NEPAL: DEUBA DUBBED PRIME MINISTER; CONGRESS'

C O N F I D E N T I A L SECTION 01 OF 04 KATHMANDU 001024

SIPDIS

STATE FOR SA/INS
LONDON FOR POL - GURNEY
NSC FOR MILLARD

E.O. 12958: DECL: 06/01/2014
TAGS: PGOV NP
SUBJECT: NEPAL: DEUBA DUBBED PRIME MINISTER; CONGRESS'
KOIRALA OUT IN THE COLD

REF: A. KATHMANDU 1012


B. KATHMANDU 751 (NOTAL)

C. KATHMANDU 819

Classified By: CDA JANET BOGUE. REASON: 1.5 (B,D).

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SUMMARY
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1. (C) At about 11:00 a.m. local time on June 2, King
Gyanendra appointed two-time Prime Minister and President of
the Nepali Congress (Democratic) Sher Bahadur Deuba as Prime
Minister. He is expected to be sworn in on June 3.
According to Palace sources, Deuba's nomination has the
critical support of Communist Party of Nepal - United Marxist
Leninist (UML),the country's largest party, as well as that
of two other Parliamentary parties, although whether the UML
will join Deuba's government remains unclear. The UML's
support to Deuba has shattered the five-party alliance,
leaving Nepali Congress President and adamant prime
ministerial aspirant Girija Prasad Koirala out in the cold.
In the absence of an all-party consensus candidate for Prime
Minister (Ref A),Deuba, the last democratically elected
Prime Minister before the King dismissed him for
"incompetence" in October 2002, seems a good compromise
choice. Moreover, his middle-of-the-road politics, his
party's comparatively restrained profile over the past
several months of street protests, and his ostensibly
easy-going manner make him well positioned to attract other
parties--with the notable likely exception of long-time rival
Koirala's Congress--into his new government. Friendly to the
U.S. and supportive of the global war on terror, Deuba can be
expected to press for sustained, if not increased, U.S.
assistance to counter the Maoist insurgency. Biographic data
on Deuba follows in Paras 7-8 below. Suggested press
guidance follows in Para 9 below. End summary.

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KING TAPS DEUBA AS NEW PM
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2. (U) At about 11:00 a.m. local time on June 2 the
state-owned media announced that King Gyanendra had appointed
Nepali Congress (Democratic) President and former Prime
Minister Sher Bahadur Deuba as Prime Minister. The King
reportedly charged the new PM with forming a multi-party
government and holding national elections by April 2005.
Deuba is expected to be sworn in June 3. The appointment
followed a flurry of meetings late June 1, most notably
between Communist Party of Nepal - United Marxist Leninist
General Secretary Madhav Nepal and Indian Ambassador Shyam
Saran, followed by a subsequent meeting between Nepal and
Deuba. The post of Prime Minister has remained vacant since
the May 7 resignation of former PM Surya Bahadur Thapa.


3. (C) The formal announcement was preceded by a private
telephone call from Shekhar Dhungana, Joint Secretary at the
Royal Palace, to Charge informing her of the impending
appointment. The early-morning call from the Palace was
rapidly followed up by another to Charge from Prabhakar Rana,
King Gyanendra's confidant and business partner, providing
additional information. According to Rana, Deuba's
nomination has the support of the pro-royalist National
Democratic Party (also known by the Nepali acronym RPP) and
the pro-royalist faction of the Nepal Sadbhavana Party.
(Note: Like Deuba's Nepali Congress (Democratic),neither
the RPP nor this faction of the Sadbhavana Party is part of
the five-party alliance that has been protesting against the
King's "royal regression." End note.) More important,
however, the Communist Party of Nepal - United
Marxist-Leninist (UML),the largest party in the country and
a leader of the alliance, had agreed to support Deuba, Rana
asserted. Initially, the UML will support the new government
"from outside," Rana said, but could join the government
later. In the meantime, the UML has reportedly agreed to
withdraw from the ongoing five-party protests against the
Palace. Rana attributed the UML's apparent ambivalence to
the party's own "internal problems," as well as the
constraints it faces in extricating itself gracefully from
the five-party alliance. He added that he understands there
is a written agreement between UML leader Madhav Nepal and
Deuba on the distribution of portfolios in the new Cabinet
but acknowledged that he has not actually seen such a
document. Some Cabinet positions may also be assigned to
non-party "technocrats," he advised. The full Cabinet will
likely be named within the "next day or two." In response to
Charge's query whether the new Cabinet would be formed in
time for the June 4 visit of Indian Foreign Minister Natwar
Singh, Rana replied, "I certainly hope so."


4. (C) The King's decision to choose Deuba has left Nepali
Congress President and former Prime Minister Girija Prasad
Koirala "frantic," Rana chuckled. According to Rana,
Koirala, who has served as Prime Minister in five previous
governments and had been blatantly angling for a sixth, has
telephoned him repeatedly since the previous evening,
pledging his support to "anyone but Deuba," his long-time
rival, as PM. Among others, Koirala suggested he would
reconsider former Speaker of Parliament Taranath Ranabath and
UML General Secretary Madhav Nepal--both of whose bids
Koirala had rejected resoundingly just a few days earlier
(Ref A)--as well as Surya Bahadur Thapa, the royal appointee
whose resignation had been a central goal, hypothetically at
least, of the five-party protests.

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COMMENT
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5. (C) Comment: Deuba's name has been floated as a
possible contender ever since the King began contemplating a
replacement for then-PM Thapa (Ref B). We had also heard
that the UML had indicated possible support for Deuba (Ref
C). In many ways, Deuba's moderate politics; his status as
head of the third largest party in the most recent
Parliament; his credentials as a leader in the pro-democracy
movement of 1990; the low profile of his party during the
vitriolic protests against the Palace by the five-party
alliance; and his position as the last democratically elected
Prime Minister before the King dismissed him and assumed
executive power in October 2002 all suggest his suitability
as a compromise candidate. By appointing Deuba, the King may
attempt a face-saving claim to be reverting to the situation
that existed before he ventured into constitutionally
uncharted territory by dismissing Deuba's government and
appointing his own. Moreover, Deuba's affable,
non-confrontational demeanor makes him well positioned to
attract support from other political leaders--with the
notable exception of his long-time nemesis and former party
colleague Koirala. Should Deuba succeed in gaining the
support of the UML's Nepal, the RPP, and the pro-royalist
faction of the Nepal Sadbhavana Party, he could lay claim to
a majority of the seats held in the most recent Parliament.
(Note: Of a total of 205 seats, the Nepali Congress
(Democratic) accounts for 30; the UML 69; the RPP 11; and the
Mandal faction of the Sadbhavana 4 for a total of 114. End
note.)


6. (C) Comment (Continued): Koirala's characteristic
implacability and self-absorption, reflected most recently in
his refusal to give party colleague Taranath Ranabhat or
alliance partner Madhav Nepal a chance at the PM's chair (Ref
A)--have cost him dearly. His intransigence--to say nothing
of his lack of political pragmatism--seem to have left him in
the political wilderness, with only the ideologically awkward
allies of the far-left People's Front Nepal (with a combined
total of 6 MPs in the last Parliament) and the Peasants' and
Workers' Party (1 MP),and the tattered remains of the rest
of the Nepal Sadbhavana Party (1 MP). As the largest party,
the UML's abandonment of the "decisive agitation" renders the
ongoing campaign of protests significantly less "decisive."
Most important, UML support for a Deuba government appointed
by the King would inhibit the Maoists' (heretofore
successful) strategy of manipulating the democratic parties
and the Palace against each other.

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BIOGRAPHIC INFORMATION ON SHER BAHADUR DEUBA
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7. (SBU) Sher Bahadur Deuba has served as Nepal's Prime
Minister twice: from September 1995-March 1997 and again
from July 2001-October 2002. Deuba's first stint as PM
proved generally unproductive, due in part to his indecisive
management style and the lack of support he received from his
personal and political rival, Nepali Congress power broker
G.P. Koirala. In an effort to keep the peace in his
coalition government, he allocated nearly 50 Cabinet
positions across the parties, at great expense to the
national budget and at considerable detriment to his own
effectiveness. Consequently, his ambitious plans, including
the privatization of major state-owned enterprises,
languished. During his second term as PM, Deuba presided
over the first ceasefire and negotiations with Maoist
insurgents (July-November 2001); the first-ever deployment of
the Royal Nepal Army against the Maoists and the imposition
of a state of national emergency, which temporarily suspended
most civil rights, from November 2001-August 2002; and the
visit of Secretary Powell to Kathmandu in January 2002. On
May 22, 2002, Deuba, fearing a vote of no confidence (most
likely spearheaded by Koirala),requested King Gyanendra to
dissolve Parliament. Enraged at Deuba's move, Koirala
expelled him from the Nepali Congress Party on May 26, 2002,
whereupon Deuba formed the rival splinter Nepali Congress
(Democratic). Atlhough deteriorating security conditions
made elections unfeasible, in July 2002 Deuba, rather than
extending the tenure of the UML-dominated local bodies,
allowed their terms to lapse, thereby creating a vacuum in
representative government at both the national and local
elections. Deuba's subsequent inability to hold elections as
scheduled prompted the King to dismiss him, citing his
"incompetence" as a leader, on October 4, 2002. Several
former ministers in Deuba's second Cabinet subsequently faced
corruption charges brought by the Commission for the
Investigation into the Abuse of Authority (CIAA),the
constitutional body charged with controlling and prosecuting
corruption. Following Deuba's dismissal, the King assumed
executive authority and appointed two successive Prime
Ministers and Cabinets. Other party leaders, particularly
Koirala, blamed Deuba for facilitating the royal "regression"
and the King's extra-constitutional activities, pointing to
Deuba's insistence on dissolving Parliament as the initial
"trigger" for the King's subsequently more active and direct
involvement in governing.


8. (SBU) Born in the far-western district of Dadeldhura in
1946, Deuba began working in politics, initially in student
organizations affiliated with the pro-democracy movement, in

1965. In 1971 he became president of the Nepal Students
Union, the student wing of the then-banned Nepali Congress.
In all, Deuba spent a total of nine years in prison for his
pro-democracy activities. He earned his bachelor of law and
masters of arts in political science from Tribhuvan
University in Kathmandu. In 1988 the Socialist International
sponsored his continued studies at the University of London,
where he earned a diploma in international law and relations
in 1990. In 1994 he married Dr. Arzu Rana, a women's
activist who is the granddaughter of one of the last Prime
Ministers of the autocratic Rana regime, which ended in 1951.
The couple has one son who attends the British School in
Kathmandu. Friendly to the U.S., Deuba was a vocal supporter
of the global war on terror. His government may be expected
to press for continued, if not increased, U.S. assistance to
address the Maoist insurgency. He staunchly supports a
western approach to the economy and favors U.S. investment in
Nepal. Deuba briefly met with President Bush during a visit
to Washington in May 2002. Despite his proficiency in
English, an apparent speech impediment makes Deuba difficult
to understand in any language.

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SUGGESTED PRESS GUIDANCE
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9. (SBU) Suggested press guidance follows below:

--We welcome the appointment of Sher Bahadur Deuba, an
experienced democratic leader, as a significant step toward
the restoration of representative democracy in Nepal.

--This appointment marks an important opportunity for all
pro-democratic and constitutional forces in Nepal to work
together to address the many urgent challenges, including a
terrorist insurgency, now confronting the nation.

--We urge all supporters of multi-party democracy and
constitutional monarchy to cooperate, in the national
interest, in giving their fullest support to this endeavor.
BOGUE