UNCLAS SECTION 01 OF 02 KATHMANDU 001626

SIPDIS

SENSITIVE

STATE FOR SA/INS
DEPARTMENT PLEASE ALSO PASS TO USAID
LONDON FOR POL - RIEDEL

E.O. 12958: N/A
TAGS: PGOV EAID NP GON
SUBJECT: NEPALI GOVERNMENT HANDS LOCAL GOVERNMENT OVER TO
BUREAUCRATS

REF: KATHMANDU 1387

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SUMMARY
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1. (SBU) Having allowed the terms of all locally elected
officials to expire as of July 16 (reftel), the Government of
Nepal (GON) has announced plans to transfer local bodies'
functions and authority to civil servants until elections can
be held in April and new representatives installed in July.
GON officials--reportedly including the Prime Minister
himself--have acknowledged that the decision not to extend
the local bodies' terms was politically motivated. The
Opposition, which controlled the majority of the local
bodies, has already signaled its displeasure with the GON
plan. Several donors, especially those with large programs
committed to strengthening local governments, have expressed
frustration with the GON action and threatened to withhold
funding. The re-election next year of these critical
elements of grass-roots democracy is likely to require
substantial moral and material support from the international
community. End summary.

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CIVIL SERVANTS TO TAKE OVER LOCAL BODIES
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2. (U) On August 15 the Cabinet decided to appoint civil
servants to assume the responsibilities and functions of
locally elected officials, whose terms were allowed to expire
July 16 (Reftel). The Cabinet's decision not to extend the
five-year terms of the local bodies for another year had left
Nepal's 75 District Development Committees (DDCs), 58
municipalities, and 3,912 Village Development Committees
(VDCs) with no functioning government--and thus no ability to
recieve and disburse funds--for a month.


3. (U) The August 15 announcement followed an abortive
effort by the Government of Nepal (GON) to elicit an
all-party consensus on how to administer local government in
the absence of locally elected bodies. All Opposition
parties, with the exception of the National Democratic Party
(RPP), boycotted an August 11 all-party meeting called by the
GON on the subject.


4. (U) According to the Cabinet's plan, civil servants from
ministries with offices at the local level (Agriculture;

Home; Education; Health; Physical Works; Local Development;
and Women, Children, and Social Welfare) will take the place
of elected local bodies officials. Each DDC will be replaced
by a seven-member team of civil servants, headed by the Local
Development Officer (LDO) in the role of the DDC Chairman;
each municipality by a five-member team, with the
municipality's Executive Officer sitting in for the mayor,
and each VDC by a three-member team, with the VDC Secretary
subbing for the VDC Chairman. (An earlier plan to include
members of civil society organizations in these newly formed
bodies was nixed.) Ganga Dutta Awasthi, Joint Secretary for
the Ministry of Local Development, acknowledged that the
Maoists had disrupted the operations of many rural VDCs--700
VDC offices have been destroyed in the course of the
insurgency--but he expressed confidence in the GON's ability
to recruit adequate numbers of bureaucrats to serve in these
remote areas. The Ministry already has applied to the Civil
Service Commission to fill 350 vacant VDC Secretary slots.


5. (U) Awasthi emphasized the temporary nature of the new
arrangement, which will remain in place until new local
elections can be held next year. The GON has committed to
hold these elections by April, he noted. Since local
elections are a lengthy and cumbersome process--DDCs can only
be elected after VDCs are in place--the new local bodies are
unlikely to be in place until July 2003 at the earliest, he
conceded.

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OPPOSITION, SOME DONORS UNHAPPY
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6. (SBU) The Cabinet decision to allow the local bodies'
terms to expire unleashed a firestorm of criticism from the
Opposition, as well as from several donors. Jhala Nath
Khanal, a Standing Committee Member of the Communist Party of
Nepal - United Marxist Leninist (UML), which controlled the
majority of such bodies, denounced the move as
"anti-democratic." Democratically elected officials at the
village level occupy the front lines against Maoist
insurgents, he argued, and are thus often targeted for
intimidation and assassination. By letting democratically
elected local bodies expire, Khanal charged, the Nepali
Congress government has achieved by bureaucratic fiat exactly
what the Maoists have been trying to accomplish through their
campaign of terror and murder: the abolition of local
democratic government.


7. (SBU) Nor is the UML sounding the only note of
discontent. Several donors with projects aimed at
strengthening local government, including the Germans, Swiss,
Dutch, Danes, and UNDP, have all expressed dissatisfaction
with the GON decision, with some--most notably the Germans
and Swiss--threatening to freeze disbursements for some
projects. Awasthi said those donors reacted too hastily,
noting that the GON decisions both to allow local bodies to
expire and to assume responsibility for the functions of
those bodies after their expiration were fully in accord with
the Local Self-Governance Act. He believes the new
bureaucratic arrangement will persuade these donors to resume
disbursements. The local head of the German aid agency,
however, told emboff his organization will likely bypass the
new official local bodies, working instead with user groups
and other community organizations. The Swiss aid director
said his agency was still considering how to respond to the
GON plan. A World Bank official said that his organization
was considering whether to withhold some budgetary support
from the central government as a way of expressing its
disapproval for the move.

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POLITICAL MOTIVATION?
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8. (SBU) Adding to the donors' displeasure is the GON's
explicit acknowledgement that party politics played a
substantial role in the decision not to extend the local
bodies for one year. Officials at the National Planning
Commission and the Ministry of Local Development have told
emboffs that the PM and his Cabinet feared the
Opposition-dominated local bodies would divert funding to
support UML candidates in the upcoming national elections.
(The Prime Minister himself reportedly admitted these motives
to a group of donors during a recent meeting on the budget.)

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COMMENT
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9. (SBU) Faced with the imminent expiration of local
bodies, the PM had two choices consistent with Nepali law:
allowing them to lapse or extending their term for one year.
He chose the former, primarily for admittedly partisan
reasons. Unfortunately, this decision follows others--the
dissolution of Parliament, the extension of a state of
emergency that suspends nearly all civil rights--that leaves
Nepal's young democracy in a particularly precarious
condition with no elected representatives at any level of
government. Filling the year-long vacuum at the local level
with bureaucrats is a pale substitute, especially since civil
servants owe their allegiance to their respective line
ministries, rather than to local residents whose interests
they should be advocating. Pressure from foreign missions,
including this one, reportedly persuaded the GON leadership
to commit to holding local bodies elections by April. These
elections, like the parliamentary elections scheduled for
November, are likely to require substantial administrative
and financial support from the international community.



MALINOWSKI