UPDATE ON NEPAL'S MAOIST INSURGENCY, JULY 26-AUGUST

UNCLAS SECTION 01 OF 05 KATHMANDU 001458

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E.O. 12958: N/A
TAGS: PINS PTER CASC PGOV NP
SUBJECT: UPDATE ON NEPAL'S MAOIST INSURGENCY, JULY 26-AUGUST
1

REFERENCE: (A) KATHMANDU 1388
(B) KATHMANDU 1423
(C) KATHMANDU 1431
(D) KATHMANDU 1399

SUMMARY
--------------


1. On July 31 Maoists agreed to sit for a third round of
formal peace talks with the Government of Nepal (GON).
Kamal Thapa, Information Minister and GON negotiating team
member, welcomed the decision but remained cautious, saying
that a date for a third round of talks would be set through
"mutual consultation." Kofi Annan, UN Secretary General,
issued a statement on July 30 once again offering UN
assistance to Nepal to achieve a peaceful outcome.
According to July 25 press accounts, the Government of India
has voiced concern over reports that Maoists from Nepal are
forming ties with terrorist groups in India. Maoist
leadership reportedly is under intense pressure from Maoist
cadres and international allies such as the Revolutionary
Internationalist Movement (RIM) to abandon dialogue and
return to all-out war. Despite the continuing ceasefire and
in direct violation of the code of conduct, Maoists attacked
security forces, murdering three and injuring two. The
insurgents continue to intensify extortion demands, severely
beating those who fail to comply. Sher Bahadur Deuba,
President of the Nepali Congress (Democratic) and former
Prime Minister, accused the Maoists on July 25 of preparing
for war. Maoists have threatened to punish severely anyone
who defies their orders to stop working with US affiliated
development and humanitarian organizations. End Summary.

GON ACCEDES TO MAOIST DEMANDS;
MAOISTS AGREE TO FURTHER PEACE TALKS
--------------


2. Timeline:

---On July 23, Maoists responded to the GON's July 13
invitation to sit for a third round of talks by setting new
preconditions (Ref A).

---In its response on July 25, the GON addressed each of the
Maoists' preconditions, declaring its continued commitment
to the peace process, and inviting the Maoists to sit for
talks by August 15. The GON assured the Maoist leadership
that the GON's negotiating team has full legal authority to
make decisions, so there is no need for the King's direct
involvement; agreed to make public the whereabouts of over
three hundred Maoist cadres as soon as possible; and said it
is willing to release three central committee members. The
GON refused to accept the controversial demand that the
Royal Nepal Army (RNA) be restricted to within five
kilometers of their barracks, explaining that "to restrict
and limit the responsibility and domain of the army would
not be in the broader interest of the country."

---On July 27 Baburam Bhattarai, Maoist ideologue and head
of the Maoist negotiating team, issued an eight-page list of
ultimata, demanding that the GON fulfill their prerequisites
by July 31 or the Maoists would conclude that the GON has
"unilaterally dissolved the ceasefire and dialogue."

---On July 29 the GON conceded several of the Maoists'
demands, releasing three central committee members from
prison, and releasing information on thirty-six missing
Maoist cadres (Ref B). The GON's quick response put
pressure on the Maoists not to walk away from the dialogue.
Minister Lohani said on July 30 that "now it is up to the
Maoists."

---On the afternoon of July 31 Pushpa Kamal Dahal
(Prachanda),Maoist supreme leader, issued a statement that
the Maoists would sit for a third round of talks (Ref C) and
invited the political parties to be involved.

GON CAUTIOUSLY WELCOMES MAOIST DECISION
--------------

3. The GON welcomed the decision of the Maoists to sit for
a third round of talks, but warned, "we should not get too
excited." Minister Thapa said the GON would proceed
carefully, and would try "every possible means" to involve
the political parties. The GON had requested talks by mid-
August, but Thapa conceded that a date would be set through
"mutual consultation."

UN SECRETARY GENERAL OFFERS ASSISTANCE
--------------


4. On July 30 Kofi Annan, UN Secretary General, issued a
statement expressing the UN's willingness to assist Nepal in
finding a peaceful solution to the current conflict.
Annan's statement praised the ceasefire and said the "UN
remains at the disposal of Nepal to assist in the
achievement of a negotiated peaceful solution." Prakash
Chandra Lohani, Minister of Finance and member of the GON's
negotiating team, declared on July 27 that there was no need
for third-party mediators, reportedly saying, "this is our
internal matter and we are striving to resolve it."


5. Human rights organizations, political parties and
members of civil society have expressed the importance of
the GON and Maoists continuing with the peace dialogue. The
National Human Rights Commission (NHRC) issued a statement
on July 29 urging both sides to sit immediately for a third
round of talks. The NHRC also faulted the ongoing exchange
of letters for creating "misunderstandings" which
jeopardized the future of the peace talks.


6. Facilitators for the peace talks issued a joint
statement on July 29 appealing to both sides to sit for
direct talks, and to continue efforts to ensure the success
of the peace process. The facilitators complained that the
"peace dialogue has not been disrupted but nothing
significant has been initiated." The team reportedly also
opined that rigid stands by both the GON and the Maoists had
pushed the peace talks into a "critical stage," but were
still confident the next round of talks would take place.


7. In separate statements on July 30, leaders from Nepal's
major political parties reportedly have warned against a
return to violence, saying the people of Nepal would not
accept any action that pushed the country to further
violence. Girija Prasad Koirala, President of the Nepali
Congress (NC),reportedly called it "inappropriate" for the
Maoists to issue an ultimatum during a time of uncertainty.
Koirala also declared that the Maoists should hold talks
with the political parties if they were not satisfied with
the GON. Committee members from the Communist Party of
Nepal-United Marxist Leninist (CPN-UML) said the GON's
willingness to fulfill some of the demands kept hope alive
for another round of talks. The CPN-UML staged a rally in
the capital on July 31 to pressure the GON and the Maoists
to continue dialogue. The Rastriya Prajatantra Party (RPP)
also called on the Maoists to sit for another round.
MAOISTS FORMING TIES IN INDIA
--------------

8. According to press reports on July 25, the Government of
India voiced concern over the possibility that Maoists from
Nepal are forming ties with terrorist groups in India. At a
meeting attended by senior police and civilian officials
from the Indian state of Bihar and the India-Nepal border
districts of Bara and Parsa, Indian officials reportedly
voiced concerns on alleged violence committed in India by
Maoists who are aligning themselves with India's militant
People's War Group (PWG) and Maoist Communist Center (MCC).
The governments of Nepal and India have agreed in the past
to share intelligence in order to combat terrorist
activities in both countries.

RIM EXERTS RADICAL INFLUENCE FROM INDIA
--------------


9. On July 30 Mohan Bikram Singh, a former mentor to
Baburam Bhattarai and Pushpa Kamal Dahal (Prachanda),told a
local publication that the Maoists "no longer see any
purpose in continuing with dialogue." Singh also claimed
that the Maoists are under intense pressure from Maoist
cadres and international allies to abandon dialogue and
return to violence. At the forefront of those exerting
pressure is the Revolutionary Internationalist Movement
(RIM),which is known for encouraging revolution over
dialogue. (Note: RIM imposed pressure on the Shining Path,
the Maoist organization in Peru, to abandon dialogue and
return to war. End note). Senior Maoist leaders reportedly
attended a recent RIM conference in the Indian State of
Bihar (Ref D),where attendees praised the insurgency,
claiming "Nepal is advancing to new heights and transforming
the country into a bastion of world proletarian movement,"
and adopted the slogans of "Hands Off Nepal" and "Look to
the Himalayas, a Better World in Birth." RIM reportedly has
also aligned itself with the Maoists and the Maoist
Communist Center (MCC) of India.

MAOISTS CLASH WITH SECURITY FORCES
--------------


10. On July 30 five unarmed Royal Nepal Army (RNA)
personnel in the eastern district of Sindhuli were attacked
by a large group of armed Maoists. Responding security
forces found three alive and two who had been brutally
beaten and then shot to death. The soldiers reportedly had
just returned from collecting their salaries, which the
insurgents appropriated. The brutal murders were condemned
by the Defense Ministry in a press release issued on July

31. On July 29 Maoists reportedly killed a head constable
of police in Kaski District by slashing his throat.


11. Security forces and Maoists clashed in the western
district of Surkhet on July 30. According to security
forces, the insurgents opened fire and a clash ensued for
almost two hours. No injuries were reported, but army
personnel recovered nine socket bombs, ammunition and rifles
left by the Maoists at the scene.

DEUBA ACCUSES MAOISTS OF PREPARING FOR WAR
--------------


12. Sher Bahadur Deuba, President of the Nepali Congress
(Democratic) and former Prime Minister, accused the Maoists
on July 25 of preparing for war. According to press reports
Deuba said that the Maoists would "stage a drama of
dialogue" before waging war, and claimed that the insurgents
were actively recruiting cadres, extorting money and
importing ammunition from abroad. (Note: Deuba was Prime
Minister when the Maoists walked out of peace talks after
two rounds of dialogue in 2001 and subsequently launched
simultaneous attacks on a police post and army barracks,
killing fourteen soldiers and thirty-seven policemen. End
Note).


13. The local press quoted an unnamed senior Royal Nepal
Army (RNA) official on July 30 as saying that the Maoists
have amassed arms and ammunition in the eastern region of
the country as a possible prelude to war.

MAOISTS WARN AGAINST WORKING WITH USG PROGRAMS
-------------- -


14. Maoists continue to increase anti-American rhetoric.
The insurgents have posted notices in the districts of
Nuwakot, Rasuwa, and Sindhupalchowk ordering residents not
to work with USG funded projects and warning of severe
punishment to anyone who defies the order. The notice
claims "under the cover of Save the Children US, the U.S.
imperialists are conducting activities." Maoists have
warned that if the notices are ignored, they would be
"compelled to take severe action."


15. The All Nepal National Independent Students' Union-
Revolutionary (ANNISU-R),the Maoist affiliated student
organization, has reached a deal with the Private and
Boarding School Organization of Nepal (PABSON) to
discontinue employment of any foreign teachers, mostly
Indian nationals and Bhutanese refugees. The militant
student organization has announced "severe action" against
any schools that fail to comply.

MAOIST EXTORTION INTENSIFIES
--------------


16. Maoists continue to intensify extortion demands. In
the far-western district of Humla the insurgents reportedly
are targeting teachers and businessmen in the villages, and
looting food from the farmers. Civilians who refuse to
donate allegedly have been abducted and beaten. In Kailali
District a group of Maoists severely beat two civilians who
were unable to give them USD 700, an exorbitant amount in
that region.

COMMENT
--------------


17. The breakdown of the ceasefire has been avoided for
now, but the prospects for further peace talks remain
fragile. Prachanda's statement, though agreeing to another
round of talks, is ominously critical of the dialogue so
far, labeling the peace process as a "joke and a situation
of confusion." The Maoist negotiating team reportedly is
still in India, so it is unclear when a third round will
occur. Virtually no one to who we talk expresses any
confidence that a return to warfare can be avoided in the
longer term without concerted foreign pressure. End
Comment.

MALINOWSKI