US embassy cable - 02KATHMANDU1091

C O N F I D E N T I A L SECTION 01 OF 03 KATHMANDU 001091 
 
SIPDIS 
 
STATE FOR SA/INS 
LONDON FOR POL - RIEDEL 
 
E.O. 12958: DECL: 05/30/2012 
TAGS: PGOV, NP, Government of Nepal (GON) 
SUBJECT: RECONCILIATION EFFORTS IN NEPALI CONGRESS PARTY 
 
REF: KATHMANDU 1055 AND PREVIOUS 
 
Classified By: AMB. MICHAEL E. MALINOWSKI.  REASON:  1.5(B,D). 
 
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SUMMARY 
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1.  (C)  Efforts to reconcile intra-party rivals Prime 
Minister Sher Bahadur Deuba and Nepali Congress President and 
former Prime Minister G.P. Koirala appear headed in the right 
direction.  Koirala has directed party peacemakers to patch 
things up during his upcoming jaunt to China June 1.  In a 
meeting with the Ambassador May 31, Koirala said his party 
will participate in the November 13 elections, but stressed 
his continuing fear that royal and/or military interference 
may undermine chances that they are free and fear.  The 
business community appears to be solidly behind PM Deuba and 
may threaten to withhold customary contributions to the 
Nepali Congress Party if intra-party squabbling continues. 
End summary. 
 
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EFFORTS AT RECONCILIATION 
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2.  (C) Neutral-minded leaders in the Nepali Congress Party, 
such as former Deputy Prime Minister Ram Chandra Poudel, 
former Finance Minister Ram Sharan Mahat, and former Speaker 
Taranath Ranabhat, are joining party patriarch K.P. 
Bhattarai's ongoing efforts to heal the rift between Prime 
Minister Sher Bahadur Deuba and former Prime Minister and 
Nepali Congress Party President G.P. Koirala (Reftel).  Mahat 
told the Ambassador May 30 Koirala admitted to the 
peacemakers that expelling Deuba from the party was a 
mistake, and is looking for a face-saving way out of the 
impasse.  Koirala will leave for a four-day visit to China 
June 1 and will likely do nothing, however, until after his 
return. 
 
3.  (C)  Some party insiders have told us that while Koirala 
may have seen the error of his ways, his supporters seem 
hell-bent on fueling the antagonism between the two leaders, 
making any possible conciliatory gesture all the more 
difficult.  Among the most rabid is said to be G.P.'s 
daughter Sujata, who has political aspirations of her own and 
sees Deuba (who is closer to her age than to her father's) as 
a significant obstacle to her dynasty-building. 
 
4.  (C) Complicating efforts at reconciliation, however, is 
the personalization of politics both Deuba and Koirala 
cultivate.  Former Cabinet member and Deuba friend Ram Sharan 
Mahat said Deuba typically took any opposition to his wishes 
in the Cabinet as a personal attack.  Extension of the 
emergency should have been argued on its own merits, Mahat 
said; instead, Deuba made it a test of personal loyalty to 
him. 
 
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KOIRALA: LEAVE IT TO THE YOUNGER GENERATION 
TO SORT OUT 
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5.  (C)  The Ambassador met with Koirala at the former PM's 
residence May 31.  Koirala said his principal concern now is 
that the elections scheduled for November 13 be free and 
fair. People don't want elections now, he opined.  Conditions 
are not conducive; the insurgency has fueled an atmosphere of 
fear, and there is doubt about how the military and police 
will conduct themselves during the polling.  But since the PM 
has called elections, the Nepali Congress Party, as a 
democratic institution, will participate.  He told the 
Ambassador he had met with human rights groups the previous 
day to emphasize the need for neutral and effective election 
monitoring, and noted that he plans to travel to the 
districts soon to assess the situation.  The Ambassador 
responded that he and other donors have stressed to all 
involved--including PM Deuba, the King, and the 
military--that ensuring free and fair elections in November 
is critical.  All seemed to understand the importance and 
pledged their support.  The Embassy is also looking at how it 
can be helpful during the elections in other ways, such as 
voter education.  Koirala said he was glad to hear of the 
King's reaction, but asked rhetorically how "serious" the 
monarch's assurances are. 
6.  (C)  The Ambassador noted that the Nepali Congress Party 
faces the additional challenge of attempting to mount a 
national election campaign when its internal house is in 
disarray.  Koriala acknowledged that some party leaders, 
including the aged and increasingly frail K.P. Bhattarai, are 
trying to patch up the rift.  He said he has told "the 
younger generation" (i.e., younger than Koirala, who is 
nearly 80) that since he is close to retirement, the future 
of the party depends on them and it is thus up to them to 
find a solution to the problem while he is in China.  (Note: 
Koirala also told the Ambassador eight years ago that his 
generation was then ready to step away from the political 
scene and let the younger generation of party leaders run 
things.  End note.)   He expects some such accommodation will 
be found during his absence.  PM Deuba had committed "a 
Himalayan blunder" in dissolving Parliament, Koirala said, 
after assuring the all-party meeting May 22 that he would 
withdraw his proposal to extend the emergency.  That Deuba 
moved to dissolve Parliament at almost midnight without 
consulting either the Nepali Congress MPs or his own Cabinet 
leads Koirala to suspect "something fishy" in the decision. 
In the previous three dissolutions, the late King Birendra 
had always waited 48 hours to consult lawyers, political 
leaders and others before making his decision.  This new 
King, on the other hand, "moved fast," Koirala observed, 
repeating, "That's why I feel there is something fishy."   He 
appealed to the Ambassador to tell the King not to let the 
Royal Nepal Army (RNA) interfere with the elections. 
 
7.  (C) Why should the King or military wish to undermine 
free and fair elections?  Koirala said he had been 
conducting, with the King's knowledge, some behind-the-scenes 
talks with Maoist leaders aimed at restarting dialogue.  The 
King was "positive" toward the initiative, directing Koirala 
to determine the Maoists' "bottom line" on negotiations.   He 
surmised that the King may not have liked Koirala's previous 
public statement that the Maoists should deal with 
Parliament, as the true representatives of the people, since 
the King "doesn't want to give credit to Parliament." 
Koirala said he had proposed a referendum on amending the 
Constitution (but not amending essential elements that ensure 
a multiparty democracy, human rights, and a Constitutional 
monarchy).  The informal talks "were going on," but now 
"everything is disrupted."  He intimated that he believes the 
King (and perhaps the military) may have been uncomfortable 
with his progress with the Maoists. 
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BUSINESS LEADERS TO USE CHECKBOOK INFLUENCE 
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8.  (C)  A number of business leaders have told us they back 
Deuba, and while they would prefer to see fences mended, do 
not want a reconciliation that will only mean continued 
in-fighting and influence peddling.  A meeting Deuba held 
with business leaders May 29 produced a public statement of 
support for him.  President of the Federated Nepal Chambers 
of Commerce and Industry Ravi Bhakta Shrestha told Ambassador 
May 30 that the business community will also use its 
influence to try to mend things in the party.  Specifically, 
Shrestha said his well-heeled members could put Koirala and 
others on notice that partisan bickering is bad for business, 
sends the wrong signal to investors, and is hurting the 
economy.  (Note:  Businessmen are also not likely to welcome 
the United Marxist-Leninist (UML) government that is almost 
certain to win the election if the Nepali Congress Party 
splits.  End note.)  If steps are not taken to improve 
intra-party relations, Shrestha will warn, the Nepali 
Congress can expect significantly reduced contributions from 
the business community in the upcoming elections.  According 
to former Finance Minister Mahat, the Koirala camp is hurting 
for cash, while Deuba has the advantage of being in office 
going for him. 
 
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COMMENT 
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9.  (C)  Since a Nepali Congress Party split almost certainly 
means an Opposition victory at the polls, we are not 
surprised that Koirala has instructed the would-be 
peacemakers to clean up the mess he and Deuba have made while 
he is on a face-saving "mission" out of the country.  We 
expect an accommodation will be reached upon his return.  We 
also expect him to keep up the drumbeat of worry about free 
and fair elections--with the inevitable, implicit link to 
possible Palace/military underhandedness in the process.  We 
will continue to underscore to all players our interest--and 
theirs--in securing free and fair elections that are, to the 
extent possible, held on time.  We would like to offer 
assistance, as we have in the past, to support such 
elections, and are now looking at possible ways to be helpful 
in this process. We recommend possible donor support for the 
elections as a topic for discussion at the upcoming meeting 
on Nepal in London June 19-20. 
 
MALINOWSKI