NEPAL: THE PERFECT STORM GATHERING

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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
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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
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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
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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
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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
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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

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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
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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
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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
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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