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

C O N F I D E N T I A L SECTION 01 OF 02 KATHMANDU 000819 
 
SIPDIS 
 
STATE FOR SA/INS 
LONDON FOR POL - GURNEY 
NSC FOR MILLARD 
 
E.O. 12958: DECL: 04/28/2014 
TAGS: PGOV NP GON
SUBJECT: NEPAL:  ROYAL INSIDER OPTIMISTIC ON PROGRESS 
BETWEEN PARTIES AND PALACE 
 
REF: KATHMANDU 790 
 
Classified By: CDA JANET BOGUE.  REASON:  1.5 (B,D). 
 
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SUMMARY 
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¶1.  (C)  On April 29 Prabhakar Rana, King Gyanendra's 
confidant and business partner, called on Charge d'Affaires 
and DCM to brief them on progress toward reconciliation 
between the parties and the Palace.  Rana expects Nepali 
Congress President Girija Koirala will agree to meet the King 
soon and credited the Indians with playing a helpful role in 
persuading Communist Party of Nepal - United Marxist Leninist 
(UML) General Secretary Madhav Nepal to be equally 
cooperative.  According to Rana, once an all-party government 
is formed, the King envisions the ensuing twelve months as 
focused on preparations for elections--suggesting that the 
timeline for actual polls could be stretched out to autumn 
¶2005.  The King reportedly is concerned that centrist 
political parties, like the two factions of the Nepali 
Congress, have allowed their popular base to wither and would 
fare poorly in an early election against the leftist UML and 
its allies.  The King wants to ensure that the centrist 
parties have adequate time to rebuild their popular base, 
Rana noted.  We have heard optimistic predictions from Rana 
several times before over the past two years, none of which 
has ever been realized completely.  That said, Koirala's 
unusually accommodating tone, as well as the Indians' 
strenuous advocacy efforts, are hopeful new elements.  We 
believe Koirala shares some of the King's fears about the 
UML's relative strength and may welcome the opportunity to 
come to an understanding with the Palace.  End summary. 
 
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KOIRALA COMING AROUND? 
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¶2.  (C) On April 29 Prabhakar Rana, King Gyanendra's 
confidant and business partner, called on Charge d'Affaires 
and DCM to brief them on progress toward reconciliation 
between the parties and the Palace.  Rana, who noted he was 
traveling to New Delhi for what he described as religious 
reasons, reported indications that "things are moving in a 
positive direction."  In a recent conversation, Nepali 
Congress President Girija Koirala told Rana that he is ready 
to meet the King and will try to persuade Madhav Nepal, 
General Secretary of the Communist Party of Nepal - United 
Marxist Leninist (UML), to do the same upon his return from 
Bangkok April 29.  (Rana said the Indian Ambassador had 
received the same assurances from K.P. Oli, the UML's 
second-ranking leader and Nepal's personal political 
nemesis.)  Koirala had told Rana that it would help if the 
Government of Nepal reduced the "red-line" areas (in which 
demonstrations are banned) before he met the King, but added 
that his request should not be construed as a precondition. 
Finally, Koirala also raised the possibility of cancelling a 
mass demonstration planned for May 3 if a dialogue with the 
King is initiated. 
 
¶3.  (C)  Rana said he had urged Koirala to reach an 
accommodation with Sher Bahadur Deuba, the President of the 
Nepali Congress (Democratic) splinter and Koirala's long-time 
rival.  When briefing Koirala on Deuba's meeting with the 
King (Reftel), Rana said he underscored the King's agreement 
to accept Deuba as Prime Minister again, provided that Deuba 
could win the support of other parties as well.  Koirala 
reportedly told Rana that his party would have difficulty 
joining a Deuba-led government and suggested lending support 
"from outside."  Rana said he discouraged that proposal, 
adding that Koirala could be counted on to undermine any 
government in which his party was not included.  Rana said he 
urged Koirala not to miss the opportunity to reach an 
understanding with the Palace, and suggested, if Deuba is 
unacceptable, that Koirala propose several other names to the 
King as possible new Prime Ministers.  Although Koirala did 
not commit to do so, Rana said he had the impression that the 
party leader "already had several names in mind." 
 
¶4.  (C)  The King is not satisfied with the performance of 
the government of Prime Minister Surya Bahadur Thapa, Rana 
continued.  The small size of the Cabinet has required its 
Ministers to assume multiple portfolios, lessening its 
efficiency.  The King is not even pleased with its 
anti-corruption efforts, Rana observed, adding that the 
monarch believes the current government--which he 
appointed--is just as corrupt as previous ones.  Although the 
Government's anti-corruption organization is making a sincere 
effort, Rana explained, the number of actual prosecutions has 
been limited because of the corruption of the judiciary. 
 
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LATER ELECTIONS TO ALLOW 
STRONGER NEPALI CONGRESS 
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¶5.  (C) Rana told the CDA that the King had expressed concern 
that centrist parties like the Nepali Congress had lost 
significant ground at the local level to the UML and other 
leftist parties since the last elections.  The UML is much 
better organized than the Nepali Congress factions, which 
have let their national organizations wither, he observed. 
If there were an election soon, Rana said, the King fears 
that the UML and other leftist parties--including, possibly, 
the Maoists--would emerge as a single bloc with a plurality. 
To avert that, the King wants a sufficiently long period 
before national elections to allow the centrist parties to 
re-establish their popular bases.  Thus, once an all-party 
government is formed, the King wants to allow a full year for 
election preparations, Rana said, suggesting that national 
elections might not take place before autumn 2005.  Rana said 
he had tried to dissuade the King from pursuing a proposal to 
install a neutral caretaker government two months before 
elections are held (Reftel), arguing that it is "probably not 
realistic" to insist that the parties agree to the plan at 
this early stage in discussions. 
 
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U.S. AND INDIA AS FACILITATORS 
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¶6.  (C)  CDA stressed to Rana that the U.S. has no preference 
regarding which party or which individual heads a new 
government.  Insead, we support the restoration of the 
multi-party system, creation of a broad-based government, and 
cooperation between the parties and the Palace.  She said the 
U.S. will continue to play a facilitating role, encouraging 
the parties to engage in dialogue with the King.  The King 
fully understands the U.S. perspective, Rana asserted, and 
his views are consistent with it.  He reported that the 
Indian Embassy is also working hard to promote an 
understanding between the parties and the Palace.  The Indian 
Ambassador had conveyed to Koirala many of the same points 
Rana himself made to the Nepali Congress leader and has also 
been helpful in urging the UML's Nepal to meet the King 
without precondition. 
 
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COMMENT 
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¶7.  (C) Rana has optimistically predicted political 
reconciliation several times over the past two years. 
Unfortunately, none of his scenarios ever came to fruition. 
That said, this latest report offers some ground for hope. 
First, Koirala's newly flexible stance suggests his sense of 
political pragmatism may be outweighing his more typical 
inclination toward pettiness and vengefulness.  If he sees in 
the King's overture a way to outflank Deuba and the UML's 
Nepal, he may grab it.  The Indians also appear to be playing 
a more constructive role.  More than any other international 
actor, the Indian government has well-established social, 
political, and financial influence with Koirala's Nepali 
Congress.  We do not share the King's purported concern of a 
UML-Maoist link in the next election.  Despite its name, the 
UML is itself a centrist party that has had hundreds of its 
activists killed by the Maoists since the beginning of the 
insurgency.  Instead, the King's reported desire to provide a 
longer preparation period before elections may be an effort 
to tempt Koirala into supporting a new government. 
 
 
BOGUE