US embassy cable - 05NEWDELHI1298

C O N F I D E N T I A L SECTION 01 OF 02 NEW DELHI 001298 
 
SIPDIS 
 
E.O. 12958: DECL: 02/17/2015 
TAGS: PREL, ETRD, ECIN, PK, NP, BG, IN, SAARC 
SUBJECT: INDIA SAYS SAARC STILL ALIVE, SUMMIT HINGES ON 
NEPAL/BANGLADESH ACTIONS 
 
REF: A. NEW DELHI 1224 
 
     B. NEW DELHI 826 
     C. 04 NEW DELHI 7426 
 
Classified By: PolCouns Geoff Pyatt.  Reasons 1.4 (B, D) 
 
1.  (C) Summary: In contrast with the predominant view in the 
Indian media that by opting out of the Dhaka Summit, India 
dealt a fatal blow to SAARC, the GOI told us it remains 
committed to the organization.  MEA Joint Secretary (SAARC) 
V. Ashok told PolCouns and Poloff on February 16 that he was 
"hopeful" regarding the future of regional cooperation, 
indicating that India would attend a rescheduled Summit, 
provided Nepal and Bangladesh took steps to reverse the 
political misdeeds that India cited in its cancellation 
notice (ref B).  Ashok was equally upbeat about SAARC's 
negotiations for a regional free trade area, SAFTA, even with 
the question of most favored nation status from Pakistan 
unresolved.  End Summary. 
 
Prerequisites for a Summit 
-------------------------- 
 
2.  (C) Ashok recognized that India's decision to 
unilaterally cancel the February 6-7 South Asia Association 
for Regional Cooperation (SAARC) Summit had "caused rumblings 
among the neighbors," but explained that New Delhi had to 
convey a firm message to Nepal in response to the King's 
actions on January 31.  Ashok, who was already in Dhaka on 
February 2 when the Foreign Secretary announced that PM Singh 
would not attend, remembered having to inform the BDG as 
having been "slightly embarrassing."  Describing the blast at 
the hotel where the PM was to have stayed, the Joint 
Secretary insisted there were legitimate security concerns 
 
SIPDIS 
about the Dhaka Summit.  In a more sober view of Bangladesh 
than some of his MEA colleagues, Ashok empathized with the 
effort the BDG has now taken twice to organize the Summit, 
commenting that while Dhaka was "initially miffed," they are 
now talking about new dates.  But, without the appropriate 
political atmosphere, SAARC cannot achieve any results, he 
added. 
 
3.  (C) PolCouns underlined our interest in the scheduling of 
an early SAARC Summit as a means to build confidence and 
further regional integration.  SAARC "awaits normalcy," Ashok 
asserted in response.  When India sees positive signals from 
both Bangladesh and Nepal on security and democracy, he 
continued, "we could see about restarting the SAARC process." 
 The Joint Secretary noted that Nepal weighed more heavily in 
the GOI decision to not go to Dhaka.  As far as making a 
third attempt at the thirteenth Summit, Ashok said that he 
would be happy to see the meeting happen in April or May 
2005.  If it slips beyond then, he continued, is not 
inconceivable that the Summit would be pushed into 2006, in 
light of parliamentary, climatic (monsoon), and religious 
(Ramadan) considerations from June to December. 
 
4.  (C) Reiterating what the Foreign Secretary said in his 
February 2 announcement that the Prime Minister would not go 
to Dhaka, Ashok insisted that India is committed to the 
organization and that he was "hopeful" for its future. 
Confident in SAARC's potential, he underlined his previously 
enunciated view that it is time for SAARC to move from 
meetings and studies to projects, and highlighted for example 
a regional HIV/AIDS program that will involve training 
doctors and paramedics, along with mobile clinics and 
awareness programs. 
 
5.  (C) Ashok conveyed a positive line on SAARC just days 
after Foreign Secretary Shyam Saran in his February 14 speech 
on India's South Asia policy slammed the organization for 
having a "hardly inspiring" record, and being one in which 
the members have a "deep resistance to doing anything that 
could be collaborative."  Saran added that some members see 
SAARC as "a vehicle primarily to countervail India." 
 
SAFTA Not Yet Derailed 
---------------------- 
 
6.  (C) His enthusiasm for the South Asia Free Trade Area 
(SAFTA) unfazed by neighborhood developments, Ashok was 
nearly as upbeat about the prospects for trade negotiations 
as he had been before the Summit's double postponement (ref 
C).  His only concern was that the seventh ministerial 
meeting scheduled for the end of February in Male would now 
be held in March, which would also delay the eighth and final 
meeting of negotiators. 
 
7.  (C) Even the potential sticking point of Pakistan's 
hesitation in granting MFN status to India did not appear to 
Ashok as insurmountable.  He was optimistic that if Pakistan 
allowed India MFN (i.e., normal trade relations) status 
through SAFTA, which the agreement would require, Islamabad 
would also grant it bilaterally.  He confirmed that during 
the sixth SAFTA meeting in December, the two discussed India 
removing textiles from their negative list, if Pakistan did 
so with chemicals.  While there is resistance to this move 
among textile industry interests in India, Ashok thought 
economic common sense would prevail, as it had with Sri Lanka 
(ref A).  He cautioned, however, that if Pakistan and 
Bangladesh prefer to remain "with their heads in the sand," 
the other four SAARC members, who already enjoy fairly 
liberalized trade, will proceed without Islamabad and Dhaka. 
MULFORD