INDIA REVIVES TOP-LEVEL ENGAGEMENT WITH BANGLADESH

C O N F I D E N T I A L SECTION 01 OF 03 NEW DELHI 005318

SIPDIS

E.O. 12958: DECL: 07/11/2015
TAGS: PREL PTER KCRM KWMN ETRD ENRG BD IN
SUBJECT: INDIA REVIVES TOP-LEVEL ENGAGEMENT WITH BANGLADESH
BUT SUSPICIONS LINGER

REF: A. NEW DELHI 4330

B. DHAKA BG IIR 6 925 0054

C. NEW DELHI 5048

Classified By: PolCouns Geoff Pyatt, for Reasons 1.4 (B, D)


1. (C) Summary: Meetings between the Foreign Secretaries of
India and Bangladesh in New Delhi on June 21-22 provided the
first opportunity after a two year gap for the nations' top
diplomats to turn around deteriorating relations by airing
disagreements, reviving several working groups, and planning
for additional exchanges before the SAARC summit in November.
Delhi-based analysts observed a sincere interest on both
sides to improve relations and believe the GOI has realized
the importance of greater engagement with Bangladesh as the
first step towards mending the soured fences. The Foreign
Secretaries' meeting is an important high-level effort, but

SIPDIS
real progress will require a perception in Delhi that Dhaka
is addressing India's security concerns as well as a GOI
commitment to hear Bangladeshi grievances and intensify
economic cooperation. End Summary.

A Show of Top-level Bonhomie
--------------


2. (U) Despite the recent border tension and security
concerns about insurgents in Bangladesh, Indian media
reported that FS Saran's meetings with FS Heymayetuddin, who
previously served as Dhaka's envoy to Delhi, were held in a
"cordial atmosphere" in which both sides evinced a genuine
interest in mending ties. The meetings followed sharp
criticism of GOI policy toward Bangladesh (Ref A) and calls
from strategic analysts for top-level intervention to address
piled-up issues and repair the neighborly rift. Setting a
positive tone for PM Singh's visit to Dhaka for the SAARC
conference in November, FS Saran personally received his
counterpart at the airport and thanked him for the June 16
operation against anti-India military camps in Moulovibazar
(Ref B).


3. (U) After seven hours of meetings, the Joint Press
Statement listed the following results:

-- Agreement to convene the bilateral Joint Working Group on
Trade by August 2005, sign the revised Trade Agreement and
the Bilateral Investment Protection and Promotion Agreement
(BIPPA),and send the Indian Minister for Commerce and
Industry to Dhaka.

-- Resumption of meetings of the Joint Boundary Working
Groups (JBWG) in August 2005 to consider boundary-related
issues such as boundary demarcation and exchange of enclaves
and territories.

-- Satisfaction at the commencement of coordinated patrolling
by border forces of both countries and Bangladesh agreement
to examine the Indian proposal for coordinated patrolling of
the feasible sections of the riverine boundary.

-- Need to convene the Joint Rivers Commission in Dhaka and
Indian pledge not to take any unilateral action on the Indian
River Linking Project which would harm Dhaka's interests.

-- Indian invitation to Bangladeshi delegation to visit in
July 2005 to discuss extension of USD 150 million line of
credit for infrastructure projects.

-- Explore bus services between Dhaka and Guwahati, Dhaka and
Shillong and Dhaka and Siliguri.

Diplomats Agree to Disagree
--------------


4. (C) The Foreign Secretaries aired their views on other
contentious issues, but agreed to nothing beyond future
meetings. The Joint Statement reflects differences over the
two toughest disagreements, namely border fencing issues and
anti-India insurgents. Bangladesh insisted that India's
plans to build border fences within 150 yards of the frontier
do not conform with the 1975 border guidelines. The GOI
requested a high-level meeting on illegal cross-border
activity and migration, which Dhaka continues to deny
publicly. Delhi stressed the need for greater information
sharing and action against Indian insurgents in Bangladesh,
but FS Hemayetuddin did not agree to the Indian request to
share intelligence on Northeast insurgents. Mashfee Binte
Shams, Counselor at the Bangladesh High Commission expressed
satisfaction over the meetings, stressing that the "negatives
shouldn't outweigh the progress made in the discussions," but
noted that Bangladesh is looking for greater economic
concessions from India. FS Saran emphasized to U/S Burns the
progress on boundary and trade issues and the agreement to
revive several joint working groups (Ref C).

For India, Security Counts
--------------


5. (C) The Foreign Secretaries agreed to increase
coordinated patrolling as one method to decrease tension and
corruption between Border Security Forces (BSF) and
Bangladesh Rifles (BDR). According to Shams, coordinated
patrolling along the land border has already begun, and
Hemayetuddin agreed to examine a new Indian proposal for
expansion to the riverine boundary. Institute of Defense
Studies and Analyses Associate Fellow Sreeradha Datta told
Poloff that this simultaneous patrolling is little more than
increasing coordination between the guards regarding where
they are at what time of day. She noted that corruption is
so endemic on both sides of the border that greater
coordination between guards will do little to cut down on the
win-win economics of facilitating petty smuggling and illegal
migrant crossings.


6. (C) The BDG operation against anti-Indian insurgents one
week before the meeting contributed to the improved
atmosphere, but did little to ease the ongoing security
concerns. Calling the June 16 operation "cosmetic," IDSA's
Datta told Poloff that this was a intentionally-timed
maneuver before the meetings and not a symbol of commitment
to rooting out insurgents. To further beef up security, the
"Hindustan Times" reported on the last day of meetings that
the India Home Ministry will replace approximately 10
battalions of BSF serving in the Kashmir Valley with the
Central Reserve Police Force (CRPF) in order to increase the
number of guards available for the Indo-Bangla border.

Improving Relations Through Economic Concessions
-------------- ---


7. (C) New Delhi's "carrots" in its Bangladesh relationship
are primarily economic and stem from Dhaka's one billion USD
trade deficit with India. In the revised Trade Agreement,
which has been pending since 1999, New Delhi has offered to
extend some economic concessions to Dhaka in the form of duty
free entry for additional goods. The details of this
agreement, yet to be signed, are not public. The Bilateral
Investment Protection and Promotion Agreement (BIPPA) has
been under negotiations since 1982, and would guarantee that
Indian investments in Bangladesh can't be expropriated, with
the hope that other Indian companies to follow Tata's recent
investment example. Shams indicated that Dhaka would look
more favorably on gas pipeline discussions if Delhi gave
transit rights for Bangladeshi goods going to Nepal and
Bhutan, facilitated the delivery of electricity from Nepal
and Bhutan, and made efforts to reduce the trade gap.

8. (C) Delhi-based analysts viewed this economic leverage as
an opportunity for the GOI to make simple gestures to improve
quickly the atmosphere and take some pressure off Bangladesh.
Professor S.K. Pandey from Jawaharlal Nehru University told
Poloff that as the "big brother neighbor," it was the GOI's
responsibility to grant economic concessions as the next step
towards improving relations. Strategic analyst C. Raja Mohan
called on Prime Minister Singh to de-link economic and
security dimensions of its policy towards Dhaka in the same
way that the GOI de-linked cross-border terrorism and
normalization of ties with Pakistan. By refusing to
negotiate on the economic aspects until Dhaka acts on
terrorism and migration, Mohan observed that India has
blocked progress on either front.

A Positive Note or Upward Trend?
--------------


9. (C) Indian analysts agreed that the Foreign Secretaries'
meeting was a long overdue first step towards improving
relations, but differed on their interpretations of results
and next steps. Noting the upcoming elections in Bangladesh
and the anti-Indian tendencies of the BNP electoral base, the
IDSA's Datta speculated that the improved relations would
face a ceiling as long as the country was under BNP rule.
Dr. Deba Prasad Nanda of Delhi University agreed that the
traditionally anti-Indian stance of the BNP would be a
limiting factor, but told Poloff that India will need to put
more efforts into this relationship to avoid losing a
burgeoning market and influence to China. JNU's Dr. Pandey
observed that the GOI showed greater maturity by restarting
engagement, but needs to take additional steps to fulfill
India's role as a stabilizing force in South Asia, primarily
through greater economic engagement.

Comment: Its a Start at Least
--------------


10. (C) Whether this diplomatic overture spreads to a real
improvement of relations will in the short term depend upon
the upcoming meetings between the Home, Commerce and Water
ministries and on the perception in India that Dhaka is in
fact responding to its security concerns. Given the recent
terrorist incident in Ayodhya and the media sensitivity to
perceived threats from Bangladesh, de-linking economic
cooperation from cross-border issues in the current climate
will be difficult and could open the Congress to BJP
criticism ahead of elections in West Bengal (which the
Communists are expected to win). It is also not clear
whether the GOI is ready to offer attractive market access to
Bangladesh that would improve the latter's economy and reduce
the large trade deficit. Increasing concern about, and
criticism of, the GOI's Bangladesh policy as well as PM
Singh's visit to Dhaka for the November SAARC meetings are
all incentives for New Delhi to remain engaged constructively.
BLAKE