NEPAL: WORLD BANK PLANS PAYMENTS TO MAOIST

C O N F I D E N T I A L SECTION 01 OF 02 KATHMANDU 000308 SIPDIS SIPDIS E.O. 12958: DECL: 03/17/2018 TAGS: EAID PGOV PTER MARR UN NP SUBJECT: NEPAL: WORLD BANK PLANS PAYMENTS TO MAOIST COMBATANTS Classified By: Classified By: Ambassador Nancy J. Powell. Reasons 1.4 (b/d). Summary -------------- ¶1. (C) On March 12, the World Bank Country Director for Nepal, Susan Goldmark, briefed the Ambassador on the World Bank's proposal to provide approximately USD 40 million in International Development Association (IDA) funding to the Government of Nepal (GON) for payments to Maoist combatants and victims of the conflict. Goldmark told the Ambassador that the Ministry of Finance had made an emergency operations request for funds so that the GON could make good on the promises it made in the 23-Point Agreement signed in December ¶2007. The World Bank is planning to present the proposal for approval by the IDA Board in Washington, DC on April 8. World Bank Proposes Payments to Maoist Combatants -------------- -------------- ¶2. (C) Susan Goldmark, World Bank Country Director for Nepal, informed the Ambassador on March 12 that the Bank was in the process of preparing a proposal to allocate USD 40-44 million in International Development Association (IDA) funding on a new, three-part program for Nepal. The money would primarily be used to finance payments by the Government of Nepal (GON) to the 19,600 Maoist People's Liberation Army (PLA) combatants in cantonments whom the UN Mission in Nepal (UNMIN) identified as verified in December 2007. Lesser amounts would go to approximately 14,000 victims of the 10-year Maoist insurgency, including family members of those killed by the Maoists and the security forces. A Bank staffer pointed out in a previous briefing that funds would also go to the Peace and Reconstruction Ministry and/or the planned High-Level Peace Commission. He noted the money would come from USD 50 million in IDA funds allocated to Nepal under IDA 14 and would be disbursed under an expedited procedure. He added that the USD 50 million had to be programmed prior to June 2008 or it would have to be returned. Details of Combatant Financing -------------- ¶3. (C) Goldmark explained that the Bank was proposing to provide funding for the Maoist combatants through a special agreement under which each combatant would receive a payment of NRs 21,000 (USD 333) reflecting payment of NRs 3,000 (USD 48) per month for the last seven months. In addition, each combatant would be entitled to future monthly payments for a maximum of six months or until they are discharged. Conflict victims would each receive NRs 100,000 (USD 1,587). The agreement would not include payment to the approximately 3,000 minors and 1,000 adult non-combatants disqualified during the UN verification process. (Note: It is unclear how or when the GON plans to compensate this portion of the cantonment population or even what percentage of them are still residing in the camps. UNMIN sources report that, although no formal discharges have taken place, large numbers of the disqualified have simply left the camps. End Note.) GON's Financial Obligations Under 23-Point Agreement -------------- -------------- ¶4. (C) According to the Country Director, Finance Minister Mahat had approached the World Bank in January with an urgent, emergency appeal to assist the GON in fulfilling its obligations to pay compensation under the December 2007 23-Point Agreement. (Note: Article 11 of the 23-Point Agreement, under which the Maoists agreed to rejoin the Nepali Government and participate in the Constituent Assembly election, addresses payments to combatants. That article states that verified combatants were to receive their past due allowances by February 12 and monthly allowances KATHMANDU 00000308 002 OF 002 thereafter. Those who were disqualified were to be given their allowances and arrangements were to be made to send them home. This was the first time the commitment was put in writing. Article 8 states that family members of those who lost their lives during the armed conflict were to receive compensation by mid-February. End Note.) Comment: Payments to Combatants: A Checkered History -------------- -------------- ¶5. (C) Although the December 2006 Arms Monitoring Agreement provided that the GON and the Maoists were to agree on assistance packages for those non-combatants to be discharged in advance of cantonment, it was not until the spring of 2007 that the two sides reached agreement on payments. By then, the Maoists had placed large numbers of non-combatants in the camps. The eventual oral agreement was to pay NRs 3,000 (USD 48 per month) to combatants and non-combatants alike, calculating from November or December 2006 (the start date was disputed),and some payments were made. A second tranche of payments was made in the fall and again in December. The GON periodically withheld payments on the grounds that the Maoists had failed to fulfill their reciprocal obligation to return seized property. There was also considerable dissatisfaction within the GON about Maoist demands for payments to those who no longer appeared to be resident in the camps. There were also frequent allegations, apparently credible, that the Maoist leadership (political or PLA commanders) were holding back portions of the payments for other uses. GON reprtedly disbursed payments for combatants, minors and non-combatants in late February with no trasparency or accounting according to UNMIN sources. UNMIN has disassociated itself from this set of payments. Transparency Required -------------- ¶6. (C) Goldmark emphasized to the Ambassador March 12 that the funding agreement would require a clear paper trail documenting the flow of funds from the GON to each Maoist combatant or conflict victim, respectively. The agreement would also include provisions for technical assistance to the Nepali banks which would be tasked with traveling to each of the PLA cantonments (7 main camps and 21 satellite camps) to make the actual transfers. She said that UNMIN and the Bank were still discussing the best method for payment: cash versus savings accounts. There was also an ongoing discussion of how best to promote the recipient's responsible management of the lump sum payments. The Country Director noted that Bank staff planned to present the proposal for approval by the IDA Board in Washington, DC on April 8. Comment -------------- ¶7. (C) World Bank Country Director Goldmark made the argument to the Ambassador that the payments were necessary to promote the peace process. While there is clearly a need to resolve the question of payments to Maoist combatants, who have been residing in cantonments, in many cases under unsatisfactory conditions, since November 2006, there are a number of troubling aspects to the program. The timing of the payments and the MOF's assurances of transparency are both suspect. Although the Bank is stressing that the payments are in support of the peace process, there is very little detail on how the payments will be made and how ultimately they will support the peace process. POWELL