US embassy cable - 05KATHMANDU2306

UNCLAS KATHMANDU 002306 
 
SIPDIS 
 
STATE FOR SA/INS; STATE FOR INR; LONDON FOR POL/GURNEY; 
NSC FOR DORMANDY; USAID FOR ANE/SA: BUNDY 
 
E.O. 12958: N/A 
TAGS: PREL, PTER, ECON, EAID, EFIN, NP, Maoist Insurgency 
SUBJECT: NEPAL: COST OF THE MAOIST INSURGENCY 
 
REF:  04 KATHMANDU 002367 
 
SUMMARY 
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1.  The effect of the ongoing Maoist insurgency is 
palpable in every sector of Nepal's economy.  The 
estimated economic cost of the conflict, since 1996 when 
it started, is more than USD 2.3 billion.  Insurgents have 
destroyed public and private property worth USD 71 
million.  The conflict has reduced the flow of foreign 
direct investment (FDI) to its lowest figure in 10 years. 
Recent Maoist bombings and forced closures of schools and 
industries have put the lives of thousands of workers and 
students in jeopardy.  END SUMMARY. 
 
COSTS OF THE MAOIST CONFLICT 
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2.  The estimated economic cost of the conflict is more 
than USD 2.3 billion.  Although the Maoist insurgency 
started in 1996, it escalated and began to seriously 
affect the economy in 2001, when the Maoists embarked on a 
strategy of armed attacks against security forces and 
government infrastructure.  Maoist insurgents have 
systematically destroyed power installations, 
telecommunications facilities, bridges, government 
buildings and facilities, banks, schools, health posts, 
and hospitals.  The resulting loss of physical 
infrastructure and property exceeds USD 71 million. 
 
3.  According to media reports and various domestic and 
international agencies, more than 12,000 people have lost 
their lives as a result of the conflict.  According to the 
UNDP, more than 200,000 families have been internally