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

UNCLAS SECTION 01 OF 04 KATHMANDU 001593 
 
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, AUGUST 16-22 
 
REFERENCE:  (A) KATHMANDU 1565 
            (B) KATHMANDU 1557 
 
SUMMARY 
------- 
 
¶1.  The Government of Nepal (GON) and the Maoist rebels 
finally met for a third round of negotiations on August 17 
in the southwestern city of Nepalgunj (Ref A).  Tensions 
reportedly were high, as the GON acceded to Maoist demands 
for a roundtable conference and formation of an interim 
government, but rejected the demand for a constituent 
assembly.  The Maoist leadership flayed the GON's reform 
paper as totally unacceptable and as possibly signaling the 
end of peace talks.  The international community lauded the 
continuation of dialogue and the GON's agenda, while the 
political parties remained unsatisfied.  Ambushes on 
security forces by insurgents resulted in the deaths of 
three policemen and nineteen insurgents.  Six other security 
personnel were also injured in clashes, three of which 
occurred during the third round of negotiations.  Maoist 
contempt for civilians, as well as the ceasefire, continued 
with the discovery of four bombs on a school playground, 
allegedly meant for the American Embassy, the abduction of 
eight people, and threats from a high-level Maoist of 
strategic attacks throughout the Kathmandu Valley and 
assassination of security officials.  Maoists also 
implemented new orders banning vehicles from entering the 
far-western districts of Bahjang and Darchula, which lie on 
the Indian border.  The All Nepal National Independent 
Student Union-Revolutionary (ANNISU-R), the Maoist 
affiliated student organization, warned of civil war if 
demands for constituent assembly were not fulfilled.  End 
Summary. 
 
TENSIONS HIGH AMONG MUCH-AWAITED THIRD ROUND 
-------------------------------------------- 
 
¶2.  The long awaited third round of peace negotiations was 
held on August 17 in Nepalgunj, in the lowlands souththwest 
of Kathmandu (Ref A). Chief GON negotiator Dr. Prakash 
Chandra Lohani, Minister of Finance, and Kamal Thapa, 
Minister of Information and Communication, met with Maoist 
negotiators Baburam Bhattarai and Krishna Bahadur Mahara. 
The GON presented its agenda, touted as a proposal for 
"forward-looking reforms," that included input from members 
of civil society, political parties, and human rights 
activists.  Both sides reportedly agreed to a six-point 
agenda, which included political and social reforms as well 
as rehabilitation for victims of the insurgency.  The GON 
conceded two key Maoist demands--a roundtable conference and 
an interim government--but rejected the insurgents' demand 
for a new constitution, arguing that any problems could be 
solved "through amendments to the existing constitution." 
After reaching an impasse, the talks were adjourned on 
August 19, but Minister Thapa claimed they were "very 
useful," and "there will be no breakdown in the cease-fire." 
 
¶3.  During the meetings, Chief Maoist negotiator Baburam 
Bhattarai reportedly threatened to break off the talks after 
the GON rejected outright the Maoist demand for a 
constituent assembly.  However, the Maoists notably have 
failed to explain the rationale behind their rejection of 
GON proposals.  (Note:  On August 16, prior to the third 
round, Bhattarai had declared that the Maoists would not 
accept any proposal for "mere reform" of the current 
constitution, and ominously warned that any lack of 
seriousness from the GON would "invite disastrous 
consequences." End note).  Bhattarai also blasted the GON's 
request to place the issue of surrendering arms on the 
agenda as "ridiculous." Following the adjournment of the 
third round, Bhattarai said he doubted the peace talks would 
be successful unless the GON revised its concept paper. 
 
¶4.  Maoist Supreme leader, Pushpa Kamal Dahal, alias 
Prachanda, reportedly echoed Bhattarai's foreshadowing of 
failure in a telephone interview on August 18, declaring 
that the Maoists will not agree on "anything less than 
constituent assembly." If the GON's concept paper is final, 
he warned, then "everybody should know the talks have 
failed." 
 
INTERNATIONAL COMMUNITY PRAISES GON PROPOSALS 
--------------------------------------------- 
 
¶5.  Despite Maoist criticisms of the GON's agenda, the 
international community has praised the concept paper as "a 
step forward" in finding a peaceful solution to the current 
crisis.  In addition to the USG, the United Kingdom, India 
and representatives of civil society voiced support for the 
proposals, calling them progressive and democratic.  A press 
release issued on August 18 by the United Kingdom hailed the 
GON's concept paper as "a comprehensive position by the 
Nepalese government," and said it was encouraged that social 
and economic issues were being addressed. India's ambassador 
to Nepal welcomed the GON's proposals as a "basis for future 
understanding" between the two sides. 
 
¶6.  The Rastriya Prajatantra Party (RPP) also voiced 
support, and the Nepal Teachers' Association issued a 
statement on August 18 lauding the GON's agenda as "a 
democratic proposal in every sense." The support and praise 
of the GON's agenda would appear to put additional pressure 
on the Maoists to be more compromising, instead of merely 
concentrating on their own demands. 
 
¶7.  Both the GON and the Maoists have been under pressure to 
make the peace talks successful.  On August 16 in Nepalgunj, 
a memorandum signed by over thirty organizations and 
individuals was delivered to both the GON and the Maoists 
urging success of the talks and warning of the heavy cost to 
everyday people if they failed.  A peace rally was also 
organized on August 17 by sister organizations of the 
Maoists to put pressure on both sides.  Students, workers 
and intellectuals affiliated with the Maoist party 
reportedly all participated in the rally. 
 
LEFTISTS STICK TO OLD MANTRAS 
----------------------------- 
 
¶8.  Despite apparent widespread support of the GON's concept 
paper, the Communist Party of Nepal-United Marxist Leninist 
(CPN-UML) has refused to endorse it, concentrating on its 
own agenda against monarchial "regression," and promising to 
continue its anti-government agitation until the "regressive 
forces are completely uprooted."  Madhav Kumar Nepal, 
general secretary of CPN-UML, said the GON's agenda would 
not solve the current crisis because it does not address the 
issues raised by the agitating political parties.  He 
claimed the people would not accept the monarchy and accused 
the King of trying to destroy democracy.  Nepal also issued 
an unusual challenge to the Maoists, declaring defiantly 
that if the insurgents truly wanted fundamental change, 
"they should join our joint movement against regression."  A 
statement issued on August 18 by the United Left Front (ULF) 
also decried the GON's proposal and said it would not 
resolve any of Nepal's political problems.  Both parties 
pledged to continue with their movements against the King. 
 
SECURITY FORCES AND MAOISTS CLASH 
--------------------------------- 
 
¶9.  As the third round of peace negotiations got underway in 
the western part of Nepal, eastern districts saw three 
violent clashes between security forces and Maoists.  On 
August 17, security forces reportedly were ambushed by a 
group of armed Maoists in the eastern district of Ramechhap. 
Security forces returned fire and killed five insurgents. 
Later that day in the same region, a second clash ensued, 
resulting in the deaths of twelve more insurgents.  In a 
separate battle, a policeman was killed and three others 
injured in the northeastern district of Dolakha after 
Maoists detonated pressure cooker bombs.  Two policemen were 
killed on August 19 in Siraha District, in the southeast, 
when a large group of insurgents opened fire on them.  On 
that same day in the western district of Salyan, three 
security personnel were injured in a clash with Maoist 
cadres, and in the northeastern district of Taplejung, which 
borders India and China, two Maoists were killed by security 
forces during a clash.  Security forces recovered explosives 
from the scene.  A report released on August 21 by the 
Informal Sector Service Center (INSEC), a local human rights 
group, claims that a total of 76 people have been killed in 
armed clashes since the ceasefire was declared in January. 
 
¶10.  Maoist leaders in the east accused security forces of 
"barbaric and cowardly murder," but Colonel Deepak Gurung, 
Royal Nepal Army (RNA) spokesman, questioned the logic 
behind Maoist ambushes, which he said was "baffling."  The 
insurgents reportedly are attacking army and police patrols 
that venture beyond five kilometers of their barracks, which 
the Maoists claim is a breach of the agreement allegedly 
reached during the second round of talks. 
 
¶11.  Insurgents abducted a policeman on August 21 in Surkhet 
District; he remains missing.  Five policemen abducted last 
week by insurgents (Ref B) were released on August 15. 
According to police sources they were released on the 
condition that Maoist cadres arrested in Khotang are 
released and security forces stop alleged abuse of villagers 
in that district.  The insurgents threatened "dire 
consequences" to the freed policemen and their families if 
their demands were not fulfilled. 
 
MAOISTS' ACTIONS SHOW DISREGARD FOR CIVILIANS 
--------------------------------------------- 
 
¶12.  A vernacular newspaper reported on August 17 that, 
according to a high-level Maoist, the insurgents are 
prepared to launch attacks at places within the main cities, 
including the Kathmandu Valley, if talks fail.  Over one 
thousand insurgents reportedly have been deployed to launch 
attacks in Bhaktapur, Lalitpur and Kathmandu.  The 
publication also quotes the unnamed source as saying that 
the insurgents have formed a special task force to carry out 
high-profile assassinations of senior police and army 
officials. 
 
¶13.  On August 15, members of the RNA defused four bombs 
found on a playground of an elementary school in Kathmandu. 
Two days later, a sister organization of the Maoists claimed 
responsibility for planting the bombs.  In a press statement 
released on August 17, the organization said the bombs were 
supposed to be planted at the compound of the American 
Embassy because "the Americans are interfering in the 
internal affairs" of Nepal, but were mistakenly planted at 
the school. 
 
¶14.  Maoists abducted a total of eight civilians, including 
a school principal and two CPN-UML party members.  The CPN- 
UML workers were abducted by the insurgents on August 20 
from the central district of Dhading.  On August 17, four 
civilians were abducted in Sindhupalchowk, and on August 21, 
two businessmen were kidnapped in Udayapur.  There is no 
information on the whereabouts of any of the missing. 
 
¶15.  Maoists in the far-western districts of Bahjang and 
Darchula, which lie on the Indian border, have banned 
vehicles from entering the districts.  The insurgents are 
protesting the alleged arrest of twelve of their cadres. 
 
MAOISTS BECOME LANDLORDS 
------------------------ 
 
¶16.  Maoists in the districts of Bardiya and Kailali, along 
the western Terai, have seized land belonging to ex- 
ministers and other government officials.  The insurgents, 
acting as landlords, employ farmers to work on the land, and 
demand as a levy half of the crops that are produced.  The 
insurgents reportedly also have taken over parts of land 
owned by local villagers who remain silent out of fear they 
will lose the rest of their land.  Maoists in the eastern 
district of Siraha also reportedly confiscated land from 
three landlords and claimed to have distributed it to 
landless members of lower castes.  However, no one has been 
seen tilling it. 
 
ANNISU-R THREATENS A CIVIL WAR 
------------------------------ 
 
¶17.  On August 16, the All Nepal National Independent 
Student Union-Revolutionary (ANNISU-R), the Maoist- 
affiliated student organization, reportedly said that the 
constituent assembly is the "bottom line" for the Maoists, 
and warned if the GON failed to agree to the demand, it 
would "certainly lead the country to further civil war." 
Himal Sharma, general secretary of ANNISU-R, said that the 
Maoists had "statutorily given rights to revolt." 
 
MALINOWSKI