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. -------------- ¶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 �00A;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 NEW DELHI 00001096 002 OF 002 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. WHITE