US embassy cable - 03KATHMANDU1823

C O N F I D E N T I A L SECTION 01 OF 02 KATHMANDU 001823 
 
SIPDIS 
 
DEPT FOR SA/INS AND DS/IP/SA 
ISLAMABAD FOR AMBASSADOR POWELL 
LONDON FOR POL/GURNEY 
NSC FOR MILLARD 
 
E.O. 12958: DECL: 09/14/2013 
TAGS: PTER, ECON, ASEC, NP, Maoist Insurgency 
SUBJECT: NEPAL:  INDUSTRIAL SECURITY GROUP DISCUSSES MAOIST 
EXTORTION AND THREATS 
 
REF: KATHMANDU 1369 
 
Classified By: Ambassador Michael E. Malinowski for reasons 1.5 (b) and 
 (d). 
 
Summary 
======== 
 
1.  (SBU) On September 11, the Industrial Security Group, 
comprised of the bilateral chambers and foreign missions of 
the U.S., U.K., France, Germany, and India, held a meeting to 
discuss the deteriorating security situation in Nepal.  The 
group reviewed the Government's security plans, Maoist 
extortion demands, and next steps.  End summary. 
 
Government Plans for Dialogue on Security Issues 
============================================= ==== 
 
2.  (SBU) On September 11, British Ambassador Keith 
Bloomfield chaired a session of the Industrial Security 
Group, which includes members from the chambers of commerce 
and foreign mission of the U.S., U.K, France, Germany, and 
India (reftel).  The meeting was attended by the U.S. 
Ambassador and RSO, German and French Charges', a 
representative from the Indian Embassy, and heads of the 
bilateral chambers of commerce.  Ambassador Bloomfield and 
the head of the British Chamber of Commerce and Industry, 
Rajendra Khetan, reviewed discussions they held with Home 
Secretary Ananta Raj Pandey the week of August 18 regarding 
 
SIPDIS 
security for Nepal's industrial sector.  Pandey reported that 
the Government of Nepal (GoN) has adopted four points to 
discuss with industry:  a) Request the private sector to 
contribute funds for a proposed Industrial Security Force; b) 
A recommendation on whether the stationing of troops in 
industrial areas would increase or decrease Maoist targeting 
of industries; c)  The monitoring of Maoist activity in and 
around company facilities; and d) The development of a 
package of options that would increase security.  Ambassador 
Bloomfield reported that while the Home Secretary had opened 
the door for dialogue, he has not re-engaged on the topic in 
the two weeks since the meeting. 
 
Participants Report a Peak in Extortion 
======================================== 
 
3.  (SBU) Chamber representatives reported that in the past 
week, Maoists have increased their extortion demands, which 
are now backed with threats of retaliation.  In addition to 
the Maoists' traditional practice of soliciting from 
companies, Maoists are now sending letters to prominent 
individuals.  These letters are signed by area commanders 
using pseudonyms.  For the first time, according to a member 
of the British Chamber, Maoists are making extortion demands 
of banks and financial companies.  (Note:  In the past, 
Maoists would attack financial institutions to steal money 
rather than try to extort it.  End note.) 
 
4.  (SBU) Nepal-USA Chamber of Commerce and Industry 
President, Sunil Sakya, reported that in the historic city 
and tourist site of Lumbini (the birthplace of Buddha), there 
is almost no presence of security personnel.  The police that 
are posted in the district are sleeping in temples and fields 
and are inconsistently reporting for duty during the day.  A 
member of the British Chamber reported that the Chief 
District Officer of Makwanpur, a six-hour drive south of 
Kathmandu, is threatening to withdraw a six-man police unit 
guarding Nepal/Lever's plant, a force the facility has 
enjoyed for nearly two years. 
 
Germans Shutdown Development Projects 
====================================== 
 
5.  (SBU) German Charge' Klaus Tesch reported to the group 
that the German development agency, GTZ, has ended its 
hydro-electric project on the Marsygahdi River in Kaski 
District (west of Kathmandu), since the break in the 
cease-fire due to Maoist extortion demands.  Shortly after 
the resumption of hostilities, the Maoists added a ten-day 
deadline. 
 
"Where are the Police?" 
======================== 
 
6.  (SBU) Ambassador Bloomfield asked about the Joint 
Secretary within the Home Ministry designated as the single 
 
SIPDIS 
point of contact to report extortion demands.  British 
Chamber President Khetan replied that while the Joint 
Secretary is taking reports, he does not have the resources 
 
SIPDIS 
to conduct investigations or arrests.  Ambassador Malinowski 
and Ambassador Bloomfield recommended that anti-extortion 
training and capacity building would be a good area in which 
to direct bilateral programs.  Ambassador Malinowski directed 
RSO to solicit Home Ministry views on conducting 
anti-extortion operations and standing up a special unit to 
conduct investigations. 
 
Comment 
======== 
 
7.  (C) Despite two years of promises to form an Industrial 
Security Force, the GoN has not been able to deliver.  But 
neither have the businesses given the cash-strapped GoN the 
funds needed to form a specialized force.  The reported 
increases in extortion demands track with other reports the 
Embassy has received.  The break in the cease-fire, 
unfortunately, provides the Maoists an opportunity to make 
good on their "or else" threats by attacking hold-outs who 
refused to meet Maoist demands.  The proposal to assist the 
Ministry of Home to develop a capacity to pursue Maoist 
extorters garnered general support from the group and will be 
pursued by RSO.  The concept would not only address the 
current problem of Maoist extortion, but it could also be 
transformed into a financial crimes unit later. 
MALINOWSKI