This record is a partial extract of the original cable. The full text of the original cable is not available.

C O N F I D E N T I A L SECTION 01 OF 03 NEW DELHI 001480 
 
SIPDIS 
 
E.O. 12958: DECL: 02/25/2015 
TAGS: PREL ETTC ECON IN PK INDO PAK

SUBJECT: BAGLIHAR, OTHER J&K HYDEL PROJECTS COMPLICATE  INDO-PAK CALCULUS 
  REF: A. NEW DELHI 1282 
     ¶B. ISLAMABAD 2264 
     ¶C. NEW DELHI 1113 
  Classified By: A/DCM Geoff Pyatt for Reasons 1.4 (B, D) 
 
¶1.  (C) Summary: The Indian government recently offered new  evidence of its benign intentions for the Baglihar hydel  project by noting that, if its dam were used to inundate  Pakistan, one of its own existing downriver projects would be  the first casualty.  Although the MEA continues to exude  confidence the Baglihar project complies with India's treaty  obligations, the GOI has been curiously unwilling to share  with us any supporting evidence to prove their position. 
This is in stark contrast to the Pakistanis, who have begun a  major public relations effort here.  Meanwhile, the Baglihar  issue continues to move slowly on three fronts: its  construction, direct discussions between Indian and Pakistani  officials, and the dispute resolution process under the Indus  Water Treaty (IWT) umbrella.  The World Bank's IWT  obligations are not as simple or straightforward as some  commentators had originally suggested.  The new item in this  mix is a handful of other planned hydel projects in J&K, some  of which may conflict with proposed Pakistani projects.  The  GOI may have to brace itself for more treaty challenges,  although both sides continue to respect the IWT and seem  content to let the World Bank take the lead in resolving the  issue.  End Summary. 
  GOI: Salal Dam Guarantees Good Behavior on Baglihar 
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¶2.  (C) In a little noticed February 16 remark, Foreign  Secretary Shyam Saran provided further insight into why the 
  SIPDIS  GOI believes it is right on Baglihar, commenting that if  India ""had any intention of either flooding Pakistan or  denying water to Pakistan, the first installation that would  disappear would be the Salal project,"" which is downriver on  the Chenab from the Baglihar site.  Calling the 400 MW Salal  project ""very important to India and the state of J&K,"" he  said it was unrealistic to think that New Delhi would ""harm  itself in order to have the capability to hurt Pakistan.""  Saran concluded that the IWT was signed precisely to prevent  such suspicions. 
  Opaque GOI, Active GOP 
---------------------- 
 
¶3.  (C) Our repeated attempts to obtain India's views on  Pakistan's January 18 World Bank petition have met with  stonewalling from the GOI.  The Indian Water Secretary  cancelled a meeting with the DCM, and the Indian Indus Water  Commissioner continues to deflect calls to the MEA.  In  contrast, the Pakistani High Commission sent us an eight-page  fact sheet outlining their view of how the issue has evolved  since New Delhi first informed Islamabad of its intentions to  build the project in 1992. 
  Baglihar Construction Proceeding ... 
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¶4.  (C) According to the Indian press, work on Baglihar is  accelerating, with the first of two 450 MW phases expected to  be completed in early 2006 and the second in the 2007-8  timeframe.  New Delhi continues to brush aside Islamabad's  calls to halt construction of the project -- slated to be the  largest power generator in J&K -- until after the IWT process  is complete.  MEA Joint Secretary Arun K. Singh has  repeatedly pointed out that it put the Tulbul Navigation  Project/Wullar Barrage on hold in 1987, and subsequent GOP  unwillingness negotiate essentially killed it.  Eight rounds  of bilateral talks since then have produced no results. 
 
... As are the IWT Process and Direct Talks 
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¶5.  (C) The Pakistani High Commission on February 23 pointed  out to us that Islamabad offered to continue bilateral  discussions while the IWT process continues -- and the issue  was discussed during Natwar Singh's recent trip to Pakistan  (Refs A and B) -- but the GOP would not put the dispute  resolution process on hold because of its fear of being faced  with a fait accompli, saying ""the Indians continue to build,  we will continue with the World Bank."" 
  World Bank Clarifies Its Role 
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¶6.  (C) According to the text of the IWT, the Bank is not a  ""guarantor"" of the Treaty, but it does have ongoing  responsibilities.  On issues that the two governments cannot  resolve bilaterally, the Bank is to appoint a ""neutral  expert"" (vice mediator or arbitrator) to try to adjudicate  the ""differences.""  The Bank is to consult both parties in  selecting the neutral expert and it would also manage the  trust fund to cover the expert's expenses. 
 
¶7.  (C) If differences go beyond the expert's mandate of  determining treaty compliance, the Bank would then help to  establish an arbitration board to address what would be  termed ""the dispute.""  According to the IWT, the World Bank  President and other eminent individuals (such as the UN  Secretary-General and the Chief Justices of the US and UK) 
  SIPDIS  would be asked to select three members of a seven-member  independent arbitration court, with New Delhi and Islamabad  each appointing two representatives of their own. 
Separately, a World Bank official in New Delhi told  D/PolCouns recently that this would be the first test of the  IWT and that Pakistan ""seems to have taken all the necessary  steps"" to initiate the dispute resolution process.  The Bank  official commented that despite the confidence we have seen  among our GOI interlocutors, ""India may not want to be so  bold."" 
  Kishanganga/Neelum Dam on the Table ... 
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¶8.  (C) Meeting on February 10-14 in New Delhi, Indian and  Pakistani Indus Water Commissioners discussed GOP technical  concerns regarding the height and water diversion of another  proposed dam on the Kishanganga (also called Neelum) River;  although this represented an extension of the scheduled  two-day meeting, the only outcome was an agreement to  continue the dialogue.  FM Natwar Singh also discussed the  issue during his February 15-17 Islamabad trip (Refs A and  B).  Compared to Baglihar, however, the GOI would reportedly  have difficulty presenting the GOP with a fait accompli, as  the Kishanganga work site is snowed in between November and  May, which allows more than two more months of negotiations  before construction could resume.  The GOI would presumably  want to complete Kishanganga before Pakistan can begin work  on its own 969 MW Neelum-Jhellum Dam Project, because if the  Pakistani dam is built first, IWT provisions appear to  protect the downstream Pakistani project from upstream Indian  diversions or ponding. 
 
... And Several Projects are On the Drawing Board 
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¶9.  (C) Our World Bank contact added that even if India and  Pakistan could resolve the Baglihar and Kishanganga projects,  there are several more hydroelectric dams planned for Indian  Kashmir that might be questioned under the IWT.  He ticked  off the recently begun Dul Hasti Dam, and the proposed  Burser, Pakul Dul, and Sawalkote projects -- all on the order  of 1000 MW -- as significant undertakings in varying stages  of planning that might be questioned as to their IWT  compliance. 
  Comment 
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¶10.  (C) GOI reluctance to discuss Baglihar and other power  projects may reflect their supreme confidence, or perhaps  concern that their case is not as firmly grounded as they  have led us to believe.  The new item is the potential for  the Dul Hasti, Burser, Pakul Dul, and Sawalkote hydel  projects to exacerbate Pakistani anxiety over access to  water.  As a Pakistani diplomat recently commented to us,  ""There are no doves and there are no moderates on water  issues.""  The GOI, in its desire to produce power for J&K  that fulfills the economic aspirations of Kashmiris and  demonstrates the effectiveness of the elected government, may  not fully appreciate -- or may simply not care about --  Pakistani concerns.  The saving grace in this politically  charged impasse is the IWT.  India and Pakistan seem content  to have the World Bank take the lead in resolving this issue,  which should seriously reduce the likelihood of Islamabad's  worst case scenario, that India's dams in J&K have the  potential to destroy the peace process or even to lead to war  (Ref B).  We and our Pakistan-watching contacts (Ref C) hope  that the external judgment of either the neutral expert or  the arbitration court will provide the political cover for  whichever side eventually needs to climb down. 
MULFORD