULD LIKE TO MOVE FASTER
TO LIBERALIZE FINANCIAL SECTOR"
---------------------------------

4. (SBU) Asked to give his views on the reform process,
Singh said that politically speaking, there were no serious
opponents to reform from either the right or the left. Even
the Communists, who ruled three states, were led by economic
reformers in West Bengal. Singh said he would like to move
faster to liberalize the financial sector, but on that score
the left is still presenting obstacles. He said there still
is a lingering "fear of the unknown" in India, and many
"cautious reformers." He admitted that even he did not
understand all the complexities of some new financial
instruments. Still, Singh was fairly confident that growth
would continue, as long as the GOI did not "mess up" the
balance of payments or allow inflation to spiral out of
control.

5. (SBU) Singh cited the "awesome responsibility" he feels
leading a country of one billion people. Because the bulk of

NEW DELHI 00000768 002 OF 003


the population and work force did not enjoy enough
protection, he felt he needed to tread slowly on reforms,
saying, "Things might be different if we had safety nets."
This insecurity is part of the problem of modernizing any
developing country. Over 600 million Indians depend on small
scale farming on land holdings averaging between 1 and 1.5
hectares. Their lives are so precarious that "when God
fails, disaster and misery ensue." Indian cities could not
withstand mass migrations of rural populations, and the
challenge to India is to develop the rural economy "around
but not in" agriculture. India did not aspire to U.S.
standards of living, Singh said, "and if we did, that might
be harmful to the environment." He said that if he managed
to somehow soften the edges of extreme poverty before his
death, then he would think his efforts would have been a
success. When Secretary Gutierrez cited the wisdom with which
Singh was opening the retail sector, Singh defended his
prudent approach. He said that while services represent over
50 per cent of India's GOP, the bulk of those working in
services come from small scale enterprises, characterized by
low productivity and disguised unemployment. Moving too
quickly to modernize retail risked social upheaval.

--------------------------------------------- ------------
APPLIED SCIENCE KEY TO ECONOMIC GROWTH, CLEAN ENVIRONMENT
--------------------------------------------- ------------

6. (SBU) Secretary Gutierrez recounted his Feb. 13 meeting
with Technology Minister Sibal, during which the two
discussed the possible creation of an S and T group with
public/private involvement. Such an entity could receive
inputs from the CEO Forum with a view towards commercializing
technological research. Singh said the proposal would,
"have my blesssing," and he cited how much India's Green
Revolution depended on U.S. inputs, particularly from
venerated Professor Norman Borlaug. Such research in the
60's and 70's had largely come from the public sector, but
now S and T research is largely privately financed. The key
to future cooperation would be how to disseminate new
technologies at reasonable cost to lift people out of
poverty. Secretary Gutierrez pledged to work to identify
funding for such a project. He noted USDOC's intention to
bring a clean technology trade mission to India in April.
Again the P.M. responded enthusiastically and indicated a
desire to work together with the U.S. on climate change.
Singh said he espoused the precautionary principle on climate
change questions, and he noted that land and water
degradation in India was already having a major impact on
millions of subsistence farmers.

--------------------------------------------- -----
DESIRE TO UNBLOCK STALLED U.S. RESEARCH APPLICATIONS
--------------------------------------------- -----

7. (SBU) When Secretary Gutierrez added that USDOC also
wanted to find ways to cooperate with India in the field of
education in order to increase people to people ties, and
mentioned the DOC educational marketing initiative, Singh
noted recent controversy over the poor treatment of American
scholars in India, who have been faced with numerous hurdles
in having their research proposals approved by the GOI. He
said he had "flagged" the issue to his staff, and he labeled
current GOI inaction as a "product of past thinking." He
noted that in the 1960's Peace Corps Volunteers had provided
the mainstay of Indo-U.S. people to people contacts, but when
that program ended after the Bangladesh War, responsibility
for promoting people to people ties had been picked up almost
exclusively by American scholars. Times now had changed;
almost all middle class Indians now have a close friend or
family member living in the U.S., and Americans of Indian
origin are now an "economic force to be reckoned with."

--------------------------------------------- --

NEW DELHI 00000768 003 OF 003


PAKISTAN: GRADUAL EFFORTS TO IMPROVE RELATIONS
--------------------------------------------- --

8. (SBU) During their meeting, Gutierrez and Singh also
briefly discussed Indo-Pakistan relations. Singh said he is
trying to improve bilateral ties, but because of terrorism
attacks, which detract from his ability to move forward,
progress is not always easy. The Indian public response to
terrorist attacks in Mumbai and elsewhere is revulsion, and
unfortunately, the epicenter of terrorism is "in the
neighborhood." Nevertheless, he and President Musharraf had
both decided to work jointly to investigate terrorist attacks
and improve relations. Singh also said India remains
strongly committed to help Afghanistan, and to that end has
provided over 750 million dollars in development assistance
in the field of health, education, road-building, hydro power
and electricity transmission.

9. (U) Meeting participants who joined Secretary Gutierrez
were Ambassador Mulford, USDOC U/S Lavin, and Economic
Counselor Davison (notetaker). Joining P.M. Singh were
Ministry of Finance Secretary Ashok Jha, Financial Sector
Secretary Vinod Rai, Commerce Secretary G.K. Pillai, and

SIPDIS
Industry Secretary Ajay Dua.

10. (U) Secretary Guitierrez' party has cleared this cable.
MULFORD

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