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05NEWDELHI4193 2005-06-03 12:04:00 CONFIDENTIAL Embassy New Delhi
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1. (C) Summary: Joint Secretary (North) Ranjit Rae told
A/DCM and Poloff on June 3 that India will caution Nepali
Congress leader GP Koirala to avoid allying with the Maoists
during his upcoming visit to New Delhi. Following a visit to
Kathmandu, Rae worried that the gap between the King and the
parties was widening, but suggested that the time was ripe
for the GOI and USG to consider the "endgame" for finding a
political settlement that would satisfy the monarchy, the
parties, and enough Maoists to steer them away from violence
and into the political mainstream. End Summary.

Koirala Visit to New Delhi


2. (C) Rae said that Koirala's New Delhi visit for medical
treatment beginning the weekend of June 3 would include
meetings with the Prime Minister, Foreign Minister, MEA
officials and opposition leaders. The GOI will emphasize to
the former PM the danger of any collaboration with the
Maoists, since "they still have guns," and sound out
Koirala's views on where the parties could compromise with
the King, and what directions to take next. Noting that UML
party member Jhalanath Khanal was stopped by HMGN from
visiting India this week (reftel), Rae said that he hoped
Koirala would be permitted to depart as planned, adding that
HMGN was aware of Koirala's plans and GOI interest in his

Political Impasse Grows


3. (C) Rae reviewed his impressions from his recent trip to
Nepal, commenting that although the gap between the Palace
and the parties is widening, the military situation seems to
have improved, at least in the Kathmandu area. Although the
Maoists have shown themselves unable to prevail against the
RNA militarily, the RNA has not made any effort to expand its
control from Kathmandu and a few district headquarters. As a
result, "official Nepal" is confined to major cities and
towns, while the rest of the countryside is subject to
control by the Maoists, he stated.

4. (C) The political parties are upset by the Palace's
appointment of new administrators at all levels of
government, Rae reported. The parties fear that the King is
using the time before next year's proposed municipal
elections to entrench himself in power, ensuring that the
administrators involved in conducting the polls will be loyal
to him. As a result, the parties will not participate in the
elections unless there is first an accommodation with the
King to bring the parties into the government, Rae said.

5. (C) Rae worried that the deep mutual distrust between the
King and the parties was hardening irreversibly. As the gap
between them grows, he speculated, the more radical party
elements, including the student leaders, will push the
parties to adopt a Maoist-aligned agenda calling for a
republic. If the parties publicly joined the Maoists against
the King, reconciliation with the Palace would be almost
impossible. Rae said that the party leaders in Kathmandu had
interpreted the GOI decision to release some non-lethal
military assistance to the RNA as a sign that India was
siding with the King, adding that he had sought to correct
that perception in meetings last week. A/DCM expressed
concern that the reports of GOI dalliances with Maoist leader
Bhattarai risked sending other mistaken signals to Nepal,
leading party leaders to conclude that they should throw
their lot in with the Maoists. Rae acknowledged that the
Palace had spun the reports in this direction, and underlined
that a Maoist convergence with the parties would be bad for

Consultations on the Future


6. (C) Admitting that India's entire Nepal policy was under
internal review, Rae suggested that it was time for the US
and India to consider an "endgame" to the crisis. We should
identify the "broad contours" of a political settlement that
could accommodate some of the demands of all sides. Rae
speculated that the split in the Maoist leadership and losses
against the RNA may have affected their willingness to
compromise, and that we should assess whether significant
numbers could be "peeled off" and brought into the political
mainstream. He commented that after Koirala's visit the GOI
would have a better sense of what policy to follow. A/DCM
welcomed the suggestion of consultation on a future
settlement, and acknowledged that India's own domestic
experience was relevant to the task of bringing Maoist
ideologues into the political mainstream. However,
experience with other insurgencies, including Punjab, also
teaches that some of the Maoists will not be brought into the
political process, and must be dealt with as a security/law
enforcement problem. In this context, we told Rae that
Washington would be interested in the GOI's conclusions.



7. (C) As the GOI rethinks its Nepal policy and seeks a
political outcome that could satisfy enough of the actors to
end the political crisis and the insurgency, we will need to
consult closely to ensure that our positions remain
coordinated. The Bhattarai incident shows how readily
uncoordinated actions from one faction of India's pluralistic
system can appear to be signals of policy direction. The New
Delhi meeting between U/S Burns and FS Saran later in June
might be a good opportunity to hear India's views on Nepal's
future and share ours.