Asked if he had any questions, Mr. Lalu responded that he understands the Hyde Act and 123 Agreement, and "my party members and I are trying to convince everyone that there is nothing to fear."

133766 12/11/2007 14:32 07NEWDELHI5280 Embassy New Delhi CONFIDENTIAL "VZCZCXRO8878OO RUEHBI RUEHCI RUEHLH RUEHPWDE RUEHNE #5280/01 3451432ZNY CCCCC ZZHO 111432Z DEC 07FM AMEMBASSY NEW DELHITO RUEHC/SECSTATE WASHDC IMMEDIATE 9660INFO RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVERUCNNSG/NUCLEAR SUPPLIERS GROUP COLLECTIVERUEAIIA/CIA WASHDCRHEBAAA/DEPT OF ENERGY WASHINGTON DCRUEKJCS/JOINT STAFF WASHDCRHEHNSC/NSC WASHDCRUEKJCS/SECDEF WASHDCRUEHUNV/USMISSION UNVIE VIENNA 1356RUCNDT/USMISSION USUN NEW YORK 5788" "C O N F I D E N T I A L SECTION 01 OF 02 NEW DELHI 005280

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E.O. 12958: DECL: 12/10/2017 TAGS: PREL, PARM, TSPL, KNNP, ETTC, ENRG, TRGY, IN SUBJECT: RAILWAY MINISTER LALU REAFFIRMS SUPPORT FOR NUCLEAR DEAL BUT WANTS POLITICAL CONSENSUS

Classified By: Ambassador David Mulford for Reasons 1.4 (B and D)

1. (C) Summary: Minister of Railways and key government ally Lalu Prasad Yadav told the Ambassador December 7 that he sought to convince the Left of the benefits of implementing the U.S.-India civil nuclear cooperation initiative. Yadav said that he saw the need for energy as a major challenge facing India, but no one wanted early elections. Yadav updated the Ambassador about his efforts to continue upgrading India's railroads. The Ambassador mentioned that two U.S. firms were interested in constructing a diesel locomotive factory. Yadav's continued support of the nuclear deal is essential to move the initiative forward, but his party's precarious position in the state of Bihar and his desire to remain in power through a full term at the center will make him discourage the government from provoking the Left to withdraw support and the government to call early elections. End Summary.

Yadav Supports Nuke Deal

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2. (C) In a December 7 meeting with Minister of Railways and key government ally Lalu Prasad Yadav, the Ambassador thanked him for his positive approach to the U.S.-India civil nuclear cooperation initiative. Partially speaking through an interpreter, Yadav explained that he considered India's power needs ""the most urgent problem."" As a member of the UPA-Left committee formed to discuss the deal, Yadav conveyed that he sought to ""sort out confusion and misunderstanding with the coalition partners."" ""In a democracy, we have to obtain the opinion of everyone,"" he explained. Asked if he had any questions, Yadav responded that he understands the Hyde Act and 123 Agreement, and ""my party members and I are trying to convince everyone that there is nothing to fear."" He noted that he himself has good relations with the Left.

3. (C) The Ambassador recounted that he had attempted to sway the opposition BJP, but the party leaders repeated the same arguments in Parliament that the Ambassador had refuted. Yadav derided the BJP's assertion that it will renegotiate the deal if it comes back to power. ""Double-speak won't get them power,"" he said. He recognized that the Ambassador had a duty to promote the initiative, but warned that his meetings with the BJP prompted some to question, ""why are the Americans so eager?"" Yadav clarified that his own political party, the RJD, disagreed with the U.S. over Iraq, but he saw that the nuclear deal provides substantial energy and environmental benefits for India. The Cabinet committee approved the 123 Agreement, scientists and former President Kalam supported it, Yadav observed, but the Left still had questions. ""We are in favor of convincing everyone,"" he underlined. ""Let us wait. We are in favor, but no party wants elections.""

Faster, Heavier, Longer

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4. (SBU) The Ambassador commended Yadav on his success in turning around Indian Railways. Yadav said that he operated the Railways according to three words: ""faster, heavier and longer."" ""Each word is worth two billion dollars,"" he asserted. Yadav said that he hoped to capture more of the freight market, 60 percent of which still travels by truck, by constructing a dedicated freight corridor from Delhi to Mumbai and Ludhiana to Calcutta. The Ambassador conveyed that two U.S. firms have expressed interest in building a new diesel locomotive factory in Bihar, and encouraged Yadav to ensure that the corridor would be diesel. Yadav replied that Japan's assistance will mean that the eastern corridor will likely be electric. That still leaves the western corridor, however, on which he planned to operate double-stacked containers on flat wagons using diesel. He related that his staff had traveled to China to see their double-stacked cars operating on electric rail, but they had a 30 percent lower capacity because they were not flat. Yadav also boasted that Indian Rail has recently increased the train length to 58 cars carrying a total of 4000 tons, nearly double the 2300 tons they carried before. Indian Rail had even experimented with 116 cars, he revealed.

Yadav Believes Left will Stay in West Bengal

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5. (C) The Ambassador asked for Yadav's political observations in Gujarat and West Bengal. Yadav believed that Chief Minister Narendra Modi had communalized the Hindus in Gujarat, but he saw unrest in the state BJP. As for West Bengal, Yadav contended that the Left's reduced standing is only temporary and they will retain control over the state government.

Comment: Yadav's Support Is Essential But Need for Consensus Remains

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6. (C) Yadav, popularly known as Lalu, is known as one of the most savvy, colorful, grassroots politicians in India, and one of the three vital allies of the UPA government. The Parliament debate put the support of those allies on display. Tamil Nadu Chief Minister Karunanidhi, who leads the DMK party, had his daughter give her first speech in Parliament in support of the nuclear deal. Sharad Pawar's Maharashtra-based NCP also spoke in favor. For his part, Lalu sat through both Parliamentary debates, and though he did not speak formally, he actively retorted to the opposition during the frequent shouting matches that punctuated the debates.

7. (C) But as Lalu made clear in his meeting, and as the other allies alluded in their speeches, support for the nuclear deal is contingent on earning consensus. Although we cannot gauge whether Lalu seriously believes he can sway the Left, his stated aim for consensus reveals the pressure that the allies may have exerted on the UPA government to mitigate the chances of the Left from withdrawing from power. While it should be heartening that Lalu sees some political gain in supporting the nuclear deal, his support stops if the downfall of the government comes into play. The conventional wisdom here suggests Lalu's first priority is to see the UPA secure a full term -- with all the opportunities for patronage that represents.

8. (C) Bio Note: Lalu was attended by four key RJD Members of Parliament (MPs) and senior Rail Ministry bureaucrat, who greatly amplified the Minister's thoughts as expressed in workable, heavily accented English. Lalu seemed on his best behavior. He certainly was not the spontaneous, funny, earthy, rustic Lalu Indians know and love, prompting our senior FSN to comment that the MEA must have scared him silly prior to his meeting the Ambassador. Lalu was a gracious and perfect host, ensuring that a sizable fraction of Rail Bhavan's 1.4 million workers catered to our hospitality needs during the 30 minutes we were there. It was an unforgettable experience.

MULFORD