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Cockpit Of Intrigue
Why Kathmandu is now labeled the subcontinent's "Casablanca"

To read the local press, it was an open-and-shut case. At 7.25 on the morning of Jan. 2, Asim Saboor, a clerk in the Pakistan embassy in Kathmandu, was caught red-handed in a sting operation trying to sell counterfeit Indian currency to an undercover Nepali policewoman. Locking himself in his house, Saboor insisted on diplomatic immunity, beginning a protracted and diplomatically bruising stand-off. He was finally declared persona non grata and expelled on Jan. 6 in a blaze of publicity.

Nearly four months later, precisely what happened is still far from clear. Significantly, the incident came within days of India's humiliation at the hands of the hijackers of Indian Airlines Flight IC814, who launched their heist from Kathmandu - with the active assistance of diplomats at the Pakistan embassy, claims New Delhi. So was the Saboor affair a straight-up bust? Or, as his own superiors insist, a set-up in a tit-for-tat operation at the behest of India intended to embarrass Pakistan? "It's not proven either way and I'm keeping an open mind," says a European diplomat. "There's so much corruption and so many people operating on behalf of one side or the other here, you can never be sure."

What is certain is that hostilities between India and Pakistan are not simply confined to disputed Kashmir. They also reach out across the region as the subcontinent's arch-enemies wage a bitter undercover war of subversion, destabilization and disinformation. Of late, the favored cockpit for confrontation and intrigue has been Nepal.

That's not by chance. Small, sleepy and resolutely neutral amid Asia's big-power tensions, Nepal has a police and security apparatus that has never been geared for the challenges of the New World Disorder. Over the past decade money politics and official corruption have flourished. Add to that brew an open-door visa-on-arrival regime aimed at boosting tourism and you have what one diplomat delicately describes as a "permissive security environment." Put plainly, Kathmandu has slowly emerged as the Casablanca of the subcontinent, a largely unsupervised playground for rival intelligence services, transiting terrorists and organized crime.

Another reason for Nepal's predicament has been its open border with India. Since a 1950 treaty, nationals of both states have been free to cross the border without documentation or even registration - and not just at certain designated crossing points. Any Indian or Nepali - or anyone looking like one - can cross anywhere along the border's 1,750-km length. This unusual arrangement has proved a boon for a range of underworld types including narcotics traffickers, gold smugglers, gun-runners, Maoist insurgents and - if the Indians are to be believed - Punjabi and Kashmiri terrorists operating with the support of Pakistan's Inter-Services Intelligence Directorate (ISI). "We have a very real problem over misuse of the open border," says a ranking Indian official. "Pakistan is aware of our vulnerabilities."

That vulnerability, Indian security sources claim, is being exploited in several key areas. One is the movement of counterfeit currency. Whether Asim Saboor was guilty or not, there is no doubt large amounts of counterfeit Indian currency, mainly 500-rupee (about $11) bills, have been moving across the border into northern India. And they are not being printed in the back streets of Kathmandu. "The quality is so good it could only have been printed in a secure press," says a source. "It's coming into India not only through Nepal, but Nepal is a safe conduit as the India-Pakistan land border is very closely monitored." An indication of the concern: advertisements have appeared on Indian TV warning citizens of the bogus bills, while the Reserve Bank of India has raised the issue with its Nepal counterpart.

There is also concern over a string of seizures in Nepal and in India of RDX plastic explosive used in bomb blasts in New Delhi and other northern Indian cities. As with the fake currency, the Indians have pointed their finger squarely at Pakistan, and specifically the Pakistan embassy in Kathmandu which, they allege, acts as a nerve-center in the secret war on India. "[The Pakistanis] are using Nepal as a launching pad for operations against India," asserts an Indian source.

Take the case of Lakhbir Singh. According to Nepal security officials, the Sikh "Khalistan Zindabad Force" loyalist was arrested in November 1998 in a Kathmandu hotel with 20 kg of RDX and timing devices. On interrogation, he is alleged to have identified three Pakistani embassy officials with whom he had liaised, one of them none other than Asim Saboor. If you are prepared to believe Indian security officials, nearly half of the 27 diplomats and staffers at the embassy are working for ISI.

The Pakistanis are not slow to return the compliment. New Delhi's sprawling embassy on the outskirts of the Nepalese capital is one of its biggest worldwide, they note - and it's amply staffed with operatives of the Research & Analysis Wing (RAW), India's external intelligence service. RAW men are believed to be actively monitoring the activities of other powers in Nepal as well as "cultivating" friendly politicians, pliant journalists and elements within the police. Independent analysts are not rushing to call either side liars.

The center of the storm recently has been Kathmandu's Tribhuvan International Airport (TIA) where on Dec. 24 one or more of the hijackers evidently strolled onto Flight IC814 with pistols and grenades. The ramshackle airport has never been noted for tight security. "There's a fantastic amount of smuggling going on through TIA, mainly gold but other stuff too," says a Western security official. "The smugglers use TIA with the tacit agreement of the customs officials, who have little or no interest other than kickbacks."

The Indian anger in the wake of 814 was palpable. "We'd been warning them about security risks for years," fumes a New Delhi-based defense analyst. "We'd been offering them help with computerization. But they wouldn't listen."

Following the 814 fiasco, India slapped a ban on Indian Airlines flights to Kathmandu, which remains in place and has had a severe impact on the lucrative Indian segment of Nepal's tourist industry. That treatment is seen by many in Nepal as a classic example of a one-off incident (actually the first-ever hijack out of TIA) being used as a pretext to apply bullying tactics and impose further Indian influence on Nepal. Specifically, New Delhi is holding out to have Indian security personnel stationed permanently at TIA.

There has also been fury in Nepal over what is viewed as a crude campaign by the Indian news media during and after the hijack to browbeat and denigrate Nepal. (Indian media had erroneously reported armed terrorists walking straight onto IC814 off a Pakistan International Airlines flight from Karachi, and also blacklisted a luckless Nepali passenger as part of the gang.) Indian journalists, runs the refrain, are all too ready to lap up their government's line over the alleged activities of ISI. These days, ISI is liable to cop the blame for every explosion, train wreck or power-cut across India. "I get the sense the Indian press is fed stuff, but most of these people don't know what they're talking about," says an aggrieved newspaper editor in Kathmandu. "Editors in New Delhi simply don't know the realities here."

Certainly, the 814 affair touched raw nerves on both sides of the India-Nepal border. "The Indians are giving them a hard time," observes the European diplomat. "And the Nepalis are super-sensitive about it. It's a classic case of a small country with a tradition of proud independence with a giant neighbor." As a result, many Nepalis are more than happy to have countries such as Pakistan and Bangladesh on the block to provide a counterweight to Big Brother in New Delhi.

In the final analysis, Nepal's own openness is all but inviting the sort of traffic that risks giving it a bad name. Indian and Nepali officials are currently studying ways of monitoring the open border. But with Indo-Pakistani tension set to persist and corruption well entrenched, few in Kathmandu are holding their breath for fast improvements. Nepal's own harassed security officials may just be wishing that all the spooks in town were as well-behaved and as unobtrusive as those operating out of another notably large embassy - that of the People's Republic of China.

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