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06KATHMANDU2749 2006-10-16 11:27:00 CONFIDENTIAL Embassy Kathmandu
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1. (C) Contrary to the indications we had on October 13, the
Government of Nepal (GON) and the Communist Party of Nepal
(Maoist) (CPN-M) did not reach a peace deal at their meeting
on October 15. No new date for talks was announced.
According to our sources, Maoist arms management was the
principal stumbling block. Peace facilitator Siebert told
Charge October 16 that the UN peace team met October 16 with
both the GON and the CPN-M separately and then together in an
effort to assist the two sides in reaching an agreement.
Siebert also informed Charge, and Seven Party Alliance
leaders confirmed, that the parties plan to wait until a deal
is in place on all the issues before meeting again.

Despite High Expectations No Peace Deal


2. (C) In spite of optimistic predictions on October 13 from
USAID-contracted peace facilitator Hannes Siebert, the Prime
Minister's Defense Advisor Ramesh Jung Thapa and Nepali
Congress - Democratic (NC-D) General Secretary Bimalendra
Nidhi (reftel), the Government of Nepal (GON) and the Maoists
failed to reach a peace agreement at their meeting the
afternoon of October 15. At the previous three sessions, on
October 8, 10 and 12, all of parties in the governing
Seven-Party Alliance (SPA) had participated in the
negotiations with the Communist Party of Nepal (Maoist). On
the 15th, it was only the "Big Three" -- the Nepali Congress
(NC), the Communist Party of Nepal - United Marxist Leninist
(CPN-UML), and the NC-D. Prakash Mahat, a member of the NC-D
Central Committee and a participant in the talks, stated to
Emboff October 16 that it was simply easier for the NC, the
CPN-UML and the NC-D to work out a deal with the Maoists, and
then present it to the others. It also had the added
advantage of limiting the ability of the three small leftist
parties in the SPA to make mischief, something which had been
a problem, he said, in the prior sessions. There was no
press conference after the meeting on October 15 and no new
date for talks was announced.

Maoist Arms Management and Other Open Issues


3. (C) Peace facilitator Siebert explained to Charge on
October 16 that the anticipated deal on the central issue of
Maoist arms management had broken down in part because Prime
Minister Koirala had decided after meetings with Chief of
Army Staff Katawal as well as the King's Principal Secretary
to return to his prior insistence on complete separation of
the Maoists from their arms before they entered an interim
government. Sujata Koirala, the PM's daughter, told Emboff
on October 15 that she had also pressed her father to hold
out for complete separation. Anything short of that, she had
told him, would not be acceptable to the international
community. Mahat stated to Emboff October 16 that he thought
all of the remaining open issues could be resolved if arms
management were resolved. That included the role of the
monarch and the composition of the interim parliament.
According to Mahat, the Maoists' demands for the creation of
a unified republican front and for "suspension of the
monarchy" were largely for popular consumption. They
realized, he said, that the NC would never agree to the first
and that the second had largely already happened. Mahat
suggested that the parties would agree to some sort of
statement regarding nationalization of the King's property in
order to satisfy the CPN-M's demands.

Next Steps


4. (C) Bim Riwal, a leading member of the CPN-UML, told
Emboff October 16 that he thought agreement on the issues of
arms management, the monarchy and the interim parliament
could perhaps be reached within four to five days. Mahat
said a deal might be possible within a week. Peace
facilitator Siebert passed on to Charge October 16 that the
decision on when to call the next session had been left to
the Prime Minister. The next formal meeting would not take
place until there was a deal on all of the open issues. In
the meantime, the UN peace team met separately October 16, he
reported, with the GON and the CPN-M and then with both in an
effort to reach agreement on arms management. Chakra
Bastola, a senior NC leader, informed Emboff October 16 that
the talks were continuing, but that public expectations were
outpacing the negotiations. It was important, he said, to
lower the talks' profile and allow low-key informal
discussions to continue among the parties and the Maoists so
that consensus could be reached.



5. (C) We see the delay in reaching a peace deal as a good
thing. For a short time, it appeared that Prime Minister
Koirala might allow the Maoists into an interim government
with their arms. We are delighted he did not do so. We will
redouble our efforts to shore up him and his colleagues in
the CPN-UML and the NC-D to continue taking a firm position.
Post will also continue to work closely with the UN Secretary
General's representative to the peace process, Ian Martin,
and his team to help them fashion an arms management deal
that will protect Nepal's fragile democracy.