Nepali Times
"Nepal needs a supportive international environment."

The Indian ambassador to Nepal, Shyam Saran, spoke to Nepali Times on Tuesday on a wide range of issues, including the Maoist insurgency, bilateral relations, trade and hydropower. He emphasised that the Maoist insurgency was not just a threat to the security of Nepal, but also to the security of India. The ambassador also reports progress on bilateral issues like trade, transportation and the Birganj dry port railway agreement.

Nepali Times: After many years of somewhat strained relations, we in Nepal sense a slight relaxation in Nepal-India ties. Are we imagining it, or is it for real?
Shyam Saran: I am at a disadvantage because I don't know whether the relationship before was lacking in trust. My general impression is that there has all along been a very easy relationship between our leaders, even at times when there were differences on certain issues. There is very easy communication between our leaders, which continues to this day.

Currently the relationship is more relaxed, because there is greater understanding between the two countries. It may be partly because Nepal has been going through a certain crisis. India has responded to this particular crisis by extending whatever support it can whether it is providing training to security forces, being part of a supportive international environment in which the government of Nepal can deal with these issues. Perhaps allaying some of the fears about India may have helped in the matter.

But despite this understanding between senior leadership, things seem to get stuck at the bureaucratic or state government level.
I think that perception is perhaps not entirely accurate. There is such a range of interaction between India and Nepal that I wouldn't be surprised that every now and then some issues crop up. But sitting here in Kathmandu or even in Delhi, we see that all the good things that are happening don't make news. Say, the boundary pillar issue. For the last few years, we have been working very smoothly repairing border pillars, correcting whatever distortions may have come into the demarcation. But that doesn't make news. Somebody raises one issue about one pillar in one particular sector in this long border, and this gives the impression that everything has
fallen apart.

We ought to be a little careful in making assessments about India-Nepal relations. Take the trade treaty. Every one agrees that the 1996 trade treaty was very favourable to Nepal. It still remains a favourable treaty. I always say Nepal should look at India as an opportunity because which other smaller country has such a huge growing market right at its doorstep, to which it has virtually duty free access? Of course, problems do arise like the problem of vanaspati ghee or acrylic fibre. The important thing is whether we have a mechanism in place where such issues can be dealt with successfully. The temptation to politicise each such issue and make it the sum total of our relationship has to be avoided.

Once more, the issue of inundation has arisen. Why do these things keep happening?
We have a Standing Committee on inundation problems. It is headed by a Director General on the Nepali side and the Commissioner of the Ganga Water Commission on the Indian side. Given that we have this long border and so many rivers, there will be issues of inundation because of the structures built on the Indian side and its impact on the Nepali side and vice versa. By the way, there are also issues we have with the Nepali side: in the last meeting, there were about 20 or 21 inundation issues raised by the Nepali side, but there were 16 similar issues raised by the Indian side. The important thing to remember is, with population pressure many of the previously uninhabited riverine areas in both countries are affected by flooding. The only way to deal with it is to sit down and see what we can do to minimise the problem. We have a mechanism in place. It is important that the mechanism works and that the people who know the subject verify what the problem is and find how we can deal with it in everyone's interest.

There is a general belief in Nepal that the Maoists agreed to the ceasefire because New Delhi leaned on them, and raided their hideouts. To what extent was this a factor, and will this pressure mount?
We don't have any contacts with the Maoists. We regard the Maoist insurgency not only as a threat to the security of Nepal, but also a threat to the security of India. Why? Because this particular group also has links with insurgent groups in India like MCC and PWG. We know they have worked and trained together, and so right from the start, we have extended all possible cooperation to the Nepali side in dealing with this. We shared intelligence with the Nepali authorities and handed over some people who were apprehended on our side. If this has been a factor in convincing the Maoists that they must come to terms with the government of Nepal, we are very happy. As you know in the last few months, we have also strengthened our own security presence at the border by deploying some of the Special Security Bureau forces so cross border movement can be monitored. Maybe that too has helped.

There is also a feeling that perhaps India in the past had not done enough to control Maoist activities on its territory even though their hideouts were known, and this despite the danger of a spill over of the insurgency.

People in Nepal forget that India is a huge country with over one billion people and in order to apprehend, or to have any kind of control over the kind of presence you are talking about requires very good intelligence. It is not enough to say that the Maoists held a meeting at a certain place or that a Maoist leader was giving an interview somewhere else. Unless you have a very good and real-time intelligence exchange it is like looking for a needle in a haystack. And, sometimes it is said that if Indian agencies had wanted to apprehend the Maoists they could have done so easily. That is a very childish way of looking at things because if the Indian intelligence agencies were so efficient then why would we have insurgencies in India at all? Within
Nepal itself, have you been able to find exactly where they are? One should not be unfair about allegations, people should realise what the ground realities are.

But you agree that this is a conflict with trans-boundary ramifications?
When you have such an open border, and where there are thousands of people going back and forth that some people slip across, then it is imminently possible that some guns slip through. But we have to try to see how we can deal with it. The way to deal with it is through much better cooperation. And cooperation between the security forces of both sides has increased. As the problem became more acute over time, we made assessments and devised cooperative measures to deal with it more effectively.

Post-11 September, we see increased Western interest in the region, and in the conflict in Nepal as well. We have heard senior Indian officials cautioning Western governments about the lethal military support to Nepal. What level of coordination is here between New Delhi and Western governments vis-?-vis Nepal?
Certainly, both the US and the UK are good friends of Nepal as is India. We have a common interest in making sure that Nepal continues to be a country with political stability and economic prosperity. To that end an exchange of information and assessment, which is quite normal, has been taking place. We are very happy to see that they are consulting us on the evolving situation, and whenever we have been asked we have shared our perceptions with them.

Does that include military hardware assistance as well?
We have conveyed to the government of Nepal that we will take care of its requirement in terms of its military and security forces to a certain extent on a concessional basis. If the US or the UK supplies those items or provides training in certain areas-that is always welcome. Most importantly, the major role that can be played by Western countries is to focus their attention on the developmental requirements of Nepal because that is where the real crux will lie for the future of this peace process.

Your government has been fairly direct in stating its preference for the political parties to be a part of the peace process. What role do you see them playing? And, how do you view the crisis of confidence between the monarchy and the mainstream political parties at the moment?
We can only share our assessment with the political leaders here and the other important segments of society. But ultimately it is the political parties, perhaps the monarchy and others who have to decide how they would like to deal with this issue. Whether before the ceasefire or after, we are convinced that for the future of Nepal, being a parliamentary democracy, it is important for the monarchy and the political parties to work together. Cooperation is something they have to work out themselves. Our job as a friend is to point out how we see the situation but only if we are asked for advice or assessment. It is for the political forces here to decide how they move forward.

Recent Nepal-India talks on the transport and railways treaty have been inconclusive. What is holding things up?
What unfortunately emerges from the coverage of these meetings does not reflect reality. For example, on the railway agreement we actually managed to thrash out all the pending issues except for a couple of technical ones because they were raised during the meeting and we had to consult our authorities in order to come to a solution. That has been more or less completed and fairly soon we should be concluding the agreement. Many people do not realise that India itself constructed the railway line under a grant. If we were not interested in the ICD [Inland Container Depot] project why would we have contributed? Secondly, the customs procedures that have been worked out are virtually the same as it is for any importer in India with only one exception-that the importer has to put in a declaration regarding the content of the container. There will be a seal, which will be put in Kolkata and if that seal is there it will get through the border without further checks.

The paperwork too has been drastically reduced. If customs procedures are simplified, both sides benefit. Our efforts have been to negotiate a win-win situation for all concerned.

But there seems to be extreme sensitivity on some issues like the proposed transport agreement and the extradition treaty.
Regarding the transport agreement, the Nepali side had raised the issue that they would have a problem including cargo vehicles in the transport agreement because there are transport interests here who feel threatened by unlimited opening to cargo vehicles coming in from India. So, we said OK, let's put it aside for the time being. Despite that there were people making statements about Indian transport entrepreneurs taking over the transport sector, etc. With the other part of the agreement that is related to the movement of passenger vehicles, we want to achieve as easy a movement between India and Nepal as possible. There are thousands of Nepali and Indians visiting each other's countries, this would make their travel easy. At a time when you are trying to promote tourism by organising road shows in India, the transport agreement should reflect that. The reports that India refused to give routes to Patna and Delhi are not true. All we said was since these two routes were raised during the meeting itself, we would have to consult the concerned state governments.

We have no problem with that. That's just a formality.

On extradition, there are certain aspects of the treaty that are standard in other extradition treaties around the world. The model treaty that the UN has does not exclude the extradition of third country nationals. Even before the discussions started newspapers started talking about no third country nationals being included. This can't be done. The fact is, if Nepal says that its territory will never be used for any hostile activity against any neighbour, how can you exclude a third country national? Indeed, we are still in the process of negotiation. It is something that takes time. We can't negotiate through the media. It is not accurate to say that there is an impasse.

There have been reports of Indian interests in hydropower sites in western Nepal. How concrete are these plans, and do you see the climate now more conducive to push through bilateral hydro projects?
We are always ready. The question is whether or not we are ready to focus attention on economic viability of certain projects. Politics can come later. India doesn't expect Nepal to subsidise power for India.

Also, India can't pay more than what it pays others for power from alternate sources. So, we have to work out between the two countries whether it is viable. If it is, let's go ahead. But if right from the beginning it is entangled in political problems how can we move ? Given the fact that India has a very large and growing need for energy we are interested in purchase of power from Nepal. But it has to be done on the basis of very cool, calm and economic assessment. Both countries should benefit.

You have gone on record saying that India would not like to mediate on the peace talks between His Majesty's Government of Nepal and the Maoist rebels. Would India accept any third party mediation or facilitation in this context?
Let me clarify. This is really a matter to be decided by Nepal. My point was very clear: Nepal needs a supportive international environment. If you have a third party mediator, he will have to take a neutral stance between the two sides. We do not wish to see a violent insurgency and an established government put on the same footing. The third party may also inject its own agenda into the negotiations. There may be temptation for a donor to use aid as leverage in the process and this may be not in the best interest of Nepal. But this again, is a matter for Nepal to decide.

Is there a possibility for a new wave of Indian investment in Nepal?
There is tremendous opportunity for Nepal to attract foreign investment. Nepal's proximity to a large and growing market next door, its tariff free entry into this market, lower wage rates and a less congested infrastructure are advantageous. Nepal can certainly capitalise on these aspects. We get a lot of queries from Indian companies who want to invest in Nepal despite the insurgency. But you need to create the right investment climate and fiscal incentives.

The interest is there, that I can vouch for. What we need is to sit down together and see how we can remove some of the deterrents. In tourism, some five million Indian tourists go abroad every year. But Nepal hasn't been able to attract even a fraction of that. During the entire summer Nepal is like a hill station for the whole of north India. So, you need to be more pro-active and send the right message.

(11 JAN 2013 - 17 JAN 2013)