NEPAL: THE PERFECT STORM GATHERING

C O N F I D E N T I A L SECTION 01 OF 02 KATHMANDU 000426 SIPDIS SIPDIS FOR THE DEPUTY SECRETARY, U/S BURNS AND AMBASSADOR TOBIAS FROM THE AMBASSADOR FOR A/S BOUCHER FROM THE AMBASSADOR DEPT FOR SCA/INS E.O. 12958: DECL: 02/23/2017 TAGS: PGOV PTER PREL KDEM NP SUBJECT: NEPAL: THE PERFECT STORM GATHERING REF: 06 KATHMANDU 3217 Classified By: Ambassador James F. Moriarty. Reasons 1.4 (b/d). Summary -------------- ¶1. (C) Three issues threaten to coalesce into a "perfect storm" that could blow the winds of change in Nepal in a dangerous direction: Maoist arms management and entry into Nepal's interim government, ethnic unrest in the Terai, and the fate of the monarchy. A derailing of Nepal's peace process would have negative ramifications in South and Central Asia, particularly in India. The Government of Nepal (GON) now has an opportunity to get ahead of the curve with Maoist setbacks in the Terai and the blowback following the Maoist combatants recent walk-out from UN-monitored cantonments. Increased U.S. assistance could make the difference for a peaceful, prosperous, and democratic Nepal. Arms Management and Interim Government -------------- ¶2. (C) Concessions to the Maoists in peace negotiations gave the Maoists the upper hand in most areas. Now, the bottom line issue has come to the fore: arms management. Prime Minister Koirala has pledged that the Maoists would not be allowed into Nepal's interim government until the UN-monitored arms management process was complete. The UN has completed the first phase of arms management and presented its report to the GON. The GON now has to decide if arms management is sufficient. We have made it clear to both the GON and the UN that the U.S. will support the GON. We have pushed the GON not to settle for the Maoists only being separated from a small percentage of their modern weapons. Initial reports indicate, however, that the arms management exercise might have in fact collected the large majority of Maoist weapons. Maoists Goals Have Not Changed -------------- ¶3. (C) The Maoists continue to ratchet up the pressure on the GON to enter an interim government immediately. They will argue that arms management is complete. That said, Maoist intimidation and violence continues relatively unabated both in the countryside and in the Kathmandu Valley. The recent walkout of thousands of Maoist combatants from cantonments blatantly violated the Comprehensive Peace Agreement. Maoist interference in the re-establishment of police posts and destruction of voters lists has shown that the Maoists are not yet serious about entering into a peaceful, democratic system. The Maoists will use every means at their disposal to capture power, and are poised to exert maximum pressure to that end in the upcoming elections. Marginalized Groups Gain Their Voices -------------- ¶4. (C) With elections ahead, a spectrum of marginalized groups in Nepal, Madhesis, Janajatis, Dalits, Women, and others who have historically been excluded from the political system in Nepal, have made their voices heard. The government has been slow to respond. It has offered concessions to these groups only when their protests have become too disruptive to ignore. Terai Unrest Could Fracture Nepal -------------- ¶5. (C) Unchecked, the recent uprising of the Madhesis in the Terai threatens to fracture Nepal. The GON approached the Terai issue with indifference -- coming up with vague responses to the problems raised by the protestors without sitting down with them. The Madhesis responded by choking KATHMANDU 00000426 002 OF 002 Kathmandu by closing down the roads from India. They threaten to do the same again starting February 25 if the government does not give in to their demands: the Home Minister's resignation, proportional representation, and a federal system. We have stressed to the GON the importance of an inclusive dialogue that searches for a comprehensive solution. It is unclear what the GON will do. Government Leverage Increasing Against Maoists -------------- - ¶6. (C) Despite Maoist advances in recent months, the Maoists now face a more complex and less permissive operational space. The unrest in the Terai was a huge setback for the Maoists. It showed the general public in Nepal that Maoist claims of strong popular support were hollow. Protestors in the Terai burned Maoist offices and pushed Maoists out of villages, raging equally against Maoist cadre and GON security forces. The GON could potentially use this Maoist loss of "popularity" to its advantage in negotiations with the Maoists, but to date the government has not taken advantage of this leverage. The Maoists have become increasingly tied into the peace process in recent days, submitting to UN registration and monitoring. King Continues to Stir Up Trouble -------------- ¶7. (C) The King's speech on February 19 showed just how out of touch the monarch is from the sentiments of the country. His attempt, on Democracy Day, to validate his February 2005 takeover was a blatant misrepresentation of the facts that enraged most Nepalis. The reaction from the GON, civil society, and the Maoists was swift, strong condemnation from all sides. The Maoists subsequently attempted to use the King's speech as leverage against the GON in the ongoing peace negotiations. The GON has been able to stand up to this pressure thus far, but it is unclear how much longer the government will be able to hold out. The Maoists are pushing the interim parliament to declare Nepal a democratic republic without waiting for the Constituent Assembly, a move that would give the Maoists a big ideological victory. Comment: Time For U.S. Assistance -------------- ¶8. (C) We recently outlined the funding necessary for effective U.S. support to Nepal's democratic transformation (reftel). We continue to believe that an additional 10-15 million USD could make a tremendous difference. Without the vigorous backing of the international community, the chances for successful democracy in Nepal are shaky. The UN Mission in Nepal's limited arms management and election mandate has left many priorities to be addressed by other donors. Most donors are responding slowly. The GON will need the support of the international community to promote security sector reform, prepare for the elections, and restore justice. In order to create an inclusive democracy, Nepal will also need assistance in election monitoring and voter and civic education. The U.S. is quickly approaching our last, best chance to assist the people of Nepal to construct a peaceful, prosperous, and democratic country. The alternatives, a totalitarian Maoist state or a nation violently fractured along ethnic lines, would undermine U.S. interests and regional stability. MORIARTY