INDIA COMES TO GRIPS WITH MAOIST VICTORY IN NEPAL

C O N F I D E N T I A L SECTION 01 OF 02 NEW DELHI 001096

SIPDIS

SIPDIS

E.O. 12958: DECL: 04/16/2028
TAGS: PREL PGOV KDEM IN
SUBJECT: INDIA COMES TO GRIPS WITH MAOIST VICTORY IN NEPAL

REF: NEW DELHI 1051

Classified By: Political Counselor Ted Osius for Reasons 1.4 (B, D)


1. (C) Summary. Official India welcomed Nepal's relatively
free and fair election, saying in public statements that it
was satisfied with the results and looked forward to working
with the Maoist goernment. Foreign Minister Mukherjee has
called Pushpa Dahal ("Prachanda") to offer official
congratulations. While on its public face, India has taken
the high road and endorsed the process in Nepal, Embassy
contacts worry about negative consequences for the
India-Nepal relationship. End Summary.


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2. (C) As reported in reftel, India was quick to congratulate
the people of Nepal for a "successful" election and a
"welcome and historic step toward democracy." In the days
following the election, with results showing the Maoists
poised to win a plurality if not majority, the GOI official
line continues to be determinedly upbeat. Foreign Minister
Mukherjee telephoned Maoist leader Prachanda on April 15 to
offer India's official congratulations, reportedly confirming
Delhi's willingness to work with the Maoist party toward
building a stable Nepal and stable India-Nepal relations.
Indian media has quoted official sources as saying "We will
work with the results," and have lauded the GOI for its
policy of "reaching out to the Maoists" since the time of
King Gyanendra's downfall. The "Hindustan Times" quoted one
unnamed GOI official as saying, "We've been in touch with
them (the Maoists) for a long time, we are not coming in at
this late stage." The source went on to assert that in the
run-up to the election India had played a role in bringing
Nepalese political parties together. In one rather
pollyanna-ish story, the Indian Express asserted that "On the
whole, India feels it is in a better position than most
countries given that it led the diplomatic initiative which
has now resulted in bringing an insurgent outfit into the
political mainstream."


3. (C) Post's contacts, however, expressed far more concern
than the GOI's public line about the possible repercussions
for India. General (retd.) Ashok Mehta described concerns of
Indian business in Nepal, which has faced armed robbery and
coercion from Maoists in the past, saying companies such as
Dabur and Unilever have contingency plans to move their
capital and investment out of Nepal if need be. There is
also a fear that, should the Maoists follow through on their
campaign pledge for a communist style economy, Indian
business will suffer. India is also concerned about water
rights issues, and had been hoping to move forward on
hydroelectricity discussions with the Nepalese government
after the election, but now worries that the Maoists will not
wish to pursue such cross-border projects, according to
Mehta. Most Indian commentators are also convinced that
Prachanda will insist on revising the 1950 Indo-Nepal treaty.
Also, Prachanda's line shortly following the election that
Nepal will balance its policy equal between India and CHINA
has caused consternation in Delhi, which considered "the last
Hindu kingdom" to its backyard, not heavily subject to
influence from India's giant rival to the north.


4. (C) Congress Party Minister of Parliament (MP) from Andhra
Pradesh Raashid Alvi lamented that the Maoist victory
signaled India's loss of influence in the region. He
declared that the new Maoist government in Nepal will
complicate the GOI's efforts to contain India's Naxalites.
(Note: How the Nepalese Maoists' victory will affect India's
Maoist parties and Maoist rebels is being reported septel.
End Note.) "Hardnews" commentator Sanjay Kapoor echoed Alvi's
sentiments, telling Emboff that election results will provide
ideological strength to homegrown Maoist movement. Samajwadi
Party MP Kirti Bardhan Singh, whose constituency lies in the
Terai Belt of Uttar Pradesh, saw China's quiet hand in the
election results and doubted the Congress Party's willingness
to upset its Left coalition partners by "confronting the red
flag hanging over Nepal." "Strategic Affairs" editor A.B.
Mahapatra mirrored Singh's assertions, emphasizing that the

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Maoist victory divulged China's pervasive influence in Nepal.
He predicted anti-India demonstrations in Nepal in the near
future.


5. (C) Comment. As it nearly always does with its neighbors,
India has taken a pragmatic approach to the Nepalese
election. That India had been playing both sides of the
fence, i.e., engaging with the Maoists prior to the election,
was a very poorly kept secret in Delhi. So it is no surprise
that the official Indian response to a Maoist-led neighbor is
to emphasize a business-as-usual expectation. Still, as our
contacts told us privately, there is acute concern that
Indian interests in Nepal may come under attack (ironically,
"attack" with Maoists in charge is now figurative rather than
literal),and the GOI will be watching closely for signs of
the Maoists trying to assert themselves beyond India's
comfort level. That said, political developments in Nepal
are also an opportunity for India to offer and provide
broad-based development and administrative assistance to the
fledgling Maoist-led government and, in doing so, help
support political stability in Nepal as well as reassert its
influence within the changed political landscape. End
Comment.
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