Real Estate is tough even for a Kingdom

In the annals of relations between the West and Bhutan, a remote Buddhist kingdom in the Himalayas, a vote yesterday by the Manhattan Borough Board may not rank up there with the opening of that country to tourists in 1974 or the debut of its first television network last year.

But after a nearly three-year struggle that drew the Manhattan board and the Clinton administration into a human rights debate, the isolated country won permission yesterday to buy a Midtown Manhattan town house that will serve as the permanent home of its mission to the United Nations.

Bhutan, a rugged country of an estimated 660,000 residents that is bordered by China to the north and India to the south, has operated its only diplomatic office in the Western Hemisphere out of rented space at 2 United Nations Plaza since it joined the United Nations in 1971. In an effort to expand its presence and eliminate a skyrocketing rent bill, in 1997 it bid for the right to buy a five-story town house at 763 First Avenue (42nd Street), across the street from the United Nations.

It paid a deposit on the city-owned property and won approval from the local community board, but when it came time for the Manhattan Borough Board to vote on the $2.3 million sale, the protracted human rights debate began.

Led by City Councilman Stanley E. Michels, the board refused to approve the sale, citing Bhutan's treatment of settlers from Nepal and India a decade ago. Thousands of them were forced to leave Bhutan for refugee camps set up in Nepal. The building itself is of particular significance, Mr. Michels said, because its southern exterior is the so-called Isaiah Wall, where a biblical quotation urges nations to ''beat their swords into plowshares.''

''We did not get involved voluntarily,'' said Mr. Michels, who serves on the borough board with other Council members and officials from Manhattan. ''They asked us to get involved because we have to approve the sale of the city building. I was not about to approve of their human conduct, as of two years ago.''

Bhutan, the last surviving Himalayan Buddhist monarchy, has long been protective of its borders and traditional ways. Serfdom did not become illegal until 1958. The international news media were not allowed into the country until 1974.

The purchase of the building reflects Bhutan's gradual drive to broaden its connections with the outside world, said Om Pradhan, the Bhutanese ambassador to the United Nations. ''If we are settled down, if we can have a more established mission, we will be able to play an ongoing and more meaningful role in international affairs,'' Mr. Pradhan said yesterday.

The borough board's refusal to approve the sale, first in September 1998 and again in August 1999, initially drew little attention. But it gradually drew together unlikely allies in protest, including the Clinton administration and the United Nations Development Corporation, a nonprofit agency, both of which have argued that the Manhattan board needed a foreign affairs tutorial of sorts.

Richard C. Holbrooke, the United States representative to the United Nations, wrote to the city in May, urging it to approve the sale. He cited a decision by the Bhutanese government in 1999 to grant pardons to 200 prisoners, including some considered by human rights groups to be political detainees. Negotiations are also under way to decide what should happen with 100,000 refugees in Nepalese camps who seek permission to return to Bhutan, he said.

''Based on my observations, and compared to what I have seen in numerous other countries, I would say that Bhutan is clearly a country where there is peace and respect for people, in sharp contrast to other countries that despite their problems, have not been subject to such problems in New York,'' Mr. Holbrooke wrote in his letter to the city, citing his own visit to Bhutan in 1996.

The United Nations Development Corporation, which is controlled largely by the Giuliani administration, prepared to sue Mr. Michels and other City Council members who had opposed the sale. The corporation cited the Constitution in contending that the board has no right to intervene in international affairs, particularly given the corporation's belief that the board was misreading Bhutan's human rights record.

The matter was resolved yesterday by a unanimous vote after Mr. Michels; C. Virginia Fields, the Manhattan borough president; and other board members who had objected to the sale decided that Bhutan had made progress toward addressing what they had called human rights abuses. The sale of the building is expected to be completed this week.

Yesterday, those who had opposed the sale portrayed the situation as a modest foreign affairs victory for the United States. ''Because of the intervention of the Manhattan Borough Board, the Bhutanese government has recognized the importance of human rights to the United States and the international community,'' said a statement by Ms. Fields.

Mr. Pradhan laughed when told of the statement. ''If they want to take the credit, I have no objection, but how can it be true?'' he said. ''This has nothing to do with the purchase of the building.''