Identifier
Created
Classification
Origin
10KATHMANDU38
2010-01-14 13:01:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Kathmandu
Cable title:  

NEPAL: SCENESETTER FOR PDAS MOON VISIT

Tags:  PGOV PREL KDEM MARR NP 
pdf how-to read a cable
VZCZCXRO7927
PP RUEHCI
DE RUEHKT #0038/01 0141301
ZNR UUUUU ZZH
P 141301Z JAN 10
FM AMEMBASSY KATHMANDU
TO RUEHC/SECSTATE WASHDC PRIORITY 1272
INFO RUEHBJ/AMEMBASSY BEIJING PRIORITY 7269
RUEHLM/AMEMBASSY COLOMBO PRIORITY 7612
RUEHCP/AMEMBASSY COPENHAGEN PRIORITY 0384
RUEHKA/AMEMBASSY DHAKA PRIORITY 2961
RUEHIL/AMEMBASSY ISLAMABAD PRIORITY 5653
RUEHLO/AMEMBASSY LONDON PRIORITY 6749
RUEHMO/AMEMBASSY MOSCOW PRIORITY 0146
RUEHNE/AMEMBASSY NEW DELHI PRIORITY 3428
RUEHNY/AMEMBASSY OSLO PRIORITY 0312
RUEHCI/AMCONSUL KOLKATA PRIORITY 4908
RUEHGV/USMISSION GENEVA PRIORITY 2513
RUCNDT/USMISSION USUN NEW YORK PRIORITY 3794
RUEKJCS/SECDEF WASHDC PRIORITY
RHMFIUU/CDR USPACOM HONOLULU HI PRIORITY
RUEAIIA/CIA WASHDC PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
RHEFDIA/DIA WASHDC PRIORITY
UNCLAS SECTION 01 OF 04 KATHMANDU 000038 

SENSITIVE
SIPDIS

DEPT FOR PDAS PATRICK MOON

E.O. 12958: N/A
TAGS: PGOV PREL KDEM MARR NP
SUBJECT: NEPAL: SCENESETTER FOR PDAS MOON VISIT

UNCLAS SECTION 01 OF 04 KATHMANDU 000038

SENSITIVE
SIPDIS

DEPT FOR PDAS PATRICK MOON

E.O. 12958: N/A
TAGS: PGOV PREL KDEM MARR NP
SUBJECT: NEPAL: SCENESETTER FOR PDAS MOON VISIT


1. (SBU) PDAS Moon, Embassy Kathmandu warmly welcomes you to
Nepal. You are arriving at a particularly critical juncture
in the peace process, with "indefinite" Maoist protests still
threatened for January 24, despite some welcome progress on
unblocking the political process. Pressure building as the
Comprehensive Peace Agreement deadline of May 28 approaches
for completing the integration and rehabilitation of former
Maoist combatants and drafting a new constitution. Your
visit offers a timely opportunity to press for progress on
these key issues, as well as raise important human rights
concerns. The United States has been an active funder and
supporter of Nepal,s bumpy peace process and maintains good
access and influence with the major parties.

Tentative Progress on Peace Process, Tough Issues Ahead
-------------- --------------

2. (SBU) For the first time since the resignation of the
Maoist government in May, we have some tentative progress on
Nepal's peace process. After nearly two years of stalling,
the Maoists have finally begun discharging the 4,008
disqualified former combatants, most of whom were under 18
years old when the conflict ended. You will visit one of the
seven main Maoist cantonment sites, where preparations will
be underway for discharging the disqualified on January 21.


3. (SBU) While the discharge of the disqualified former
combatants is a positive (and long overdue) step, the more
difficult challenge remains: the fate of the 19,008
"verified" Maoist combatants. Under the Comprehensive Peace
Agreement, some number of these will be integrated into the
"security forces," including the Nepal Army, and the
remainder reintegrated into Nepali society. The Government
of Nepal (GON) recently unveiled a plan to complete this
process by April 30, a deadline that no one -- including the
GON itself -- believes is realistic. The Maoists agree in
principle with the action plan, although many observers
believe the Maoists are unlikely to give up their combatants,
which they view as leverage, until they are satisfied with
the new constitution and their overall political position.

Constitution Drafting Plods Along
--------------

4. (SBU) On the constitution, Nepal's unwieldy 601-person

Constituent Assembly (CA) has made steady, albeit painfully
slow, progress in recent months. Nine of the eleven
"thematic committees" have presented their reports, and work
has begun on drafting constitutional text. On the most
difficult issues -- federalism, the structure of the
government, judicial independence, the electoral system, land
reform -- the Maoists and other parties remain
philosophically divided.


5. (SBU) The Constituent Assembly's mandate ends May 28, and
the CA is highly unlikely to promulgate a new constitution by
that date. In that case, the CA most likely will extend its
own life by six months or longer. Such a step would require
a two-thirds majority, which means that the Maoists (which
have 40 percent of the seats) and a mix of other parties (the
Nepali Congress has 19 percent; the United Marxist Leninist
18 percent; various Terai parties some 12 percent) will have
to agree on the extension, a decision that will be
politically difficult. Some conservative Nepali lawyers have
argued that the CA does not have the authority to prolong its
own existence, and have floated the idea of the president
taking over after May 28, a highly provocative step that the
Maoists would strongly protest since it would effectively
marginalize them in the political process.

Lots of Political Talk, Little Action
--------------

6. (SBU) Concluding the integration and rehabilitation
process and constitution drafting will require intense

KATHMANDU 00000038 002 OF 004


political dialogue and difficult trade-offs among the three
major parties: the United Communist Party of Nepal-Maoist,
the Nepali Congress, and the Communist Party of Nepal-United
Marxist Leninist (UML). The recently-created High-Level
Political Mechanism, led by ailing, 85-year-old Nepali
Congress President G.P. Koirala, could be a forum for such
talks, but each of the leaders in the Mechanism faces strong
challenges from within their parties, complicating the
negotiation process. Unlike the 2005-2006 peace
negotiations, leaders Pushpa Dahal "Prachanda" and G.P.
Koirala cannot, by themselves, drive the process to its
conclusion.

Maoists Tactics Shifting
--------------

7. (SBU) The political climate has improved slightly in
recent weeks, in part because of a shift in Maoist tactics.
The party allowed Parliament to resume functioning on
December 23, began the discharge of the disqualified on
January 7, and supported the creation of the High-Level
Political Mechanism on January 8, all positive steps. At
the same time, the threat of an indefinite general strike or
"bandh" for January 24 looms, a tactic that the Maoists (and
other political groups) use extensively, much to the
detriment of the average Nepali. The Maoists have also begun
nationalist and highly vitriolic attacks on India, which may
have gained them some domestic support but also further
alienated New Delhi.


8. (SBU) Where the Maoists are headed remains unclear,
perhaps even to the Maoists themselves. The divisions
between the pragmatists and the hardliners appear somewhat
sharper -- and more public -- than in the past, and Prachanda
may be having difficulty straddling the fence. There are
reports the Indians and others are trying to use these
divisions to split the Maoists in order to form a more
centrist governing coalition. This is unlikely to succeed.
In the short-term, the Maoists are desperate to return to
power, and continue to look for openings to peel off support
from other parties (just as the other parties are doing the
same to the Maoists).


9. (SBU) While we regularly engage the Maoist leadership, the
terrorist designation continues to affect our relationship.
Per the IPC instructions, we recently presented the Maoists
with a non-paper in local language outlining the steps
necessary to be removed from the two U.S. terrorist lists.
While these benchmarks are not new -- A/S Boucher and Blake
made the same case to Prachanda -- the written document
ensures full comprehension and creates a basis for further
discussions. We believe the Maoists would like to get off
the U.S. terrorist lists, both to simplify the process for
getting visas to the United States and to gain international
credibility.

Between India and China
--------------

10. (SBU) Your visit will come on the heels of the Indian
Foreign Minister's first trip to Nepal, and concurrent with
the Indian Chief of Army Staff's initial visit. Fairly or
unfairly, India is seen as the malign force behind every
political development in Nepal. India engineered the 2005
12-point Agreement, working closely with Maoist leaders.
Since then, and particularly following the Maoist's brief
period as head of government, Indian distrust of the Maoists
has grown, perhaps in part due to India's own Maoist problems
(although there is no evidence of cooperation between the two
Maoist movements),or perhaps due to the perception that
Prachanda was tilting too far toward China. The Maoist new
stridently anti-Indian rhetoric doesn't help matters. New
Delhi is now seen as opposing the Maoist return to power.


KATHMANDU 00000038 003 OF 004



11. (SBU) Nepali leaders have for centuries tried to use
Nepal's other neighbor, China, to counterbalance Indian
influence, nearly always failing. PM M.K. Nepal recently
returned from a China trip, with promises of additional
financial assistance and investment. While there is some
evidence of increased Chinese economic activity in Nepal,
China's main interests in Nepal are maintaining a stable
buffer between it and India, and ensuring Tibetans do not
start anti-Chinese movements from Nepal. (There are
approximately 20,000 Tibetans living in Nepal.)

Nepal Army Influential, Unsure of Future
--------------

12. (SBU) The Nepal Army, perhaps the country's strongest
institution, remains unsure about its place in a "new Nepal."
The Army is the fifth-largest contributor of troops to UN
peace operations, and its troops are generally considered
professional and competent. We have a positive
military-to-military relationship with the Army, and many of
its senior leadership were trained in the United States. For
the first time since 2005, we will provide approximately USD
1 million in FMF to Nepal, although Senator Leahy's recent
amendment to the Foreign Operations bill limits FMF to
humanitarian assistance, unless the Army meets certain human
rights criteria. The Army continues to be dogged by
conflict-era human rights allegations. The recent promotion
of General Toran Singh, who commanded one of the units
accused of committing gross human rights abuses in 2003, as
well as the Army's foot-dragging on cooperation with civilian
courts in the case of Major Nirajan Basnet, raises questions
about the Army's commitment to human rights. The Army points
out (rightly) that the Maoists also committed atrocities
during the conflict, but have not been held accountable. The
Nepal Army has had no human rights violations since the end
of the conflict, while the some Maoist criminal and human
rights violations continue.

Security Situation Somewhat Improved
--------------

13. (SBU) The law and order situation, particularly in the
Terai, remains poor. Few criminals are arrested and
prosecuted, and criminal gangs along the Indian border
operate with impunity. The GON's Special Security Plan
appears to be having some positive effect, particularly along
the Indian border, although the police lack resources to
implement the plan effectively. The Maoist-affiliated youth
wing, the Young Communist League (YCL),continues to engage
in illegal activities, such as threats, and extortion.

Economy and Development
--------------

14. (SBU) As the peace process drags on, Nepal's economy
continues to stagnate. Nepal is one of the poorest countries
in the world, with a per capita GDP of approximately $400.
As many as one-third of Nepalis are food insecure, while the
small elite lives well (the geni coefficient has doubled in
the last ten years). The economic hopes for many Nepalis now
rest outside the country, with as many as 2.5 to 4 million
Nepalis working abroad; remittances account for 20 percent of
GDP. New investment is low; political instability, labor
unrest, high transportation costs, and power shortages scare
away even the most adventurous of investors. Tourism has
returned to pre-conflict level, but Nepal is no where near
reaching its full potential. Trade with the U.S., mostly
carpets and pashminas, is relatively small and declining, in
part due to the end of duty-free access for textile exports.
Donors provide significant development resources in Nepal.
USAID has a diverse program, approximately $50 million in FY
2010, focused on health, democracy, and economic growth.
USAID's health and environment projects have been
particularly innovative and successful, despite the political
situation.

KATHMANDU 00000038 004 OF 004


ORDWAY