While India has major interests in the Middle East (energy, trade, expatriate workers, and religious ties), it has historically had lackluster relations in the area. GOI attention focuses on a few nations of particular importance to those interests, primarily Saudi Arabia, Iran, Iraq and more recently Israel.

47275 12/12/2005 1:08 05 NEWDELHI 9319 Embassy New Delhi SECRET 04 NEWDELHI 8053 | 05 DAMASCUS 6389 | 05 MUMBAI 1688 | 05 NEWDELHI 4194 |05 NEWDELHI 6804 | 05 NEWDELHI 6841 | 05 NEWDELHI 9223 | 05RIYADH8755 | 05STATE218793 "This record is a partial extract of the original cable. The full text of the original cable is not available." "S E C R E T SECTION 01 OF 06 NEW DELHI 009319

SIPDIS

SIPDIS

E.O. 12958: DECL: 12/08/2015 TAGS: PREL, PGOV, ETRD, ENRG, EPET, PTER, PINR, IN, BA, IR, IS, IZ, QA, MU, AE, XF, India_Iran, India-Iraq, India-Israel SUBJECT: INDIA SEEKS TO PROTECT CITIZENS, SECURE ENERGY INTERESTS IN MIDDLE EAST (C-NE5-00945)

REF: A. STATE 218793 B. NEW DELHI 9223 C. RIYADH 8755 D. NEW DELHI 6841 E. NEW DELHI 6804 F. MUMBAI 1688 G. 04 NEW DELHI 8053 H. DAMASCUS 6389 I. NEW DELHI 4194

Classified By: Political Counselor Geoff Pyatt for Reasons 1.4 (B, D)

1. (C) Summary: While India has major interests in the Middle East (energy, trade, expatriate workers, and religious ties), it has historically had lackluster relations in the area. GOI attention focuses on a few nations of particular importance to those interests, primarily Saudi Arabia, Iran, Iraq and more recently Israel. While New Delhi is aware of the potential benefits from counter-terrorism cooperation with countries in the Gulf region, those ties are underdeveloped. Analysts point to a lack of attention from top policy makers as a reason for India's nondescript foreign policy toward the Middle East. End Summary.

Strategic Interests in the Area

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2. (C) India's strategic interests in the Middle East can be summarized as energy, citizens, trade, and religious ties. India imports 70% of its petroleum, with the Persian Gulf area supplying three quarters of those imports, as well as significant amounts of natural gas. The Gulf is also home to 3.5 million Indian nationals who provide skilled and unskilled labor, with 1.4 million in Saudi Arabia alone. Because these workers come from a few concentrated centers (Kerala and Maharashtra especially), they tend to have a disproportionate political impact, as illustrated by the 2004 debate over Indian workers in Iraq. India considers the Middle East, particularly Gulf countries, as a natural export destination, stemming from historical patterns of commerce under the British raj and before. Finally, the world's second largest Muslim population and second largest Shia population give India strong cultural ties to Saudi Arabia (India supplies the second-highest number of Haj pilgrims annually) as well as Iraq and Iran (with their Shia holy sites).

3. (C) The importance of New Delhi's relationships with each of the countries listed in Ref A can be determined by the degree to which the above factors enter into the mix. Saudi Arabia, Iran, Iraq, Kuwait, the UAE, and Oman are most prominent with respect to energy, trade, expatriate Indians, and religious significance. India's relations with Egypt, Syria, Yemen, Libya, Bahrain and Qatar are of less significance (although relations with Qatar are growing, driven by Qatari exports of liquefied natural gas). While energy needs drive relations with Iran, Saudi Arabia, Kuwait and Iraq, protection of overseas citizens is a primary consideration with respect to Oman and the UAE (where commerce is also significant), and is a strong consideration with Saudi Arabia and Kuwait. The exceptions to this rule are Israel, with whom India maintains a significant defense and technology relationship, and the Palestinian Authority, support for which has been a point of domestic pride and politics due to India's NAM background and large Muslim population. Ref G provides further details on India's relations with and general lack of coherent policy towards the Gulf countries.

Saudi Arabia: Oil, Trade, and CT

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4. (C) Saudi Arabia dominates Indian attention in the Gulf due to its prominence in the areas of energy, Indian expatriates, and trade. In a conversation with PolCouns and Poloff on December 6, MEA Joint Secretary (Gulf) Sanjay Singh could not confirm reports that King Abdullah would be the chief guest at India's January 26 Republic Day celebration (Ref C), although the visit is now widely known in the press and political circles. However, drawing statistics easily from memory, he emphasized that Saudi Arabia, in addition to providing one quarter of India's oil imports, is an important partner in other trade. India is Saudi Arabia's 4th largest trading partner, while the Kingdom is India's 13th largest, and the nations count approximately 150 direct investment projects between them, about half in each direction. India has strong population ties too, he added, noting that 10% - 12% of the Kingdom's resident population is Indian, and the 20% Muslim population of India is ""strongly affected"" by events in Saudi Arabia. India's focus of interaction with Saudi Arabia is the Muslim business community in Mumbai, he noted, confirming our own impressions from interactions with prosperous traders and professionals there.

5. (C) Corroborating the rumors of a King Abdullah visit in January, well-connected columnist and commentator Saeed Naqvi told PolCouns and Poloff on December 7 that India has been pursuing a high-level Saudi royal visitor for thirty years, but had previously been unsuccessful ""at any level."" The change of heart, he suggested, was a result of US pressure on the Saudis to moderate their image. The Kingdom is ""telling us they've changed,"" Naqvi continued, and that they are not the same people who supported Pakistan's Zia ul-Haq against India, but are now more interested in normal ties with now-nuclear India.

6. (C) The GOI and KSA interact on terrorism as part of their political relationship, Singh said. India attended the Saudi-organized counter-terrorism conference in 2004, and welcomes the Saudi proposals for a regional counter-terrorism center. When pressed on whether New Delhi and Riyadh cooperate operationally on counter-terrorism or terrorist finance, he remarked that the GOI is working on strengthening institutional linkages to combat crime generally, adding that crime and terrorism are not divisible.

Iraq

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7. (C) India has traditionally been a large purchaser of Iraqi oil, and would like to renew its relations with the new Iraqi government in order to resume that role (Ref B). Additionally, New Delhi recognizes that stability and development in Iraq will be necessary to ensure stability in the Gulf region, essential for protecting Indian citizens in the area and the USD 6 billion in annual remittances they provide.

Other Countries

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8. (C) The UAE, in particular Dubai, is a strong focus of Indian business relations in the Gulf, and much shipping from Mumbai transits Dubai. J/S Singh noted that trade with Dubai is expected to reach USD 8 billion this year, running only slightly behind the volume of trade with China in recent years. Dubai also accounts for a large proportion of criminal links between India and the Middle East. The GOI has consistently drawn attention to the fact that its most-wanted terrorist/mafioso Dawood Ibrahim frequents Dubai and runs his operations from there, a status highlighted by the lavish wedding reception thrown for Ibrahim's daughter in Dubai in July (Ref F). Although Kuwait is also a fairly important source of oil, relations with it and the other nations noted in Ref A are lackluster, and generate little interest or news among New Delhi policy-makers and pundits.

9. (C) Post reported on Indian interests in Iran in Ref E, and its weak relations with Syria in Ref D. Media reports have recently indicated that India's ONGC and China's CNPC have agreed to bid on a stake in the Al Furat oil and gas venture in Syria (Ref H). However, the choice of Syria may indicate more its marginal importance as a source of oil, as it appears to be a test case for India-China cooperation, deliberately situated away from the more cut-throat competition between India and China for control of energy supplies in areas such as Sudan and Central Asia.

Relations with the OIC

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10. (C) J/S Singh dismissed the idea that India maintained hope to join the Organization of the Islamic Conference (OIC), explaining that since Pakistan ""hijacked"" the OIC to use it to condemn India, other nations have begun to use it in the same way. The OIC has been a ""reactive talk shop,"" he continued, and does not generate serious ideas. If Pakistan were to change its views of India's participation, the first ""straws in the wind"" would be the grant of MFN trade status to India. Until then, Singh commented, there will be no chance of Indian participation. He admitted, however, that New Delhi sees signs that Saudi Arabia and Malaysia are beginning to ""reappraise"" the role of the OIC in the Muslim Ummah, and could reform the OIC to be more relevant. In that case, he continued, the OIC may be willing to look at the example of democratic and secular India, where Muslims ""do well,"" despite being in the minority, and where there is little enticement to fundamentalism or radicalism.

Counter-terrorism

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11. (C) In addition to the GOI's inclusion of counter-terrorism as a subject for discussion with Saudi counterparts (above), New Delhi participates in a counter-terrorism working group with Israel, and signed a Joint Declaration in 2003 on combating international terrorism with (of all countries) Iran. We have no information on how substantial any of these interactions are. Also notable in this regard is the May 2005 meeting between Middle East Envoy Chinmaya Gharekhan and Iraq's National Security Advisor (Ref I). Gharekhan and other Indian officials told us that the GOI is focused on the emerging links between Lashkar-e-Taiba and jihadists active in Iraq, and is looking to build an intelligence relationship with Iraq.

Weak Personalities

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12. (S) Responsibility for India's policies in the Gulf and West Asia are shared among Minister of State for External Affairs E Ahamed, West Asia Envoy Gharekhan, Secretary (West) Rajiv Sikri, and J/S Sanjay Singh. Columnist Saeed Naqvi told us, however, that high level policy suffers from an inability to concentrate on more than a few key relationships, namely Pakistan, China and the US. Thus, he complained, few people pay attention to the Middle East. Foreign Secretary Saran is preoccupied with the US and Nepal, leaving ""lots of gaps,"" and Gharekhan cannot fill that vacuum because of his ""limited presence,"" Naqvi continued - ""He is not able to make an impact."" Former FM Natwar Singh's primary interest in the Middle East was advocacy of Palestinian interests to keep the Congress Party's Muslim vote bloc happy, and he did not significantly change New Delhi's approach to the region.

13. (S) Naqvi was similarly critical of Ahamed, a Minister of State who represents the UPA coalition minor partner Muslim League Kerala State Committee. Ahamed is ""fixated on Saudi Arabia,"" Naqvi said, attributing it to the perspective from his constituency near Calicut, the source of many migrant workers in the Gulf. Saudi ties in that region include trade, labor, Haj pilgrimages, and funding for madrasas - a factor that Naqvi identified in areas in Tamil Nadu, Mumbai and Bihar as well. However, because of his parochial outlook, Ahamed does not understand the larger issues, Naqvi complained. Nevertheless, he is well received in Saudi Arabia and has met King Abdullah several times. Ahamed will claim the January 26 royal visit as his own success, Naqvi predicted, complicating matters for PM Manmohan Singh, who would prefer to ease him out of the MEA and appoint a more capable successor.

Comment: Still a Blind Spot in Foreign Relations

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14. (C) Despite recognition that India's interests in the Gulf and Middle East are substantial (Ref G), New Delhi has not shown the capability to formulate its Middle East policy in a comprehensive way, and the complicated domestic politics of India's Muslim minority mitigate against policy innovation. By most estimates, the last major breakthrough in Indian policy towards the Middle East came in the early 1990s, when then-Foreign Secretary JN Dixit engineered the expansion of relations with Israel. A new breakthrough came in 2003, with the NDA's serious consideration of a major troop deployment to Iraq, but that move was scuttled by domestic considerations and looming national elections, proving again the Muslim overlay in India's approach to the Gulf. In the absence of a comprehensive policy, individual issues such as energy security or citizen protection may rise to the attention of the top levels of government from time to time and demand a response. The turmoil surrounding India's IAEA vote on Iran, intertwined with the ongoing negotiations for the Iran-Pakistan-India gas pipeline and LNG supply contracts, forced the Delhi strategic community to debate India's comprehensive interests in the Middle East and the world. New Delhi's decision in that case to advance its broader strategic interests with America, instead of simply following the path of least resistance for energy supplies, is a signal of more far-sighted thinking regarding the region. Whether the GOI continues to develop its thinking on broad and long-term interests in the Middle East may hinge in part on the interests and capabilities of the next Foreign Minister.

15. (U) Visit New Delhi's Classified Website: (http://www.state.sgov.gov/p/sa/newdelhi/)

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