1. (C) Since June 26, protests by the main Madhesi parties
inside the Constituent Assembly have prevented the Assembly
from doing any business. The Madhesi parties, with the
Madhesi People's Rights Forum (MPRF) leading the charge, are
insisting that the Interim Constitution must be amended to
provide for an autonomous Madhes. None of the major parties
are prepared to support the MPRF demand for a single Madhes
from east to west, but they are continuing to talk to the
Madhesi leaders. Meanwhile, the Maoists and the Communist
Party of Nepal - United Marxist Leninist continue to disagree
over who should be President.

Madhesi Protests in the Assembly


--------------------------





2. (C) Beginning on June 26, Madhesi Members of Parliament
have crowded around the Chairman's rostrum shouting each time
the Constituent Assembly (CA) has been called into session.
The net result has been that the Acting Chairman, K.B. Gurung
of the Nepali Congress (NC), has called off the meeting after
a few minutes. This happened on June 26, June 28 and June


29. The Madhesi People's Rights Forum, which is the largest
of the Madhesi parties and the fourth-largest party overall
in the CA, is leading the charge. The MPRF as well as the
smaller Terai Madhes Democratic Party (TMDP) and Sadbhavana
Party are insisting that the Interim Constitution must be
amended to provide for an autonomous Madhes as provided in
the 8-Point Agreement which the Government of Nepal signed
with the three parties (in the form of the United Democratic
Madhesi Front) on February 28. (Note: The Agreement did not
define Madhes geographically. End note.) They have
announced their intention to block the passage of the Fifth
Amendment on election of the President and the Prime Minister
(reftel) until their concerns are met.

Madhesi Demand Unacceptable


--------------------------





3. (C) In public remarks, MPRF chief Upendra Yadav has stated
that the Interim Constitution must provide for a single
Madhes from east to west. According to Bhim Rawal, a senior
negotiator for the Communist Party of Nepal - United Marxist
Leninist (UML), MPRF co-coordinator Jaya Prakash Gupta made
the same point to leaders of the Maoists, NC and UML on June
28 at the Prime Minister's residence. When told that this
was not the time to raise this issue, that it was for the
Assembly to decide, Gupta was adamant. Rawal said to Emboff
June 30 that the Madhesi demand was unacceptable. On June
30, NC Spokesperson Arjun Narsingh K.C. took the same stand.
The NC, he stated, would not support a federal structure
based on ethnicity. If carried to its logical end, the
Madhesi parties' stance, he warned, would lead to civil war.
Nevertheless, both Rawal and K.C. stressed they had no
alternative to dialogue, and would continue talking to the
Madhesi parties.

No Maoist-UML Agreement on President


--------------------------





4. (C) Meanwhile, the Maoists are reportedly still unwilling
to accept former UML General Secretary M.K. Nepal as the
country's first President, citing his defeat in both of the
first-past-the-post races he contested. The Maoists are said
to be pushing for UML to agree to Madhesi leftist Ram Raja
Prasad Singh. K.C. commented June 30 that the NC had stepped
aside from the discussion about the President. That was for
the Maoists and the UML to decide.


KATHMANDU 00000742 002 OF 002


Comment


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5. (C) Embassy sources in the Nepali Congress and the UML do
not expect any deal to be reached with the Madhesis on June


30. Madhesi People's Rights Forum chief Upendra Yadav is
outside Kathmandu at the moment and unavailable for talks.
Madhesi MPs disrupted the scheduled June 30 Constituent
Assembly meeting. What is not clear is how far the Madhesi
parties are prepared to go to get their way. In spring 2007,
they disrupted the then Interim Parliament for several weeks
until the Interim Constitution was amended to boost the
number of CA seats to be elected from the Terai. In early
2008, they launched a Terai "bandh" (closure) for two weeks,
paralyzing Kathmandu until the Nepali Government signed the
agreement at the end of February. Some face-saving formula
can probably be found, but if the Madhesis continue to insist
on a single Madhes across the Terai, they may find more
forces arrayed against them than they have encountered in the
past. Maoist chairman Pushpa Dahal (aka Prachanda) on June
30 publicly accused them of blocking the formation of a new
government by obstructing the CA proceedings.
POWELL