PRC: PRIME MINISTER NEPAL ENJOYS SUCCESSFUL

C O N F I D E N T I A L BEIJING 000123

SIPDIS

E.O. 12958: DECL: 01/15/2035
TAGS: PREL PGOV ENRG EAID ECON PHUM CH NP IN
SUBJECT: PRC: PRIME MINISTER NEPAL ENJOYS SUCCESSFUL
DECEMBER 26-31 VISIT TO CHINA

Classified By: Political Minister Counselor Aubrey Carlson.
Reasons 1.
4 (b) and (d).


1. (C) SUMMARY: Nepalese and PRC official sources stated
that Nepal Prime Minister Madhav Kumar Nepal's December 26-31
visit to China achieved tangible outcomes, including the
signing of two official agreements, commercial contracts and
broad agreement to strengthen the bilateral relationship. PM
Nepal sought PRC support in bolstering Nepal's international
image as a peaceful, stable, developing country and
reaffirmed to PRC interlocutors that Nepalese authorities
would not allow Nepal to be used for actions that threatened
PRC sovereignty. A Nepal Embassy contact predicts that an
upcoming Chinese business delegation visit to Nepal, Nepal
President Ram Baran Yadav's likely visit to the Shanghai
Expo, and a potential trip by Premier Wen Jiabao to Kathmandu
in 2010 will propel bilateral relations forward over the next
twelve months. END SUMMARY.

Visit Exceeds Expectations
--------------


2. (C) Nepal Prime Minister Madhav Kumar Nepal's first
official visit to China December 26-31 had far exceeded his
expectation of a symbolic goodwill visit, Nepal Embassy First
Secretary Rajaram Bartaula told PolOff January 3. Bartaula
described the visit as "excellent" and ticked off a series of
accomplishments, including: an agreement to form a
"comprehensive bilateral partnership for future generations;"
two signed bilateral agreements; new commercial contracts for
investment in Nepal; and an understanding that joint
cooperation in tourism, agriculture, hydropower and
infrastructure would drive long-term development of the
bilateral relationship. MFA Asia Department, India, Sri
Lanka, Nepal and Bhutan Division Second Secretary Jiang Wei
provided a similarly upbeat appraisal of the visit to PolOff
January 12, describing it as a significant milestone in the
history of the bilateral relationship.

Specific Deliverables
--------------


3. (C) The two sides signed an agreement on economic and
technical cooperation that increased PRC annual economic
assistance to Nepal from 100 million RMB (USD 14.68 million)
to 150 million RMB (USD 21.97 million) as well as a
Memorandum of Understanding that expanded annual youth
exchanges from current levels of 30-50 per year to 100 per
year, according to Nepal diplomat Bartaula. PRC companies
inked agreements during PM Nepal's visit in infrastructure,
agriculture and hydropower projects, most notably China
National Machinery and Equipment Import and Export
Corporation (CMEC)'s investment in the construction of the
750-megawatt West Seti hydropower dam, according to Bartaula,
who added that the dam could provide a model for future
China-Nepal-India cooperation given that Indian firms had
also invested in the West Seti project. Bartaula noted PM
Nepal's satisfaction that the China Council for Promotion of
International Trade had accepted his invitation to visit
Nepal in the first half of 2010 to explore additional
investment opportunities.

Positive Atmospherics
--------------


4. (C) PM Nepal had reiterated on multiple occasions,
including with President Hu Jintao December 30, that Nepal
would not allow any force to use Nepal's territory to
threaten China's sovereignty, according to Nepal diplomat
Bartaula. PM Nepal reportedly told President Hu, Premier Wen
and NPC Chairman Wu Bangguo during separate meetings that
Nepalese authorities planned to use the May 28, 2010 deadline
for drafting a new constitution as a pivot point to move from
a focus on the peace process to an invigorated effort to push
forward economic development, and requested Chinese
assistance in promoting an international image of Nepal as a
stable, peaceful, developing country. MFA's Jiang pointed to
the joint statement released at the conclusion of PM Nepal's
visit, which stated that "the Chinese side is pleased to see
progress made in the peace process in Nepal and sincerely
hopes that Nepal will realize peace, stability and
prosperity," as evidence of China's support for Nepal's
peaceful resolution of political differences and upcoming
focus on economic development.


5. (C) Nepal Embassy contact Bartaula confirmed that
discussion of India's influence in Nepal had been
conspicuously absent throughout PM Nepal's visit. Bartaula
explained that Chinese sensitivity to Indian influence in
Nepal had been in the background of every conversation, but

it had never been raised directly because it would have
"soured the mood" of the visit.

Upcoming High-Level Visits
--------------


6. (C) Bartaula stated that Premier Wen Jiabao would likely
visit Nepal in late 2010, marking the first visit by a senior
PRC leader to Nepal in at least seven years. Plans were
underway for Nepal President Ram Baran Yadav to visit
Shanghai during the Shanghai Expo, according to Bartaula.
MFA's Jiang separately acknowledged that PM Nepal had invited
Premier Wen to visit Nepal, but declined to confirm Premier
Wen's acceptance of the invitation.
HUNTSMAN