INTER-AGENCY MEETING

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP88G01117R000300880002-0
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 20
• Document Creation Date: December 22, 2016
• Document Release Date: December 16, 2010
• Sequence Number: 2
• Publication Date: August 8, 1986
• Content Type: MEMO

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OWN 1
8 August 1986
MEMORANDUM FOR: Distribution
SUBJECT: Inter-Agency Meeting
TYPE OF MEETING SIG
DATE 7 August 1986
TIME 1500
PLACE Rm. 7516 Department of State
CHAIRED BY Armacost
ATTENDEE(S) (probable) SUBJECT/AGENDA
____India
PAPERS EXPECTED Agenda received 8 Aug
INFO RECEIVED Per memo received 8 Aug
DISTRIBUTION:
DCI
DDCI
ExDir
DDO
DDI
VC/NIC
D/Exec Staff
ES
SDO/CPAS
ER
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EXECUTIVE SECRETAR1f-I7-;r J 1
preparing material for DDCI.
DCI
DDCI
EXDIR
D/ICS
DDI
DDA
DDO
DDS&T
Chm/NIC
E 11 IG
12 Compt
13 D/Oll
14 D/PAO
15 D/PERS
16 VC/NIC
17 NI0/NES
1s D/NESA
19 C/NE/DO
Remarks to 9: Please have NIO/NESA take lead in
Ex tive Secretary
8 Aug 86
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United States Department of State
Washington, D.C. O52U
August 7, 1986
SECRET
Interagency Group No.
OVP
NSC
ACDA
AID
CIA
Commerce
Defense
JCS
OMB
Treasury
USIA
USTR
60
-
-
-
-
Mr.
Mr.
Mr.
Mr.
Donald P. Gregg
Rodney McDaniel
William Staples
Richard Meyer
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Mrs.
Helen Robbins
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COL
James Lemon
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CDR
Manfred Karlisch
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Mr.
L. Wayne Arny
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Mrs.
Sherrie Cooksey
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Mr.
Larry Taylor
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Amb.
Michael Smith
Under Secretary Armacost will chair a SIG meeting on India on
August 21, 1986, 3:00 p.m. in Room 7516 at the Department of
State. The SIG will review progress in demonstrating to India
that it can and should widen its strategic options through
improved relations with the United States, as mandated by NSDD
147. Ambassador Dean, who is in the United States on
consultations and home leave, will attend. The Interagency
Intelligence Memorandum "Indian Response to U.S. Initiatives" (NI
IIM 86-10009) provides background on progress achieved. A brief
discussion paper on issues will be circulated before the meeting.
Representation will be principal plus one. Please telephone
the names of your agency's representatives to Sharon Ohta
(647-5804) by COB 19.
Nicholas Platt
xecutive Secretary
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DECL: OADR
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Director of Secret `'"?1
Central 25X1
Intelligence
Indian Response to
US Initiatives ?
Interagency Intelligence Memorandum
Secret
NI 11M 86-10009 ?
June 1986
Copy 515
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NI I IM 86-10009
INDIAN RESPONSE TO
US INITIATIVES
Information available as of 13 June 1986 was
used in the preparation of this Memorandum,
approved for publication on that date by the
Chairman of the National Intelligence Council.
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CONTENTS
Page
SCOPE NOTE ...................................................................................... 1
KEY JUDGMENTS .............................................................................. 3
DISCUSSION ........................................................................................ 7
India's View of the United States .................................................... 7
US Gains and Setbacks in India Since November 1984 ................. 7
Transfer of Sophisticated Technology ......................................... 7
Terrorism and Narcotics .............................................................. 8
Continuing Differences over Pakistan and Sri Lanka ................ 9
Major Factors Influencing the Indo-US Relationship ..................... 10
Gandhi's Survival .......................................................................... 10
Gandhi's Commitment to Economic Reform ............................. 10
Foreign Payments Strains ............................................................. 10
Indian Bureaucrats and Elites ...................................................... 10
New Delhi Sees Obstacles and Opportunities Ahead .................... 11
US Strategic Interests in Asia .......................... ............................. 11
Superpower Relations ................................................................... 11
Technology Transfer Issues .......................................................... 11
Narcotics ........................................................................................ 12
External Factors That Will Influence US Ties to India ................. 12
Soviet Policy Toward India .......................................................... 12
Indo-Pakistani Relations ............................................................... 13
Future US Actions or Events That Are Likely To Accelerate
or Slow Improvement in Relations .............................................. 13
Expansion of Trade, Especially in Sophisticated Technology... 13
Cultivating the High-Level Dialogue .......................................... 13
Maintaining Momentum in Traditional Areas of Indo-US
Cooperation ............................................................................... 14
Military Assistance to Pakistan .................................................... 14
Erosion of Gandhi's Political Power ............................................ 14
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SCOPE NOTE
In connection with a current interagency review of US policy
toward India, the Department of State has requested a study of the
effect of these policy initiatives over the past year on Indian foreign pol-
icy and on Indian attitudes toward the United States. This Interagency
Intelligence Memorandum assesses the gains the United States has made
since Rajiv Gandhi became Prime Minister, the extent to which Soviet
policy and Indo-Pakistani relations will influence Indo-US relations, and
addresses the obstacles to and opportunities for improved Indo-US
relations over the next year or two.
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KEY JUDGMENTS
New Delhi is responding favorably to US policy initiatives to
improve relations with India, but continuation of the trend is heavily
dependent on Rajiv Gandhi remaining in power. Key factors behind
Rajiv's response are:
- His personal affinity for Western culture and conviction that
economic reform and high-technology imports are necessary to
accelerate domestic development.
- His unprecedented political strength at home and willingness to
risk bold departures from his mother's policies.
- His capacity to cope with an entrenched bureaucracy, recalci-
trant elites, and foreign payments strains.
The United States has already made substantial gains since Rajiv
assumed power in November 1984:
- Senior Indian officials have largely removed the anti-US rheto-
ric from their statements on issues over which Washington and
New Delhi continue to differ.
- Indian officials have virtually stopped blaming Indian domestic
unrest on the United States.
- Gandhi has attempted to deemphasize the importance of US-
Pakistani ties in determining New Delhi's relations with
Washington.
- The Indians are cooperating on narcotics, have publicly thanked
the United States for its cooperation on Sikh terrorism, and have
condemned international terrorism in general.
- New Delhi has responded to US Army, Navy, and Air Force
initiatives to expand training exchanges and port visits.
- The Indians have signed a Memorandum of Understanding and
Nuclear Assurances protocol to facilitate the purchase of sophis-
ticated US commercial and military production technology.
- US and Indian firms are negotiating a dramatically larger
number of joint ventures and contracts that are beginning to
show up as gains in US exports of manufactured goods
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New Delhi will be constrained to move only gradually in any
further improvement of relations with the US:
- Gandhi still faces considerable resistance from individuals in the
government and military bureaucracies who have vested inter-
ests in the policies of the past. Some have dragged their feet on
implementing Gandhi's program to improve relations with the
United States.
- Gandhi may face foreign payments difficulties that will limit
New Delhi's ability to purchase sophisticated US technology.
- A qualitative increase of US military aid to Pakistan or embar-
rassing disclosures on the Pakistani nuclear weapons program
may unleash a barrage of domestic criticism that will compel
Gandhi to lower the visibility of Indo-US relations.
- Setbacks in relations between the United States and the USSR
would constrain Gandhi to move more slowly in expanding
cooperation in politically sensitive areas such as military techni-
cal missions.
- New Delhi may be less than a full partner in sharing informa-
tion on narcotics because of political sensitivities.
Soviet policy toward India and Indo-Pakistani relations will com-
plicate, but are not likely to determine, the course of Indo-US relations.
So long as Gandhi controls the policymaking agenda, New Delhi will
deflect Soviet efforts to derail improvements in Indo-US relations and
will minimize the effects of Indo-Pakistani relations on the relationship
between India and the United States. A significant boost in US arms aid
to Pakistan involving weapons not tied to the situation in Afghanistan
also would slow relations. In neither case do we believe Gandhi would
lose his interest in improving ties to the United States, but Gandhi will
move cautiously to limit the damage his domestic opposition could
inflict on him over these issues.
From New Delhi's perspective, US decisions on technology transfer
issues in the months ahead will be a key test of US commitment to im-
proved relations. Gandhi will be willing and able to ride out a moderate
slowdown in technology transfer and the resulting domestic criticism
because he needs US technology. A major slowdown, however, in the re-
lease of technology or escalation in the level of assurances required will
force New Delhi to turn to Western Europe or Japan.
Additional visits and briefings by US officials with their Indian
counterparts will be almost as important as technology transfer in
expanding cooperation. The United States can expect to win additional
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good will by expanding links in agricultural research, space exploration
and communications, and trade-areas in which the United States and
India have longstanding ties.
While we expect Indo-US relations to gradually improve, we
believe certain developments would seriously disrupt the trend:
- Gandhi's assassination, particularly at the hands of a Sikh, which
would force a politically weaker successor to cope with serious
domestic communal unrest. A successor is less likely to be
committed to improving ties to the United States.
- A dramatic erosion of Gandhi's political power-probably over
communal issues, the economy, or Pakistan-which would
compel Gandhi to fall back on the "safe" policies of the past.
- Information of substantial Pakistani progress on its nuclear
weapons program that probably would cause at least a tempo-
rary downturn in Indo-US relations as New Delhi considered its
nuclear options.
- Significant developments in the Indian nuclear program that
would force the United States to suspend the transfer of
sensitive high technology to New Delhi.
- A significant expansion in Sino-US military and nuclear cooper-
ation that India views as discriminatory or endangering New
Delhi's security.
- The failure of either the United States or the Indians to show
flexibility in response to the other's sensitivities when negotiat-
ing security assurances needed for the transfer of restricted
technology.
- Leakage of Western technology to the Bloc at rates or levels
unacceptable to the United States
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DISCUSSION
India's View of the United States
1. From New Delhi's perspective, relations between
India and the United States historically have been
characterized mainly by differences. India often has
viewed Washington's actions as undercutting key
interests:
- New Delhi is primarily concerned with securing
its preeminence in the region to the exclusion of
other-particularly extraregional-powers.
- India also has long aspired to be recognized as a
Gandhi's personal style as well as a broader favorable
response to US initiatives:
- Indian officials have virtually stopped blaming
their domestic troubles on the meddling "foreign
hand" of the United States.
- High-level Indian officials have denied allega-
tions of US support for Sikhs raised in the Indian
parliament.
major actor in international diplomacy.
2. Against this backdrop, however, New Delhi has
become determined to join the revolution in advanced
technology and views the United States and other
Western nations as natural partners in this effort. For
the most part, Rajiv Gandhi has conducted foreign
policy with an eye to his primary domestic agenda-
transforming India into a modern, economic power.
He is seeking to improve relations with potentially
hostile neighboring states so that New Delhi's attention
and resources can be more fully dedicated to acceler-
ating domestic economic growth.
US Gains and Setbacks in India Since November
1984
3. As a result, Indo-US ties are gradually gaining a
more solid footing, and in this latest upswing in
relations, Gandhi believes both New Delhi and Wash-
ington have developed a more sober understanding of
the different goals each side has for the relationship.
Starting with Indira, but picking up momentum under
Rajiv, the expanded range of visits and briefings by
senior US officials have helped assure India that the
United States recognizes New Delhi's preeminent role
in the region and values India's views and cooperation
on issues of common concern. For its part, New Delhi
has moderated its official statements on a number of
issues that frequently have soured relations in the past.
India also has shown a willingness to cooperate in new
areas, such as the transfer of sensitive technology,
military training, terrorism, and narcotics.
4. The atmospherics of the relationship have
changed considerably since November 1984, reflecting
- Following briefings by senior US officials, Gandhi
and his principal advisers have modified their
rhetoric on several issues on which New Delhi
and Washington differ, particularly the Strategic
Defense Initiative, disarmament issues, and
South Africa.
- The Indian press has picked up on Gandhi's
aversion to anti-American rhetoric. There has
been some change for the better in the tone of
reporting on the United States and Indo-US
affairs. pro-Amer-
ican articles are appearing with increasing fre-
quency and reporting on anti-US themes has
diminished. New Delhi appears to have cau-
tioned editors not to accept Soviet-inspired sto-
ries uncritically.
5. Transfer of Sophisticated Technology. Gandhi's
efforts to obtain technology are giving the United
States access-although limited-to new areas of the
Indian government and industry, fostering ties that
will provide a long-term basis for further improve-
ments in relations and opportunities for US business.
6. As a result of the high priority India attaches to
the acquisition of technology, Gandhi has moved
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forward on issues of importance to the United States.
He pressed Indian officials to sign the Memorandum
of Understanding (MOU) on technology transfer; nego-
tiations had languished under Indira Gandhi's leader-
ship. New Delhi also agreed to the Nuclear Assurances
protocol
7. Gandhi has cautioned, however, that he antici-
pates an extended period of confidence building dur-
ing which New Delhi and Washington work out their
differences over the protection of sensitive technology
and costs. Gandhi's acknowledgment that the process
may be slow reflects his assessment of the divisions
within both the Indian and the US administrations
over building closer ties through the transfer of sophis-
ticated technology. On the Indian side Gandhi faces
opposition both from those who oppose reliance on
imported high technology and those against closer ties
to the West.
8. The Indians have not been enthusiastic about
negotiating a General Security of Military Information
Agreement (GSOMIA), and this has constrained efforts
to improve relations. Indian Defense Science Adviser
Arunachalam has told US officials that New Delhi
prefers to place its requests through the newly negoti-
ated MOU and Nuclear Assurances channels. The
Indians do not have such an agreement with other
states and have told US officials they do not think the
Indo-US defense relationship has reached that stage.
9. The Indians have responded to US initiatives to
exchange defense technical missions to explore pros-
pects for long-term cooperation in defense production
technology. Gandhi has said publicly that New Delhi
would look to the United States for sophisticated
military production technology before considering
purchases of major weapon systems. India has agreed
to purchase night vision technology from the United
States and a Naval data base system, and has asked for
the technology to manufacture or to purchase jet
engines, fast computers, communications systems, in-
ertial navigation systems, and a variety of other mili-
tary-related subsystems. Access for the US Govern-
ment and private Americans to Indian defense
establishments has also improved.
10. New Delhi also has responded favorably to US
Navy and Army initiatives to expand training ex-
changes and port visits:
- The Indian Navy in April formally requested
that officers be admitted to courses in surface
and ASW warfare, dockyard management, and
NBC defenses, and will have a team here this
month to study US naval training.
- The Indians also decided against raising the issue
of prohibiting port calls by US nuclear armed
ships. The Indian frigate, Godavari, is scheduled
to pay port calls in the United States in June-a
first for the Indian Navy.
- The US Army and Air Force also have offered
additional training options that have been ac-
cepted by the Indian military, but await final
Foreign Ministry approval. A US Army team has
visited India to make recommendations on train-
ing cooperation.
11. US initiatives to boost high-technology sales to
India have led to dramatic increases in proposed joint
ventures and contracts under negotiation that are
beginning to show up as gains in US exports. New
Delhi approved 200 new financial and joint ventures
between US and Indian businessmen in 1985, more
than with any other country. In the largest single deal,
New Delhi awarded a contract to a US company for
the manufacture of US computers in India over time
worth $500 million. Aside from this sale, US sales of
telecommunications equipment, industrial machinery,
computers, and scientific instruments reached 10-year
highs in 1985, according to US trade statistics.
12. Terrorism and Narcotics. The Indians have
taken several steps on terrorism favorable to the
United States, largely in response to US moves such as
the arrests of Sikhs allegedly plotting to kill a visiting
Indian Cabinet official and the extensive security
precautions taken for Gandhi's visits. Although reluc-
tant to enter into a formal counterterrorism assistance
program, the Indians have:
- Moved away from their traditional practice of
excusing terrorism connected with what they
deemed to be national liberation movements and
instead are describing terrorism as an interna-
tional problem requiring an international re-
sponse.
- Accepted US assistance in upgrading airport
security and in investigating the Air India crash
off the coast of Ireland.
- Briefed the Indian Parliament and press on US
cooperation, resulting in news stories and editori-
als favorable to the United States.
- Supported bilateral and regional efforts in South
Asia to combat hijackings and curtail cross-bor-
der movements by suspected terrorists.
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United States Exports to India, 1976-85
Other
Raw material
Foodstuff
Manufacture
Soviet Exports to India, 1976-85a
Other
Machinery and equipment
Petroleum and products
13. A minor setback in relations since Rajiv as-
sumed power is differences that have emerged over
Libya. Gandhi and other senior Indian officials have
tried to limit the damage, however. Gandhi refused
requests from the Arab states to criticize US economic
sanctions against Tripoli. Following the US airstrike
against Libya, Gandhi took a relatively restrained
approach toward the United States in a speech to the
Indian Parliament, urging the United States to use
diplomatic rather than military leverage to combat the
threat. Gandhi also sacked Foreign Minister Bhagat,
who vehemently criticized the US action-a move that
Gandhi probably hopes has signaled New Delhi's
readiness to put the issue aside.
14. On narcotics, US suggestions for increased coop-
eration have coincided with a growing awareness in
New Delhi of the expanding Indian drug trade. The
Indians have responded by:
- Forming an Indo-US working group on narcotics.
- Negotiating a six-point bilateral antinarcotics
program with Pakistan.
- Supporting an antinarcotics initiative in the
South Asian Association for Regional Cooperation
(SAARC).
15. Continuing Differences Over Pakistan and
Sri Lanka. US arms sales to Pakistan remain an
important obstacle to improving relations. Rajiv Gandhi,
however, has not made US-Pakistani relations the
make-or-break test of improved Indo-US relations the
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way they have been in the past. Gandhi has shifted the
focus of New Delhi's opposition to US military aid to
Pakistan-stressing the economic costs to India and
Pakistan of an arms race in South Asia, rather than the
strategic threat posed by Pakistan's possession of the
weapons.
16. The Indians are aware that Indo-Pakistani rap-
prochement is a major US regional goal, and argue
with US officials that Washington should reward their
efforts to reduce Indo-Pakistani tensions by reducing
US military assistance to Pakistan and working harder
to blunt Pakistan's nuclear program.
Indo-US relations comes from the match between
Gandhi's drive for high technology and US interest in
high-technology sales. Gandhi remains committed to
economic liberalization and modernization that, out of
necessity, will promote closer trade ties to the United
States. Much of the Indian industrial sector is stagnant
and inefficient because of government control and
lack of competition. The last five-year plan fell 18
percent short of planned expenditures primarily be-
cause state enterprises could not provide the necessary
resources. Indians believe, and we concur, that India
will need more efficient management, greater produc-
tivity, and additional financial resources especially
from the private sector, to achieve its goal of 5-percent
17. US diplomatic intervention, or sales of lethal
military equipment to Sri Lanka in support of
Jayewardene would have a serious negative impact on
US-Indian relations. New Delhi, so far, has welcomed
US diplomatic support for India's efforts to broker a
settlement between Sri Lanka's Tamil and Sinhalese
populations. The Indians also welcome Washington's
willingness to defer, in part, to Indian initiatives
toward Colombo, even though some Indian officials
continue to be suspicious of US motives in Sri Lanka.
In return the Indians have demonstrated forebearance
when erroneous press stories have claimed the US was
supplying arms or intelligence to Sri Lanka.
Major Factors Influencing the Indo-US
Relationship
18. Gandhi's Survival. We believe continued im-
provement in Indo-US relations is heavily dependent
on Gandhi's survival. His personal affinity for Western
culture, bold departures from his mother's policies,
and unprecedented political strength at home have
been key elements in the improvement of the tone and
expanded scope of Indo-US ties. We doubt any succes-
sor will have a combination of attributes as favorable
to US interests. Although Gandhi is in excellent health,
he is the target of Sikh extremists. Their fanaticism
together with the inadequacies of Indian security
make Gandhi highly vulnerable.
19. His death would represent a significant blow to
US interests. Those cabinet members who are enthusi-
astic proponents of closer ties to the United States,
Defense Secretary Arun Singh and Finance Minister
V. P. Singh, are unlikely to succeed to the Prime
Ministership, because they lack strong political bases.
Probable successors who do have political influence
are likely to be less committed to improving ties to
Washington
20. Gandhi's Commitment to Economic Reform.
The greatest impetus to the continued development of
average annual economic growth.
21. Foreign Payments Strains. Gandhi's focus on
the acquisition of sophisticated US technology de-
pends, in part, on New Delhi's capacity to avoid
international financial difficulties. A deterioration in
India's balance of payments is likely before 1990 both
because the cost of import growth-even with lower
world oil prices-will greatly exceed the income from
the growth in exports. In addition, the debt service
burden and payments to Western Europe for military
equipment will increase substantially. We expect New
Delhi will attempt to forestall a foreign payments
crisis by selectively reimposing restrictions on imports,
even though such a policy reversal would slow eco-
nomic growth. Such restrictions would jeopardize the
current enthusiasm within the Indian business commu-
nity to line up joint ventures and purchase US technol-
ogy.
22. Complaints about US policies on loans and trade
could cause a deterioration in relations as problems
mount and advocates of liberalized economic policies
seek a scapegoat for their failure to improve economic
performance. Some Indian officials continue to see an
anti-Indian bias in US policies that limits Indian access
to International Development Agency and Asian De-
velopment Bank loans. But Indian criticism of the
United States on this issue is less than it was two years
ago.
23. Indian Bureaucrats and Elites. Gandhi's flex-
ibility in accelerating and expanding relations with the
United States is constrained by the views of many
bureaucrats and university-educated elites who have a
vested interest in supporting India's previous policies
toward the United States and USSR. Gandhi's efforts
to follow through on initiatives toward the United
States will be slowed by the imperative of changing
this view to accommodate his vision and priorities.
the foreign policy
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bureaucracy has consistently dragged its feet on Gandhi's
efforts to improve relations with the United States and
to advance India's economic interests through foreign
policy. Many of these officials have worked for years
to advance India's interests with the Soviet Union and
are used to thinking of the United States as a diplomatic
opponent. Their deeply ingrained suspicions of the
United States will be hard to overcome
24. This is also the case within the military estab-
lishment. In the Past, Ministry of Defense officials
have succeeded in frustrating efforts to expand US-
Indian military contacts. In our view, the opposition
stems from longstanding Indian worries about a possi-
ble US embargo of equipment in the event of a war
with Pakistan and the reluctance of officials to jeopar-
dize a vested interest in Indo-Soviet military ties.
Therefore, any purchase of major US weapon systems
will face strong opposition within the Indian bureauc-
racy
25. Many Congress Party politicians who achieved
prominence in the party through loyalty to Indira
Gandhi have opposed Rajiv's efforts to expand ties to
the United States. Gandhi's decision in recent weeks to
oust the most outspoken critics in the party and move
aside Indira's old-guard suggest he is gradually consoli-
dating support for his initiatives, including improved
relations with the United States.
26. Finally, India's educated urban elites are still
suspicious of Rajiv Gandhi's efforts to deepen ties to
- US military assistance. to Pakistan that was not
clearly tied to the Soviet presence in Afghanistan.
28. Gandhi will face a barrage of domestic political
criticism if he continues his visible efforts to improve
relations with the United States while Washington is
seen to be strengthening Islamabad's capacity to strike
India with conventional weapons and failing to pres-
sure Pakistan to contain progress in developing nuclear
29. New Delhi also views the developing US-Chi-
nese security relationship and US Indian Ocean policy
as inimical to its interests. Neither of these concerns,
however, is as important to India as the Pakistani issue.
30. Superpower Relations. The Indians probably
calculate that they can pursue their objectives more
easily when relations between Washington and Mos-
cow are smooth. From India's perspective, downturns
in superpower relations complicate its efforts to gain
greater diplomatic flexibility and self-reliance in de-
the United States.
~he majority view US arms sales to Pakistan
and the US presence in the Indian Ocean as a direct
threat to India's security. In contrast, fewer than 20
percent consider the Soviet presence in Afghanistan or
the Indian Ocean as a threat.
New Delhi Sees Obstacles and Opportunities
Ahead
27. US Strategic Interests in Asia. For New Delhi
the most difficult obstacle to further improvement in
Indo-US relations is Pakistan. In April, Gandhi ac-
knowledged to Parliament that there were two issues
that could cloud the improving Indo-US relationship:
- Pakistani progress toward the development of
nuclear weapons.
fense and economic development.
31. Technology Transfer Issues. We believe New
Delhi views negotiations with Washington over the
timing and release of sensitive technology as both an
opportunity and a potential obstacle to improved
Indo-US relations. Indian officials are disappointed
with the pace and process of technology transfer since
the signing of the MOU. In particular, the Indians
have complained about the repeated requests from the
US for additional assurances. New
Delhi resents the inference that n is will pass sensi-
tive information to the Soviets and is concerned about
opening Indian operations to US inspectors.
32. At the same time, New Delhi welcomes the
MOU and the nuclear Assurances protocol as evidence
of US interest in marketing commercial and military
high technology. US activity intensifies competition
among potential suppliers-including the Soviets. New
Delhi, no doubt, hopes that it can extract favorable
terms and conditions on US technology transfer cases
by fostering competitive bidding. We also believe that
negotiations on the transfer of sophisticated Soviet
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military weapons technology continue to drag out, in
part because the Indians continue to press for better
deals from Moscow
33. India's growing indigenous capabilities-partic-
ularly in software-also may pose a near-term chal-
lenge to US interests in protecting international trade
control mechanisms. Although India grudgingly ac-
cepts controls on US technology as the price of
acquiring it, we believe New Delhi would resist
strongly any pressure from the United States or
COCOM to curtail exports of what it views as its own
technology to any country, including the USSR. Re-
strictions would be interpreted as an affront to India's
sovereignty and an attempt to prevent it from chal-
lenging the West in world markets.
34. Narcotics. We expect that Indian sensitivities
may prove an obstacle to developing a balanced
External Factors That Will Influence US Ties
to India
35. Soviet Policy Toward India. The Soviets fear
that Rajiv Gandhi's Western orientation and his inter-
est in gaining access to Western technology will make
him responsive to the US desire for better ties at
Moscow's expense. The Soviets are especially con-
cerned about renewed Indo-US military cooperation.
In order to prevent any downturn in Indo-Soviet
relations, the Soviets have maintained a steady stream
of high-level contacts, offered India some of their
newest military hardware, and mounted major propa-
ganda campaigns aimed at sustaining Indian suspicions
of the United States and Pakistan. The Soviets realize
most Indians regard US technology as superior to that
of the USSR and have mounted a covert propaganda
campaign designed to discredit US technology. How-
ever, Moscow's efforts to use its media assets to
influence Indian opinion have not been very success-
ful.____________ last January that, in the preceding six
to eight months, reporting on familiar anti-US themes
had diminished substantially and in some cases, all but
disappeared from the mainstream Indian press.=
36. Moscow is trying to counter every development
in Indo-US relations with a balancing Soviet move. For
example, when it became clear President Reagan
would see Gandhi in New York last September, Gorba-
chev insisted on another meeting with Gandhi as well.
When the Soviets saw how much favorable publicity
was generated by the Festival of India in the United
States, they scheduled a Festival for the USSR. At
Moscow's request the Indian frigate, Godavari, which
is due in the United States in June, has first paid a port
call in the Soviet Union. From the Indian perspective,
such Soviet sensitivity represents an opportunity be-
cause it gives New Delhi more leverage and allows
India to demonstrate its equidistance between the
superpowers
the end of the year.
37. Moscow has paid particular attention to culti-
vating Rajiv. In 1983, when he still had only a nominal
job in the Congress Party, Moscow invited him to the
USSR and gave him VIP treatment beyond even that
normally accorded most heads of state. Once Gorba-
chev assumed office in March 1985, he personally took
charge of the courtship of Rajiv. In addition to their
three face-to-face meetings since then, Gorbachev
nurtures the relationship by writing regularly to Rajiv
and by occasionally sending special envoys to New
Delhi to brief him on topics of common concern.
Reporting suggests that the first Third World country
Gorbachev will visit since becoming General Secretary
will be India. and that his visit will take place before
38. Soviet diplomacy highlighting close Indo-Soviet
relations has been supplemented by the conduct of
ongoing economic and military relations. The Soviet
Union is India's largest commercial trading partner
after the United States with total two-way trade of
about $3.7 billion in 1985. The trading relationship
consists largely of an exchange of Soviet petroleum for
Indian agricultural products and consumer goods. In
addition, we estimate India paid the Soviets about
$600 million last year for military imports, India has
purchased over $7 billion in Soviet arms since 1980,
and its annual payments to Moscow for arms already
purchased will probably increase to as much as $1.8
billion by 1994.
39. The Soviet position in India has broad and
diverse foundations and is well entrenched. In addi-
tion to diplomacy commerce and arms supply, the
broad range of Soviet efforts includes educational
exchanges, political party subsidies and subventions,
bureaucratic penetration, and a range of active mea-
sures, all of which are designed to increase Soviet
influence and thwart US inroads
40. Despite the heavy Indian dependence on the
Soviets, particularly for military equipment, we be-
lieve that, so long as Gandhi controls the policymaking
agenda, New Delhi will deflect Soviet efforts to
frustrate meaningful improvement in Indo-US ties.F-
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41. n o- a istani Relations. A downturn in
Indo-Pakistani relations would constrain Gandhi's ef-
forts to improve Indo-US relations, in our judgment.
Gandhi faces a domestic constituency that is quick to
suspect the worst of the Pakistanis and to criticize
Gandhi for being "soft" toward Islamabad. Although
we do not expect a collapse of the high-level talks
between Indian and Pakistani officials on defense,
nuclear, and economic issues, such a breakdown prob-
ably would force Gandhi to lower the visibility he
gives to Indo-US relations. Similarly, the revelation of
information indicating substantial Pakistani progress
in its nuclear weapons program probably would com-
pel Gandhi to slow the pace of progress in Indo-US
relations.)
42. As a result of the extensive cooperation between
Washington and New Delhi on the issue of Sikh
extremists, we do not believe Indo-US relations will be
damaged by Indo-Pakistani differences on this issue.
However, the issue of Pakistani support for Sikh
separatists remains a source of strain in Indo-Pakistani
43. Indian and Pakistani domestic developments
also closely influence the tenor of Indo-Pakistani
relations and will, to a limited extent, affect the course
of Indo-US relations. In India, a sustained outbreak of
Hindu-Muslim sectarian violence-which Gandhi con-
siders a serious possibility-would prompt a major
downturn in Indo-Pakistani relations. We believe
Gandhi's interest in improving relations with the
United States would be put aside while he coped with
the political fallout of domestic unrest.
Future US Actions or Events That Are Likely To
Accelerate or Slow Improvement in Relations
44. Gandhi is not likely to make dramatic changes
in the way he approaches Indo-US relations. In our
judgment, he is looking for gradual improvement over
a period of many years with a focus on developing ties
to the United States that will help India accelerate its
drive to self-sufficiency and international prominence.
We also do not believe that improvements in Indo-US
relations will necessarily lead to a diminution in Indo-
Soviet relations. All that said, however, we believe the
Indians would be receptive to additional US initiatives
to improve relations.
45. Expansion of Trade, Especially in Sophisti-
cated Technology. From New Delhi's perspective the
key test of US commitment to improved relations will
continue to be Washington's response to Indian re-
quests for the transfer of advanced US technology and
for flexibility on financing. New Delhi would
welcome:
- US release of the backlog of cases falling under
the MOU and decisions eliminating some of what
the Indians see as ad hoc requirements for
additional assurances.
- US willingness to field additional Defense techni-
cal teams, such as the team that recently went to
India to discuss the Light Combat Aircraft, in
response to Indian requests. We believe a sus-
tained US effort, either directly or through the
West Europeans, to assist India in the develop-
ment of its Light Combat Aircraft would be
particularly well received in New Delhi.
- Additional US offers to help with financing to
accelerate the pace of Indian purchases of sophis-
ticated technology. Conversely, heavy constraints
on financing for major contracts would signal
limits in the US commitment to India
46. A significant slowdown in the release of tech-
nology or a major escalation in the level of assurances
required by the United States would force Gandhi to
turn to the West Europeans or Japanese. If no alterna-
tives are available, he will resort to the well developed
"self-reliance" theme and do without:
- Such decisions would also deepen the suspicions
of many influential Indians that the United
States intends to prevent India from becoming a
great economic or political power.
- Even those Indians inclined to support closer ties
to the United States would read a drying up of
high tecnology releases as an indication that the
United States does n _t_ take a's great power
aspirations seriously.
47. Cultivating the High-Level Dialogue. We
believe a continuation of the visits and briefings by
senior US officials-such as the proposed visit of the
Secretary of Defense-will be almost as important as
technology transfer in expanding cooperation:
- These efforts will go a long way toward assuring
the Indians that the United States is committed
to a longterm, steady growth in relations.
- The United States will hold Gandhi's good will,
in our judgment, if it continues to brief the
Indians on Afghanistan and US military assis-
tance to Pakistan, despite the public criticism
that may flow out of India on these issues.
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- Additional briefings on disarmament issues are
likely to help rather than hurt the course of Indo-
US relations.
- Similarly, an exchange of views on South Africa
probably will help to strengthen Gandhi's under-
standing of-if not support for-the US position.
48. Maintaining Momentum in Traditional Ar-
eas of Indo-US Cooperation. The United States could
expect to win additional good will among India's
scientific and business elites by expanding cooperation
in agricultural research, space exploration, communi-
cations, and trade-areas in which the United States
and India have long cooperated with little friction:
- US initiatives to reinvigorate ties to US and
Indian agricultural research facilities by address-
ing India's needs in water resource management,
energy-saving practices, fertilizers, and dry land
farming are likely over time to encourage col-
laboration and open opportunities for US
agribusiness.
- US efforts to sustain Indo-US space cooperation
will also protect Washington's long-term invest-
ment and advantage over the Soviets. We expect
New Delhi will wait for a US launch of its
INSAT-IC communications satellite-and also
will send the Indian astronaut when NASA re-
schedules Shuttle launches.
49. Military Assistance to Pakistan, A decision to
increase military aid to Pakistan independent of the
situation in Afghanistan, in our judgment, would
considerably slow the pace of improving Indo-US
relations:
- The sale of weapons the Indians consider ill
suited for use in the Afghan border area will give
credence to Gandhi's critics in and out of his
administration who suspect the United States and
the Chinese of arming Pakistan for an eventual
attack on India.
- Gandhi will be obligated, from his perspective, to
counter US military aid to Pakistan with addi-
tional arms purchases, undercuting his ability to
reinvigorate the Indian economy. We believe
much of the military modernization, however,
would occur in any event.
50. Erosion of Gandhi's Political Power. To the
extent that Gandhi loses political power at home, he
may find it more difficult to pursue closer ties to the
United States. Gandhi's fallback position would be to
identify more closely with the policies of his mother.
These policies, while open to improved relations with
the United States, were more closely tied to socialist
ideology, anti-imperialist rhetoric, and Soviet friend-
ship. They continue to enjoy the support of many of
the Congress Party old guard whose support Gandhi
would need in the event that he fumbles away much
of his political popularity. Gandhi faces potential
domestic crises from growing communal conflicts and
from inflationary pressures.
51. Other possible developments could hamper con-
tinued improvement in Indo-US relations:
- Leakage of Western technology to the Bloc at
rates or levels unacceptable to the United States.
Despite Indian assurances, India will be hard
pressed to prevent compromise of some sensitive
technology.
- Significant developments in the Indian nuclear
program that would force the United States to
suspend the transfer of sensitive high technology
to New Delhi.
- A significant expansion in Sino-US military and
nuclear cooperation that India views as discrimi-
natory or endangering New Delhi's security.
- A potentially contentious Indian request for a
Sikh extradition treaty.
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