June 9, 2006

Warily, India and China to reopen Silk Route trade

By Simon Denyer

NATHU-LA, India (Reuters) - As the rain sweeps across the
high Himalayan pass, a Chinese soldier arrives at the three
strands of barbed wire which separate his country's territory
from that of long-time rival India.

But this soldier is no longer brandishing a gun, on this
once most sensitive of borders between the world's two most
populous countries. Instead he takes some video for his family
back home and pauses to shake hands across the rusty fence.

Just a few yards away bulldozers on both sides of the
frontline are building not fortifications but a road, to
connect India and China and reopen a historic trade route. New
Delhi and Beijing plan to reopen the Nathu-la pass in June
after more than 40 years, a potent symbol of rapprochement
between Asian giants who fought a Himalayan war in 1962.

For an initial five-year period the pass, at an altitude of
14,200 feet, will handle limited border trade between the tiny
northeast Indian state of Sikkim and southern Tibet. It will be
a modest start, but it promises much more.

"We are very much looking forward to the opening of the
pass," said B.B. Gooroong, adviser to Sikkim's chief minister.
"It is symbolic... but we have to break the ice."

The Sikkim government's enthusiasm is not entirely matched
in New Delhi, where the establishment still remembers being
caught off guard by China's sudden advance across the Himalayas
in 1962.

Much of the 2,200-mile common border remains disputed, and
Indian officials say they are not yet ready to throw open the

Nevertheless a gradual process is under way which could
eventually lead to a significant trade route opening up from
the Indian port of Kolkata to the Tibetan capital, Lhasa.

"They will go slowly, and there is still some distance
before we get full-fledged transit trade," said foreign policy
analyst C. Raja Mohan. "But there is potential."


A study commissioned by the Sikkim government suggested
trade across Nathu-la could reach $2.8 billion a year by 2015.

Today that figure appears a little fanciful. It is hard to
imagine anything larger than a minibus negotiating the narrow
road that snakes for 35 miles through the steep forested hills
from Sikkim's capital, Gangtok.

A few corrugated iron warehouses have been built to handle
customs and immigration formalities, and a small trade mart
erected to exchange goods at Sherathang, a chilly hamlet 5
miles below the pass.

Nor has the Sikkim government yet won's Delhi's approval
for its plan to build a new, two-lane 22-billion-rupee
($500-million) highway from Nathu-la to western India,
bypassing Gangtok's already congested streets.

But pressure is building from China, as it tries to bring
economic prosperity and extend political control over its vast,
remote and sometimes neglected west. Lhasa lies just 320 miles
by road from Nathu-la; Kolkata is a stone's throw away compared
to Beijing.

The passes between Sikkim and Tibet were once part of the
Silk Road, a network of trails which connected ancient China
with India, Western Asia and Europe.

Revived during British rule in India, trade across Nathu-la
took off after independence in 1947 and China's invasion of
Tibet in 1950. A decade later, more than 1,000 mules and horses
and 700 people took the narrow trail every day.

India imported raw wool, animal hide, and yak tails for use
in shrines. It sent clothes, petrol, tobacco, soap, Rolex
watches and even disassembled cars, including one for the Dalai
Lama, the other way. Payment came in sacks of Chinese silver

Trade came to an abrupt halt in 1962. Five years later
skirmishes at Nathu-la left scores dead on both sides.


As India and China rebuilt relations, two minor trade
points were opened at the western end of the border in the
1990s, but agreement to open the more significant Nathu-la pass
came during then Prime Minister Atal Behari Vajpayee's trip to
China in 2003.

At the same time China indicated it was ready to drop its
claim to Sikkim, a former Buddhist kingdom which had merged
with India in 1975.

"That was a very major landmark agreement from the
political perspective," said one Indian official. "Now it is
the economic side which will come into play."

Sikkim has few industries, but officials hope the local
Dansberg and Yeti beers, produced at a factory in the south of
the state, will prove popular across the border.

Even more exciting could be the prospect of tourist traffic
one day crossing Nathu-la. Officials hope that Sikkim could
eventually be the center of an international Buddhist
pilgrimage circuit, from Tibet to Thailand and India to Nepal.

But even in Sikkim, there are concerns. Representatives of
the mainly Buddhist Bhutia and Lepcha minorities are worried
that unregulated development will bring in tens of thousands of
outsiders and swamp their fragile cultures.

Truck traffic could bring alcoholism, prostitution and
AIDS. Roads mean pollution, landslides and ecological damage,
they say.

"Negative effects are bound to come," admits state industry
and commerce minister Ram Bahadur Subba. "But development work
has to be carried out."