INDIA WELCOMES BHUTANESE PM ON FIRST TRIP ABROAD

C O N F I D E N T I A L SECTION 01 OF 03 NEW DELHI 002137

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SUBJECT: INDIA WELCOMES BHUTANESE PM ON FIRST TRIP ABROAD

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


1. (U) Summary. Bhutan's first democratically elected Prime
Minister (PM) Jigmi Y. Thinley visited India July 14 - 17.
The four-day visit to Delhi marked Thinley's first trip
abroad after assuming power in April. Thinley met with
Indian PM Manmohan Singh and other officials to continue the
dialogue initiated during Singh's May visit to Bhutan.
Collaboration on hydropower projects topped the agenda,
followed by development aid, increased infrastructure,
health, and tourism. According to the Bhutanese embassy in
New Delhi, the Bhutanese PM characterized the trip as a
"routine goodwill visit," but the pomp and press displayed by
both sides announced that India remains Bhutan's closest
ally. End Summary.

Age-Old Allies
--------------


2. (U) On July 29, Poloff met with Bhutanese Embassy First
Secretary Tenzin Rondel Wangchuk to discuss the recent visit
of the Bhutanese Prime Minister (PM) to Delhi. True to the
pledge he made upon entering office, Prime Minister Jigmi Y.
Thinley made his first state-level visit outside of Bhutan to
India July 14 - 17. The Indians received the PM and his 52
member delegation with the pomp befitting a head of state as
Thinley met with PM Manmohan Singh, President Pratibha Patil,
Vice President Hamid Ansari, External Affairs Minister Pranab
Mukherjee, Home Minister Shivraj Patil, Congress Party
President Sonia Gandhi, Leader of the Opposition L.K. Advani,
Power Minister Sushil Kumar Shinde, Tourism Minister Ambika
Soni, and Deputy Chairman of the Planning Commission Montek
Singh Ahluwalia. According to Wangchuk, the PM had "no
specified agenda" and the visit was a "routine" gesture to
express Bhutan's gratitude to its oldest and most trusted
ally. The discussions followed the agenda set when PM Singh
-- the first leader to visit the new democracy -- visited
Thimpu in May. Both sides promoted the visit as a further
step in boosting economic cooperation and contributing to
overall Indo-Bhutan relations.


3. (U) Wangchuk noted that the Royal Government of Bhutan's
(RGOB) 10th five-year plan -- which began on July 1 -- drove
the discussion, as India is Bhutan's largest development
partner. The five-year plan broadly outlines Bhutan's social
and economic development strategy, from energy to
infrastructure to scholarships. He contended that formal
details of the GOI's assistance to Bhutan were still fluid,
but disclosed that the GOI had historically doubled or even
tripled the amount of aid given to Bhutan with each
successive five-year plan. Consistent with media reports,
Wangchuk predicted that GOI would double the amount of aid
given to Bhutan, bringing the total to approximately USD 826
million.

Megawatts for Manmohan
--------------


4. (U) As expected, Wangchuk reported that hydroelectric
power was the main issue on the table. The GOI and the RGOB
had earlier agreed on a target amount for exportable energy
to India at a capacity level of 5,000 MW by 2020. During PM
Thinley's visit, the countries doubled the target to 10,000
MW -- admittedly a "quite ambitious" goal given the current
capacity is only 1,488 megawatts. Wangchuk disclosed that in
order for Bhutan to take advantage of India's enormous energy
needs, it must act quickly as the glacial source of its
hydropower is quickly melting. The GOI committed to boost
infrastructure for the project through a mix of grants and
credits to the RGOB. He signaled that the percentage of

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credits has increased over the past several years and he
expects that trend to continue. Wangchuk admitted that
Bhutan lacks the technical capacity to construct the
hydroelectric plant; consequently, Indian contractors with
the appropriate expertise, hired by the RGOB, will handle the
construction projects. He added that the agreement includes
transfer of knowledge offsets, requiring the GOI to establish
specialized industrial training institutes in Bhutan so that
eventually the Bhutanese will take over project maintenance.
The institutes bring the added bonus of boosting Bhutan's
skilled labor force in the midst of rising unemployment
rates.

GOI's Golden Jubilee
--------------


5. (SBU) India's development assistance to infrastructure
figured prominently in discussions between PM Thinley and
Deputy Chairman of the Planning Commission Montek Singh
Ahluwalia. In 2005, India and Bhutan signed a memorandum of
understanding to establish a railway between Hashimara, India
and Phuentsoling, Bhutan. According to Wangchuk, the
resulting feasibility study revealed significant problems;
however, he said the governments decided to proceed anyway
with the construction of a freight line, dubbed the Golden
Jubilee Rail Line. The line's construction commemorates the
50th anniversary of Prime Minister Nehru's month-long visit
to the Himalayan nation. He underscored the railway's
commercial importance for the land-locked country, noting
that the transportation of cash crops, such as oranges and
apples, would become much less expensive for Bhutan. The 20
kilometers of rail will link Bhutan to the entire Indian
railway network. Wangchuk emphasized that it would not be a
passenger line and that he could not hazard a guess on the
timeline for construction. When asked about border security
issues, he remarked that the Indo-Bhutan border remains open
and fairly sleepy, "except when someone decides to throw a
bomb over the border."


Medical Schools for Indian Students
--------------


6. (C) Wangchuk intimated that the GOI's proposal for
further cooperation in the medical field came as a surprise
to the Bhutanese embassy. The GOI offered to finance the
construction of a more specialized medical college modeled
after the All India Institute of Medical Sciences (AIIMS) in
Thimpu. India also raised the possibility of building a
nursing school in addition to the two Indian-financed
hospitals already under construction. Wangchuk asserted that
it would be impossible for Bhutan to absorb all the graduates
given that the demand for western-trained practitioners is
not high in a country with a well-organized network of
traditional medicine facilities. Given the incredible
competition for entrance to Indian medical schools, he
confided that the Bhutanese suspect the construction offer is
really intended to provide an alternative for Indian
students; regardless, Bhutan will accept the gift.


7. (C) Comment. The meetings between the world's youngest
and largest democracies proceeded as expected and further
solidified -- with impressive media coverage -- India's
position as Bhutan's best friend. Bhutan has always had
excellent relations with India, regardless of the ruling
coalition due to the RGOB's very strong relationship with
India's bureaucracy. In the upcoming months, as Bhutan's new
government begins to further define itself and face the
courtship of many countries requesting formal diplomatic
relations, the reaction of India's bureaucracy will bear

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watching as will the Bhutanese response. End Comment.
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