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C O N F I D E N T I A L SECTION 01 OF 04 KATHMANDU 000129 
 
SIPDIS 
 
E.O. 12958: DECL: 02/19/2019 
TAGS: PREL PGOV PTER EAID ENVR ENRG EINV ETRD MARR
PREF, PHUM, UN, IN, BT, CH, NP 
SUBJECT: NEPAL: BOUCHER STRESSES U.S. INTEREST IN 
DEMOCRACY, DEVELOPMENT AND END TO VIOLENCE 
 
REF: 08 KATHMANDU 1297 
 
Classified By: Ambassador Nancy J. Powell.  Reasons 1.4 (b/d) 
 
Summary 
------- 
 
¶1. (C) During his February 11-12 visit to Kathmandu, 
Assistant Secretary Richard Boucher emphasized to members of 
the Government of Nepal that the United States was interested 
in strengthening Nepal's democracy, in promoting the 
country's economic development and in seeing an end to 
violence.  Prime Minister Pushpa Dahal was emphatic that the 
United Communist Party of Nepal - Maoist is committed to 
multi-party democracy and confident his coalition government 
will serve out its term.  He promised Boucher a statement 
soon renouncing terrorism and immediate action on past 
terrorist incidents involving the U.S. Embassy.  Dahal and 
the other ministers expect that the constitution will be 
drafted by the 2010 deadline, although devising a federal 
state will be difficult.  The Assistant Secretary urged the 
Maoist Party to work in consensus with the other parties, 
including in completing the peace process through the 
rehabilitation and integration of Maoist combatants.  Boucher 
affirmed that the Obama Administration intended to continue 
its assistance to, and engagement with, Nepal. 
 
Prime Minister: Confident About Government, Constitution 
--------------------------------------------- ----------- 
 
¶2. (C) On February 11, Prime Minister Pushpa Dahal insisted 
to visiting Assistant Secretary for South and Central Asian 
Affairs Richard Boucher that the United Communist Party of 
Nepal - Maoist is committed to multiparty democracy and human 
rights.  The Maoists have no intention of seizing power. 
Dahal said he was not worried other parties would bring down 
his government; is coalition will serve out its two-year 
term.  His goal is to reach political consensus on major 
issues, including with the opposition Nepali Congress.  The 
Prime Minister said 40 teams of Constituent Assembly members 
were about to travel around the country seeking input in 
drafting Nepal's new constitution.  Dahal predicted the main 
debate in the CA would be over the question of federalism, 
but that the Assembly will meet its May 2010 deadline. 
 
Peace Process Moving, Development Needed 
---------------------------------------- 
 
¶3. (C) The Maoist Party chief noted that the Special 
Committee on integration and rehabilitation of Maoist 
combatants, which he was chairing, was scheduled to have its 
third meeting later the same day.  He hoped the Special 
Committee would complete its work by the time the UN Mission 
in Nepal's term ended in July 2009.  Dahal opined that some 
People's Liberation Army units should be integrated into the 
Nepal Army, not just as individuals, but he added that the 
details will have to be discussed.  The Maoists will be 
flexible.  The Prime Minister urged the United States to 
provide a massive increase in aid, what Maoist Finance 
Minister Baburam Bhattarai called in the same meeting a "mini 
Marshall Plan."  The Prime Minister argued that, given the 
state of the country after a decade of civil war and the 
large number of unemployed youth, only a big increase in aid 
could ensure the current peace would be sustainable.  The two 
Maoist Ministers pushed for more U.S. investment.  Dahal 
pointed out the cabinet was in the process of establishing an 
investment board, which he will head, to approve and expedite 
mega investment projects -- in hydropower, for 
example. 
 
Boucher: Lifting of Terrorist Tags, Press Freedom 
--------------------------------------------- ---- 
 
¶4. (C) The Assistant Secretary welcomed the strong public 
statement that the Prime Minister had issued in December 
condemning the terrorist attacks in Mumbai.   Boucher asked 
 
KATHMANDU 00000129  002 OF 004 
 
 
if the Prime Minister would make a broader statement 
renouncing terrorism in all its forms.  Before the United 
States could take the Maoists off the Terrorist Exclusion 
List and the Specially Designated Global Terrorist List and 
have normal relations with the party, the Maoist Party would 
also have to acknowledge responsibility for the killing of 
the two Embassy guards -- to the families and the public, 
perhaps to the National Human Rights Commission or the future 
Truth and Reconciliation Commission.  In addition, the United 
States continues to look closely at the Maoists' attitude 
toward violence.  The United States wishes to see the Young 
Communist League (YCL) demobilized as a paramilitary 
organization as promised and was concerned that the Maoists' 
use of violence was coming up again.  Prime Minister Dahal 
said he could issue a general statement soon.  He reiterated 
that the killing of the guards had not been pursuant to 
Central Committee policy, and noted that a senior party 
leader had already provided a detailed explanation of the 
killing to the U.S. Embassy (reftel).  The Maoist chief hoped 
any remaining questions could be cleared up within "a few 
days."  It would be no problem to acknowledge responsibility 
to the family.  The Prime Minister stated that incidents of 
violence by the League had "very much decreased."  The 
process of demobilizing the League had started: they had 
already vacated some industrial estates.  Boucher highlighted 
press freedom as another U.S. concern.  Dahal conceded that 
some Maoist cadres had been involved in "wrong activities," 
and cited the example of the attack by Maoist labor leaders 
on Himal Media.  Dahal said he had intervened to ensure the 
culprits were handed over to the police.  The Maoist Party 
chief also admitted that Maoist cadres participated as 
individuals in the killing of a woman journalist (Uma Singh) 
in the Terai in January. 
 
Aid Continuing, Looking for Climate Change Partners 
--------------------------------------------- ------ 
 
¶5. (C) Boucher pointed out that the United States had 
maintained a high level of assistance to Nepal in 2008 of 
approximately USD 70 million per year, even after the Maoists 
took over the country's government.  The Assistant Secretary 
said the United States was keen to enhance its existing aid 
coordination with the government and among donors.  This was 
especially important as the Nepal Development Forum 
approaches in May.  Boucher urged the Prime Minister and the 
Finance Minister to create positive conditions for private 
investment, particularly in hydropower, and remarked that 
U.S. investors were interested.  Democracy and development 
would be the focus of the new U.S. administration.  He added 
that President Obama and Secretary Clinton were looking for 
partners to address the issue of climate change and had 
appointed a special envoy on the issue. 
 
Foreign Secretary: Bhutanese and Tibetan Refugees 
--------------------------------------------- ---- 
 
¶6. (C) In his meeting with Assistant Secretary Boucher on 
February 11, Foreign Secretary Gyan Chandra Acharya 
encouraged Boucher to urge the parties to stay the course on 
the peace process and the constitution.  The difficulty was 
that the Government of Nepal was facing so many conflicting 
demands at once.  The biggest challenge is figuring out how 
to improve the government,s delivery of services to the 
people.  Boucher reported that the Bhutanese Prime Minister 
had told him during his visit that the Royal Government of 
Bhutan was ready to deal with the Nepalis on taking back 
refugees in categories 1 and 4, but it is most important to 
establish the principle that some refugees had a right to 
return. Acharya said that the Government of Nepal had told 
the Royal Government of Bhutan in New York during the UN 
General Assembly in fall 2008 and in subsequent meetings in 
New Delhi that Nepal and Bhutan must take advantage of the 
window of opportunity created by the U.S. resettlement 
program.  He worried that the Royal Government would want to 
revisit the past, insisting on proof of physical eviction. 
He expressed concern as well about the residual population of 
 
KATHMANDU 00000129  003 OF 004 
 
 
Bhutanese refugees.  The Foreign Secretary stated that 
starting an UN-administered registration program for Tibetan 
refugees would be "difficult."  Nepal was under tremendous 
press from the Chinese Government not to change the current 
arrangement.  The Assistant Secretary countered that the 
current arrangement left Nepal with a problem: many longtime 
resident Tibetans with no legal status.  He pointed out that 
the United States was willing to take some. 
 
Foreign Minister: Government, Constitution, Integration, Terai 
--------------------------------------------- ----------------- 
 
¶7. (C) On February 11, Foreign Minister Upendra Yadav 
detailed to Boucher that the governing coalition would stay 
together, but more consensus was needed.  Yadav, who is head 
of the Madhesi People's Rights Forum, expected the Nepali 
Congress to be a cooperative opposition.  The parties lost 
lots of time -- 8 months out of the 24 provided to draft the 
constitution -- but Yadav indicated that the Assembly is 
compelled to complete it on time.  Public pressure, including 
from civil society, will make sure of it.  The Madhesi want a 
presidential system of government with autonomous states. 
The Foreign Minister praised the strength and democratic 
principles of the U.S. Constitution and welcomed assistance 
from U.S. experts.  Regarding integration of combatants, 
Yadav noted that the Madhesi had a different concept from the 
Maoists: integration does not mean a merger of the two 
armies.  The character of the Nepal Army as a national army 
needs to remain the same.  Minors and other unverified 
require vocational training and various options for 
employment.  The last option should be integration of 
individuals into the Army.  He blamed the Maoists for the 
delay in getting started.  With respect to the Terai, the 
law-and-order situation is poor, but not out of control. 
Most of the armed groups are criminals and have no political 
agenda.  The political groups must be brought into the 
mainstream, and reasonable demands addressed.  Prior 
agreements with the Madhesis should be implemented.  Finally, 
to ensure security, the political parties have to be 
persuaded to stop interfering with the police every time an 
accused person is arrested. 
 
Finance Minister: Government, Constitution, Maoist Violence 
--------------------------------------------- -------------- 
 
¶8. (C) In a separate meeting with the Assistant Secretary on 
February 12, Finance Minister Bhattarai confided that he is 
optimistic that things are "moving in the right direction." 
There were ups and down, but this is to be expected after 10 
years of civil war.  However, if the Government of Nepal 
failed to create jobs, and absorb the youth into productive 
activities, the country would face a crisis.  The Finance 
Minister averred that schoolteachers in the villages would 
contribute useful ideas to Members of Parliament as they fan 
out across the country seeking suggestions for the new 
constitution.  Drafting will start in earnest after the teams 
return to Kathmandu in March.  Boucher raised again the issue 
of violence by the Young Communist League.  While the Prime 
Minister characterized it as a matter of a few incidents, the 
United States sees it as a much more widespread problem. 
Bhattarai responded that the Maoist party was frankly 
concerned.  "Some bad elements" had infiltrated the party. 
At the same time, the Maoists recognized the League's 
paramilitary style must change.  The difficulty was that the 
League consists of full-time members of the party who had 
left homes and family during the insurgency.  They expect the 
party to look after them.  The Maoists are developing 
projects such as road construction to keep them busy.  The 
Assistant Secretary reiterated that the U.S. would be 
conducting the review of the Maoists' terrorist designations, 
watching the level of violence.  The Finance Minister 
promised a general statement against terrorism soon. 
 
Economy, Trade 
-------------- 
 
 
KATHMANDU 00000129  004 OF 004 
 
 
¶9. (C) Bhattarai stated that internal funds were not enough 
for the Government of Nepal to complete all of the required 
reconstruction.  Nepal needs donor funds, including for big 
projects in areas such as energy (hydropower) and tourism. 
Boucher encouraged Bhattarai to work with the World Bank and 
Asian Development Bank (ADB).  The United States does not 
have the money for big projects, but is actively engaged with 
the Bank and the Bank, and the involvement of the 
international financial institutions will also attract the 
needed private capital.  The Finance Minister noted that 
Nepal had not yet been greatly affected by the global 
financial crisis, but observers fear that remittances will 
fall and overseas workers will be sent home.  In a subsequent 
meeting that Bhattarai arranged in his office, Nepali 
business leaders appealed to the Assistant Secretary for 
duty-free status for ready-made garments.  Boucher replied to 
them, as he did to the Prime Minister, the Finance Minister, 
the Foreign Minister and the President: the expansion of U.S. 
trade preference to Nepali textiles was extremely unlikely. 
 
President: Government, Rule of Law, Ordinances 
--------------------------------------------- - 
 
¶10. (C) On February 12, President Ram Baran Yadav 
characterized Nepal as a country in transition, which has 
achieved a democratic republic.  The issue is how to 
stabilize that republic.  Consensus among the major political 
parties, including the Nepali Congress, is essential.  The 
Special Committee has been formed; now it has to act fast to 
deal with the Maoist insurgents who are still in cantonments. 
 President Yadav said the Maoist-led government is not 
serious about dealing with widespread violence, about the 
rule of law.  Yadav pointed out that the Parliament had been 
in session for five months, and yet the Government had waited 
until one week after Parliament was on recess to present him 
with three ordinances for his signature.  Yadav stated that 
he had told the Prime Minister that ordinances were to be the 
exception, and Dahal had agreed to use them sparingly. 
(Comment: Dahal assured Boucher on February 11 that the 
Government of Nepal will present all the ordinances, as 
required, to the Parliament for debate and approval when it 
reopened in a month and a half.)  Yadav urged the United 
States to promote democracy in Nepal, denounce violence, 
encourage development, and continue support for the Nepal 
Army. 
 
Comment 
------- 
 
¶11. (C) Prime Minister Dahal's reaffirmation to Assistant 
Secretary Boucher of the Maoists' commitment to multiparty 
democracy was timely given the continuing predilection of 
senior Maoist leaders, including Dahal, to engage in 
revolutionary rhetoric when speaking to Maoist cadres, and 
ongoing abuses by the Maoists' Young Communist League.  His 
promise of a broad statement against terrorism is also 
welcome.  Boucher took the opportunity to acknowledge limited 
progress by the Maoist-led government in drafting the 
constitution and bringing the peace process to a conclusion, 
but also to push for continued progress and consensus, as 
well as end to violence.  The Assistant Secretary's February 
11-12 visit, which received widespread, positive attention in 
the Nepali print and broadcast media, also served to reassure 
an anxious Nepali public that the United States is committed 
over the long-term to Nepal's democracy and its development. 
 
 
¶12. (U) Assistant Secretary Boucher has cleared this cable. 
POWELL