US embassy cable - 03KATHMANDU1321

S E C R E T SECTION 01 OF 04 KATHMANDU 001321 
 
SIPDIS 
 
NOFORN 
 
STATE FOR SA/INS, PM AND INR 
LONDON FOR POL/GURNEY, NSC FOR MILLARD 
 
E.O. 12958: DECL: 07/10/2013 
TAGS: PTER, PGOV, PREL, PHUM, NP, Maoist Insurgency 
SUBJECT: NEPAL: PEACE PROCESS PROGNOSIS DIM 
 
REF: (A) KATHMANDU 1099 (B) KATHMANDU 1175 (C) 
     KATHMANDU 1262 (D) KATHMANDU 1032 
 
Classified By: Ambassador Michael E. Malinowski for Reasons 1.5 (b,d) 
 
1. (S/NF) Summary.  Maoist activities in violation of the 
code of conduct, including extortion, harassment and 
abductions, have increased since late May, dramatically in 
the last couple of weeks.  In particular, Maoists have 
stepped up efforts to rebuild their war chest with the 
possible objectives of bolstering their stocks of arms and 
ammunition, paying salaries to militants, and/or buying 
political respectability.  At the same time, rhetoric by the 
Maoist leadership against the Government of Nepal has grown 
more vitriolic.  Maoist rhetoric against the United States 
increased several weeks ago as well, but appears to have 
tapered off more recently.  A truncated negotiating team, 
limited by Prime Minister Thapa's failure to bring the legal 
political parties into the government, has delayed resumption 
of formal peace talks.  Although informal talks began July 
12, formal negotiations are on hold until the two sides 
concur on what was agreed at the last round of talks. 
Statements and actions by other actors, such as the Royal 
Nepal Army, National Police and the Palace, could place 
increasing strain on the cease-fire.  It now appears that the 
Maoists are preparing to abandon the negotiations if they 
cannot obtain a commitment from the GON for an unrealistic 
demand to restrict army movements, and will likely blame the 
Government if they resume violence.  End Summary. 
 
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Increase in Maoist Activity 
--------------------------- 
 
2. (C) Since late May, the insurgents have increased sharply 
activities in violation of the code of conduct agreed to by 
the Maoists and the Government of Nepal (GON).  Relaxed 
restrictions during the cease-fire have allowed the Maoists 
to increase their presence in areas where they were less 
active and to continue to intimidate the population in areas 
not under sustained GON control.  In some areas, the Maoists 
continue to prohibit the GON from re-establishing a presence 
and providing services. 
 
3. (S/NF) Reports of Maoist extortion, harassment, 
abductions, recruitment and training have become more 
frequent (Ref A).  All of the international chambers of 
commerce have received complaints from member companies that 
the Maoists are regularly harassing and extorting money from 
them in unprecedented amounts.  Reports from the countryside 
indicate that the insurgents are taxing harvests, development 
projects, drug trafficking, and remittances, as well as 
forcing villagers to pay for 'membership cards' into the 
Maoist organization (Refs B, C).  Press reports indicate that 
since the end of May the Maoists have abducted 65 people and 
killed 6 others as compared to 148 abductions and 8 killings 
from January through May.  (Note. GON security forces 
reportedly have killed 6 suspected-Maoists in the period from 
January through May and another 14 people since late May. 
End Note.)   Maoist military training has been ongoing, with 
the Royal Nepal Army (RNA) reporting over 150 known training 
exercises since the cease-fire was declared in January. 
 
4. (S/NF) The increase in insurgent activity coincided with 
the May 30 resignation of then-Prime Minister Lokendra 
Chand's government and was likely a reaction to political 
uncertainties over the new government leadership.  With 
Chand's resignation, the first GON negotiating team was 
dissolved; talks with the Maoists have not resumed since the 
second round was held May 9.  Prime Minister Surya Bahadur 
Thapa has appointed two cabinet members to the negotiating 
team with the intention of including negotiators from the 
main political parties once, and if, they join the 
government.  In the meantime, Information Minister Kamal 
Thapa announced publicly in late June the GON's willingness 
to resume negotiations.  Informal meetings began July 12, but 
formal negotiations are on hold until the two sides concur on 
what was agreed at the last round of negotiations. 
Well-placed Embassy contacts indicate that the Thapa 
government is preparing to resume the negotiations in a more 
systematic, professional way than was done by previous GON 
negotiators.  However, most of the Maoist leadership, 
including the negotiating team, has been conspicuously absent 
from the capital since early June, apparently (and 
inexplicably) fearing preemptive arrests by the Government. 
 
--------------------------------------------- ----------------- 
Maoist Rhetoric: Accusations against the GON and United States 
--------------------------------------------- ----------------- 
 
5. (SBU) Maoist rhetoric has grown increasingly negative 
since the Thapa government came to power on June 4 (Ref B). 
The rhetoric's focus has been on accusations that the GON has 
been violating the code of conduct and on warnings against 
"foreign interference," placing particular emphasis on 
alleged interference from the U.S., UK and, to a lesser 
extent, India.  Maoist political leaders continue to press 
for a round table meeting with the King and political 
parties, an interim cabinet that would include Maoist leaders 
and a constituent assembly that would overhaul the 
constitution, with special attention to severing the King's 
authority over the army. 
 
6. (S/NF) Although Maoist anti-American rhetoric has tapered 
off in the last two weeks, that rhetoric in the recent past 
targeted the Maoists' formal inclusion on the U.S. 
Government's terrorist watch-list as well as U.S. military 
and economic support to the GON.  In a press release on June 
29, Pushpa Kamal Dahal, alias Prachanda, Maoist supreme 
leader, declared that there was a "serious conspiracy from 
within and outside the country" to derail the peace process. 
 Leftist newspapers and surrogate covert Maoist supporters 
have reported that the U.S. is encouraging the GON to take a 
hard-line approach to negotiations with the Maoists, falsely 
suggesting that the U.S. is pushing the GON towards breaking 
the cease-fire. 
 
--------------------------------------------- -- 
Maoist Fund-Raising Objectives: Guns or Butter? 
--------------------------------------------- -- 
 
7. (S/NF) The insurgents' aggressive campaign of fund-raising 
through extortion could have a number of objectives.  First, 
the Maoist leadership could be building up its war chest in 
anticipation of a break in the cease-fire and resumption of 
hostilities.  Post has received information that the Maoists 
continue to seek and import arms and ammunition and have the 
financial wherewithal and capacity to use explosives albeit, 
still at a fairly unsophisticated level.  Second, the RNA 
reports that the Maoist leadership's financial needs have 
increased because it has been obliged to begin offering 
salaries comparable to those of the RNA in order to retain 
its mid- and low-level cadres.  The Army leadership tells us 
that its information indicates that the Maoist organization 
is under stress due to low morale, a lack of resources and 
the perception by the rank and file that the leadership is 
faltering.   Third, the Maoist leadership could be building 
up its treasury in order to buy political respectability and 
to assist its effort at a 'soft landing' within the political 
mainstream.  Another possibility, supported by some 
intelligence, is that the Maoists will pursue both military 
capability and political respectability simultaneously by 
sending its military wing underground while pursuing 
political advantage as a legitimate party. 
 
------------------------------- 
Splits Within the Maoist Camp? 
------------------------------- 
 
8. (C) The Maoist organization is structured with a Central 
Committee of roughly 50 members and smaller District 
Committees led by District Commanders.  How the insurgents 
approach recruitment, training and extortion at the district 
level depends largely on the personality of the District 
Commander.  Consequently, in some districts, there have been 
few incidents of abduction or forceful recruitment, while in 
others there have been many.  However, in all districts, even 
those considered less Maoist-affected, local Maoists have 
held mass gatherings and continue to collect money through 
taxes and extortion. 
9. (S/NF) There appears to be some disconnect between the 
district-level Maoist rhetoric and that at the national 
level.  In Chitwan, for example, during their mass meetings, 
local Maoists reportedly have expressed deep commitment to 
the peace process and unwillingness to return to the jungle. 
However, national-level rhetoric continues to be hard-line, 
reasserting that the Maoists are willing and able to resume 
guerrilla warfare.  In late June, the Maoist supreme leader 
Prachanda declared that there would be a "great disaster" if 
the peace negotiations were disrupted.  One worrisome 
consequence of this disconnect is that it is not certain that 
all the district commanders would obey a central order to 
disarm if a political settlement were reached in Kathmandu. 
 
10. (S/NF) There may be some increased strain also within the 
Maoist Central Committee.  The political leadership headed by 
Dr. Baburam Bhattarai reportedly is more interested in 
working with the disaffected political parties and becoming 
part of the political mainstream than the military arm led by 
Ram Bahadur Thapa (alias Badal) and the Maoist supreme 
commander Pushpa Kamal Dahal (alias Prachanda).  However, 
reports from the field indicate that the Maoist military 
cadres, with some exceptions, are continuing to execute 
orders faithfully from the politburo.  Post believes that 
there is a strong possibility that the Maoist leadership 
could stage a falling-out between the political and military 
wings, thereby allowing the political leadership to continue 
its dialogue with the GON while the military wing uses terror 
and violence to reinforce the Maoist position, a la tactics 
used by the IRA/Sein Fein and the Palestinian Liberation 
Organization.  RNA leaders suggest that they are aware of 
this possibility and are prepared to counteract it, but have 
not specified how. 
 
-------------------------------- 
Grim Prognosis for Peace Process 
-------------------------------- 
 
11. (S/NF) The dramatic increase in violations of the code of 
conduct by the Maoists, the delay in peace talks, the 
intransigence of the legal parties, increasingly negative 
rhetoric by the Maoists, and possible dissonance within the 
Maoist hierarchy are putting growing pressure on the 
cease-fire.  Some suspect that top Maoists are in hiding 
already for fear that Prime Minister Thapa's new government 
intends to break the cease-fire unilaterally and seize the 
Maoist leadership.  The government is coming under increased 
pressure from a growing number of victims of the Maoist 
extortion campaign to put a stop to it.  That likely would 
result in the arrests of some key Maoists including some 
known leaders.  For talks to resume, the Maoists have 
indicated that Thapa's government must confirm in advance its 
acceptance of agreements allegedly reached during the second 
negotiating round.  However, because there are no written 
records of those talks, controversy continues, particularly 
over whether the previous GON negotiating team agreed to 
limit the RNA to within 5 kilometers of its barracks. 
 
12. (S/NF) All sides--the Maoists, RNA, National Police and 
Palace--have made statements or are acting in ways that could 
aggravate the fragility of the cease-fire.  RNA leaders have 
warned that they are prepared to implement martial law in the 
far west and east of the country if the cease-fire breaks. 
On July 6, the Inspector General of Police issued an arrest 
warrant on extortion charges for Kumar Dahal (alias Vijay), 
the Maoist commander in the Kathmandu Valley who claimed 
responsibility for the murders of two Embassy security 
personnel in December 2001 and November 2002.  If the arrest 
takes place, the Maoists might use it as an excuse to break 
the cease-fire, claiming a direct attack on the party 
leadership.  Meanwhile, King Gyanendra appears willing to 
take a more assertive role.  In a private conversation with 
the Ambassador, the King suggested that if Prime Minister 
Thapa is unable to win the cooperation of the political 
parties, he could be forced to consider a range of possible 
options."  The only prognosis on which there is much 
agreement among our best contacts is that the future of peace 
negotiations looks increasingly grim. 
MALINOWSKI