NEPAL-INDIA RELATIONS

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
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
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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 ...
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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
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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