US embassy cable - 05NEWDELHI2410

UNCLAS NEW DELHI 002410 
 
SIPDIS 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: ETRD, ECIN, PREL, IN, PK, NP, BG, SAARC 
SUBJECT: SAARC: NO SUMMIT IN SIGHT, SAFTA ON TRACK 
 
REF: A. NEW DELHI 1426 
 
     B. NEW DELHI 1298 
 
1.  (SBU) Summary: Prospects for a rescheduled SAARC Summit 
in 2005 are diminishing amidst scheduling difficulties and 
Indian concerns over the coup in Nepal and instability in 
Bangladesh.  In a March 30 meeting with USAIDoff and Poloff, 
MEA Joint Secretary (SAARC) V. Ashok expressed optimism, 
however, that SAFTA would still be implemented on schedule in 
January 2006.  Ashok was confident that Islamabad would, as a 
result of SAFTA, grant India preferential trade status.  He 
indicated that if members were not willing to make SAARC 
successful, India would leave it behind in favor of other 
regional groupings.  End Summary. 
 
Summit Still Stymied 
-------------------- 
 
2.  (SBU) Local media reported on March 31 that a SAARC 
Summit in 2005 was unlikely, clarifying earlier suggestions 
that India had agreed to an April Summit.  Joint Secretary 
Ashok's March 30 remark on the Summit ("whenever that is") 
supported this suggestion.  Ashok's cynicism contrasted with 
the GOI's public statements.  An MEA official stated in 
Parliament on March 17 that SAARC relations had not suffered 
a setback as a result of the Summit's cancellation. 
 
3.  (SBU) Commenting on the prolonged postponement, the 
"Hindustan Times" Diplomatic Correspondent Nilova Roy 
Chaudhury told Poloff that India is saying "yes in principle 
to the Summit, but finding fault with the scheduling as a way 
to say no."  While scheduling is indeed difficult due to 
Parliament sessions, travel schedules, and the impending 
monsoon, New Delhi is not prepared to attend a Summit soon 
because GOI political and security concerns with Nepal and 
Bangladesh remain, she observed. 
 
SAFTA Moving "With or Without the Summit" 
----------------------------------------- 
 
4.  (SBU) Ashok reported that the South Asia Free Trade Area 
(SAFTA) was progressing well.  He was "very hopeful" that the 
agreement would be finalized by July 2005 and implemented in 
January 2006, as scheduled.  Noting that the once-postponed 
seventh meeting in the Maldives was held last week, and that 
the next session was planned for Kathmandu in April, Ashok 
explained that the discussion in Male focused on a 
compensation mechanism for customs revenue loss and a formula 
to determine whether an increase in trade volume will offset 
lost revenue. 
 
5.  (SBU) On India receiving MFN status from Pakistan, Ashok 
was again upbeat, citing as an example Pakistani PM Shaukat 
Aziz's remark in India in November 2004 that when SAFTA is in 
place, "it will be MFN-plus."  Ashok saw "realism seeping 
into SAARC" as members see the success of other regional 
organizations, and sense that they have "missed the bus." 
Nonetheless, he reiterated the Foreign Secretary's point (Ref 
A) that if SAARC is not willing to join India at its pace, 
New Delhi will work more closely with other groups, such as 
the Bay of Bengal Initiative (BIMSTEC). 
 
Comment 
------- 
 
6.  (SBU) New Delhi seems increasingly willing to let the 
2005 SAARC Summit fizzle, although it remains interested in 
SAFTA and the improved trade status with Pakistan it may 
include.  The GOI can only use the excuse of scheduling 
conflicts as a reason for postponement for so long, and will 
eventually have to clarify how much of a priority SAARC 
really is for its foreign policy. 
MULFORD