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E.O. 12958: DECL: 02/13/2017TAGS: PREL, PGOV, KWWT, ECON, PBTS, ENRG, ECIN, KISL, PK, INSUBJECT: BOTH SIDES VICTORIOUS IN BAGLIHAR VERDICT, INDIA PERHAPS MORE SO

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Classified By: A/PolCouns Atul Keshap, Reason 1.5 (B,D)

1.  (C) Summary.  The World Bank-appointed neutral expertannounced his ruling on February 12 regarding thecontroversial Baglihar dam project, which both Pakistan andIndia claimed as a victory.  Several specifications contestedby Pakistan are being addressed, but the overall design ofthe dam is intact and India is ready to move forward towardcompletion and operation in one year's time.  The ruling isnot only final and binding, but also establishes that Indiais in the clear to proceed with other projects in the regionthat involve waters granted to Pakistan under the 1960 IndusWaters Treaty.  The Indian press praised the verdict as avictory and vindication after more than a decade ofdisagreement.  End Summary.

Design Largely Acceptable, Just Needs Tweaking--------------------------------------------- -

2.  (U) World Bank-appointed neutral expert Professor RaymondLafitte, a Swiss civil engineer, released his final andbinding decision on February 12 regarding the Baglihar dam toPakistani and Indian representatives in Bern, Switzerland.Lafitte cleared the 450-MW Indian hydroelectric project onthe Chenab River with only minor alternations, which Indiasaid in a statement ""all arise from calculations and not from(conflicts with the) basic principles"" of the 1960 IndusWaters Treaty.  Pakistan had contended that the 4.5-meterfreeboard (the vertical distance between the top of the damand the level of the contained water supply) should be only0.84 meters tall, but Lafitte found a 3-meter height inorder.  The new, shorter design will stand over 140 meterstall, total, and conform to the standards of theInternational Commission of Large Dams.  The neutral expertruled in India's favor that the dam could have 32.56 millioncubic meters of pondage (the dam's water storage capacity),an amount lower than India's design of 37.50, but far greaterthan the 6.22 advocated by Pakistan.  He also allowed ahigher rate for the design flood than Pakistan wanted inorder to account for calculation uncertainties and possibleclimate change.  Finally, Lafitte agreed with India'sapproach to deal with the silt that accumulates from thesediment-rich Himalayan water.  India uses an outlet methodthat did not exist in 1960 and will not interfere with thelevel of flow of the Chenab's waters, according to theneutral expert's decision and in keeping with the IndusWaters Treaty.  The dam is scheduled for completion by early2008 with a total cost of around $1 billion (estimates varyfrom Rs. 40 to 50 billion).

Media Reaction: India Scores A Victory, Vindication--------------------------------------------- ------

3.  (SBU) Many news outlets on Tuesday reflected a sense ofvictory and vindication for India.  Multiple newspapers notedthat the changes recommended by Lafitte are ""marginal"" andthat the dam's electricity output is not expected to beaffected by the verdict.  The Hindu reported that India hadclaimed a ""moral victory,"" and that there was ""visiblerelief"" in the Indian Water Resources Ministry.  An articlein The Pioneer claimed that the dam, outfitted with ananticipated second 450-MW power station, could ""rejuvenate""Jammu and Kashmir's economy, ""which is in doldrums after

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years of strife.""  The Times of India had one of the moststrongly-worded articles, saying that India can ""happily livewith"" the verdict, which denies ""Pakistan any excuse toquibble.""  The article gloated, ""This is the second time inrecent years that India has been given a thumbs up in adispute involving Pakistan,"" the earlier incident being thedowning of a Pakistani surveillance aircraft by India in 1999.

Decision Has Set Precedent--------------------------

4.  (C) Former High Commissioner to Pakistan G. Parathasarthytold PolOff on February 13 that this decision ""setprecedents"" for future construction of dams affected by theIndus Waters Treaty.  ""A lot of projects that were held upare now possible,"" he said.  In particular, he noted thatIndia can now proceed with its Kishenganga dam project inJammu and Kashmir, the subject of a similar disagreementbetween Pakistan and India.  ""If the Pakistanis object, thenwe'll take the issue to the World Bank again,"" he said.  ""Theindependent expert made clear what is acceptable under theIndus Waters Treaty and what isn't.""  In the past, India hadoffered to build the Baglihar dam lower (as the verdictcommands) and thus the same outcome could have been reached""15 years earlier"" had Pakistan chosen to cooperate with, andnot contest, India's intentions, Parathasarthy noted.  Healso compared the Baglihar dam project with the older Salaldam project, another dam in Jammu and Kashmir.  In the caseof the Salal dam, India designed and constructed the dam withPakistani sediment-related specifications in mind.  As aresult, he claimed that the dam became ""silted-in"" in under20 years.  Given Monday's verdict, India will likely not makethe same mistake twice.

Important That Islamabad Feels It Won, Too------------------------------------------

5.  (C) The ruling reflected several of Pakistan's objectionsto the dam, as mentioned in paragraph 2.  PolOff spoke withHindustan Times editor Manoj Joshi on February 13, whoemphasized that the verdict has so far been well received inPakistan.  ""If you can work out solutions for both capitals,then that's the way to do it,"" he said.  Joshi finds thatwater is an ""emotional issue"" in South Asia, particularlygiven the current protests in Karnataka in response to theCauvery Tribunal verdict.  It would have been unproductivehad the decision been India's victory alone, and disagreementover the issue would have been dragged ""on and on.""  Hesummarized, ""If India says one thing, the Pakistanis willdisagree.""  That there was an international observer in thiscase makes the verdict palatable to the Pakistanis.  Joshipointed to the Kutch boundary tribunal of the 1960s, in whichanother international arbiter decided a largely technicaldispute between the two nations.  Although not part of theComposite Dialogue process, Joshi believes that the Baglihardecision may have positive--though indirect--implications forother areas of contention in Indo-Pak relations.

Comment: A Workable Outcome---------------------------

6.  (C) Comment:  The fact that both India and Pakistan are

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claiming victory is a positive outcome to one problem thathas plagued relations for 15 years.  As our Indianinterlocutors frequently remind us about Indo-Pak relations,it may have been a wise decision for the U.S. not to haveintervened in this issue since things very well could havetranspired in a less mutually applauded way and the U.S.could have taken the blame.  As it is, neither side iscasting blame on Prof. Lafitte, the World Bank, the U.S., orany other third-party entity.  The verdict may also mitigateIndia's distrust in international arbiters, allowing fortheir potential use in addressing other problems.  Since the450-MW hydroelectric station is expected to come on-line inone year's time, it should also provide a boon to the unmetenergy needs of Jammu and Kashmir (estimated at 2000 MW) aswell as India at large.  That India has the green light tocomplete and/or build similar dams on other rivers throughoutJammu and Kashmir is a fact likely not lost on anyone inenergy-starved New Delhi.  End Comment.

7.  (U) We coordinated this cable with Embassy Islamabad.MULFORD"