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Cablegate: A River Runs Through It - Connecting Burma and India

VZCZCXRO9078
RR RUEHAST RUEHBI RUEHLH RUEHPW
DE RUEHCI #0099/01 0791202
ZNR UUUUU ZZH
R 191202Z MAR 08
FM AMCONSUL KOLKATA
TO RUEHC/SECSTATE WASHDC 1934
INFO RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE
RUEHGO/AMEMBASSY RANGOON 0419
RUEHBJ/AMEMBASSY BEIJING 0147
RUEHCN/AMCONSUL CHENGDU 0134
RHEHAAA/NSC WASHINGTON DC
RUEHRC/DEPT OF AGRICULTURE USD FAS WASHINGTON DC
RUEAIIA/CIA WASHDC
RUEIDN/DNI WASHINGTON DC
RHMFIUU/CDR USPACOM HONOLULU HI
RUEHCI/AMCONSUL KOLKATA 2362

UNCLAS SECTION 01 OF 02 KOLKATA 000099

SIPDIS

SIPDIS

E.O. 12958: N/A
TAGS: PREL ECON SENV PGOV ETRD EWWT EPET IN BM BG
SUBJECT: A RIVER RUNS THROUGH IT - CONNECTING BURMA AND INDIA

KOLKATA 00000099 001.2 OF 002


1. (U) SUMMARY: The Kaladan Multi-Modal Transport Project
linking the landlocked states in Northeast India with Sittwe
port in Myanmar holds the promise of making Mizoram an economic
gateway, and providing India with access to international trade
routes via the Bay of Bengal. The tentative steps taken so far
by the GOI to realize its vision make the Mizo people cautiously
optimistic about this ambitious project, and the potential
economic benefits override concerns about possible
socio-political fallout from closer economic engagement with
Burma. It will be some time before the KMTP "arrives," and even
then the GOI will tightly control its impact out fear of
increased commercial competition from Southeast Asian and
Chinese products. END SUMMARY.

2. (U) Proposed by the Indian Ministry of External Affairs in
2003, the Kaladan Multi-modal Transport Project (KMTP) aims to
develop a trade route between India and Burma along the Kaladan
River. The river is navigable for approximately 225 kilometers
from the Burmese port of Sittwe on the Bay of Bengal to the town
of Kaletwa (Setpyitpyin). From Kaletwa, a 62-kilometer road to
Saiha in the Indian state of Mizoram will be constructed,
linking at Saiha to India's National Highway 54, which runs
through Mizoram's capital Aizawl into Assam and then mainland
India (skirting Bangladesh).

3. (U) The KMTP is estimated to cost USD 120 million. A major
portion of the expenditure would go to development of the Sittwe
port, making the Kaladan river navigable up to Kaletwa, and
building roads from Kaletwa to the Indo - Burma border. The GOI
has decided to fund the project fully and hand it over to the
Government of Burma (GOB) on completion. The Framework
Agreement on the project and Accompanied Protocol are scheduled
to be signed the first week of April 2008 when Burma's Vice
Senior General Maung Aye is expected to visit New Delhi. Rail
India Technical Economic Services (RITES), a GOI public
consultancy company, will be the lead organization in executing
the project.

4. (U) The development of the KMTP is of vital interest to
India as it will offer the land-locked, north-eastern states of
Assam, Arunachal Pradesh, Nagaland, Manipur, Mizoram, Meghalaya,
and Tripura access to a sea port. The route bypasses
Bangladesh, which has been reluctant to give India access to the
Chittagong port less than 200 km away from Agartala, the capital
of Tripura. With Mizoram acting as gateway to an international
trade route via Myanmar, the state is hoping to reap significant
economic benefits from the project. President of the Mizoram
Chamber of Industries & Commerce K. Lalhmingthanga said that the
opening up of the new trade route will provide a much needed
outlet for products from Mizoram. Currently, there are only two
railway links connecting the state to other parts of India via
Assam. The nearest one is Bairabi rail station, located about
110 kilometers from the state capital Aizawl and the other is
Silchar, which is about 180 kilometers from Aizawl. Bairabi is
a meter (narrow) gauge track so its use is limited; the route
via Silchar is often beset by labor disputes, preventing a
smooth flow of consignments in and out of Mizoram.
Lalhmingthanga also hopes that the KMTP will create new jobs and
employment sectors in a state where job opportunities outside
government service are very limited.

5. (U) The expected boom may be some time in coming. Dean of
the Economics Department of Mizoram University Dr. Lianzela
believes that it will take another seven to ten years to develop
the KMTP. He echoed the Mizoram Chamber's view that this is a
federally funded and controlled project over which the Mizoram
government has little or no control, although the state has the
potential to gain a great deal from the project. The main food
crop grown in the state is rice paddy, which forms the staple
diet of the Mizo people. In recent years natural calamities
like un-seasonal or excessive rainfall and rat infestation due
to bamboo flowering have severely damaged rice production. The
practice of jhum (shifting or slash and burn) cultivation has
also caused environmental degradation. The Mizoram government
is encouraging and supporting farmers in the state to move away
from jhum cultivation to growing cash crops like ginger,
turmeric, chilies, and fruits like pineapples, passion fruit,
oranges and grapes. But this policy of diversifying
agricultural production has lacked a corresponding preservation
and marketing component for the new produce. Lianzela cited a
2007 incident when farmers threw hundreds of pineapples onto the
highway to protest the lack of adequate cold chain facilities
and market access for the fruit that they had been encouraged by
the government to grow. Lianzela opined that the (short term)

KOLKATA 00000099 002.2 OF 002


benefits of the KMTP to the Mizoram economy would be that
products from Mizoram could find a wider market and that it
would be easier to bring in food grains to the state.

6. (U) State officials are less aware of the project and less
engaged in it, however. Few of the government officials we met
(including the Secretary for Food and Civil Supplies, the Excise
Commissioner, the Home Commissioner, Power Secretary, Secretary
for Rural Development, and Health Minister) nor senior
representatives of Mizoram's largest NGO the Young Mizo
Association commented in detail about the KMTP. To those we
spoke with, the economic benefits of the KMTP override any
concerns about increased economic engagement with Burma and any
socio-political implications of greater access to Burma through
this trade route.

7. (U) Comment: Mizoram's leaders are keeping an eye on the
KMTP, but the general consensus is that it is a GOI-run project
with significant uncertainties about the time frame for
commissioning and completion. Everyone agreed that if
operational, the trade route would be beneficial to the Mizoram
economy. This underscores the way in which the GOI keeps a
firm grip on the reins of the NE states - by controlling the
cash flow to the state governments, requiring obeisance from
democratically-elected leaders, and suppressing state activism
in the name of security. A project of the magnitude of the KMTP
is bound to have environmental, social, and political
consequences, yet no one appeared concerned about such issues.
The uncertainties about the time frame of the KMTP also call
into question the seriousness of India's Look East policy. The
opening up of the Indo-China trade route through the Nathu La
pass in the Himalayan state of Sikkim in 2006 held the promise
of spurring the economy of that region, however there is not
much visible evidence that this has happened. The actual
success of the KMTP may be diminished by the GOI's protectionist
instincts on the grounds of security and fear of goods dumping
from China and other Asian nations.
JARDINE

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