NEPAL: MAOISTS CONTINUE TO INTIMIDATE INDUSTRIAL

C O N F I D E N T I A L SECTION 01 OF 02 KATHMANDU 000339

SIPDIS

SIPDIS

E.O. 12958: DECL: 02/09/2017
TAGS: PREL PGOV PTER ECON ELAB UK NP
SUBJECT: NEPAL: MAOISTS CONTINUE TO INTIMIDATE INDUSTRIAL
SECTOR

REF: KATHMANDU 326

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

Summary
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1. (C) On February 8, the Industrial Security Group (ISG),a
business-diplomatic group, chaired by the Ambassador,
discussed continued Maoist threats against the commercial and
industrial sectors. Extortion, kidnappings and violence
continued and appeared to be soaring in the run-up to a
planned Maoist rally celebrating the 11th Anniversary of the
Maoist insurgency in Kathmandu on February 13. Business
leaders complained about the growing militancy of Maoist and
other trade unions and the Government of Nepal's (GON)
failure to address these concerns. The ISG also discussed
the recent unrest in the Terai and its impact on industry.

Maoist Violence and Intimidation Continue
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2. (C) The Industrial Security Group (ISG) met February 8 to
discuss continued Maoist extortion and threats made against
employees in the commercial and industrial sectors. (Note:
The ISG includes representatives of the Embassies of France,
Germany, India, the UK, the U.S. and the Delegation of the
European Commission, along with their bilateral Chambers of
Commerce. The U.S. Ambassador is Acting Chair. End Note.)
Business leaders complained that Maoist intimidation and
violence had not declined since the signing of the
Comprehensive Peace Agreement in November 2006 or after the
Maoist entry into the Interim Parliament in mid-January. ISG
members cited requests for money, food, and lodging for the
planned Maoist rally in Kathmandu on February 13, as well as
continued demands to hire additional workers. ISG members
reported that since mid-November, the Maoists had kidnapped
and held for ransom more than nine Marwari (Indian origin)
businessmen.

Militant Trade Unions
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3. (C) The Maoist-affiliated All-Nepal Trade Union
Federation-Revolutionary (ANTUF-R) remained the leader in
violence and intimidation the business leaders reported.
Some ISG members complained that other trade unions were
beginning to take their lead from the Maoists and had started
using violence and threats to advance their interests.
(Note: Trade unions in Nepal are affiliated with political
parties. End note.) Hotel industry representatives claimed
some advances in their relationships with unions, including
limiting labor negotiation rounds to once every three years.
However, other industry representatives stated that trade
unions presented new and unreasonable demands all the time.
Many complained of recent gatherings held at their businesses
to demand that management either provide jobs to new workers
or direct support to the Maoists. N.N. Singh, Executive
Chairman of Coca-Cola's operations in Nepal, added that, when
pressured by Maoists for "donations" of drinks, he was happy
to provide city water, not Coke.

Ministry of Industry and Commerce: No Help
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4. (C) Many ISG members believed that the Ministry of
Industry and Commerce had been paralyzed by the impending
entry of the Maoists into an interim government. Business
leaders stated that the Ministry had not done anything to
ease tensions because GON officials were too busy preparing
to work with the Maoists. Members complained that there was
a lack of rule of law, and that the Ministry of Industry and
Commerce, the Labor Office, and the courts were of no help.
The Ambassador, his German counterpart Ambassador Ring and
British DCM Bute stressed that it was up to the police to
take action against Maoist abuses, but the police had failed
to do so.

Terai: No Movement

KATHMANDU 00000339 002 OF 002


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5. (C) Business owners were hopeful that the situation in the
Terai would calm down after the Prime Minister's speech on
February 7, 2007 (reftel). Recent transportation blockades
had effectively closed all of Nepal's border with India and
stranded goods. ISG members also commented that their
factories in the Terai were forced to run without management
because any manager who appeared to be Pahadi (a person from
the hill regions of Nepal) was afraid to appear for work.
Hotel owners lamented that several hotels had already been
forced to close and that the recent events in the Terai,
coupled with the tightening of the Nepal-India border, was
crushing the hotel and tourism industry. One member said
that many in the hotel and tourism industry had lost complete
hope for 2008.

Comment
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6. (C) Despite the Maoist January entry into the Interim
Parliament, their actions remain unchanged. Businesses
continue to suffer from their abuses and no end is in sight.
The overwhelming feedback from the ISG was that violence and
demands on business were increasing. We were also struck by
a hardening of the position of some of our European
colleagues toward the Maoists at a time when many among
Kathmandu's chattering class are acting as if the Maoists had
changed for the better. The British DCM made clear, for
instance, that his Embassy was going to be taking a much
harder line on the Maoists in light of Maoist abuse of a
local Embassy employee. The German Ambassador was also
outspoken in his criticism of Maoist actions against a
German-funded power plant project. The ISG will issue a
statement urging the Maoists to end their violence, in the
hope that such a statement will pressure the Maoists to
improve their behavior somewhat. That said, Post has limited
hope of any true change of heart by the Maoists anytime soon.
We will continue to maintain pressure on the GON and
international actors with influence in Nepal to take steps
necessary to restore law and order and secure Nepal's fragile
peace.
MORIARTY