NEPAL: SCENARIOS, WINNERS AND LOSERS AFTER MAY 3-4

C O N F I D E N T I A L SECTION 01 OF 02 KATHMANDU 000365

SIPDIS

E.O. 12958: DECL: 05/04/2019
TAGS: PGOV MARR PREL PTER NP
SUBJECT: NEPAL: SCENARIOS, WINNERS AND LOSERS AFTER MAY 3-4
EVENTS

REF: KATHMANDU 356 AND PREVIOUS

Classified By: Ambassador Nancy J. Powell. Reasons 1.4 (b/d)

Summary
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1. (C) With Prime Minister Dahal's resignation (septels),the
current Maoist-led coalition is finished. Replacements
include a coalition of the Maoists and the Madhesi People's
Rights Forum, a national coalition or a Nepali Congress or
Communist Party of Nepal - United Marxist Leninist-led
coalition. Prime Minister Dahal may have solidified his base
with the hardline faction in his party, but he has been
damaged. Nepal's peace process and people look to be the
biggest losers.

Events of May 3 and May 4
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2. (U) After two weeks of failing to persuade his coalition
to join the United Communist Party of Nepal - Maoist (UCPN-M)
in firing Chief of Army Staff (COAS) General Rookmangud
Katawal, Prime Minister Pushpa Dahal and the Maoist ministers
voted unilaterally at a cabinet meeting on May 3 to remove
him. The PM informed General Katawal he was removed and
appointed Katawal's deputy, Lt. General Kul Khadka, as Acting
Chief. President Ram Baran Yadav subsequently issued a
letter directing Katawal to continue in office. Ministers
from the second-largest party in government, the Communist
Party of Nepal - United Marxist Leninist (UML),and from a
minor Madhesi-based party submitted their resignation. On
May 4, PM Dahal accepted those resignations and in an
afternoon address to the nation announced his own
resignation. Details of these and other related events are
reported septel.

Maoist-Led Government Bowing Out
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3. (C) PM Dahal's address described all of the challenges his
Maoist-led government had faced over the past eight months
from internal and external groups who he claimed were opposed
to Nepal's democracy. In his speech, which had strong
nationalist overtones, he insisted that Nepal would no longer
bow down to national and international "forces" and condemned
President Yadav and those who had encouraged him to oppose
the Maoist effort to assert civilian supremacy by firing
General Katawal. According to the President's staff, the
President will meet with his advisors before making a
decision on next steps. President Yadav is expected,
however, to accept the resignation. Under the Interim
Constitution, the resignation of the Prime Minister
automatically dissolves the government.

Non-Maoist Coalition Possible
--------------


4. (C) Unlike the 1990 Constitution, the Interim Constitution
does not spell out the procedure the Head of State is to
follow in constituting an interim or new government.
Theoretically, President Yadav could ask any of the 24
parties in the Constituent Assembly to assemble a government.
More likely, he will consult with the leaders of all the
major parties, including the UCPN-M, to find out which party
is likely to command a majority in the 601-member assembly.
The Nepali Congress leads the opposition and is the
second-largest party in the CA, but the President is not
required to approach the NC first. One possibility, which
was under discussion prior to the events of May 3 and 4, is a
UML-led government headed by former General Secretary Madhav
Kumar Nepal. M.K. Nepal is considerably closer to the NC
than the current leader of the UML, Jhalanath Khanal. While
a minority government cannot be ruled out, the UML and NC
would need the MPRF, as well as several small parties, to
reach the magic 301-member mark.


KATHMANDU 00000365 002 OF 002


Potential New Maoist-Led Government
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5. (C) Shymananda Suman, Foreign Policy Advisor to MPRF
President and Foreign Minister Upendra Yadav, told Emboff May
4 (prior to the Prime Minister's announcement),that the
Forum opposed the decision to sack the Army chief, but was
undecided about leaving the government. Suman said that the
MPRF would find a restructured Maoist-led cabinet in which it
was the second-largest party appealing for two reasons.
First, with the UML out of the picture, the Forum would be
entitled to more ministers, and more important ministries.
Second, while the Maoists do not support the MPRF's call for
a single Madhes state across the entire Terai, the Maoist
concept of several Terai states running east to west is
closer to the Forum's federal vision than the NC's and UML's
stated preference for states running south to north. Suman
conceded, however, that the MPRF was internally divided. No
decision would be made until the party's central committee
could meet to deliberate, and no meeting could take place
until the party president returned from overseas, at the
earliest on May 6. A Maoist - Forum alliance would also
require several small partners to add up to 301.

National Coalition?
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6. (C) The NC Central Committee voted as recently as April 28
not to join a national unity government with the Maoists, UML
and MPRF. PM Dahal's resignation re-opens the issue. The
advantage of a national coalition now is that it might make
the drafting of a new constitution simpler and could help
share the pain of any difficult political compromises. A
faction of the NC, including former Finance Minister Ram
Mahat and Sujata Koirala, the daughter of party president and
former PM G.P. Koirala, are believed to be eager to go back
into government. The NC has yet to decide, however, if and
under what conditions it would do so.

Winners and Losers
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7. (C) Prime Minister Dahal's decision to resign and the
staunchly nationalistic speech in which it was imbedded will
certainly win him points with party hardliners. His
nationalistic tone and thinly veiled criticism of India (and
presumably also the United States) will appeal as well to
those who resent what they see as India's constant meddling.
That said, Dahal's resignation after less than 9 months in
office also has echoes of the short-lived governments that
were the bane of Nepal in the late 1990s and the early part
of the current decade. How President Yadav will appear in
this controversy remains to be seen. PM Dahal accused him of
perpetuating the bad tradition of the monarchy where the Head
of State took on executive powers, instead of remaining
properly ceremonial.

Comment
--------------


8. (C) The biggest loser from the events of May 3 and 4 looks
to be Nepal's peace process and people. An interim
government will eventually be established, but will not be in
a position anytime soon to address the real problems its
citizens face. These have little to do with politics and are
focused almost exclusively on surviving from day to day.
Post will report septel on possible U.S. policy options in
the changed circumstances.
POWELL