NEPAL'S "STATE OF THE UNION" IMPRESSES FEW

C O N F I D E N T I A L KATHMANDU 001797

SIPDIS

SIPDIS

E.O. 12958: DECL: 07/10/2016
TAGS: PGOV ECON PREF NP
SUBJECT: NEPAL'S "STATE OF THE UNION" IMPRESSES FEW


Classified By: Charge d'Affaires Nicholas Dean. Reasons 1.4 (b/d).

SUMMARY
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1. (C) On July 9, Deputy Prime Minister K.P. Oli presented to
Parliament the Government of Nepal's (GON) annual policy and
program statement for the 2006-2007 fiscal year (full text
emailed to SCA/INS). (Note: The Nepali fiscal year runs from
July 15 - July 14. End Note.) The statement to Parliament,
attended by the Charge and other members of the diplomatic
community, was comprehensive, if light on details. It
focused on consolidating the democratic gains from the
people's movement, including the GON's commitment to
establish sustainable peace through constituent assembly
elections. While some political and business leaders were
happy with the statement, many were critical that the
statement was "traditional" and failed to address the
expectations of the pro-democracy movement. End Summary.

ANNUAL POLICY AND PROGRAM STATEMENT VERY BROAD
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2. (U) In a departure from the past practice of the King
presenting Parliament with the GON's equivalent of its "State
of the Union," and with PM Koirala still in the hospital,
Deputy PM Oli presented the GON's comprehensive 34-point
policy and program statement for the 2006-2007 Nepali fiscal
year on July 9. It included transitional themes of peace and
constituent assembly elections. The Nepal Army, Nepal
Police, and Armed Police Force are to be managed "in
accordance with the changed context." Sustainable peace is
to be established "in accordance of the people's wishes" by
holding free and fair constituent assembly elections.
Programs are to be launched for the relief and welfare of
those affected by and displaced by the Maoist insurgency.


3. (U) The annual statement also focused on the rural sector.
The GON will give priority for projects that increase rural
employment and will give more money to Village Development
Committees (VDC). The GON pledged to target rural
empowerment and poverty reduction programs, with priority for
women's capacity development programs. The GON plans to
implement some mid-scale hydroelectric projects to meet
electricity needs of the people to include an expansion of
rural electrification. Also, each household without
electricity will be provided a solar lamp. On the economic
front, the GON plans to establish an Industrial Revival Fund
to rehabilitate industries and economic sectors negatively
affected due to the "state of crisis" of the economy over the
past five years. The GON announced it will seek reform in
the civil service to make it competent, efficient, and
service oriented. The GON also promised to make efforts to
bring an "early end to the Bhutanese refugee problem," as
well as "repatriate them to their country with dignity."

SOME POSITIVE REACTIONS TO STATEMENT...
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4. (C) CPN-UML General Secretary Madhav Kumar Nepal welcomed
the statement and stressed that its essence was
"transformation of transitional Nepali society into a new
democratic one." Businessman Rajendra Khetan, Vice President
of the Confederation of Nepalese Industries, stressed that
this "was the first time ever" the government had given
importance to economic and trade issues in its annual
statement. He noted that if implemented, the statement of
policies and programs "could not be a better document."

...BUT MANY POLITICOS CRITICAL
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5. (C) Many political leaders commented that the statement
did not sufficiently address the expectations of the recent
pro-democracy movement. Anil Jha, Joint Secretary General of
the leftist Nepal Sadbhawana Party-Anandi Devi (NSP) told
Emboff that the programs announced by the Seven-Party
Alliance (SPA) government were like "old wine in a new
bottle." He speculated that, given such lackluster
announcements, the general masses could become disillusioned
with the government and SPA, and gradually become inclined
toward Maoist plans and programs." Surendra Prasad
Chaudhary, Member of Parliament, Nepali Congress (NC),
thought the programs announced were "stereotypical" and
commented that the statement should have been done in a
better way to "empower every sector of society."


6. (C) Pashupati Shumsher Rana, Chairman of the conservative,
more royalist Rastriya Prajatantra Party (RPP),called the
statement "traditional" and said it failed to address the
expectations of the pro-democracy movement. He opined "there
should have been a clear mention of legal, technical, and
practical issues to be addressed for free and fair
constituent assembly elections." Madhav Kumar Nepal
acknowledged the statement had some shortcomings and
mentioned that it would have been better if the SPA "had come
up with a time table and action plan for constituent assembly
elections." Chairman of the Rastriya Janashakti Party
(RJP) Surya Bahadur Thapa commented that the statement lacked
"any priority and time frame" or "any concrete action plan to
bail the country out." Thapa stressed the need to settle the
arms issue before the Maoists joined the government.

COMMENT
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7. (C) The new government's annual statement of policies and
programs contains many general statements that look good on
paper. However, with the GON's poor track record of backing
up its words with actions, many people had hoped this year's
statement would contain more specific, obtainable plans,
rather than broad, less credible proposals agreeing to fix
all the country's woes. The criticism of the GON's statement
is part of the ongoing disappointment on the part of many
Nepalis with unmet expectations from the new government. PM
Koirala's absence due to poor health further adds to the
perception that the GON is idling and not moving forward.
DEAN