NEPAL: FOUR PARTIES AGREE ON BASIC PRINCIPLES FOR

C O N F I D E N T I A L SECTION 01 OF 02 KATHMANDU 001231

SIPDIS

STATE FOR SA/INS
LONDON FOR POL - GURNEY

E.O. 12958: DECL: 06/30/2014
TAGS: PGOV NP
SUBJECT: NEPAL: FOUR PARTIES AGREE ON BASIC PRINCIPLES FOR
COALITION GOVERNMENT

REF: KATHMANDU 1024

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


1. (SBU) Summary: On June 30 three political parties
joined Prime Minister Sher Bahadur Deuba's Nepali Congress
(Democratic) in endorsing a statement of objectives for
Deuba's government. The parties' hard-won agreement on the
43-point program opens the door for the formation of a
coalition government. The press optimistically reported that
the composition of the Cabinet may be announced as early as
July 1. The alliance offers the possibility of the
broadest-based government since King Gyanendra dismissed the
last democratically elected government in May 2002. Former
Prime Minister G.P. Koirala's Nepali Congress, meanwhile,
largely due to the obduracy of its leader, remains out of the
coalition, out of the Cabinet, and out in the cold. End
summary.



2. (U) After nearly a month of intensive wrangling, on June
30 the Communist Party of Nepal - United Marxist Leninist
(UML),the National Democratic Party (also known as RPP, its
Nepali acronym),and the Nepal Sadbhavana Party (Mandal
faction) joined Prime Minister Sher Bahadur Deuba's Nepali
Congress (Democratic) in endorsing a statement of common
objectives for Deuba's government. The agreement on the
43-point common minimum program (CMP) opens the door for the
formation of a four-party coalition government. According to
press reports, portfolio assignments to the new Cabinet may
be announced as early as July 1. (Comment: We expect it may
take somewhat longer. End comment.) In addition to the
premiership, the Nepali Congress (Democratic),according to
popular speculation, is expected to retain five Cabinet
slots, while the UML, RPP and Sadbhavana may pick up five,
three and one respectively. In addition, two ministerial
posts may be awarded to non-party technocrats chosen by the
Palace. Both Deuba and UML General Secretary Madhav Kumar
Nepal reportedly agreed to reserve four ministries for former
Prime Minister G.P. Koirala's Nepali Congress, in the event
the octagenarian leader--the last hold-out among the major
mainstream political party leaders--later decides to join the
government. According to press and party sources, the Nepali
Congress (Democratic) and the UML continue to disagree on
allocation of the powerful ministries of Finance and Home,
with the UML aggressively laying claim to these key posts,
and Deuba's party just as energetically resisting.


3. (U) The common program, while predictably featuring
commitments to strengthen democracy, "safeguard the
achievements of the 1990 People's Movement," hold elections
and resolve the Maoist insurgency through a "progressive
political consensus" attained from negotiations, also
contains a surprising number of objectives aimed at improving
Nepal's socio-economic development. For example, the CMP
pledges to "increase gradually" the number of female
candidates in Parliament and in locally elected bodies, and
undertakes to transform, through "constitutional methods,"
the National Assembly (the Upper House of Parliament) into a
body more representative of women, the lower castes, and
ethnic minorities. Other noteworthy (if not fully
fleshed-out) objectives include special assistance programs
for the least developed, Maoist-affected regions of the
country; land reform; special employment opportunities for
lower castes, women and ethnic minorities; improved rural
community health programs; the establishment of a social
security program; and property rights for women.


4. (C) In a June 29 conversation with the DCM, RPP Chairman
Pashupati SJB Rana says he thinks Deuba already has accepted
his proposal for a Peace Secretariat to help the government
pursue negotiations with the Maoists more systematically and
knowledgeably. Rana also said that his contacts with the
Maoists indicate that they may be willing to enter
negotiations with the Government without initiating a formal
cease-fire, which is still unpopular with the Royal Nepal
Army because the Maoists exploited the last one to their
advantage. Like some other commentators, Rana believes that
the next round of negotiations should be unpublicized and
preferably take place outside Nepal to prevent the kind of
high-profile ultimata that the Maoists used previously to
leverage concessions out of Government negotiators. Rana
says he believes that India would oppose active mediation by
any outside government or organization like the UN. Where an
outside party may be helpful and acceptable, he suggested,
would be in providing a foreign venue for peace talks and
security to both sides.


5. (C) Comment: Given the bitterness and contention more
typical of the domestic political culture, the all-too-rare
phenomenon of four parliamentary parties agreeing on
anything--much less a 43-point program to underpin a
coalition government--is heartening. In the absence of
elections, Deuba's continuing efforts to bring the RPP, the
Sadbhavana, and most important, the UML, into his Cabinet
seem to offer the best prospects yet for a broader-based,
more representative government since King Gyanendra dissolved
the last democratically elected government and appropriated
executive authority in May 2002. Substantial hurdles
remain, however, the most formidable being the thorny
question of the allocation of key ministries like Home and
Finance. Moreover, even the UML's support does not
necessarily counterbalance the enmity and sustained
antagonism that the Nepali Congress (Koirala) can be expected
to level against Deuba. With three of the five largest
parties now supporting Deuba's government, former Prime
Minister G.P. Koirala's Nepali Congress is the only
mainstream party without a seat at this multipartisan
table--and thus a potentially destabilizing factor as the new
government seeks to establish itself.
BOGUE