INDIAN AMBASSADOR AFFIRMS IMPORTANCE OF

C O N F I D E N T I A L KATHMANDU 002558

SIPDIS

SIPDIS

USUN ALSO FOR S, P AND A/S BOUCHER

E.O. 12958: DECL: 08/29/2016
TAGS: PGOV PTER ECON MARR IN NP
SUBJECT: INDIAN AMBASSADOR AFFIRMS IMPORTANCE OF
U.S.-INDIAN COOPERATION ON NEPAL


Classified By: Ambassador James F. Moriarty. Reasons 1.4 (b/d).

Summary
--------------


1. (C) In a meeting on September 18, Indian Ambassador
Mukherjee told the Ambassador that he had heard that the
recent meeting between Prime Minister Koirala and Prachanda
had been successful. Two-on-two talks were planned, he said
for September 26, 27 and 28 between the Government of Nepal
(GON)'s chief peace negotiator Home Minister Sitaula and the
PM's nephew on the government side and Maoist Supremo
Prachanda and his deputy Bhattarai on the other. Mujkherjee
admitted that he was spending much of his time looking after
Indian business people facing Maoist threats and cited the
example of Indian Airlines. There was little he could do to
help them. The Ambassador stressed the importance of the
U.S. and India being on the same page and mentioned reports
that Mukherjee had been complaining about U.S. security
assistance to Nepal. The Indian Ambassador did not deny that
he had made a complaint, but said his principal concern was
the high profile of U.S. military training. The Ambassador
also urged his Indian counterpart to make another attempt to
persuade New Delhi to be helpful on the Bhutanese refugee
issue.

Developments in the Peace Process
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2. (C) Ambassador Mukherjee told the Ambassador on September
18 that he had heard that Prime Minister Koirala's meeting
with Communist Party of Nepal (Maoist) (CPN-M) leader
Prachanda's meeting on September 17 at the PM's residence had
been a fruitful one. They had discussed all the key
outstanding issues in the peace process. They had also
resolved, Mukherjee stated, to organize a follow-up meeting
on September 26, 27 and 28. That negotiation session would
bring together the Government of Nepal's chief peace
negotiator, Home Minister Sitaula, and PM Koirala's nephew
Shehkar Koirala on one side and CPN-M Supremo Prachanda and
his chief deputy Dr. Baburam Bhattarai on the other. The
Indian Ambassador appeared supportive of this format. The
Ambassador, on the other hand, voiced concern that Sitaula
and S. Koirala would be overpowered. (Note: Sitaula and S.
Koirala were the two who pressed PM Koirala in June to sign
the 8-Point Agreement with the Maoists, about which the PM
subsequently expressed private regret. End Note.)

Helping Indian Business People
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3. (C) Mukherjee told the Ambassador that he spent much of
his time looking after Indian business people who were facing
extortion demands and other threats from the Maoists. He had
been frank, he said, telling them there was little he could
do. He cited the case of the Nepal office of Indian Airlines
which the Maoists had compelled to pay a large sum of money.
The company's management in New Delhi said that someone in
Nepal would have to repay them or they would have to take
other measures. Mukherjee informed the Ambassador that he
then explained that it would be impossible to recover the
money but that he had an idea on how to prevent future
extortion. He said he told the Nepalis that if the extortion
continued Indian Airlines would fire all its permanent
employees and move to a temporary contract system. The
Maoists had gotten the message. Mukherjee noted that the
Maoists had approached him, saying that they would be much
more reliable friends of India than the parties or the King.
This claim was laughable, he remarked.

The Maoist Threat to India
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4. (C) The Ambassador reiterated his concerns about the
negative consequences for India if the Maoists took over
Nepal. It was not just a matter of providing moral support
to the Indian Maoists. They would, the Ambassador insisted,
be providing material support as well. Mukherjee did not

disagree. It was one thing, the Indian Ambassador added, if
the Maoists came to power through an election. It would be
something else if they got there through force and
intimidation. The problem was the Minister Sitaula was not
giving any orders to the police to enforce the law. The
Government of India had even offered specific assistance to
the Nepali police forces but had received no answer.

U.S. Military Assistance No Threat to India
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5. (C) The Ambassador took advantage of that opening to
mention that he had heard reports that Ambassador Mukherjee
had complained to PM Koirala about U.S. security assistance
to Nepal. The Ambassador reaffirmed that the USG had been
open in declaring how it was assisting Nepal in this sector
and that we had kept the Indian Embassy informed. Mukherjee
did not deny that he had complained. He stressed that he had
taken the initiative to discuss the issue with the PM,
without instructions from New Delhi. His response, which
appeared to be thought out, was that his concern was the
publicity the events -- such as the recent week-long security
sector reform conference -- had gotten. It might, he
thought, attract unwelcome attention from the Chinese. The
Ambassador explained that some of the publicity was the
result of a frequent Maoist presence in the major Kathmandu
hotels, but agreed that such assistance should be as low-key
as possible.

Assistance on the Bhutanese Refugee Issue
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6. (C) Changing the subject, the Ambassador asked if it would
be possible for Mukherjee to make another attempt to persuade
his government in New Delhi to get involved in the Bhutanese
refugee issue. Specifically, the Ambassador asked if the
Government of India would be willing to issue some sort of
guarantee to the Government of Nepal that it, the GOI, would
not allow the Government of Bhutan to expel any more of its
ethnic Nepali residents. The Ambassador referred to the
fragile status of the 100,000 plus ethnic Nepalis still in
Bhutan as one of the main reasons why the GON had thus far
refused to begin allowing third-country resettlement of the
approximately 100,000 Bhutanese refugees in Nepal. Mukherjee
did not make any promises, but said he would try.

Comment
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7. (C) At least in his initial comments, Mukherjee seemed
more inclined to give Sitaula and the PM's nephew a decent
chance of making progress on peace during talks tentatively
scheduled for next week. He seemed persuaded by the end, of
the conversation that such talks could instead be disastrous.
The Indian Ambassador is understandably concerned about his
people; Indians face discrimination and resentment here in
the best of times. The Maoists are masters at playing on
these prejudices. We continue to believe that strong
U.S.-Indian cooperation on Nepal policy is crucial to a
positive eventual outcome. We are pleased that Mukherjee
shares that view without reservation, but concerned that
policymakers in New Delhi may have a rosier view of the
situation than circumstances warrant.
MORIARTY