US embassy cable - 04KATHMANDU1024

C O N F I D E N T I A L SECTION 01 OF 04 KATHMANDU 001024 
 
SIPDIS 
 
STATE FOR SA/INS 
LONDON FOR POL - GURNEY 
NSC FOR MILLARD 
 
E.O. 12958: DECL: 06/01/2014 
TAGS: PGOV, NP, Political Parties 
SUBJECT: NEPAL:  DEUBA DUBBED PRIME MINISTER; CONGRESS' 
KOIRALA OUT IN THE COLD 
 
REF: A. KATHMANDU 1012 
 
     B. KATHMANDU 751 (NOTAL) 
     C. KATHMANDU 819 
 
Classified By: CDA JANET BOGUE.  REASON:  1.5 (B,D). 
 
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SUMMARY 
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1.  (C) At about 11:00 a.m. local time on June 2, King 
Gyanendra appointed two-time Prime Minister and President of 
the Nepali Congress (Democratic) Sher Bahadur Deuba as Prime 
Minister.  He is expected to be sworn in on June 3. 
According to Palace sources, Deuba's nomination has the 
critical support of Communist Party of Nepal - United Marxist 
Leninist (UML), the country's largest party, as well as that 
of two other Parliamentary parties, although whether the UML 
will join Deuba's government remains unclear.  The UML's 
support to Deuba has shattered the five-party alliance, 
leaving Nepali Congress President and adamant prime 
ministerial aspirant Girija Prasad Koirala out in the cold. 
In the absence of an all-party consensus candidate for Prime 
Minister (Ref A), Deuba, the last democratically elected 
Prime Minister before the King dismissed him for 
"incompetence" in October 2002, seems a good compromise 
choice.  Moreover, his middle-of-the-road politics, his 
party's comparatively restrained profile over the past 
several months of street protests, and his ostensibly 
easy-going manner make him well positioned to attract other 
parties--with the notable likely exception of long-time rival 
Koirala's Congress--into his new government.  Friendly to the 
U.S. and supportive of the global war on terror, Deuba can be 
expected to press for sustained, if not increased, U.S. 
assistance to counter the Maoist insurgency.  Biographic data 
on Deuba follows in Paras 7-8 below.  Suggested press 
guidance follows in Para 9 below.  End summary. 
 
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KING TAPS DEUBA AS NEW PM 
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2.  (U)  At about 11:00 a.m. local time on June 2 the 
state-owned media announced that King Gyanendra had appointed 
Nepali Congress (Democratic) President and former Prime 
Minister Sher Bahadur Deuba as Prime Minister.  The King 
reportedly charged the new PM with forming a multi-party 
government and holding national elections by April 2005. 
Deuba is expected to be sworn in June 3.  The appointment 
followed a flurry of meetings late June 1, most notably 
between Communist Party of Nepal - United Marxist Leninist 
General Secretary Madhav Nepal and Indian Ambassador Shyam 
Saran, followed by a subsequent meeting between Nepal and 
Deuba.  The post of Prime Minister has remained vacant since 
the May 7 resignation of former PM Surya Bahadur Thapa. 
 
3.  (C)  The formal announcement was preceded by a private 
telephone call from Shekhar Dhungana, Joint Secretary at the 
Royal Palace, to Charge informing her of the impending 
appointment.  The early-morning call from the Palace was 
rapidly followed up by another to Charge from Prabhakar Rana, 
King Gyanendra's confidant and business partner, providing 
additional information.  According to Rana, Deuba's 
nomination has the support of the pro-royalist National 
Democratic Party (also known by the Nepali acronym RPP) and 
the pro-royalist faction of the Nepal Sadbhavana Party. 
(Note:  Like Deuba's Nepali Congress (Democratic), neither 
the RPP nor this faction of the Sadbhavana Party is part of 
the five-party alliance that has been protesting against the 
King's "royal regression."  End note.)  More important, 
however, the Communist Party of Nepal - United 
Marxist-Leninist (UML), the largest party in the country and 
a leader of the alliance, had agreed to support Deuba, Rana 
asserted.  Initially, the UML will support the new government 
"from outside," Rana said, but could join the government 
later.  In the meantime, the UML has reportedly agreed to 
withdraw from the ongoing five-party protests against the 
Palace.  Rana attributed the UML's apparent ambivalence to 
the party's own "internal problems," as well as the 
constraints it faces in extricating itself gracefully from 
the five-party alliance.  He added that he understands there 
is a written agreement between UML leader Madhav Nepal and 
Deuba on the distribution of portfolios in the new Cabinet 
but acknowledged that he has not actually seen such a 
document.  Some Cabinet positions may also be assigned to 
non-party "technocrats," he advised.  The full Cabinet will 
likely be named within the "next day or two."  In response to 
Charge's query whether the new Cabinet would be formed in 
time for the June 4 visit of Indian Foreign Minister Natwar 
Singh, Rana replied, "I certainly hope so." 
 
4.  (C) The King's decision to choose Deuba has left Nepali 
Congress President and former Prime Minister Girija Prasad 
Koirala "frantic," Rana chuckled.  According to Rana, 
Koirala, who has served as Prime Minister in five previous 
governments and had been blatantly angling for a sixth, has 
telephoned him repeatedly since the previous evening, 
pledging his support to "anyone but Deuba," his long-time 
rival, as PM.  Among others, Koirala suggested he would 
reconsider former Speaker of Parliament Taranath Ranabath and 
UML General Secretary Madhav Nepal--both of whose bids 
Koirala had rejected resoundingly just a few days earlier 
(Ref A)--as well as Surya Bahadur Thapa, the royal appointee 
whose resignation had been a central goal, hypothetically at 
least, of the five-party protests. 
 
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COMMENT 
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5.  (C)  Comment:  Deuba's name has been floated as a 
possible contender ever since the King began contemplating a 
replacement for then-PM Thapa (Ref B).  We had also heard 
that the UML had indicated possible support for Deuba (Ref 
C).  In many ways, Deuba's moderate politics; his status as 
head of the third largest party in the most recent 
Parliament; his credentials as a leader in the pro-democracy 
movement of 1990; the low profile of his party during the 
vitriolic protests against the Palace by the five-party 
alliance; and his position as the last democratically elected 
Prime Minister before the King dismissed him and assumed 
executive power in October 2002 all suggest his suitability 
as a compromise candidate.  By appointing Deuba, the King may 
attempt a face-saving claim to be reverting to the situation 
that existed before he ventured into constitutionally 
uncharted territory by dismissing Deuba's government and 
appointing his own.   Moreover, Deuba's affable, 
non-confrontational demeanor makes him well positioned to 
attract support from other political leaders--with the 
notable exception of his long-time nemesis and former party 
colleague Koirala.  Should Deuba succeed in gaining the 
support of the UML's Nepal, the RPP, and the pro-royalist 
faction of the Nepal Sadbhavana Party, he could lay claim to 
a majority of the seats held in the most recent Parliament. 
(Note:  Of a total of 205 seats, the Nepali Congress 
(Democratic) accounts for 30; the UML 69; the RPP 11; and the 
Mandal faction of the Sadbhavana 4 for a total of 114.  End 
note.) 
 
6.  (C)  Comment (Continued):  Koirala's characteristic 
implacability and self-absorption, reflected most recently in 
his refusal to give party colleague Taranath Ranabhat or 
alliance partner Madhav Nepal a chance at the PM's chair (Ref 
A)--have cost him dearly.  His intransigence--to say nothing 
of his lack of political pragmatism--seem to have left him in 
the political wilderness, with only the ideologically awkward 
allies of the far-left People's Front Nepal (with a combined 
total of 6 MPs in the last Parliament) and the Peasants' and 
Workers' Party (1 MP), and the tattered remains of the rest 
of the Nepal Sadbhavana Party (1 MP).  As the largest party, 
the UML's abandonment of the "decisive agitation" renders the 
ongoing campaign of protests significantly less "decisive." 
Most important, UML support for a Deuba government appointed 
by the King would inhibit the Maoists' (heretofore 
successful) strategy of manipulating the democratic parties 
and the Palace against each other. 
 
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BIOGRAPHIC INFORMATION ON SHER BAHADUR DEUBA 
--------------------------------------------- 
 
7.  (SBU) Sher Bahadur Deuba has served as Nepal's Prime 
Minister twice:  from September 1995-March 1997 and again 
from July 2001-October 2002.  Deuba's first stint as PM 
proved generally unproductive, due in part to his indecisive 
management style and the lack of support he received from his 
personal and political rival, Nepali Congress power broker 
G.P. Koirala.  In an effort to keep the peace in his 
coalition government, he allocated nearly 50 Cabinet 
positions across the parties, at great expense to the 
national budget and at considerable detriment to his own 
effectiveness.  Consequently, his ambitious plans, including 
the privatization of major state-owned enterprises, 
languished.  During his second term as PM, Deuba presided 
over the first ceasefire and negotiations with Maoist 
insurgents (July-November 2001); the first-ever deployment of 
the Royal Nepal Army against the Maoists and the imposition 
of a state of national emergency, which temporarily suspended 
most civil rights, from November 2001-August 2002; and the 
visit of Secretary Powell to Kathmandu in January 2002.  On 
May 22, 2002, Deuba, fearing a vote of no confidence (most 
likely spearheaded by Koirala), requested King Gyanendra to 
dissolve Parliament.  Enraged at Deuba's move, Koirala 
expelled him from the Nepali Congress Party on May 26, 2002, 
whereupon Deuba formed the rival splinter Nepali Congress 
(Democratic).  Atlhough deteriorating security conditions 
made elections unfeasible, in July 2002 Deuba, rather than 
extending the tenure of the UML-dominated local bodies, 
allowed their terms to lapse, thereby creating a vacuum in 
representative government at both the national and local 
elections.  Deuba's subsequent inability to hold elections as 
scheduled prompted the King to dismiss him, citing his 
"incompetence" as a leader, on October 4, 2002.  Several 
former ministers in Deuba's second Cabinet subsequently faced 
corruption charges brought by the Commission for the 
Investigation into the Abuse of Authority (CIAA), the 
constitutional body charged with controlling and prosecuting 
corruption.   Following Deuba's dismissal, the King assumed 
executive authority and appointed two successive Prime 
Ministers and Cabinets.  Other party leaders, particularly 
Koirala, blamed Deuba for facilitating the royal "regression" 
and the King's extra-constitutional activities, pointing to 
Deuba's insistence on dissolving Parliament as the initial 
"trigger" for the King's subsequently more active and direct 
involvement in governing. 
 
8.  (SBU) Born in the far-western district of Dadeldhura in 
1946, Deuba began working in politics, initially in student 
organizations affiliated with the pro-democracy movement, in 
1965. In 1971 he became president of the Nepal Students 
Union, the student wing of the then-banned Nepali Congress. 
In all, Deuba spent a total of nine years in prison for his 
pro-democracy activities. He earned his bachelor of law and 
masters of arts in political science from Tribhuvan 
University in Kathmandu.  In 1988 the Socialist International 
sponsored his continued studies at the University of London, 
where he earned a diploma in international law and relations 
in 1990.  In 1994 he married Dr. Arzu Rana, a women's 
activist who is the granddaughter of one of the last Prime 
Ministers of the autocratic Rana regime, which ended in 1951. 
  The couple has one son who attends the British School in 
Kathmandu.  Friendly to the U.S., Deuba was a vocal supporter 
of the global war on terror.  His government may be expected 
to press for continued, if not increased, U.S. assistance to 
address the Maoist insurgency.  He staunchly supports a 
western approach to the economy and favors U.S. investment in 
Nepal.  Deuba briefly met with President Bush during a visit 
to Washington in May 2002.  Despite his proficiency in 
English, an apparent speech impediment makes Deuba difficult 
to understand in any language. 
 
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SUGGESTED PRESS GUIDANCE 
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9.  (SBU)  Suggested press guidance follows below: 
 
--We welcome the appointment of Sher Bahadur Deuba, an 
experienced democratic leader, as a significant step toward 
the restoration of representative democracy in Nepal. 
 
--This appointment marks an important opportunity for all 
pro-democratic and constitutional forces in Nepal to work 
together to address the many urgent challenges, including a 
terrorist insurgency, now confronting the nation. 
 
--We urge all supporters of multi-party democracy and 
constitutional monarchy to cooperate, in the national 
interest, in giving their fullest support to this endeavor. 
BOGUE