Background Briefing on India

Special Briefing
Chennai, India
July 20, 2011

SENIOR STATE DEPARTMENT OFFICIAL ONE: All right. Well, I thought I would just give you a brief rundown of why we’re going to Chennai, some of the events there, and maybe a little bit about the speech. I think you’ve already heard already a little bit about the speech.

First of all, Chennai and Tamil Nadu are some of the most dynamic parts of India. Chennai itself is the fourth largest city and Tamil Nadu is the, I think, fourth largest economy in India. As you know, it’s predominantly Tamil, 70 million Tamils. It’s known around India as one of the states with the highest rates of education and health, and I think that’s one of the real drivers of the growth that we’ve seen.

As all of you know, the growth story in India, for a lot of the early part of the last 10 years, was on the basis of services exports, particularly IT exports, and certainly Tamil Nadu was part of that. But since then, it’s interesting that Tamil Nadu has also become a leader in the manufacturing area as well. So we have a lot of big American companies down there. Ford has a big plant near Chennai; John Deere has a new joint venture; Caterpillar has a big set-up down there as well. So American companies are very much part of that economic dynamism down there. We’re really happy about that.

The other piece of that is the skilled workers. You all may have heard in the sort of run-up to this visit, India has been a major beneficiary of the so-called H1B visas, which are the skilled worker visas. Last year, India received 65 percent of those visas worldwide, and a very large percentage of those visas were issued at our consulate in Chennai, again, I think, underlining the dynamism of the local economy and how well things are going, particularly at the high-tech sector.

In terms of some of the events that we’re going to be doing there, she’s going to be giving a speech at this place called the Anna Centenary Library. It’s just been finished in 2010. It’s a gleaming, new, beautiful building.

QUESTION: Does that mean it’s air conditioned?


QUESTION: It has wi-fi and (inaudible).

SENIOR STATE DEPARTMENT OFFICIAL ONE: It’s one of the largest libraries now in Asia. I think you’ll see it’s a pretty impressive place. We also want to be giving a speech down here, because Chennai has really been kind of a bridge to all of Southeast Asia. A lot of the Tamil traders many hundreds of years ago went as far down as Indonesia and Malaysia, and you could still see when you go to places like Bali, when you guys go there, you’ll see a lot of Hindu temples, and so those are the legacy of these Tamil traders. So again, it’s always had this seafaring tradition, and I think that’s one of the themes that the Secretary will be echoing in her speech.

The Secretary will be meeting with the chief minister of Tamil Nadu, who is Chief Minister Jayalalithaa. I’ll give you the spelling of that later. She’s just been reelected now. She’s been in office now three times. She was – she defeated the previous incumbent, Muthuvel Karunanidhi, in the most recent elections just this year. So she’s back for her third term. She’s quite an interesting, dynamic woman. She’s the – she’s a former Tamil film star. She, many times, has had her own TV channel called Jaya TV. So she’s very popular and very well known in Tamil Nadu. She is one of now four women chief ministers in India. The others are the chief minister in Andhra Pradesh, the chief minister of Delhi, and then who’s the other one – oh, the chief – the newly elected chief minister in West Bengal. So collectively now, women chief ministers run states that have 30 percent of the population of India, so I think – I’m sure the Secretary will be talking, I’m sure, about that.

We do – we have a lot of interesting and good programs in Chennai. They’ve always been a leader in the international AIDS arena, where again, they got a jump on the rest of India starting to work on HIV/AIDS back in the early 1990s. So they were able to bring down the HIV infection rates much more quickly than some of the other parts of India. We’ve also been working very collaboratively with them on trafficking in persons, which, as you know, has been a bit of an issue in India. And this year, for the first time, India, as you’ll recall, was brought down to Tier 2 – Tier 2 Watch List – reflecting a lot of the progress. And some of that progress was achieved here at Chennai, where they’ve set up anti-trafficking units at the state level, and again have taken quite a forward leadership role. So that might come up in the meeting.

And then the other issue is probably going to be about Sri Lanka, to say the 70 million Tamils in Tamil Nadu are all very concerned about the situation in Sri Lanka. There’s 70,000 Tamil refugees from Sri Lanka that are still in Tamil Nadu. The state and the central government are very happy to be supporting that. There’s no pressure to leave or anything like that. I think some of them have started to slowly trickle back to Sri Lanka, now that the situation is slowly improving. One of the concerns here in Tamil Nadu is always about the IDPs. As you recall, there were almost 300,000 IDPs at the very end of the war. Almost all of those have now been resettled in the north. There’s about 10,000 or so that still need to be resettled, but generally, I think the government’s record on that has been good.

Where we and the Indians are pushing for progress is on this whole process of reconciliation, where – which is – includes a wide variety of different issues. They need to organize provincial council elections up in the north so that there will be, for the first time, an indigenous leadership in that area that was ruled by the LTTE for 30 years. They need to complete the resettlement process. They need to set up a process of providing for land dispute resolution, because again, many people have claims to various parts of those lands. They need to stop the activities of paramilitaries that continue to operate in that part of the country.

QUESTION: Who is she going to be talking about this with?


QUESTION: Who is she going to be talking about this with?

SENIOR STATE DEPARTMENT OFFICIAL ONE: Well, I don’t – I’m just giving you a little bit of background on the general sort of situation (inaudible) Sri Lankans – sorry, the Tamils – and also in Indian (inaudible).

QUESTION: (Inaudible.)

SENIOR STATE DEPARTMENT OFFICIAL ONE: (Inaudible.) Yeah. So then again, I think – I imagine this will be a subject of conversation during their talk. The other thing – I just wanted to talk a little bit about the speech itself.

I think there’s going to be sort of two broad themes, which is India’s growing leadership in Asia and the importance that we attach to working more closely with India in Asia. So there are really two parts to that – India and the Asia Pacific. As you all are now heading off to ASEAN, we look to encourage greater Indian participation in all the Asian Pacific institutions. We recently (inaudible) East Asia summit as one of the premiere Indo – sorry, Asia Pacific institutions. The President looks forward to seeing Prime Minister Singh at the next summit.

QUESTION: (Inaudible.)

SENIOR STATE DEPARTMENT OFFICIAL ONE: We’re also going to be extending an invitation to Montek Singh Ahluwalia, the deputy planning commission chair, to come to the APEC* summit in Honolulu.

QUESTION: Is that the first time you’ll be able to be (inaudible)?

SENIOR STATE DEPARTMENT OFFICIAL ONE: Yeah. But as you know, there’s a moratorium for now on new membership.


SENIOR STATE DEPARTMENT OFFICIAL ONE: But again, it’s just sort of a symbolic thing to show the importance that we attach to greater –

QUESTION: As an observer?


QUESTION: They never attended anything (inaudible)?


QUESTION: They are already – asked if they can participate in (inaudible), right?

SENIOR STATE DEPARTMENT OFFICIAL ONE: Yes, very much so. Very much so. So again, we want to work with – closely with the Indians on all of these Asia Pacific issues, but particularly things like maritime security, protecting sea lanes, disaster management. And again, we’re just building on a lot of the engagement they’ve already had. India has had a Look East strategy for many years. They have free trade agreements, or what they call comprehensive economic partnership agreements, with many countries, like Indonesia. The Indonesian president was the recent guest of honor for India’s National Day. So they very much attach a great priority to expanding their engagement in Asia, so that’s a welcome message for that.

The other theme will be, again, the importance that we attach to India’s leadership in helping to integrate South and Central Asia. As all of you know, we’re making a big push now to do (inaudible) what we call a Silk Road strategy. And that’s essentially to, first of all, help Afghanistan to get on its own two feet economically so it doesn’t need to rely on assistance from the United States and other donors. A key part of that first will be helping Afghanistan to build up its own infrastructure. India, as you know, recently had a visit by Prime Minister Singh to Afghanistan. He pledged a new envelope of $500 million, bringing their total package of assistance now to 2 billion. A lot of that is in the infrastructure area. They played a tremendous role all over Afghanistan, building up electricity and roads and all kinds of infrastructure, and of course, capacity-building with the Afghan Government. So that’s a very welcome piece.

A second part of the Silk Road strategy is working to try to give some impetus to a lot of these big regional projects like the Turkmenistan-Afghanistan-Pakistan-India pipeline. That’s a pipeline that will bring natural gas from Turkmenistan to India primarily, but it will also, of course, have benefits for Afghanistan and Pakistan. Then the project was launched. There was an intergovernmental agreement last year in Turkmenistan between those four countries. Negotiations are now going on about the pricing for that. From the Indian perspective, the price – the delivery price for gas has got to be less than the price for LNG they now get from the Gulf. So I think that’s what’s driving a lot of the price negotiations.

QUESTION: Just one thing real quickly: When you talk about maritime security and protection of sea lanes, are you talking about --

SENIOR STATE DEPARTMENT OFFICIAL ONE: Let me come back to that. Let me just finish with this and then I’ll get back to the Afghanistan stuff.

So some of these regional projects, we’re encouraging a lot of electricity-sharing as well between countries like Uzbekistan, Turkmenistan, Tajikistan. Some of those we’re involved with ourselves. So that – again, that’s a second piece of the Silk Road strategy.

A third piece is the whole trade aspect. As you know, the presidents of Afghanistan and Pakistan recently agreed to start implementing the Afghanistan-Pakistan Transit Trade Agreement. It’s a very welcome step. And they also agreed to extend that to Central Asia, so that also is a very important thing. We’ll be working to help do whatever we can to promote that. I think the Central Asians, from their perspective, very much welcome that. In our conversations with them, they very much see markets of India and recently Bangladesh and Pakistan as their economic future. So they are particularly interested in opening the transit trade to India so that then they could have their trucks pass all the way through into India, but also increasingly to Bangladesh and beyond. We very much support that. That’s why the Secretary, I think, has been very encouraging of the Indians and the Pakistanis to continue the progress that they’ve made in particularly the commerce secretary talks to improve bilateral India and Pakistan trade.

I think we had some encouraging readouts during our visits yesterday with some of the economic leaders and the prime minister. Those talks are proceeding well. They’re making progress. And of course, if there is sufficient progress and sufficient confidence built over time, that could, again, allow for an opening to (inaudible) the trade, which would be a real game-changer for not only Afghanistan, but for – also for Pakistan and for countries of Central Asia. So that is, broadly speaking, the kind of Silk Road strategy. She – I think she will be talking about that in the speech.

She’ll also be talking about the importance that we attach to India’s helping to encourage the process of reconciliation. As you know, India has always had good relations with the Northern Alliance. And they, in turn, can help encourage various factions of the Taliban to engage in this reconciliation and reintegration process, which just beginning now. So the Secretary had some good discussions yesterday with her Indian interlocutors about that. I think they very much support the reconciliation process, particularly with the three redlines the Secretary laid out: renouncing violence, renouncing ties with al-Qaida, and respecting the Afghan constitution.

The Indians, like many countries in the region, don’t want to see a precipitous U.S. withdrawal, and the Secretary reassured them that we are withdrawing 33,000 troops over the next year and a half or so. And that a very important part of our strategic partnership declaration that we’re now negotiating with the Afghans is precisely what kind of residual military presence we will have in Afghanistan after the transition ends in 2014. So I think they were reassured by that. But the Secretary, again, will be talking about that in her speech today.

So again, it’s – the overall themes are, first of all, the leadership that India already has taken in South and Central Asia, how we want to work more closely with them not only in South and Central Asia, but also in the Asia Pacific region. And again, we think it jives very good and plays symbolically to give this kind of speech, to (inaudible) – we were very well-received.

QUESTION: When you talked about the sea lane – protection of sea lanes and maritime security, you’re talking about protecting that east – further eastward? Are you talking about Straits of Malacca, South China Sea, or are you talking about --


QUESTION: -- Somalia?

SENIOR STATE DEPARTMENT OFFICIAL ONE: Just sort of conceptually now, we haven’t begun to really talk in detail about these things with the Indians.

QUESTION: Are you thinking – is this a piracy issue or is it --


QUESTION: -- broader than that?

SENIOR STATE DEPARTMENT OFFICIAL ONE: You’ll recall that even after 10 years ago, after 9/11, there was some – there was a lot of piracy. And even then, the United States and India were cooperating in the Straits of Malacca on stopping piracy. So there’s already some precedent for this. And again, we think that there are (inaudible). These are things that, to be clear, we still need to discuss with the Indians. We’re really just beginning on this Indian (inaudible).

QUESTION: Can I ask you two things about yesterday’s talks?


QUESTION: One is, on the civ-nuke thing, the Secretary had a pretty strong message about tightening up the liability law.


QUESTION: I’m wondering, if coming out of this – these talks, how satisfied are you that they’re in any political position to do that now? I mean, it seems very, very difficult, given they’ve already agreed to the current setup, for them to go ahead and change it. Are they assuring you that they will, and is there any kind of timeline? Or is this just stuck?

SENIOR STATE DEPARTMENT OFFICIAL ONE: Well, I would say that there’s still work to do on the part of the Indians. I wouldn’t say it’s stuck.

QUESTION: It seems like they don’t want to be pushed.

SENIOR STATE DEPARTMENT OFFICIAL ONE: Well, the Indians never want to be pushed. Yeah. I think that really, the Secretary emphasized two points. First of all, that they need to fulfill their commitment to ratify the Convention on Supplementary Compensation, which is the international standard for the (inaudible) nuclear liability, and they’ve committed to doing that. So I don’t think that there’s going to be a problem on that.

The second and perhaps more serious issue is bringing their own regime that they have into the compliance with the CSC. So again, the Secretary emphasized the importance of them coordinating with the IAEA on that, getting their advice, also coordinating with both Indian and American companies, because, as the Secretary said yesterday in her public remarks, we have put an enormous amount of effort into the civil nuclear deal. It’s important because we want it to help support India’s growing energy needs.

We also embarked to support our companies. Two reactor sites have now been set aside for American companies in Gujarat and Andhra Pradesh, and it would be a very serious problem if India were to come out with regulations that were not, in fact, in compliance with the CSC and then left us out in the cold, not being able to profit from all of the hard work that we have put into that. So I think she was very straight forward about these concerns, and again, we’ll just have to work very closly with them about that. I think the Indians understand our concerns and want to work with us.

QUESTION: Are you more confident now then you were prior to the Secretary’s meeting?

SENIOR STATE DEPARTMENT OFFICIAL ONE: I’d just say we had a good conversation. We need to work more on this. Obviously, we had – this is not the only focus of our conversation. We had so many other issues.

QUESTION: But it’s not – I mean, just to push you a little bit on it, it sounds like that part of the – while the broader relationship is still strong that that part didn’t go --


QUESTION: -- you weren’t satisfied. You weren’t satisfied --

SENIOR STATE DEPARTMENT OFFICIAL ONE: Clearly, more work needs to be done on this. Yes.

QUESTION: (Inaudible.) Can you talk about the competition between India and China as far as manufacturing?

SENIOR STATE DEPARTMENT OFFICIAL ONE: Well, again, I think, again, a good story here is that the India manufacturing sector has now started to come into its own. For many years, Indian manufacturers just simply weren’t competitive. In part, that’s because of their (inaudible) infrastructure which remains very seriously (inaudible). So for example, the finance ministry yesterday told her that they intend to invest one trillion dollars in the next five year plan on infrastructure. And obviously, that’s going to help the competitiveness of manufacturers a lot right now. I think the reason that you see greater competitive manufacturing industries in a place like Chennai is that they’re very close already to the water, so they have ready access to the sea, and so some of the infrastructure problems are not as readily apparent as in Chennai, where some of the places that are more inland (inaudible). But Chennai also has set up a lot of special export processing zones and other things to encourage foreign investment. I think that helps a great deal.

QUESTION: One more on the Iran oil sales. I know that the U.S. has always said they understand India’s need to get Iranian oil, but there doesn’t seem to be any mechanism that would allow this to happen that would be acceptable to the U.S. So I’m wondering is there some discussion of a way that India can do this that the U.S. will sort of allow to happen? I mean, how does it work that you understand they need it but you don’t want them to buy?

SENIOR STATE DEPARTMENT OFFICIAL ONE: We’ve been working very closely with India for the last six months to find a mechanism through which they can make their payments. They have now quite a substantial backlog. Obviously, they need to make those payments and honor the obligations. So they’ve been, I think, very good about working with us and with other partners to find something that will not only be in compliance with UN sanctions, but also will be respectful of U.S. sanctions. So I think we’ve had a good conversation. Our Treasury is working with their relevant Indian officials. We’re not there yet, but I think a solution is --

QUESTION: What mechanism would it be though? Would it be escrow accounts or what – how would – how could it possibly work?

SENIOR STATE DEPARTMENT OFFICIAL ONE: (Inaudible) until it’s actually been (inaudible) – let me just that we’re – I think we’re making good progress and a solution is in sight.

QUESTION: [Senior State Department Official One] can we (inaudible) out (inaudible)?


QUESTION: Thanks, [Senior State Department Official One].

SENIOR STATE DEPARTMENT OFFICIAL TWO: We’re coming between you and your lunch.

SENIOR STATE DEPARTMENT OFFICIAL ONE: A dangerous place to be. (Laughter.)

SENIOR STATE DEPARTMENT OFFICIAL TWO: Very dangerous place to be. I mean, you become persona non grata in a second. The Secretary will also be going to the Working Women’s Forum. This is an organization of some close to a million women who are organized in some 3,000 villages and 1,000-plus some areas. Jaya Arunachalam, who is the head of this, is the pioneer. She’s been doing this work for decades and she bases it on human dignity and raising women up through work. They are all earning incomes. They are provided with leadership skills. They are organized, and they have viable businesses that the Secretary will see.

A huge ingredient of her work has been microcredit, and so small amounts of credit that give the women the opportunity to get what they need to start a business and then they pay it back in very high repayment rates. This is one of the successful social entrepreneuring phenomenas of India. This whole area of self-help groups is a great contribution in many ways to lifting up poor people, particularly investing in women. The Secretary, in the past, has met with the self-help fund women’s association, SEWA. They are one of the largest – this is another one of the large groups. And by banding poor people together, sometimes the poorest of the poor, they get market clout. They are able then to come together in ways that sell their products, bring them better incomes, and certainly enhance their abilities to become economically independent, which is quite a phenomenon for these really poor people.

The Secretary will make two announcements. One will be based on what the self-help groups represent, and that is through our work we’ve got women’s empowerment working group of the strategic dialogue. Through our work with India we have committed to – through the India School of Business to provide specialized training to the leaders of the self-help groups in terms of market access. Because one of the things they still want to have greater ability to succeed at, even though many of them have contracts with Marks & Spencer, with Mimosa, and other companies, is to be able to understand high quality, great quantity that a lot of companies want if they’re going to do business and really learning the business techniques that are going to be required for them to be much more successful in export readiness. So there’s that.

Then the second great phenomena here – one of the most significant ones in terms of women’s progress – is the panchayat, women at the local village council level political participation or at the urban council level. Several years ago, almost a decade ago, India voted to have reservations for women at this local level of governance, and this is how they broke in. Today, there are more than a million women in local governance. They are called the silent revolution in India’s democracy. And several studies have been done, including studies in the United States, show that women in these operations, many of them, are governing differently. They’re providing sanitation, they’re working at digging wells, safe drinking water, education for their kids, addressing health needs, and it’s really creating a source of public well-being at that level, which is making the striking difference. Some of the women at the WWF event will be from these panchayats.

When I was last in Chennai, I visited one of the panchayat groups. They’re amazing in terms of what they’re able to do because they’re so committed to really making a difference at the local level. So her second announcement has to do with a business – regional business – not – sorry, not business, but training for local governance – women in local governance from the region – Sri Lanka, Nepal, Bangladesh, India, et cetera using this panchayat model among others. We’re going to go to the Asia University for Women in Bangladesh and really work at a core curriculum that will begin to model best practices in local governance. But again, this is – this enterprise and phenomena, as well as the self-help social entrepreneurs, are very hugely significant in India and among the key ingredients of the social change that is happening here. These self-help groups, a lot of them are based on sound business practices, and it’s not about subsidies, it’s not about handouts; it’s all about self-sustainability.

And just to pick up really quickly on what [Senior State Department Official One] said about Afghanistan, SEWA, for example, has been working in Afghanistan to help Afghan women develop some of these models – economic models so they, too, can build themselves up. So we’ve got a lot of cross-pollination going on, but this is a good, good story that she’s going to highlight out of here. And then women – that is it from cookstoves, so (inaudible).

SENIOR STATE DEPARTMENT OFFICIAL THREE: Hello. As you know, last September, the Secretary announced a Global Alliance for Clean Cookstoves, the United Nations Foundation. And half the world cooks in open fires. And what we’re trying to do – two million women and children die a year. That’s twice as much as malaria. A fifth of the black carbon in the world is from cookstoves. So today, the Secretary is going to look at a series of clean cookstoves in Chennai after this event that [Senior State Department Official Two] was just talking about. A quarter of the problem is in India. It’s about 400,000 deaths a year. About a quarter of India’s black carbon inventory is from cookstoves. So the Secretary is going to announce today two major countrywide business organizations –

QUESTION: Did you say 400,000 (inaudible)?

SENIOR STATE DEPARTMENT OFFICIAL THREE: 400,000 premature deaths a year in India, yeah. It’s a quarter of the (inaudible) – mostly women and children because they are the ones doing the cooking. So we’re announcing – she’s announcing today that FICCI, the Federation of Indian Chambers of Commerce and Industry, and CII, the Confederation of Indian Industry, are both going to announce that they’re coming onboard to help us, which is a big thing because we want to – this is a public/private partnership. So far we – around the world we have 20 countries onboard. We have a number of private sector and a number of NGOs from the World Health Organization and the World Food Program. So the Secretary is going to look at five or six clean cookstove models today, many of them manufactured in the United States, China, and India, and we’ll take a look at these. She’s going to be led around by Dr. Kalpana Balakrishnan who is with Sri Ramachandra University. She’s one of the foremost experts on health effects and cookstoves.

QUESTION: When are you guys going to actually get her to, like, fry up an egg on a cookstove?


QUESTION: Well, (inaudible) that’s got to be – you want the picture that’s –

QUESTION: One of these days, we’ve got to get that.


QUESTION: When you say that you’re teaming up with these two, the Indian confederation, what does that mean? Are they going to (inaudible)?

SENIOR STATE DEPARTMENT OFFICIAL THREE: They’re going to come on board. They’re going to use their distribution networks. FICCI has, I think, 300,000 members. So one of the dilemmas is to try to get this new market-driven cookstove out. We don’t want to give away cookstoves. That’s (inaudible).

QUESTION: They’re going to be actually (inaudible).

SENIOR STATE DEPARTMENT OFFICIAL THREE: They could. We’re in the process of working that out – and they’re – a lot of their corporate social responsibility members may be interested in funding portions and (inaudible) projects around India.

QUESTION: Thank you.

* “We understand that an invitation may be extended to Montek Singh Ahluwalia, the deputy planning commission chair, to come to the APEC CEO summit in Honolulu.”

PRN: 2011/T51-26