SB Pun

Foreword:

Prior to 1816, the Imperial Gorkha Kingdom embraced, though for a very short period, the entire hill territories from Teesta in the east to the Beas/Sutlej (Kangra) in the west, eyeing even Kashmir . This kingdom unwittingly controlled the entire sources of the Ganga tributaries including the two tributaries of the Indus and one of Brahmaputra as well. The colonial East India Company’s principle of limitation stipulated that “Nipaulese authority should on no account be extended below the hills.” However, the Rajah of Nipaul’s position was “As the Honorable Company have by the grace of God established their dominion in Hindoostan by the power of the sword, so have I by the same means acquired possession of the hills together with the low lands dependent on the territories of former Rajahs,…” . This war of words ultimately resulted in the Anglo-Nepal war of 1814-1816. The 1816 Sugauli Treaty retracted Nepal virtually to the present day boundaries of Mechi to Mahakali, relinquishing sovereignty over the basins of such important rivers like the Sutlej, Ganga, Jamuna and Teesta to the East India Company. However, the three major rivers Kosi, Gandak, Karnali with Mahakali “as the border river” remain with the Kingdom of Nepal .

From records so far available, Indo-Nepal water resources relationship started in 1874 when Nepal, during the closing era of Janga Bahadur Rana, permitted the then colonial British-India to build structures on the three Sagars (Jamuwar, Marthi and Siswa) straddling the Indo-Nepal border in the present day district of Kapilavastu. This indicates that Indo-Nepal water resources relationship is over 130 years old. Yet why has this “old historical” water resources relationship not matured to bear more fruits to the people of both countries? What are the ailments bedeviling this old historical, traditional and cultural relationship? Indo-Nepal water resources relations have generally been characterized by “mistrusts and misunderstandings”. In fact, former Water Resources Secretary to Government of India, Ramaswamy Iyer, does not mince words when he admits that India , at times, even “bullied” Nepal .

After more than five decades, Nepal has finally realized that it is not Nepal ’s hydropower that India is interested in. India ’s eyes and ears are all focused on Nepal ’s waters, particularly those from glacier-fed rivers. India ’s own ex-Foreign Secretary, Salman Haider, concedes “… India has alternative sources of power supply. We do not have alternative sources of water supply…. The long-term interest of India in water from Mahakali outweighs our interest in power supply…” While this frank statement is with reference to Mahakali , India ’s interest applies to all rivers, big and small, emanating from Nepal . The Ganges presently supports 41 million people in Bangladesh , 440 million in India and 23 million in Nepal . To cater to the rising water requirements of her burgeoning population, India in 2003 announced the IC Rs 5,600 billion River Linking Project wherein Nepal prominently figures with five key river links: Kosi-Mechi, Kosi-Karnali, Gandak-Ganga, Karnali-Yamuna and Mahakali-Yamuna. It is around these five critical river links that future Indo-Nepal water resources relationship would revolve around. This article reflects and mulls over some of the past issues and episodes that created “mistrusts and misunderstandings” in that relationship. It is hoped the article would enlighten the readers of past ailments and encourage debates on policy formulation as to “what to do” in future so that Indo-Nepal water resources relationships could be elevated to a more mature pedestal benefiting both the countries.

i) 1898 Letter on “Boundary Dispute”:

If one is to peruse the 1898 letter of Gorakhpur Commissioner, Dr. W Racy, to his British Resident at Kathmandu regarding the sill levels of the three Sagars (Jamuwar, Marthi and Siswa) that straddled the British-India and Nepal border, the Commissioner has specifically called that sill level dispute as “Boundary Dispute between Nepal and British Territory (Mr. Peppee’s Estate)” between the two nations. That is, when an intervention, be it on a Sagar or a river, is implemented by one country inundating the territory of the other country, then British-India, even in its colonial heydays of 1898, termed such interventions as “boundary disputes”. More than a century later, all water courses interventions by Republic India, that submerge Nepal ’s territories, have unfortunately been given the tag “inundation problems” and not “boundary disputes” that the two governments had previously perceived them as. Many believe that, while the Nepal Government’s Department of Water Induced Disaster Prevention (DWIDP) at Shree Mahal presently oversees these “inundation issues”, the venue should have actually been the Ministry of Foreign Affairs at Shital Niwas as they are “boundary dispute issues”. The Shree Mahal to Shital Niwas venue shift would give the necessary leverage that “the boundary dispute” tag urgently needs. In India , it is the Ministry of Foreign Affairs at New Delhi and its executive arm, Embassy of India/Kathmandu, that call the shots and not the Patna-based Ganga Flood Control Commission (GFCC). The Director General of DWIDP and Chairman of GFCC are the joint Co-Chairmen of the Standing Committee on Inundation Problems (SCIP).

One also needs to admire the “due diligence” of the then Nepal bureaucrats who were able to find mistakes in the sill levels of the Jamuwar Sagar in the Gorakhpur Commissioner’s letter. The sill level of this Sagar, as indicated in the Commissioner’s letter, was not the same as that agreed upon in the 1874 agreement. The letter was, thus, returned “with corrections in red ink”. The colonial British Commissioner admitted his mistake and duly rectified that sill level. Such kind of Indo-Nepal transparency is a “thing” of the past.

A similar type of sill level episode is now on the Indo-Nepal SCIP table regarding the other sister Sagar, the Mahali. The issue at hand is the already constructed 15-gated structures, in lieu of the original 5-gated one, by India on her territory that would “inundate” an additional 50 hectares of Nepalese territories over and above what the previous structures already “inundated”. While India contends that “approval of competent Nepalese authority in December 2002” was taken, Nepal rebuts that the joint Indo-Nepal Standing Committee on Inundation Problems (SCIP) has never approved the construction of such an important structure on the border. It is now being reported that India did obtain the signature of the local Nepalese official at the field level but without bothering to get the final approval of the “competent SCIP authority” bulldozed through with the construction work of the 15-gated structures!

ii) Letters on 1920 Sarda Agreement and Return of Nepal ’s Land:

J. Manners Smith, British Resident to Nepal, wrote to the Maharaja, Chandra SJB Rana, in 1916 that “it will be necessary to acquire a strip of land on the east side of the river which is now Nepal territory” because of the Mahakali river “swings” and the “whole winter supply” being entirely in Nepal territory, Thus, the colonial British-India and Nepal Durbar agreed to swap 4,093.88 acres of land for the Sarda/Banbasa barrage through the 1920 Sarda Agreement. Yet in 1946 Deputy Secretary/Government of Public Works Department/UP, KN Kathpalia, indicated that 36.68 acres of land (31.47 acres as computational error and 5.21 acres as mutual exchange) were still to be returned to Nepal. From information so far available, even by 2006 the Government of India has yet to return this small strip of 36.68 acres of land that Nepal had swapped under the 1920 Sarda agreement.

Nepal , through the signing of Integrated Mahakali Treaty in February 1996, without the transfer of the above 36.68 acres of land to Nepal , has now burdened herself with another territorial issue of a much larger chunk, the Kalapani/Darchula territory occupied by India in 1963. India ’s former Water Resources Secretary, R Iyer, stated that Kalapani “has nothing to do with the implementation of the Mahakali Treaty”. He, however, stressed that through “reference to old records, documents, maps, survey reports etc. the dispute needs to be settled quickly in a spirit of goodwill and not allowed to fester”. While Mr. Iyer is right that this dispute should be settled in a spirit of goodwill and not allowed to fester, Nepal believes that Kalapani is a sensitive issue impinging on her territorial integrity and sovereignty. Nepal , hence, wants the pre-1963 status quo on Kalapani restored by India before the implementation of Pancheshwar Multipurpose project.

iii) British-India Policy on Capitalization of “Annual Presents” to Nepal :

But because of the rising anti-Rana atmosphere in Nepal leading to their ouster in 1951, Britain ’s “capitalization” scheme could not fructify. Nepal ’s governments after 1951, both democratic and Panchayat, never bothered to capitalize on the “capitalization of annual gifts in perpetuity” to Nepal . This “annual gift in perpetuity”, for the blood spilt by the Gurkhas during the two great World Wars, does find itself in the Nepal Government’s annual Red Book, the budget. Singha Durbar’s Finance Ministry mandarins have been heard to term this annual gift as “blood money”! Dr. RS Mahat, the present Finance Minister, has confirmed in his book, In Defence of Democracy, that the British annual gift in perpetuity has now been capitalized at Rupees 25 lakhs. The Nepal government has unwittingly unshackled the British “for a mere dime” from their “annual gift in perpetuity” obligation to Nepal !

iv) 20 Mw Kaligandaki-Gaidakot Project:

 The hanging of four men (Shukra Raj Shastri, Ganga Lal Shrestha, Dharma Bhakta Mathema and Dasrath Chand ) by Juddha Shumshere in 1941 further fueled the anti-Rana movement in Nepal . Juddha Shumshere cleverly abdicated in 1945 and headed for Ridi/Palpa as a sanyasin. The moderate Padma Shumshere was forced into Ranchi/India exile in 1948 by the conservative Mohan Shumshere who thought the restive Nepalese could be pacified by his Five Year development plans, Nepal ’s first, in 1949. One of the projects in that Plan was the diversion of the Kali Gandaki river, through a tunnel, to drop it near Gaidakot to generate 20 Mw of power and also irrigate the fertile fields of eastern Nawalparasi’s Bhitri Madhes. Estimates carried out by a British consulting firm, Percydrew & Co (wherein BB Pande, Bijaya SJB Rana and the Bijulee Adda’s Angrej, Kilburn, were also involved), indicated the project cost as Rupees 1.8 crores, commissionable within three years, with the electricity generation cost at 6 paisa per unit. This power, besides the evacuation to Kathmandu , was envisaged to be transmitted to Butwal in the west and Janakpur in the east.

Mohan Shumshere suffered no “resource crunch” at all. For services rendered by the Gurkhas during the Second World War, Britain had recently provided Nepal Rupees 3.33 crores for developmental works. However, Mohan Shumshere, before going ahead with the project, consulted the recently-arrived Indian ambassador, Chandreshwar Prasad Narain Singh (CPN Singh), who was quick to advise that India would make available to Nepal far cheaper electricity at 2 paisa per unit from the proposed Barahachetra/Kosi project. Mohan Shumshere roundly scolded the project initiators for such an expensive project and abandoned the project. The implementation of this project, fifty years ago, could have been what the 20 Mw Chilime has now been to Nepal in terms of mobilizing local resources and skills. The CPN Singh proposed project turned out to be the Kosi Barrage Project with the 20 Mw Kataiya hydel station (derated to 13.6 Mw later) that was commissioned only in 1971 on the eastern canal. The promised 2 paisa per unit electricity turned out to be the “concessional Kosi power” at IC 10 paisa per unit. Many believe that this Kosi power is free like the “goodwill gesture” 70 million free units from the 120 Mw Tanakpur hydel station. But this is not the case. In 2006, Nepal pays India ICRs 2.70 per unit for this “concessional Kosi power” when India buys Bhutan ’s Chukha power at ICRs 1.50 per unit. Besides, at every Indo-Nepal Power Exchange meetings, India , consistently proposes that the Kosi power price be made at par with the power exchange tariff which for 2006 is ICRs 3.78 per unit.

v) “Natural Resources” in 1950 Indo-Nepal Treaty of Peace and Friendship:

Hoping to get a further lease of life on his rule, the tottering Mohun Shamsher signed the much-talked-about Treaty of Peace and Friendship at Kathmandu on July 31, 1950 . On behalf of the Government of India CPN Singh signed that treaty. While the ten articles of the treaty looked seemingly innocuous on paper, it was only in December 1959 that Jawaharlal Nehru, at a press conference, disclosed for the first time that Letters of Exchange, which were kept secret, had also been signed with the treaty. For the sake of the readers, item 4 of that letter from the Ambassador of India to the Prime Minister of Nepal dated July 31, 1950 has been dittoed below:

 If the Government of Nepal should decide to seek foreign assistance in regard to the development of the natural resources of, or of any industrial project in Nepal, the Government of Nepal shall give first preference to the Government or the nationals of India, as the case may be, provided that the terms offered by the Government of India or Indian nationals, as the case may be, are not less favourable to Nepal than the terms offered by any other foreign Government or by other foreign nationals.

 Nothing in the foregoing provision shall apply to assistance that the Government of Nepal may seek from the United Nations Organization or any of its specialized agencies.

Water is Nepal ’s principal natural resource. The rivers flowing from Nepal to India contribute 46% of the average annual flow of the Ganges . But in the critical dry period of March, April and May the Nepalese rivers contribute an astounding 75% of the Ganges flow at Farakka. This is the logic for the inclusion of that item 4 on Natural Resources in the Letters of Exchange. This is again the logic behind the 1954 Kosi Treaty (MP Koirala’s premiership) and the 1959 Gandak Treaty (BP Koirala’s premiership) coming in quick succession. Nepal ’s two major political parties, the Nepali Congress (NC) and Communist Party Nepal–United Marxist-Leninist (CPN–UML) have always been using the term “water resources” and never “natural resources”. In a recent interview to The Times of India, the Chairman of the Communist Party of Nepal–Maoists, Prachanda, said: “We want fresh treaties between Nepal and India on Natural Resources and other important issues on the basis of equality.” Prachanda is probably the only Nepalese leader to have uttered the term “natural resources” as inscribed in the secret Letters of Exchange of the 1950 Treaty.

vi) 1990 Draft Agreement on Mutual Cooperation between the Government of India and His Majesty’s Government of Nepal :

 Now let us move forward to the more recent 16 months’ Trade and Transit embargo (March 1989 – July 1990) by India on Nepal wherein India proposed the tottering Panchayat regime a Draft Agreement on Mutual Cooperation. This was a far more comprehensive Draft than that of the 1950 Treaty of Peace and Friendship incorporating the Letters of Exchange on Defence, Natural Resources and even on Unauthorized Trade. For the sake of the readers, three Articles from Part VI on Economic, Industrial and Water Resources Cooperation of the Draft have been dittoed below:

Article II

Should His Majesty’s Government of Nepal decide to seek foreign assistance for the development of the natural resources of Nepal or for any industrial project in Nepal, they shall give first preference to the Government or the nationals of India, as the case may be, provided that the terms offered by the Government of India or Indian nationals as the case may be, are not less favourable to Nepal than the terms offered by any other State or its nationals or by any international organization or agency.

 Article III

The two Contracting Parties being equally desirous of attaining complete and satisfactory utilization of the waters of the commonly shared rivers, undertake to (i) plan new uses or projects subject to the protection of the existing uses on the rivers and (ii) cooperate with each other to formulate and modify the planned new uses or projects taking into consideration the water requirements of the parties.

Article IV

The Contracting Parties agree jointly to plan, construct and manage projects of mutual benefit. In this regard, the involvement of a third party, where felt to be necessary and in the common interest, shall be subject to mutual consent.

While readers may have noted that “natural resources” still persists in the Draft, a number of important issues have cropped up in the above proposed Articles of the Draft that are new to the Letters of Exchange of the 1950 Treaty of Peace and Friendship. One is the conspicuous absence of the name of United Nations in this Draft, though one can argue that United Nations is adequately covered by the term international organization. The second is the fresh coinage of the much-talked-about term “commonly shared rivers” while the third is the involvement of a third party, all foreign developers and consultants, “subject to mutual consent”. But the most important issue, with far reaching implications, for Nepal ’s future generations to come is India ’s stand, in black and white, on “plan new uses or projects subject to the protection of the existing uses on the rivers”. Unlike the Kosi and Gandak treaties, India successfully embedded this “without prejudice to their respective existing consumptive uses” clause in the 1996 Mahakali Treaty. Unlike the tottering Mohun Shamsher, the tottering Panchayat regime must be given the credit for refusing to sign this 1990 Draft Agreement on Mutual Cooperation with India . Many believe that if this Draft Agreement, as proposed, had been signed, the Panchayat regime would never have collapsed to its knees in 1990!