US embassy cable - 03KATHMANDU991

S E C R E T SECTION 01 OF 03 KATHMANDU 000991 
 
SIPDIS 
 
STATE FOR SA/INS 
LONDON FOR POL - GURNEY 
 
E.O. 12958: DECL: 05/29/2013 
TAGS: PGOV, PREL, NP, Government of Nepal (GON), Political Parties 
SUBJECT: NEPAL:  PM RESIGNS; NEW GOVERNMENT,PROBABLY WITH 
SOME OLD FACES, TO BE FORMED 
 
REF: A. KATHMANDU 0961 
     B. KATHMANDU 0978 
 
Classified By: CDA ROBERT K. BOGGS.  REASON:  1.5 (B,D). 
 
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SUMMARY 
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1.  (S) Prime Minister Lokendra Bahadur Chand resigned from 
office on May 30.  Well-placed Palace sources predict the 
Palace will approach leaders of the Parliamentary parties to 
form an all-party government.  A confidant of the King 
credits US (and, we believe, Indian) pressure with 
encouraging the King to compromise.  Palace sources are 
suggesting former Panchayat Prime Minister and head of the 
National Democratic Party Surya Bahadur Thapa as the parties' 
consensus candidate for Prime Minister.  Whether the parties 
will accept this initiative, if it is indeed offered, depends 
on several factors, including whether all can agree on the 
aging, four-time former Prime Minister to head an all-party 
Cabinet.  End summary. 
 
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KING TAPPING THAPA? 
--------------------- 
 
2.  (S) Royal confidant Prabhakar Rana told Charge on May 29 
that he had been instructed by King Gyanendra to inform him 
that Prime Minster Lokendra Bahadur Chand would step down the 
following day and that the King would invite leaders of the 
Parliamentary parties to form a new all-party interim 
government.  Rana predicted that the parties will choose 
former leader of the rightist National Democratic Party 
(known by its Nepali acronym as RPP) and four-time former 
Prime Minister Surya Bahadur Thapa as the consensus nominee 
to head the new government.  Thapa will be more acceptable to 
the parties than Chand (another former RPP leader and 
Panchayat Prime Minister), Rana said confidently, because he 
is perceived as being more supportive of democracy and has a 
reputation as a savvy politician, able to build consensus and 
take decisions.  (Note:  This is the second time we have 
heard this prospective scenario from Rana.  The first 
time--in mid-April--events did not unfold as described.  End 
note.) 
 
3.  (S)  Rana said the King had been influenced to act 
because of USG concerns, conveyed by Charge in a May 28 
meeting with Rana, that the Palace was missing an opportunity 
to bring the parties together for the good of the nation. 
(Comment:  Indian pressure on the King may have proved even 
more decisive.  See Para 4 below.  End comment.)  For the 
initiative to work, however, the Palace is relying on the 
Embassy to help persuade the parties to cooperate, Rana said. 
 Should the parties fail to take advantage of this opening, 
the King will be forced "to take other action," Rana 
cautioned.  The Charge asked what effect a change in Cabinet 
might have on ongoing dialogue with Maoist insurgents, since 
all the members of the Government negotiating team are also 
Cabinet members.  Rana related that since the Maoists had 
expressed discontent with the head of the Government team, 
Information Minister Ramesh Nath Pandey, and that some 
reportedly were even complaining about dialogue coordinator 
and Physical Planning Minister Narayan Singh Pun, perhaps a 
change would be good.  (Comment:  We're willing to believe 
the Maoists want to get rid of Pandey; the comments about Pun 
seem less credible.  In our view, retaining Pun, who first 
established dialogue with the Maoists, would help maintain 
continuity and confidence in the talks.  End comment.) 
 
4.  (S)  Later the same evening Charge was contacted at home 
by Geeta Joshi, an advisor to PM Chand, who confirmed that 
Chand would step down.  Joshi said the move was prompted by 
the "tremendous pressure" the Indians had brought to bear on 
the King to compromise with the political parties. 
 
5.  (SBU) On May 30 Prime Minister Chand announced his 
resignation.  According to the state-owned news agency, the 
rest of his Cabinet will continue until a new government can 
be formed.  According to police sources, by mid-afternoon the 
King had invited members of the parliamentary parties to the 
long-deferred "tea party" to discuss formation of a new 
Cabinet. 
 
6.  (S)  A high-ranking member of the National Security 
Council told us on May 30 that the King plans to invite first 
all former Prime Ministers to a discussion, to be followed by 
members of the Parliamentary parties.  Besides Thapa, he 
suggested former Speaker of Parliament Taranath Ranabhat as a 
possible consensus candidate.  Madhav Nepal, the head of the 
Communist Party of Nepal - United Marxist Leninist (UML), 
currently the largest party in the country, is no longer in 
the running, he indicated. 
 
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PARTIES ARE WEIGHING OPTIONS 
----------------------------- 
 
7.  (SBU) Even before the PM's announcement, on May 30 the 
local press was reporting the rumor that Chand would step 
down and be replaced by Thapa.  Jhala Nath Khanal, a Central 
Committee member of the Communist Party of Nepal - United 
Marxist Leninist (UML) told us that Thapa had been informally 
proposed to the UML as a consensus candidate by current RPP 
President Pashupati S.J.B. Rana.  The UML would obviously 
prefer that someone from one of the two largest parties--the 
UML or the Nepali Congress--be tapped, but the UML respects 
Thapa's pro-democracy stance and would not reject his 
candidacy out of hand, Khanal said. 
 
8.  (U) Khanal's comparatively conciliatory tone contrasts 
sharply with recent hard-line rhetoric emanating from the 
parties, especially since their May 28-29 "reconvening" of 
the dissolved Parliament at the Royal Nepal Academy (Ref B). 
Some former MPs at the May 29 sit-in--including some from the 
UML--reportedly called for the establishment of a republic if 
the King continues his "activism."  The meeting, which was 
chaired by Nepali Congress President and former Prime 
Minister G.P. Koirala, adopted a six-point statement, 
featuring a proposal that the Chand government be replaced by 
either an all-party government or by reinstatement of the 
Parliament. 
 
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PARTIES' PROBABLE REACTION: 
A LOT DEPENDS ON PACKAGING 
---------------------------- 
 
9.  (S)  Comment: Whether or not the parties will accept this 
initiative depends, to a large degree, on how it is presented 
to them.  Chand was, by all accounts, the parties' consensus 
candidate for interim Prime Minister in October.  Only after 
the King appointed all the rest of the Cabinet as well (a 
move which royal confidant Rana now acknowledges as a 
misstep) did the parties begin to complain that the 
government was "unconstitutional."  However much the UML and 
the Nepali Congress might wish it, the King is unlikely to 
accept the head of either party as PM.  There is too much bad 
blood by now between Koirala (who had apparently threatened 
to accuse the King publicly of involvement in the royal 
massacre) and the King, while both the Indians and the 
Maoists harbor strong objections (albeit for different 
reasons) to the nomination of UML General Secretary Madhav 
Nepal.  As a former leader of the pro-Palace RPP and a former 
Prime Minister during the autocratic Panchayat regime, Surya 
Bahadur Thapa is obviously more preferable--and can be 
expected to be more sympathetic--to the King.  His 
pro-democracy credentials, on the other hand, could make him 
more palatable to the parties, who could see him as less 
easily manipulated by the Palace than long-time rival Chand. 
 
10.  (S)  Comment continued:  The King's reported intention 
to seek a consensus PM and form a consensus Cabinet is indeed 
welcome news.  But since the parties already feel, whether 
justifiably or not, that they were hoodwinked by the Palace 
the last time into agreeing to Chand with the understanding 
that other portfolios in the Cabinet would be equitably doled 
out--only to have the King appoint the rest of the Cabinet as 
well--the parties may be doubly cautious and suspicious this 
time.  If the parties perceive that Thapa is being forced 
upon them, they may become recalcitrant--thereby possibly 
incurring the "other action" by the King that Rana hinted at. 
 If the "tea party" initiative fails to result in the desired 
consensus, the King may harden his stance against the 
parties, and mutual suspicion will increase.  We will 
continue to encourage both the parties and our Palace 
interlocutors to work together to form a government that more 
closely reflects Nepal's multi-party landscape. 
BOGGS