This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 05 KATHMANDU 001458 
 
SIPDIS 
 
STATE FOR SA/INS AND DS/IP/NEA 
STATE ALSO PLEASE PASS USAID/DCHA/OFDA 
STATE ALSO PLEASE PASS PEACE CORPS HQ 
USAID FOR ANE/AA GORDON WEST AND JIM BEVER 
MANILA FOR USAID/DCHA/OFDA 
LONDON FOR POL/GURNEY 
TREASURY FOR GENERAL COUNSEL/DAUFHAUSER AND DAS JZARATE 
TREASURY ALSO FOR OFAC/RNEWCOMB AND TASK FORCE ON TERRORIST 
FINANCING 
JUSTICE FOR OFFICE OF THE DEPUTY ATTORNEY GENERAL/DLAUFMAN 
NSC FOR MILLARD 
SECDEF FOR OSD/ISA LILIENFELD 
 
E.O. 12958: N/A 
TAGS: PINS PTER CASC PGOV NP
SUBJECT: UPDATE ON NEPAL'S MAOIST INSURGENCY, JULY 26-AUGUST 
1 
 
REFERENCE:  (A) KATHMANDU 1388 
            (B) KATHMANDU 1423 
            (C) KATHMANDU 1431 
            (D) KATHMANDU 1399 
 
SUMMARY 
------- 
 
¶1.  On July 31 Maoists agreed to sit for a third round of 
formal peace talks with the Government of Nepal (GON). 
Kamal Thapa, Information Minister and GON negotiating team 
member, welcomed the decision but remained cautious, saying 
that a date for a third round of talks would be set through 
"mutual consultation."  Kofi Annan, UN Secretary General, 
issued a statement on July 30 once again offering UN 
assistance to Nepal to achieve a peaceful outcome. 
According to July 25 press accounts, the Government of India 
has voiced concern over reports that Maoists from Nepal are 
forming ties with terrorist groups in India.  Maoist 
leadership reportedly is under intense pressure from Maoist 
cadres and international allies such as the Revolutionary 
Internationalist Movement (RIM) to abandon dialogue and 
return to all-out war.  Despite the continuing ceasefire and 
in direct violation of the code of conduct, Maoists attacked 
security forces, murdering three and injuring two.  The 
insurgents continue to intensify extortion demands, severely 
beating those who fail to comply.  Sher Bahadur Deuba, 
President of the Nepali Congress (Democratic) and former 
Prime Minister, accused the Maoists on July 25 of preparing 
for war.  Maoists have threatened to punish severely anyone 
who defies their orders to stop working with US affiliated 
development and humanitarian organizations.  End Summary. 
 
GON ACCEDES TO MAOIST DEMANDS; 
MAOISTS AGREE TO FURTHER PEACE TALKS 
------------------------------------- 
 
¶2.  Timeline: 
 
---On July 23, Maoists responded to the GON's July 13 
invitation to sit for a third round of talks by setting new 
preconditions (Ref A). 
 
---In its response on July 25, the GON addressed each of the 
Maoists' preconditions, declaring its continued commitment 
to the peace process, and inviting the Maoists to sit for 
talks by August 15.  The GON assured the Maoist leadership 
that the GON's negotiating team has full legal authority to 
make decisions, so there is no need for the King's direct 
involvement; agreed to make public the whereabouts of over 
three hundred Maoist cadres as soon as possible; and said it 
is willing to release three central committee members.  The 
GON refused to accept the controversial demand that the 
Royal Nepal Army (RNA) be restricted to within five 
kilometers of their barracks, explaining that "to restrict 
and limit the responsibility and domain of the army would 
not be in the broader interest of the country." 
 
---On July 27 Baburam Bhattarai, Maoist ideologue and head 
of the Maoist negotiating team, issued an eight-page list of 
ultimata, demanding that the GON fulfill their prerequisites 
by July 31 or the Maoists would conclude that the GON has 
"unilaterally dissolved the ceasefire and dialogue." 
 
---On July 29 the GON conceded several of the Maoists' 
demands, releasing three central committee members from 
prison, and releasing information on thirty-six missing 
Maoist cadres (Ref B).  The GON's quick response put 
pressure on the Maoists not to walk away from the dialogue. 
Minister Lohani said on July 30 that "now it is up to the 
Maoists." 
 
---On the afternoon of July 31 Pushpa Kamal Dahal 
(Prachanda), Maoist supreme leader, issued a statement that 
the Maoists would sit for a third round of talks (Ref C) and 
invited the political parties to be involved. 
 
GON CAUTIOUSLY WELCOMES MAOIST DECISION 
--------------------------------------- 
¶3.  The GON welcomed the decision of the Maoists to sit for 
a third round of talks, but warned, "we should not get too 
excited."  Minister Thapa said the GON would proceed 
carefully, and would try "every possible means" to involve 
the political parties.  The GON had requested talks by mid- 
August, but Thapa conceded that a date would be set through 
"mutual consultation." 
 
UN SECRETARY GENERAL OFFERS ASSISTANCE 
-------------------------------------- 
 
¶4.  On July 30 Kofi Annan, UN Secretary General, issued a 
statement expressing the UN's willingness to assist Nepal in 
finding a peaceful solution to the current conflict. 
Annan's statement praised the ceasefire and said the "UN 
remains at the disposal of Nepal to assist in the 
achievement of a negotiated peaceful solution."  Prakash 
Chandra Lohani, Minister of Finance and member of the GON's 
negotiating team, declared on July 27 that there was no need 
for third-party mediators, reportedly saying, "this is our 
internal matter and we are striving to resolve it." 
 
¶5.  Human rights organizations, political parties and 
members of civil society have expressed the importance of 
the GON and Maoists continuing with the peace dialogue.  The 
National Human Rights Commission (NHRC) issued a statement 
on July 29 urging both sides to sit immediately for a third 
round of talks.  The NHRC also faulted the ongoing exchange 
of letters for creating "misunderstandings" which 
jeopardized the future of the peace talks. 
 
¶6.  Facilitators for the peace talks issued a joint 
statement on July 29 appealing to both sides to sit for 
direct talks, and to continue efforts to ensure the success 
of the peace process.  The facilitators complained that the 
"peace dialogue has not been disrupted but nothing 
significant has been initiated."  The team reportedly also 
opined that rigid stands by both the GON and the Maoists had 
pushed the peace talks into a "critical stage," but were 
still confident the next round of talks would take place. 
 
¶7.  In separate statements on July 30, leaders from Nepal's 
major political parties reportedly have warned against a 
return to violence, saying the people of Nepal would not 
accept any action that pushed the country to further 
violence.  Girija Prasad Koirala, President of the Nepali 
Congress (NC), reportedly called it "inappropriate" for the 
Maoists to issue an ultimatum during a time of uncertainty. 
Koirala also declared that the Maoists should hold talks 
with the political parties if they were not satisfied with 
the GON.  Committee members from the Communist Party of 
Nepal-United Marxist Leninist (CPN-UML) said the GON's 
willingness to fulfill some of the demands kept hope alive 
for another round of talks.  The CPN-UML staged a rally in 
the capital on July 31 to pressure the GON and the Maoists 
to continue dialogue.  The Rastriya Prajatantra Party (RPP) 
also called on the Maoists to sit for another round. 
MAOISTS FORMING TIES IN INDIA 
----------------------------- 
¶8.  According to press reports on July 25, the Government of 
India voiced concern over the possibility that Maoists from 
Nepal are forming ties with terrorist groups in India.  At a 
meeting attended by senior police and civilian officials 
from the Indian state of Bihar and the India-Nepal border 
districts of Bara and Parsa, Indian officials reportedly 
voiced concerns on alleged violence committed in India by 
Maoists who are aligning themselves with India's militant 
People's War Group (PWG) and Maoist Communist Center (MCC). 
The governments of Nepal and India have agreed in the past 
to share intelligence in order to combat terrorist 
activities in both countries. 
 
RIM EXERTS RADICAL INFLUENCE FROM INDIA 
--------------------------------------- 
 
¶9.  On July 30 Mohan Bikram Singh, a former mentor to 
Baburam Bhattarai and Pushpa Kamal Dahal (Prachanda), told a 
local publication that the Maoists "no longer see any 
purpose in continuing with dialogue."  Singh also claimed 
that the Maoists are under intense pressure from Maoist 
cadres and international allies to abandon dialogue and 
return to violence.  At the forefront of those exerting 
pressure is the Revolutionary Internationalist Movement 
(RIM), which is known for encouraging revolution over 
dialogue.  (Note:  RIM imposed pressure on the Shining Path, 
the Maoist organization in Peru, to abandon dialogue and 
return to war.  End note).  Senior Maoist leaders reportedly 
attended a recent RIM conference in the Indian State of 
Bihar (Ref D), where attendees praised the insurgency, 
claiming "Nepal is advancing to new heights and transforming 
the country into a bastion of world proletarian movement," 
and adopted the slogans of "Hands Off Nepal" and "Look to 
the Himalayas, a Better World in Birth."  RIM reportedly has 
also aligned itself with the Maoists and the Maoist 
Communist Center (MCC) of India. 
 
MAOISTS CLASH WITH SECURITY FORCES 
---------------------------------- 
 
¶10.  On July 30 five unarmed Royal Nepal Army (RNA) 
personnel in the eastern district of Sindhuli were attacked 
by a large group of armed Maoists.  Responding security 
forces found three alive and two who had been brutally 
beaten and then shot to death.  The soldiers reportedly had 
just returned from collecting their salaries, which the 
insurgents appropriated.   The brutal murders were condemned 
by the Defense Ministry in a press release issued on July 
¶31.  On July 29 Maoists reportedly killed a head constable 
of police in Kaski District by slashing his throat. 
 
¶11.  Security forces and Maoists clashed in the western 
district of Surkhet on July 30.  According to security 
forces, the insurgents opened fire and a clash ensued for 
almost two hours.  No injuries were reported, but army 
personnel recovered nine socket bombs, ammunition and rifles 
left by the Maoists at the scene. 
 
DEUBA ACCUSES MAOISTS OF PREPARING FOR WAR 
------------------------------------------ 
 
¶12.  Sher Bahadur Deuba, President of the Nepali Congress 
(Democratic) and former Prime Minister, accused the Maoists 
on July 25 of preparing for war.  According to press reports 
Deuba said that the Maoists would "stage a drama of 
dialogue" before waging war, and claimed that the insurgents 
were actively recruiting cadres, extorting money and 
importing ammunition from abroad.  (Note:  Deuba was Prime 
Minister when the Maoists walked out of peace talks after 
two rounds of dialogue in 2001 and subsequently launched 
simultaneous attacks on a police post and army barracks, 
killing fourteen soldiers and thirty-seven policemen. End 
Note). 
 
¶13.  The local press quoted an unnamed senior Royal Nepal 
Army (RNA) official on July 30 as saying that the Maoists 
have amassed arms and ammunition in the eastern region of 
the country as a possible prelude to war. 
 
MAOISTS WARN AGAINST WORKING WITH USG PROGRAMS 
--------------------------------------------- - 
 
¶14.  Maoists continue to increase anti-American rhetoric. 
The insurgents have posted notices in the districts of 
Nuwakot, Rasuwa, and Sindhupalchowk ordering residents not 
to work with USG funded projects and warning of severe 
punishment to anyone who defies the order.  The notice 
claims "under the cover of Save the Children US, the U.S. 
imperialists are conducting activities."  Maoists have 
warned that if the notices are ignored, they would be 
"compelled to take severe action." 
 
¶15.  The All Nepal National Independent Students' Union- 
Revolutionary (ANNISU-R), the Maoist affiliated student 
organization, has reached a deal with the Private and 
Boarding School Organization of Nepal (PABSON) to 
discontinue employment of any foreign teachers, mostly 
Indian nationals and Bhutanese refugees.  The militant 
student organization has announced "severe action" against 
any schools that fail to comply. 
 
MAOIST EXTORTION INTENSIFIES 
---------------------------- 
 
¶16.  Maoists continue to intensify extortion demands.  In 
the far-western district of Humla the insurgents reportedly 
are targeting teachers and businessmen in the villages, and 
looting food from the farmers.  Civilians who refuse to 
donate allegedly have been abducted and beaten.  In Kailali 
District a group of Maoists severely beat two civilians who 
were unable to give them USD 700, an exorbitant amount in 
that region. 
 
COMMENT 
------- 
 
¶17.  The breakdown of the ceasefire has been avoided for 
now, but the prospects for further peace talks remain 
fragile.  Prachanda's statement, though agreeing to another 
round of talks, is ominously critical of the dialogue so 
far, labeling the peace process as a "joke and a situation 
of confusion."  The Maoist negotiating team reportedly is 
still in India, so it is unclear when a third round will 
occur.  Virtually no one to who we talk expresses any 
confidence that a return to warfare can be avoided in the 
longer term without concerted foreign pressure.  End 
Comment. 
 
MALINOWSKI