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
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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 int

egration. 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
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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