NEPAL: FINANCE MINISTER WANTS U.S. SUPPORT FOR

C O N F I D E N T I A L SECTION 01 OF 03 KATHMANDU 001248

SIPDIS

SIPDIS

E.O. 12958: DECL: 06/25/2017
TAGS: PREL PREF PGOV EAID KDEM BT NP
SUBJECT: NEPAL: FINANCE MINISTER WANTS U.S. SUPPORT FOR
POLICE


Classified By: Ambassador James F. Moriarty. Reasons 1.4 (b/d).

Summary
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1. (C) Finance Minister Mahat told the Ambassador June 22
that the Government of Nepal's most pressing need was support
for the Nepal Police to ensure a free and fair Constituent
Assembly election. The Ambassador said the U.S. had come up
with an additional USD 2.8 million for election security, but
emphasized that the real challenge facing the Police was low
morale and the absence of leadership. Despite a
disconcerting split between "hard-liners" and "harder-liners"
within the Maoists, the Ambassador affirmed that the Maoists
remained tied into the peace process. The power-grabbing
scenarios of each group, the Ambassador emphasized, relied on
unrealistic assumptions that the political parties would
agree to transfer political power to the Maoists and that the
Army would allow a Maoist takeover. Mahat pointed out that,
with many Maoist party cadre active in Kathmandu, the Maoists
had less of a presence in the countryside, their traditional
support base. Mahat said he thought that unification of the
Nepali Congress (NC) Party and Nepali Congress Democratic
(NC-D) Party would move forward soon.

Finance Minister Requests Funds for Police
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2. (C) Finance Minister Mahat told the Ambassador June 22
that the Government of Nepal's (GON's) most pressing need was
support for the Nepal Police, highlighting the planned 70,000
temporary police that the GON planned to hire to support the
Constituent Assembly election. In Nepal's previous
elections, the then Royal Nepal Army (RNA) had provided
logistic and security support. With the Nepal Army (NA)
confined to its barracks by the Comprehensive Peace Accord,
Mahat said, the Nepal Police (NP) and Armed Police Force
(APF) would bear the burden. The Ambassador informed Mahat
that the U.S. planned to provide USD 2.8 million to the
Police for election security and said that India was poised
to provide more equipment. The Ambassador emphasized,
however, that the main challenge to the restoration of law
and order was not lack of equipment or material support but
rather poor morale and lack of senior leadership. Without
clear direction from the Home Ministry and Police officials,
even the most advanced communication equipment, riot control
gear, and vehicles would not enable the Police to enforce law
and order and re-establish a responsible presence in the
countryside. Mahat and the Ambassador agreed that Home
Minister Sitaula was not up to the task. Mahat also pointed
to Sitaula's early effort to replace some of the most
competent leaders in the Police with his own "cronies."

Minister Wants U.S. Funding Routed Through Finance
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3. (C) Mahat asked the Ambassador whether U.S. support to
the Police could go through the Peace Support Fund, which the
Finance Ministry administers, making it easier for the GON to
ensure the investments were complementary to other donor
contributions. The Ambassador responded that the U.S. was
not able to contribute to multi-donor funds, but would ensure
the GON was aware of how the money would be distributed.
Mahat then asked whether U.S. police support could be given
directly to the Finance Ministry to administer. The
Ambassador responded that he would explore various options.

Mahat Looks Toward Possible Scenarios
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4. (C) Finance Minister Mahat asked the Ambassador what
scenarios he envisioned unfolding over the coming days. The
Ambassador responded that his key concern was a perceived
unhealthy split within the Maoists between "hard-liners" and
"harder-liners." The former wanted to use the Maoists'
position within the Cabinet and the Parliament to grab more
state power and to influence the Constituent Assembly

KATHMANDU 00001248 002 OF 003


election. The latter were arguing for large-scale
confrontation to achieve Maoist aims, including leaving the
government if necessary. The troubling element of this
split, the Ambassador said, was that no Maoist faction was
arguing for participating responsibly in the democratic
process. However, the Ambassador emphasized, the Maoists
were unlikely to achieve their aims under either scenario.
Both relied on unrealistic assumptions that the political
parties would lose their will entirely and the Army would
stand meekly aside as the Maoists tried to seize power. The
Ambassador emphasized that unity between the seven mainstream
parties in the interim government would be key to ensuring
that the Maoists remained responsibly engaged in the peace
process. The Ambassador told Mahat that the Maoists were
turning their sights on the Army as their next obstacle
(following the monarchy) to absolute power. With a GON
committee for army reform recently constituted, the
Ambassador said the Maoists would likely demand full
integration of the Maoist People's Liberation Army (PLA) into
the Nepal Army.

Maoists Losing Their Footing in the Districts
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5. (C) The Ambassador reported to Mahat about a recent
briefing by National Democratic Institute's (NDI) Country
Representative Dominic Cardy that portrayed the Maoist base
of support in the districts as tenuous. The Ambassador
described a project in Karnali in which local political party
leaders were able to push back against Maoist attempts to
intimidate and participate in an NDI training at the Village
Development Council (VDC) level. Mahat pointed out that,
with many Maoist party cadre now active in Kathmandu, the
Maoists had less of a presence in the countryside, their
traditional stronghold. The Ambassador emphasized that the
parties had to reach out to their supporters at the district
level and local party leaders had to work together to address
Maoist intimidation ahead of the CA election. Mahat
highlighted the difficulty in maintaining unity as the
parties began to compete for supporters.

Congress Unification
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6. (C) Mahat stated that he thought unification of the
Nepal Congress (NC) and Nepali Congress-Democratic (NC-D)
would move forward soon. Mahat, who sits in the NC Central
Committee, said that Prime Minister Koirala, who is also the
NC President, and NC-D President and former PM Sher Bahadur
Deuba, had agreed in principle that the two parties should be
unified, recognizing that a joint way forward would serve
both parties' interests. (Note: NC-D Senior Leader Minendra
Rijal told Emboff June 25 that unification was possible in
the not-too-distant future. Rijal, who is one of the three
negotiators for the NC-D, said the NC-D and NC teams had held
three rounds of talks already. Deuba, Rijal noted, has
publicly disavowed any need to be named Koirala's party
successor. The biggest challenge, he said, was to ensure
that the NC-D's district-level cadre were given appropriate
status in a merged party. End Note.)

Mahat Calls for U.S. to Condemn Bhutan on Refugees
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7. (C) The Ambassador told Mahat that the U.S. and the
donor Core Group planned to push the GON to re-establish law
and order in the Bhutanese refugee camps following recent
violence and to reiterate GON support for third-country
resettlement. Mahat agreed that resettlement should move
forward, but asked the Ambassador why the U.S. was not more
vocal in condemning the Royal Government of Bhutan (RGOB) for
its human rights abuses and expulsion of the Bhutanese
refugees. Mahat compared Nepal's good faith efforts in the
past to negotiate repatriation with the RGOB's lack of honest
participation. The Ambassador responded that if the U.S.
condemned the RGOB, the potential for eventual repatriation
of the refugees might be lessened. However, he added, U.S.

KATHMANDU 00001248 003 OF 003


policy makers had become increasing critical, and the U.S.
had actively pressed privately on refugee returns.

Gyanendra Threatens Viability of Monarchy
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8. (C) The Ambassador and Mahat agreed that it was
unlikely, despite pressure from many sides, that King
Gyanendra would abdicate. Mahat emphasized that it would be
impossible for his party, the NC, to defend the monarchy with
King Gyanendra still in power. However, the Finance Minister
emphasized, the Nepali population's increasing frustration
with the Maoists might lead to increased sympathy for the
monarchy.

Comment
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9. (C) We will continue to consult closely with Finance
Minister Mahat to ensure the GON has the resources it needs
to support a successful peace process. We agree that support
to the Nepal Police is a key area of need. Re-establishing
law and order in the countryside ahead of the election and
managing security on election day itself will be a monumental
feat. Many stakeholders have pointed to the lack of law and
order as the central threat to the credibility of the CA
election. However, few donors are mandated or funded to
provide needed support to the Police. Post has initiated a
dialogue with the UK, India, and UNMIN on policing and
security sector reform to ensure our efforts are coordinated.
Equipment alone will indeed be a wasted investment if the
Home Minister himself and Police leaders continue to fail to
empower rank-and-file officers to enforce the law. We have
designed our initial police investment to complement a UK
dialogue on election security and plan to include program
elements such as training and police outreach to communities
to ensure equipment investments are worthwhile.
MORIARTY