US embassy cable - 05KATHMANDU2389

C O N F I D E N T I A L SECTION 01 OF 02 KATHMANDU 002389 
 
SIPDIS 
 
DEPT FOR SA/INS 
NSC FOR RICHELSOPH 
 
E.O. 12958: DECL: 11/04/2015 
TAGS: PREL, PGOV, MASS, CH, IN, NP, India Relations 
SUBJECT: NEPAL-INDIA RELATIONS 
 
REF: KATHMANDU 2383 
 
Classified By: Ambassador James F. Moriarty. Reasons 1.4 (b/d). 
 
Summary 
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1. (C) Indian Ambassador Mukherjee told the Ambassador that 
it was likely Indian Prime Minister Singh would have a 
bilateral meeting with the Nepal King on the margins of the 
upcoming SAARC summit in Dhaka.  Mukherjee said Singh would 
likely send a clear message to the King on the need to 
reconcile with the legitimate political parties.  While India 
was worried about recent reports of Chinese arms sales 
(reftel), Mukherjee commented that he had been assured by 
Chinese and Nepalese officials that Nepal wanted to maintain 
good relations with all neighbors.  Mukherjee stated that he 
had raised the issue of commercial arms sales from China and 
had warned Nepal about the dangers of making enemies of 
powerful Indian companies.  End summary. 
 
Indian PM Likely to Meet King in Dhaka 
-------------------------------------- 
 
2. (C)  On November 2, Indian Ambassador Shiv Shankar 
Mukherjee told the Ambassador that His Majesty's Government 
of Nepal had requested a bilateral meeting with the King and 
Prime Minister Singh on the margins of the upcoming SAARC 
summit in Dhaka.  (Note: On November 2, local media reported 
that, for the first time, the King would represent Nepal as 
executive head of government at the 13th SAARC summit in 
Dhaka on November 12 and 13.  The King reportedly plans to 
make Dhaka the first stop in a three week trip, returning to 
Nepal on December 2, in advance of the scheduled December 3 
expiration of the unilateral Maoist cease-fire.  The King 
intends to visit Tunisia, Kenya, Burundi (to see Nepal UN 
peacekeeping troops), South Africa, Tanzania, and Saudi 
Arabia. End note.)  Mukherjee thought that the Indian PM 
would agree to meet the King in Dhaka and appeared confident 
that the PM's message would be focused on the need for the 
King to compromise.  Mukherjee said that he had been informed 
by intermediaries that the King would like to see him in 
advance of the SAARC summit.  Mukherjee had replied that he 
was always available to see the King, but had declined to 
request an audience.  He noted he did not want HMGN to play 
up a request by India to see the King in the media and 
therefore he would wait to be summoned.   Mukherjee also 
mentioned the possibility of a visit in the near future to 
Nepal by the Indian Foreign Secretary or the Indian Chief of 
Army Staff (COAS).  Alternatively, Nepal's COAS could visit 
India. 
 
India Assured On China Arms Deal ... 
------------------------------------ 
 
3. (C)  Mukherjee stressed that India remained worried about 
Chinese arms sales to Nepal.  However, he said he had been 
assured by Chinese diplomats that China "always" gave this 
level of annual security assistance to Nepal (1 million USD). 
 The Chinese diplomats had stated that China had no intention 
of replacing India's role in Nepal, and noted the importance 
of Nepal having good relations with all its neighbors. 
Mukherjee said COAS Thapa had reiterated to the Indian DATT 
that the Chinese believed there was no substitute for good 
Nepal-India relations.  (Note: Separately, Military Assistant 
to COAS, Col. Karki told Emboff that Nepal was turning to 
China because Nepal "must achieve balance with our 
neighbors."  Karki had just returned from traveling to China 
with COAS Thapa in honor of fifty years of friendship between 
the two nations.  Karki was short on details, but stressed 
that Nepal would do what "we need to do to secure the 
country."  End note.) 
 
...But Worried About Growing Commercial Links 
--------------------------------------------- 
 
4. (C)  Mukherjee stated his concern about possible 
commercial arms sales from China.  He had warned Nepal's 
Finance Minister Rana that it was dangerous for Nepal to make 
enemies of large Indian companies.  Mukherjee noted that a 
recent sweetheart telecommunications deal with a Chinese 
company affiliated to the King's son-in-law had disadvantaged 
several of India's largest companies.  Mukherjee said he had 
cautioned Rana that Indian conglomerates were well connected 
to key politicians and parties in India and it could be bad 
for Nepal to make enemies.  Mukherjee noted to Rana that 
Nepal had made a deal for 160 crore (1.6 billion Nepalese 
rupees or 22 million USD) of military weapons from China, but 
meanwhile still had not paid a penny of the 120 crore owed to 
India for past military purchases (16.5 million USD). 
 
Comment 
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5. (C)  While HMGN appears to be using relations with China 
to pressure India, it appears unlikely that the Indian 
government will change policies until the King reaches out to 
the parties.  Since the King's takeover, the commercial 
aspects of Nepal-Indian relations have not influenced India's 
Nepal policy.  However, if HMGN starts to threaten large 
Indian conglomerates' interests, this could change. 
MORIARTY