HIGH STAKES FOR INDIA IN NEPAL

C O N F I D E N T I A L SECTION 01 OF 02 NEW DELHI 007005

SIPDIS

SIPDIS

E.O. 12958: DECL: 10/09/2026
TAGS: PREL PGOV PTER PINR PBTS MOPS KDEM NE IN
SUBJECT: HIGH STAKES FOR INDIA IN NEPAL


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


1. (C) SUMMARY: India's stakes in Nepal are high, yet, of
all its neighbors, Nepal is the easiest to manage, according
to MEA Americas Director Santosh Jha. Jha said the Maoists
are long on guns, but short on strategy. They have created
an "aura" of support, said Jha, but would be exposed in
eventual elections, in which he expects they would win no
more than 10-15% of the vote, if that. It is difficult to
predict what will happen if the peace process does not
continue, he said, but he does not think Nepal is vulnerable
to a military coup. "If anyone has a stake in Nepal, it is
India," according to Jha, who cited the Nepal-China border
and Nepal's huge 80,000 MW hydropower potential as being of
paramount interest to the GOI. END SUMMARY.

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Nepal the "Easiest" of India's Neighbors
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2. (C) Nepal is the easiest of India's neighbors to manage,
MEA Americas Director Santosh Jha argued in an Oct. 9 meeting
with SCA India, Nepal, Sri Lanka and Bhutan Director Marcia
Bernicat and DepPolCouns. Nepal is land-locked, its conflict
is ideological vs. ethnic in nature, and its assets are
concentrated, making the situation in Nepal manageable (as
opposed to that of Sri Lanka, for example). Jha noted that
the U.S. and India need to exercise concerted pressure on
Nepal to continue the peace process, and offered that the GOI
will give the political parties "all of the support they
need."

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The Maoists: Long on Guns, Short on Strategy
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3. (C) Jha stated that he doesn't believe the Maoists will
give up their arms for an expected 10-15% share of power (via
the electoral process),noting that even that number may be
an over-estimation. Jha said that elections are not just a
matter of guns, but of strategy. The best combination is to
have both, he said, but he is not convinced that the Maoists
have a strategy. They should not be allowed to come into
the political process all at once, according to Jha. He
noted that in geographically adjacent areas of India, the
Maoists have not been able to win more than one or two seats
in local elections. The Maoists in Nepal have created an
"aura of support," Jha said, but stand to be exposed in
eventual elections.

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Nepal's 4 Weak Pillars
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4. (C) When pressed by Bernicat about what would happen if
the peace process is stalled, Jha stated that it is difficult
to predict. He said that we will know much more before the
elections, and noted that international opinion is highly
influential. Asked by Bernicat what role he thought the
military would play if the situation erupts into open
conflict, Jha said that he did not think Nepal would
experience a military coup as Thailand did. The fact that
the Nepalese National (formerly Royal) Army didn't directly
fight the Maoists shows their lack of capability and will to
take over. He said the Nepalese already know the
consequences of an overly powerful King, and that they
wouldn't stand for a military government. All of Nepal's
four pillars - the Nepalese National Army, the King, the SPA
and the Maoists - are weak, according to Jha. This void has

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existed in Nepal for a long time, he said, and none of these
"pillars" has been strong enough to fill it.

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China and Hydropower: India's High Stakes in Nepal
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5. (C) When asked to outline India's strategic interests in
Nepal, Jha replied that Nepal's border with China affects
India directly. He noted that both the King and the
political parties had "played that up" in the past, using it
to their own advantage. Nepal is of immense importance to
India, Jha added, noting that Nepal is India's most closely
culturally-linked neighbor. "Nepal is more 'Indian' than any
of our neighbors," and the Nepalese are keenly aware that
they would be unable to cut off its southern border with
India in favor of its northern neighbor.


6. (C) On the energy front, Jha observed that Nepal has
80,000 megawatts in hydropower to offer India and profit
from, but that the projects to unleash that power have never
gotten off the ground. "If anyone has a stake in Nepal, it is
India," he emphasized.

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COMMENT: Where's the Beef?
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7. (C) The GOI says it sees Nepal as a "big challenge" for
the short-term, but continues to be optimistic about the
long-term future of the country. While the Nepal-China
border is a concern for India, the government seems confident
enough of its ties with Nepal and does not believe the
current situation is particularly alarming. Even its concern
over Nepalese Maoist ties with Indian Maoists seems muted.
India is clearly well-aware of the influence of the
international community on the situation in Nepal, but uses
its own influence only sparingly. Given that peace in Nepal
potentially translates to energy and security for India, and
the GOI's own conviction that Nepal's situation is
manageable, India will be motivated to press the Nepalese
government and the Maoists to continue the peace process, but
with a view that this goal is achievable only in the longer
term. END COMMENT.
PYATT