CONTENTS PAGE S No. Chapters No. 1. India's Neighbours 1 2. South-East Asia and the Pacific 19 3. East Asia 27 4. Central Asia 30 5. The Gulf, West Asia & North Africa 35 6. Africa(South Of Sahara) 49 7. Europe 55 Eastern Europe 55 Western Europe 61 8. The Americas 67 North America 67 Central and South America and the Caribbean 71 9.United Nations and international Organisations 76 Political Issues 77 Disarmament and International Security 79 Economic, Social and Humanitarian Issues 82 Human Rights 87 Administrative Financial and Budgetary Issues 88 Elections and Appointments 89 Special Agencies 90 Non-Aligned Movement 91 Commonwealth 91 International Law: Developments and Activities 92 10. Foreign Economic Relations 98 11.Trade and Investment Promotion 107 External Economic Publicity 109 12. Policy Planning and Research 112 13. External Publicity 115 14. Protocol 120 15. Passport and Consular Services and Indians Overseas 122 16. Administration and Organisation 125 17. Foreign Service Institute 128 18. Implementation of Official Language Policy and Propagation of Hindi 132 Abroad 19. Cultural Relations 133 APPENDICES 139-231 INTRODUCTION The external relations of the country continued to be guided by the well established principles which have characterised the foreign policy. in a period of constant change in the global political, economic and security environment there was need for constant monitoring and assessment of the emerging situation, with a view to protecting India's vital national interests. The changing scenario also offered many opportunities. It has been the Government's endeavour to fully utilise these opportunities to promote and safeguard our interests. Changes in the global economic situation necessitated a reassessment and strengthening of our economic diplomacy. In the international fora, the Government continued to project India's principled stand on various issues. We worked closely with Non-Aligned countries and G-77 to ensure that the views of the developing world were fully taken into account on all major political and economic issues. India contributed effectively to mobilising support for its views and in building consensus among the countries of the South on major economic issues. Among the most important of the Government's priorities during the year was to strengthen relations with neighbouring countries so as to provide a stable and peaceful environment for the socioeconomic progress of the people. Particular attention was paid to regional cooperation which would bring economic benefits to the population of the entire region. As Chairman of SAARC, India initiated a number of moves in this direction. -v> India continued to maintain traditionally warm and friendly relations with the Royal Government of Bhutan. Our commitment to deepening our close links with Bhutan was underlined through decisions on expanding economic cooperation during Bhutan's Eighth Five Year Plan period (1997-2002). The conclusion of the "Treaty between His Majesty's Government of Nepal and the Government of India concerning the integrated development of the Mahakali River including Sarda Barrage, Tanakpul Barrage and Pancheshwar Project" envisages joint exploitation of the water resources and has the potential to open up tremendous possibilities for economic cooperation between the two countries. The bilateral Trade Treaty was modified and renewed for a further period of five years. Nepalese manufactured goods can now enter India free of customs duty and quantitative restrictions. These developments symbolise the commitment of India and Nepal to strengthen economic cooperation. (India's relations with Bangladesh were significantly enhanced. During the visit to India by Prime Minister Sheikh Hasina in December 1996, the long outstanding issue relating to the sharing of water resources was resolved through the signing of a landmark Treaty on Sharing of the Ganga Waters at Farakka. The Treaty will run for thirty years and will meet minimum needs of both sides. The visit by the Prime Minister to Bangladesh in January 1997 consolidated the enhanced bilateral relationship between India and Bangladesh. Fresh impetus has been given to economic and commercial cooperation between the two countries. The Government of India decided to extend tariff concessions and remove quantitative restrictions on the import of goods in 14 sectors of interest to Bangladesh. Relations with Sri Lanka continued to be close and cooperative and there were conscious efforts to strengthen cooperation in diverse fields. President Chandrika Kumaratunga came to India on a private visit when she met the Prime Minister. India extended food assistance for rehabilitation of the civilian population of Jaffna. Regular and cordial interaction was kept up with Maldives during the year. The Maldives Institute of Technical Education, a project established with Indian assistance, was successfully completed and handed over to the Government of Maldives. -vi> India's relations with Myanmar remained friendly. A regular and constructive interaction was maintained with the Myanmar authorities in areas relevant to India's security interests, such as improved border management, security dialogue and checking of trafficking in drugs and arms. in order to improve communications and to facilitate border trade, the Government of India finalised plans for construction and development of a border road to Myanmar. The adversarial and confrontationist approach of Pakistan towards India continued during the year, thus impeding the ,normalisation of relations. Pakistan's support and promotion of crossborder terrorism continued unabated. Pakistan persisted with efforts to acquire sophisticated arms and technology in excess of its legitimate requirement, and with clandestine acquisitions for its weapon-oriented nuclear and missile programmes. Government closely monitors these developments and their bearing on the security environment in the subcontinent. All measures were taken to safeguard national interest and security. India remains committed to building a relationship of trust, friendship and cooperation with Pakistan and seeks to resolve all outstanding issues through bilateral negotiations, as envisaged in the Simla Agreement. To create a positive atmosphere and promote people-to- people relations, government took a number of unilateral steps, including issuing greater number of visas to nationals of Pakistan and enhancing interaction between intellectuals, scholars, journalists and academicians. We believe that development of people-to-people contacts and enhancement of trade and commercial ties would contribute to laying the foundation on which constructive relations between the two could be built and which remains our objective. India attaches highest importance to strengthening economic cooperation among South Asian countries under the SAARC framework. As Chairman of SAARC during the year, India played an active role in strengthening the Association and enlarging its activities to collective benefit and enrichment of the work of the Association. India believes in the centrality of SAARC in advancing collective regional effort, as envisaged in the Association's Charter, to enable the South Asian region to assume its rightful place in the world. The December 1996 SAARC Council of Ministers meeting in New Delhi gave significant impetus to growing cooperation amongst South Asian countries in economic, social, technical and cultural areas. Particularly. -vii> noteworthy were advances within the SAARC Preferential Trading Arrangement (SAPTA). India's relations with China showed steady improvement. The visit of President Jiang Zemin to India was an important milestone in bilateral relations. A significant outcome of the visit was the signing of an Agreement on Confidence Building Measures in the military field along the Line of Actual Control. During the discussions, the importance of paying adequate attention to each other's concerns on vital issues affecting unity, territorial integrity and security were underlined. The two sides agreed to work towards a cooperative and constructive relationship into the 21st century. We are saddened at the continuance of the fratricidal conflict in Afghanistan. We have called for the cessation of foreign interference in Afghanistan and for peaceful discussions and negotiations between Afghan parties. India supports the efforts of the UN Secretary General and his Special Representative to bring peace to Afghanistan. India continued her traditional policy of cooperation and friendship with the Afghan people. India's contacts with the Government of Professor Rabbani, whom it continues to recognise as the legitimate Government of Afghanistan, have continued. The close contacts with Iran were further strengthened by exchange of high level visits. The year witnessed growth in bilateral economic and commercial interactions. Central Asian Republics occupy an important place in our foreign policy. The proximity of India and Central Asia, shared history and sentiments of deep friendship on both sides, create a common stake in the furtherance of peace, stability and security in the region. India's relations with these Republics, which have just marked the fifth anniversary of their independence, are based on long-standing historical contacts, people-to-people empathy and a high degree of political understanding. Economic contacts and exchanges in science and technology and technical cooperation have been growing. Regular exchange of high level visits with