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Nepal: Beyond Royal Rule International Crisis Group Sep 15, 2005

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 Policy Briefing
Asia Briefing N°41
Kathmandu/Brussels, 15 September 2005
Internatioi
Crisis Group
Nepal: Beyond Royal Rule
OVERVIEW
Nepal is in turmoil and the monarchy is in question.
King Gyanendra had calculated that his authoritarian
moves since October 2002 would return order to a land
wracked by Maoist insurgency and political instability
but he has failed. The seven months since the royal coup
have seen security degenerate under a royal government
with no plans for peace and democracy. The Maoists
seized the initiative by announcing a unilateral three-
month ceasefire on 3 September 2005. The international
community needs to recognise that its calls for palace/
political party reconciliation as the sole path toward
stability are unrealistic. New lines need to be explored,
beginning with support for the ceasefire and the tentative
dialogue underway between the parties and the Maoists.
The king's actions have marked the definitive end of
the old status quo. There is no prospect of a stable
balance of power between palace and parties. The
monarchy retains control of state instruments, crucially
the army, but it has alienated other natural allies and
prompted swelling republicanism. The Maoists are
militarily strong and control much of the countryside
but have failed to win popular support. Mainstream
parties offer the hope of representative leadership but
have lost legitimacy and must make difficult decisions
about the monarchy and the Maoists. Civil society is
finding a voice but cannot supplant the parties and will
struggle to play a decisive role on its own.
History may credit Gyanendra for forcing the pace of
political developments, albeit not as he had hoped. While
endangering the future ofthe monarchy, the royal coup
has prompted a healthy clarification of positions and acted
as a catalyst for Maoist-parties dialogue. But there are
many dangers. The Maoists are strong and determined,
possibly serious about peace talks but also reluctant to
give up the advantages they have won through force. The
monarchy is weakened and in a corner; as pressure
mounts the king, backed by the army, may stage a further,
more brutal, crackdown on the mainstream opposition.
The political parties' unity is fragile, and they have to
reengage with their public while treading a careful line
between two armed forces hostile to democracy.
The final pattern ofthe fallout from the royal coup has
yet to become clear but some trends are identifiable.
The Maoist-parties dialogue has been boosted by the
ceasefire announcement. So far it has set modest aims,
with no illusions of instant solutions, but it has made
some progress on building confidence and developing
an agenda. Popular support for a monarchy that has
failed to deliver peace or prosperity is declining. Political
activists have already been joined on the streets by other
protestors, and mainstream dissent will certainly grow.
The mainstream parties will have to struggle to regain
mass support.
The death rate from the conflict has risen, with 1,574
fatalities reported from January 2005 through June and
major clashes in the following two months. Ifthe Maoist
ceasefire is not reciprocated or does not hold there is
potential for further escalation. Meanwhile, both the
economic and humanitarian situations have deteriorated.
The international community's one-point policy of urging
the palace and parties to cooperate was reasonable as long
as there were realistic indications they might oblige.
However, the king's actions since February 2005 have
produced a political sea-change, with moderate parties
moving toward a more republican stance and the Maoists
urging them to negotiate. Nepal's most influential friends
need to engage in a serious rethink. They should:
□ welcome the Maoist ceasefire and urge its
indefinite extension, government reciprocity, and
that all sides in the conflict seize the opportunity
for substantive talks;
□ continue suspension of military aid in order to
maintain pressure on the royal government to
restore democratic governance and explore all
avenues to peace talks;
□ replace the traditional insistence on a constitutional
monarchy alongside parliamentary government as
the sole path to stability and democracy with an
unequivocal focus on democracy — with or without
the king — and a negotiated peace;
□ work towards better international policy
coordination, especially between India, the U.S.,
the EU and the UN, preferably in the form of a
loose contact group;
□ hold a follow-up to the 2002 London International
Conference on Nepal, bringing together all major
players to chart a course towards a principled,
democratic peace and ensure basic unity of purpose; Nepal: Beyond Royal Rule
Crisis Group Asia Briefing N°41, 15 September 2005
Page 2
□ support the UN human rights monitoring mission
with money and political backing; and
□ support mainstream, non-violent democratic
parties, helping to protect them against attacks
from both armed sides and planning for a
potentially difficult transition to democracy.
There can be no return to the status quo before the 1 February
coup. Nor can there now be any easy return to the
political institutions ofthe 1990 constitution. The king
has made clear his desire to take Nepal back to the
absolute monarchy ofthe 1960s, while the Maoists insist
on moving straight to a constitutional revision process.
King Gyanendra's refusal to go back on any of his
controversial steps, however many diplomatic exit routes
he is offered, has reduced the chance for compromise.
The mainstream parties' suspicion ofthe king's intentions
and their consequent willingness to envisage abandoning
the monarchy make a palace climb-down risky.
The king may yet give in to pressure to reinstate
democratic institutions but his instinct is to see out his
all-or-nothing gamble. He may find that he has been
outflanked by both the Maoists and a resilient political
mainstream that still embodies most Nepalis' desire for
peace and democracy.
II.     A ROYAL FAILURE
A.      UNCONSTITUTIONAL MONARCHY
The February 2005 royal coup has failed.1 The king
started his power grab in October 2002 safe in the
knowledge that Nepalis were frustrated with party
factionalism, frequent changes of government, corruption,
and a failure to bring peace, prosperity and security. If
palace rule had delivered results, Gyanendra would have
won some support. But almost three years of direct
rule have achieved the opposite: four revolving-door
administrations, a cabinet tainted by corruption and
criminality, and a steady intensification of the conflict
which has led to further loss of state control in the
country.
1 On the royal coup and its aftermath see Crisis Group Asia
Report N°91, Nepal's Royal Coup: Making a Bad Situation
Worse, 9 February 2005; Crisis Group Asia Briefing N°36,
Nepal: Responding to the Royal Coup, 24 February 2005; Crisis
Group Asia Report N°94, Nepal: Dealing with a Human Rights
Crisis, 24 March 2005; and Crisis Group Asia Report N°99,
Towards a Lasting Peace in Nepal: The Constitutional Issues,
15 June 2005.
In the months following the 2005 coup, international
pressure had some effect. Most notably, it left the royal
government in an awkward limbo ~ prevented from
carrying out the full crackdown the king's advisers had
envisaged and with no other plan to cope with the
Maoists and the democratic parties. The palace's true
intentions have been gradually clarified: there was never
any real focus on dealing with the insurgency. Rather,
the priority for the hardline clique around the king has
been to uproot democracy and restore royal rule. In this,
the Maoists were actually a help, since they provided an
excuse for autocracy that could be peddled abroad while
their grip on the countryside weakened the primary
enemy, the mainstream parties.
There has been growing, if belated, realisation that the
royal government has no intention of hastening the
return of democracy. Quite the reverse: the one
constant of its program since February has been the
effort devoted to undermining democratic institutions
and politicians. The U.S., which had been strikingly
patient with the palace, has implicitly recognised that it
is trying to recreate the non-party Panchayat system
that existed before 1990. In late June 2005, visiting
Principal Deputy Assistant Secretary of State for South
Asian Affairs Donald Camp said that the return to a
pre-1990 Nepal was unacceptable.2
The king's call for municipal elections offers no real hope
for reconciliation and has already been dismissed by the
political parties. They see it as a ploy to put a democratic
facade on an autocratic regime and are convinced that any
local elections run by palace appointees under the
watchful eye of the army would be far from free and
fair. They argue that even the continued use ofthe term
"constitutional monarchy" is damaging as it implies
that the king has himself upheld the constitution.3
B.       CORRUPTION AND CRIMINALITY
A stated priority ofthe post-February administration has
been to deal with corruption, but any hopes that royal
rule would bring clean government were seriously
misplaced. The political intent was clear from the
outset, when only "post-1990" cases were targeted.
The fight against corruption rapidly descended into a
transparent assault on the king's democratic rivals.
The Royal Commission for the Control of Corruption
(RCCC) was condemned from its formation by the
"Return to pre-1990 Nepal unacceptable: Donald Camp",
www.nepalnews.com, 28 June 2005.
3 For a detailed discussion of these arguments, see Crisis
Group Report, Towards a Lasting Peace in Nepal, op. cit. Nepal: Beyond Royal Rule
Crisis Group Asia Briefing N°41, 15 September 2005
Page 3
political leaders who knew they would be its targets.
Domestic and international jurists alike cautioned that its
structure and functioning were inimical to due process.4
The U.S. said it was disturbed by the conviction of
former Prime Minister Sher Bahadur Deuba and
described the RCCC as an "extrajudicial organisation".5
The case involved the awarding of a contract in a large
Asian Development Bank-backed water project. The
bank was dismayed that the RCCC refused to consider
its own thorough investigation ofthe allegations, which
had found no evidence of wrongdoing. In September
2005, the Supreme Court finally gave in to repeated
petitions and demanded that the RCCC furnish a written
reply on its constitutionality.6
The king's own cabinet is hardly beyond reproach. His
outspoken senior vice chairman, Tulsi Giri, is on the
blacklist of wilful loan defaulters ofthe state-owned Nepal
Bank Limited.7 Despite calls for his resignation — which
would seem mandatory given the government's professed
tough policy on defaulters ~ he chose to brazen it out
with the king's support. On 14 July 2005, state-run Radio
Nepal announced an expansion of the cabinet, which
raised more questions about the king's judgement. The
new ministers included a convicted criminal, the accused
in a Panchayat-era corruption scam and one of those
chiefly responsible for the violent repression ofthe 1990
democracy movement.
C.      DISMANTLING DEMOCRACY
Royal rule has been characterised by the systematic
dismantling of constitutional bodies and processes. The
initial aim was to cripple the political parties and stifle
mainstream dissent. Beyond that, the king's confidants
have aimed incrementally to recreate the Panchayat
system instituted by King Mahendra, Gyanendra's father,
in the 1960s. This logic explains most ofthe structural
changes the palace has implemented since February 2005.
In his 1 February address the king stated: "We believe
that centralisation of authority is against democratic
4 For example, Shambhu Thapa, chairman of the Nepal Bar
Association, counselled that "arguments and legal provisions
will be futile" in challenging the authority of a body that was
itself extra-constitutional and designed for political purposes.
"Legal debate on RCCC meaningless", The Kathmandu
Post, 24 May 2005. No member ofthe commission is a legal
professional.
5 "U.S. 'disturbed' by Royal Commission verdict", www.kantipur
online.com, 28 July 2005.
6 "RCCC asked to furnish reply on its constitutionality",
www.kantipuronline.com, 4 September 2005.
7 Nepal Credit Information Bureau blacklist of wilful defaulters,
16 August 2005, p. 30.
norms".8 Decentralisation had been a prominent success
story ofthe post-1990 period, a crucial driver for local
development that was creating a sense of grassroots
democracy. But the royal government has systematically
reversed these advances. The 1960s Panchayat system
of zonal commissioners answering directly to the palace
was reinstated; committees were similarly established to
monitor political activities and the civil service at the
local level.9 Palace appointees, given power to dismiss
government officials, have supplanted elected District
Development Committee chairmen. Civil service unions
have been banned, supposedly to avoid politicisation but
prompting a strong backlash from bureaucrats, while
reserved jobs for minorities in the civil service have
been eliminated.10 The constitution has been bypassed in
important processes such as the selection of a new Chief
Justice, while the relevant law was not followed for
appointing new National Human Rights Commission
members.
While little has been done to improve security, much
effort has gone into reviving the symbols and practices
of absolute monarchy. Freshly painted signs bearing the
king's sayings appeared around Kathmandu. The Ministry
of Education started a campaign to develop "nationalist
education" by ordering that photos ofthe royal family
be put in all school textbooks. Nothing indicates a plan
for reconciliation with the political parties. The most
revealing comment was a call from retired Chief of
Army Staff Sachchit Shamsher Rana for the parties to be
declared "anti-national elements",11 a return to some of
the Panchayat's most confrontational language. As long
the palace chooses not to dissociate itself from such
views, it will be incapable of working with the democratic
mainstream.
D.       MISDIRECTED MILITARY
Supporters ofthe royal takeover argued that an unleashed
Royal Nepalese Army (RNA) would quickly bring
the Maoists to heel or force them into dialogue from a
weakened position. Nothing ofthe like has happened.
The army may have contributed to improved security
within Kathmandu since the coup, but in the countryside
little has changed. The army is still deployed defensively
and seems either unwilling or unable to adopt a proactive
Royal proclamation, 1 February 2005.
9 Without any explanation, the district monitoring committees
were dissolved on 3 September 2005.
10 "King cuts civil service reservations for indigenous peoples",
Weekly Indigenous News, 26 August 2005, available at
http://us.oneworld.net.
11 "Parties should be declared anti-national", The Kathmandu
Post, 3 July 2005. Nepal: Beyond Royal Rule
Crisis Group Asia Briefing N°41, 15 September 2005
Page 4
strategy to return some security to the general population.
Given the lack of a political strategy, this is not surprising.
Despite some headline defensive successes, the RNA's
inability to control the insurgent threat was most starkly
demonstrated by the Maoists' success in overrunning the
remote base in Kalikot — part of a road-building project —
on the night of 7 August 2005, killing well over 40
soldiers and capturing more than 50.
Token efforts to improve the RNA's image have failed
to dispel the impression of an army licensed to commit
systematic human rights violations. Even as the first
steps were taken to implement the Memorandum of
Understanding the government agreed to at the UN
Commission on Human Rights in April, the International
Committee ofthe Red Cross had to suspend visits to
places of military detention as it was being denied
appropriate access to all detainees. The RNA has further
encouraged the development of village militias, which
are likely to intensify the conflict and make its resolution
much more difficult.12 As the RNA has become more
involved in administration and assumed a more nakedly
political role, the type of rights violations have changed.
For example, a journalist with the largest selling
daily newspaper has received repeated death threats,
apparently from the security forces, following a critical
article on RNA failure to respond to allegations of rape
and unlawful killing.13
The army has been the king's most solid support: without
it, the coup would have been impossible, and its political
role has increased significantly since February 2005. It
was already the case that local commanding officers,
who had taken control ofthe police and displaced civil
administrators, were becoming the de facto governors
of districts. Since the coup, their influence has been
further extended. Retired generals are appointed to
ambassadorships and other influential posts;14 serving
officers make unashamed public interventions on policy
issues.15 As the RNA's vested interests in conflict
See Crisis Group Asia Briefing N°30, Nepal: Dangerous
Plans for Village Militias, 17 February 2004.
13 "Kantipur columnist under constant threat", www.kantipur
online.com, 22 August 2005.
14 For example, Lieutenant-General Victory Shumsher Rana
was appointed ambassador to Myanmar on 13 May 2005 and
retired Chief of Army Staff Sachchit Shamsher Rana is a
vocal member ofthe Rajparishad (Royal Council).
15 One very senior RNA officer writes frequent opinion pieces
in the English-language press under the nom de plume of "Ajay
P. Nath". In an article entitied "Let peace be the priority", The
Kathmandu Post, 31 August 2005, he argued that, "unless the
state security forces are strongly beefed up, the terrorists won't
give up their violent activities and atrocities... .To enforce the
rule of law, the security agencies have to be effective; for that,
the whole instrument of national power has to be marshalled
become further entrenched, it may gain a de facto veto
on any peace process.
While the RNA's national role has been extended, it
remains a feudal army designed primarily to support royal
power. Its only viable long-term future is as a professional
army subject to democratic civilian control but no efforts
in this direction are underway. Instead, the combination of
less security and a more politicised military has increased
the obstacles to peace and democracy.
III.   THE MAOISTS AND THE
MAINSTREAM
A.    The Maoists
The Maoists have not been weakened since February
2005. If anything, the prospects are that they will grow
stronger, although they lack wide popular support, and
they initially failed to capitalise on the opportunities the
coup presented. Relative quiescence in the first months
after the coup may have been caused by disunity within
the leadership or may have been a planned policy of
wait-and-see as pressure increased on the palace and the
parties, but poorly conducted military engagements
indicated weaknesses in both planning and capacity and
raised questions about strategic direction. However,
while the declaration of a strategic offensive in August
2004 looked premature, a series of attacks that month
showed that the surprise announcement on 3 September
of the three-month unilateral ceasefire came from a
position of strength.
In March 2005, speculation over a rift in the Maoist
leadership was fanned by RNA reports that the second-
in-command, Baburam Bhattarai, had been expelled
from the party. While these reports were both belated
and exaggerated, the Maoists were forced to admit that
there was a major debate — the latest instalment of long-
running disagreements — within the politburo's standing
committee and that Bhattarai had been disciplined.16
However, those who thought this might herald
disintegration ofthe leadership were confounded when
he surfaced in New Delhi in May 2005, accompanied
not only by party spokesman Krishna Bahadur Mahara
behind the legitimate operations of the security forces". The
chief of army staff has repeatedly praised the royal coup, for
example in a message to all RNA personnel on RNA Day.
"RNA committed to democratic values is our vision: Thapa",
www.nepalnews.com, 9 March 2005.
16 Forthcoming Crisis Group reports will examine the internal
politics ofthe Maoist movement in more detail. Nepal: Beyond Royal Rule
Crisis Group Asia Briefing N°41, 15 September 2005
Page 5
but also party chairman Prachanda.17 While press
statements indicated that ideological and organisational
disputes continued,18 the movement's unity was publicly
emphasised. Prachanda confirmed Bhattarai's rehabilitation
in July.19
A nationwide reshuffle of local commanders in mid-
2005 may indicate a new phase of operations or further
consolidation of central power within the party, indications
from many districts suggest that local commanders are
seeking to extend their control of daily life and assert
their claim to being a parallel government. Military
actions are turning up the heat on the palace: August
2005 saw not only the Kalikot success but also attacks
within Kathmandu Valley and the assassination of a
royal appointee in mid-western Banke district while
King Gyanendra was touring it. Meanwhile, attacks on
industrial targets, combined with effective blockades,
have underlined the Maoists' ability to wreak economic
damage.
The Maoist leaders' Delhi visit was tacitly endorsed
by the Indian government, its primary purpose being to
give momentum to tentative efforts at dialogue between
the Maoists and the mainstream parties. There has been a
growing recognition within the Maoist leadership that
an all-out military victory in the near future is not only
unlikely but would invite immediate external action and
be unsustainable. This has driven their exploration of
compromise, involving acceptance ofthe short-term goal
of what they term a bourgeois, parliamentary democracy.
Ideological preparation for such a move has been
underway for years. A flurry of articles and press releases
since late 2004 have indicated a willingness to stop short
of a fully communist state. Prachanda and other leaders
have repeated that they would respect the results of a free
and fair election to a constituent assembly tasked with
preparing a new constitution.20 They have not, however,
clarified the form of such an assembly and remain vague
on any timetable for disarmament.
B.       THE MAINSTREAM PARTIES
The mainstream democratic parties, the primary target of
the royal coup, have recovered from the initial crackdown
and become radicalised against the monarchy. For the
king's inner circle, February 2005 was a long-delayed
redressal ofthe palace's ignominious surrender to a mass
movement in 1990. The Maoist presence across the
countryside assisted in the task of stifling political activity.
Democratic politicians were already losing public
confidence due to their poor performance and widespread
negative perceptions about corruption, nepotism and
factionalism.21 Four major parties had compromised
themselves by joining the royally-appointed Deuba
administration in June 2004, a government that was
never likely to succeed. Participation in it, Unified Marxist
Leninist (UML) General Secretary Madhav Nepal
belatedly acknowledged in August 2005,22 was a bad
mistake.
The Nepali Congress had refused to join the Deuba
government. As the parties pulled themselves together
following the coup, this helped its veteran leader, Girija
Prasad Koirala, secure de facto leadership of a new
seven-party alliance, which brought together the major
mainstream parties with the exception of the royalist
Rashtriya Prajatantra Party (RPP) and its offshoot, the
Rashtriya Janashakti Party (RJP).23 Against steep odds,
the disparate members ofthe alliance managed to agree
on a common minimum program, which addressed the
restoration of democratic institutions (preferably through
reinstatement ofthe 1999 House of Representatives) and
peace negotiations with the Maoists.
Beyond maintaining unity and mobilising their supporters,
the major parties face a testing two-part policy dilemma:
their perceptions of the Maoists ~ whether they will
negotiate seriously; and their position on the monarchy
~ whether the groundswell of republicanism should
be heeded or a compromise preserving a ceremonial
monarchy is still preferable and possible. The debate
could split the larger parties, but relief at the Maoists'
ceasefire announcement and widespread anti-monarchical
sentiment have driven policy shifts. The UML central
committee endorsed democratic republicanism in August
while the Congress' General Convention dropped the
commitment to constitutional monarchy from the party
statute. Party leaders have urged diplomats to stop
referring to the monarchy as "constitutional" and have
Crisis Group interviews, New Delhi, May and August 2005.
18 For example, Baburam Bhattarai's press statement of 25
May 2005 and Prachanda's statement of 27 May 2005 strongly
hinted at continuing tensions.
19 Press statement, 18 July 2005.
20 See Crisis Group Report, Towards a Lasting Peace in
Nepal, op. cit, for discussion of the Maoists' position on
constitutional change.
21 Subsequent Crisis Group reporting will examine the state
of the mainstream parties and the agenda for their reform.
22 "Joining Deuba govt was a serious mistake: Nepal",
www.kantipuronline.com, 15 August 2005.
23 The RPP commands limited support; it won 10 per cent of
votes in the 1999 parliamentary elections. The RJP was
founded in March 2005 by former RPP leader and Prime
Minister Surya Bahadur Thapa. Despite their royalist stamps,
both parties have refused to endorse the royal coup. Nepal: Beyond Royal Rule
Crisis Group Asia Briefing N°41, 15 September 2005
Page 6
forcefully questioned the rationale for "reconciliation"
with a palace that seems determined to repress them.
The king may yet persuade the parties to buy into a
compromise power-sharing deal, especially Congress,
some of whose leaders are concerned a more republican
stance plays into the hands oftheir left-wing opponents.
But they would only be tempted by significant concessions.
For now, the Maoists are making the more attractive offer.
C.    Dialogue
The most significant result of February 2005 has been
the impetus given to dialogue between the parties and
the Maoists. Talks underway since shortly after the coup
gathered momentum following meetings between party
representatives, facilitators and Maoist leaders in New
Delhi in May. The prospect of a possible united front
has alarmed the royal government and its supporters;
reports such as that of a formal alliance being agreed in
far-western Humla district caused consternation.24 The
government's initial response to the Maoist ceasefire
declaration was ministerial silence and a news blackout
in the state media; the first on-the-record comments by
the information and communications minister expressed
only scepticism about Maoist sincerity.25
The talks have made some progress. Most importantly,
they have helped to clarify a theoretical framework
for a peace process, with both sides able to agree on a
constitutional assembly as a forum for debating a future
political system.26 Whatever the pitfalls along such a
route, this is a major step towards a realistic agenda. It
also suggests that those who insist a palace-party alliance
is the only starting point for a peace process are too
restrictive. Initial achievements have included a sense
among mainstream politicians that the Maoists have eased
pressure on their rural activists,27 in line with a series of
public statements promising to respect human rights, and
a specific commitment to cease physical attacks on non-
combatants.28 The ceasefire announcement is a logical
further step.
See "Maoists, parties hold district-level talks", The
Kathmandu Post, 29 July 2005 and P.G Rajamohan, "Nepal:
The stalemate that isn't", South Asia Intelligence Review 4(4), 8
August 2005.
25 "Govt expresses scepticism over Maoists' ceasefire
announcement", www.kantipuronline.com, 5 September 2005.
26 See Crisis Group Report, Towards a Lasting Peace in
Nepal, op. cit., for an explanation ofthe Maoists' and parties'
approaches to the constitutional assembly model for change.
27 Crisis Group interviews, Kathmandu and New Delhi, August
2005.
28 Prachanda, press statement, 19 June 2005.
It is also significant that the dialogue is being handled
relatively professionally despite the lack of external
assistance: each side has stuck to realistic objectives
and recognised the difficulty of addressing the larger
differences; talks were deliberately slowed to ensure
that various parties could buy into the process before
it advanced too far; and the press statements have
been well coordinated. In August 2005, the seven-
party alliance agreed to appoint a joint team for formal
negotiations, accepting an offer made by Prachanda more
than a month earlier, without ceding him the credit
that hasty acceptance would have implied.
Nevertheless, much of this appears to have been managed
by the Maoists for their own purposes, and there is
no guarantee the talks will succeed. There are major
differences which cannot be bridged easily. The Maoists
will find it hard to give up the advantages they have won
through violence and will have to be persuaded that there
are benefits in joining the mainstream. The parties may be
keen to talk but they are not likely to give the Maoists the
benefit ofthe doubt, especially in view ofthe murders of
hundreds oftheir workers. Doubts about longer-term
Maoist sincerity are legitimate; insistence that they can
make a principled compromise has not been accompanied
by any obvious change in the political culture of the
movement.
By declaring a unilateral ceasefire, the Maoists have
taken the initiative to convince the world of their
willingness to compromise. Prachanda's announcement
recognised that, "we are also well aware that a lot of
people doubt our political commitment because of our
resistance to the feudal political dictatorship. We have
done our best to remove those doubts, working towards
building an atmosphere of mutual trust, to be able to go
for a progressive political solution" ,29
D.    Civil Society
It is encouraging that civil society has been more active
and influential than many predicted. While not able to
intervene decisively in the conflict, it could play a more
critical role in mobilising the Kathmandu middle class,
whose democratic aspirations tipped the balance in 1990
but which has become disaffected with party politics.
Recent demonstrations led by the Citizens' Movement for
Democracy and Peace (CMDP) have made a powerful
statement against autocracy, royal or Maoist. They have
attracted many participants who are scathing in their
Press statement, 3 September 2005. Nepal: Beyond Royal Rule
Crisis Group Asia Briefing N°41, 15 September 2005
Page 7
criticism ofthe major parties' failings but refuse to accept
that as justification for denial oftheir democratic rights.30
However, civil society cannot supplant organised political
parties. This is not lost on civil society leaders themselves,
who have focused much of their effort on urging the
parties to reform and win back popular trust. One ofthe
main protest organisers summarised: "We are not in a
position to run a political movement ourselves — that's the
job ofthe parties, and we lack their capacity and control.
But they still don't seem to have learned enough lessons
from their mistakes in office. We're hoping that they
learn quickly and fulfil their role responsibly".31 The high-
profile CMDP events have also prompted suspicions
among the parties, with the UML launching its own
parallel movement to counter a perceived pro-Congress
bias.32
Throughout the post-coup period, the press has played
a remarkable role, with journalists constantly pushing,
often successfully, at the bounds of censorship. The
royal government has been unable to sustain the harsh
crackdown of early February, and a critical press has
kept pressure on the palace and the Maoists to abide by
international norms. Civil society go-betweens also
played an important role in helping the party-Maoist
dialogue get off the ground. However, such activities
are much easier in the capital and larger towns. In the
countryside, there is less protection, and neutrality is
much harder to maintain.
The Maoists have never had much urban support and
may not feel threatened by unarmed civilians in the
capital. But for the king, the streets of Kathmandu are
pivotal. Palace advisers will have already sensed the
growing parallels with the mass democracy movement
of 1990. Protests are being led not only by dedicated
political activists but also by middle-class professional
associations, trade unionists, artists and poets. If this
movement gathers pace, it should also worry the
Maoists. As a CMDP leader put it, "I don't know why
[outsiders] want to flood Nepal with weapons to protect
us from the Maoists. Do they think that after all these
struggles for democracy we'll just roll over and let the
Maoists rule us?"33
IV.    THE PRESSURES MOUNT
A.      ECONOMIC DETERIORATION
Throughout the first nine years ofthe Maoist insurgency,
Nepal remained remarkably, and paradoxically, stable.
Political instability in the countryside and in central
government did not translate into economic crisis; safety
valves such as easier migration to India and a growing
remittance economy cushioned displacement from the
hills. While fuelling Maoist expansion, the collapse in
rural government services was not disastrous for a
population accustomed to state neglect. The conflict did
not entirely derail development work, even in projects
funded by the Maoists' supposed arch-enemies, the U.S.
and India. Average GDP growth remained above 5 per
cent — not great by regional standards, but not bad — and
Kathmandu experienced something of a boom, fuelled
partly by conflict-induced migration from the hills.
But there is no guarantee this apparent stability will
last indefinitely. Indeed, signs of deterioration have
already appeared in all areas.
1.       Fiscal pressures
Nepal faces an economic squeeze: fiscal crisis is not
imminent but mounting pressures will harm business
confidence and may add to popular unrest. While the
budget announced in July 2005 is predicated on 4.5 per
cent growth, growth slowed to 2 per cent in the fiscal
year 2004-2005. A poor harvest, feared by analysts
following low early monsoon rainfall, could push the
economy into negative growth.34 Poor relations with
donors make a simple bail-out highly unlikely, although
healthy foreign currency reserves provide a cushion of
several months. Conflict-induced changes in rural social
structures may also compound difficulties and increase
the number of vulnerable families, especially those
without remittance income to fall back on. Foreign
investment has stagnated over the last two years; major
domestic investors are reportedly moving some oftheir
assets out ofthe country. The budget deficit for 2005-
2006 is estimated at $650 million,35 of which the
finance ministry hopes to cover $480 million through
foreign loans and grants. While around two-thirds of
the development budget has been financed by foreign
aid in the past, only half the projected loans were
realised in 2004.
Crisis Group interviews with demonstrators, Kathmandu,
25 July 2005.
31 Crisis Group interview, Kathmandu, August 2005.
32 Crisis Group interviews, Kathmandu and New Delhi, August
2005.
33 Crisis Group interview, Kathmandu, July 2005.
Crisis Group interviews with development economists,
Kathmandu, July and August 2005.
35 Figures denoted in dollars ($) in this report refer to U.S.
dollars. Nepal: Beyond Royal Rule
Crisis Group Asia Briefing N°41, 15 September 2005
Page <
Economic woes should not be exaggerated. Nepal has a
good record for maintaining macro-economic stability in
unpromising circumstances, and poverty alone does not
dislodge regimes. But for a government already fighting
on many fronts, a downturn in the economy brings extra
pressures. Some ofthe fiercest street protests followed a
hike in state-subsidised petroleum products in August
2005. Shortages and price-rises caused by the Indian
trade blockade in 1989 fed the "people's movement"
that toppled the Panchayat system. Any damage to
Kathmandu residents' basic comfort would spell serious
trouble for the king in his sole stronghold.
2.       Development difficulties
Even sympathetic donors complain about the lack of
meaningful dialogue with the royal government. "To
say that relations are at a low ebb would be an
understatement", commented a representative of a major
bilateral donor. "Our ministers are determined not to
make aid a political football but there is a vast gap
between our and the government's analysis ofthe current
situation, and they just won't talk to us realistically about
their development goals".36 The worsening security
situation and Maoist consolidation across the country
is bringing donors closer to a critical decision point.
The Maoists are seeking to exert more and more control
over rural development activities, either by issuing
direct instructions or by working through community
organisations. The country director of Swiss Development
Cooperation has commented that, "it is surprising to see
development agencies, small and large, local as well as
multilateral, hide behind a vague and self-serving concept
of 'communities' and pretend that the latter can create
and defend the 'space for development' in a violent
environment" .37
Wholesale changes at the Social Welfare Council, which
regulates NGO and INGO work, may also constrict
development projects, especially ifthe proposed new
code of conduct is as politically restrictive as some
experts fear. Major development partners share a sense of
unease. Norway has pulled out ofthe flagship Melamchi
water project, and other countries have kept their
assistance under review. According to a senior aid
official, the Asia Development Bank is still "deeply
exercised" over the Deuba corruption conviction; it is not
processing many outstanding 2004 loans and is holding
all 2005 loans.38 The World Bank is also pessimistic,
threatening future Poverty Reduction Support Credit and
possibly overall lending levels, and the International
Monetary Fund's (IMF) Poverty Reduction and Growth
Facility for Nepal could go formally off track.39 Britain's
Department for International Development (DflD)
has completed a full post-coup review of its program,
concluding that spending in this financial year is likely to
be around $27 million lower than originally budgeted.40
Donor confidence will be affected by the extent to which
they are allowed to operate in accordance with their basic
operating guidelines. Positive indications from the
government and the Maoists have not yet translated into
sufficient concrete demonstrations of goodwill.
3.       Humanitarian concerns
Nepal faces a human rights protection crisis but not
currently a humanitarian crisis. There are, however,
increased risks of a serious humanitarian situation,
especially in relation to internally displaced persons
(IDPs). The first wave of people forced out of conflict-
affected areas were mostly those best placed to cope,
among them landlords and political party activists. Many
of these were able to travel with resources and settle
in relative comfort elsewhere. More recent IDPs have
tended to be poor, often lower caste people, forced
out due to specific threats from either the Maoists or
the RNA, including the Maoist drive to recruit one fighter
from every family. Those who remain in heavily conflict-
affected areas are more vulnerable because ofthe slow
collapse of basic infrastructure, caused not so much by
government withdrawal as the loss of key local leaders
and Maoist suspicion of community-based organisations.
There is also an increasing incidence of sudden mass
displacement, the most notable example being the flight
of around 30,000 Kapilvastu villagers following vigilante
violence in March 2005.
The UN is preparing a Consolidated Appeal (CAP)
to be launched in early October, based on a common
humanitarian strategy that is being developed in
consultation with the Nepali government, local and
international NGOs, donors, the Red Cross and
international experts. A UN official stressed that,
"we don't want to imply that traditional development
cooperation should be abandoned but there is an urgent
need to fill emerging gaps in the provision of essential
services and prepare for potentially dangerous
humanitarian contingencies".41 Nevertheless, some
development practitioners are worried that existing
efforts could be undermined by a broad-brush
humanitarian approach, and the finalised CAP will no
doubt reflect such concerns.
Crisis Group interview, Kathmandu, July 2005.
37 Jorg Frieden, "Imagined communities", Nepali Times, 12
August 2005.
38 Crisis Group interview, Kathmandu, August 2005.
Crisis Group interview, Kathmandu, August 2005.
40 Crisis Group interview, Kathmandu, July 2005.
41 Crisis Group interview, Kathmandu, August 2005. Nepal: Beyond Royal Rule
Crisis Group Asia Briefing N°41, 15 September 2005
Page 9
B.       POLITICAL DISCONTENT
The government suffers from a lack of legitimacy,
growing popular discontent and international isolation,
all problems for which it lacks solutions. It has made
no progress in addressing the insurgency and faces
economic, developmental and humanitarian challenges.
It has been thrown off balance by the Maoist ceasefire
announcement and is unsure how to respond. The king
still commands the loyalty of the RNA but this is a
brittle form of power that will offer limited options
if mainstream dissent increases. The royal coup was
undertaken with limited planning: the general aim of
replacing the political mainstream with power structures
directly answerable to the palace was not accompanied
by detailed thinking in other areas. This lack of strategy
may prove fatal to the royal government: absorbed by
long-term efforts to reshape the political system, it may
be overtaken by immediate challenges for which it has
no answers.
Crude efforts to suppress mainstream dissent have led
only to renewed pressure from parties, student
movements, trade unions, professional associations
and civil society. The royal government has seemed
determined to alienate almost all potential supporters
and it has often been its own worst enemy: for example,
just as opposition was building elsewhere, it decided to
ban trade unions within the civil service. This prompted
heightened discontent among government bureaucrats
already unhappy at being subjected to close military and
palace supervision.
By early August 2005, the policy vacuum had become
painfully apparent. Ministers, who have in any case been
granted no real authority, appeared to make up policy on
the spot to avoid difficult questions. Council of Mnisters
Vice Chairman Kirtinidhi Bista appeared to reverse the
spirit of the 11 February royal proclamation when he
declared that the government was, after all, prepared
to talk to the Maoists.42 He was, however, promptly
repudiated by his colleague, Tanka Dhakal, Information
and Communications Minister. More bizarrely, Finance
Minister Madhukar Shamsher Rana suggested there
could be a referendum to test whether republicans or
monarchists had greater support.43
Escalating street protests in Kathmandu will put more
direct pressure on the government. They will continue to
be led not only by the seven-party alliance but also by
civil society groups, professional associations, trade
unions and students. Discontent is not confined to party
politicians but has permeated crucial constituencies,
including an increasingly sceptical business community.
Organisations such as the Professional Alliance for Peace
and Democracy, which unites the major lawyers',
journalists', doctors', teachers' and engineers' associations,
are taking their campaign to the districts. Businesspeople
outside the capital, aware that the king has failed to
improve security and is damaging their prospects, are
restive. "None of us supports what the king has done",
says a prominent regional businessman. "We all want to
see the end of this government as soon as possible".44
Reconciliation between the palace and mainstream
parties is not theoretically impossible but is in practice a
forlorn hope. The king has amply demonstrated that he
will spurn opportunity to compromise, however much it
may be in the interests ofthe monarchy and the country.
The mainstream parties, convinced that his plan is to do
away with democracy, are in an uncompromising mood.
While a superficial deal may yet be possible, there is no
chance of a seriously united anti-Maoist front.
The notion that the constitutional monarchy and
multiparty democracy are, in India's favoured phrase,
the "twin pillars" of stability in Nepal is now widely
questioned. As the king's own senior vice chairman of
the Council of Ministers has bluntly put it, one has to
choose between supporting the palace or the parties —
it is not possible to support both at once.45 Three years
of attempts to persuade the parties to accommodate the
ambitions of an autocratically inclined monarchy have
only helped the Maoists to expand.
C.    Looking Beyond Royal Rule
The monarchy's support base is narrow and conditional,
consisting primarily ofthe RNA. In the coming months,
the royal government is likely either to collapse or to
be replaced under pressure with some time-buying
compromise. Governments ofthe last few years, including
all royally-appointed administrations, have tended to
survive around nine months. There are no good reasons
to expect this government to buck that trend: detennination
not to give ground to the parties is not a sufficient policy
response to the multiple mounting pressures.
There can be little doubt that ofthe three power centres in
Nepal — palace, parties and Maoists — it is the palace that
has been most gravely weakened since February 2005.
42 "Govt ready for talks with Maoists: Bista", www.kantipur
online.com, 5 August 2005.
43 "Nation can go for referendum: FM Rana", The Kathmandu
Post, 6 August 2005.
Crisis Group interviews with Nepali businessmen, New
York, June 2005.
45 "Strengthen either monarchy or democracy, not both: Dr.
Giri", www.nepalnews.com, 7 July 2005. Nepal: Beyond Royal Rule
Crisis Group Asia Briefing N°41, 15 September 2005
Page 10
The mainstream parties that had served as the
constitutional monarchy's strongest bulwark now offer
a limited choice of "absolute democracy" (in which the
monarch would be a powerless figurehead) or outright
republicanism. The Nepali Congress has removed
endorsement of the constitutional monarchy from its
constitution while the UML has adopted the goal of a
democratic republic. More radical politicians and student
leaders have already placed republicanism firmly on the
agenda and see a good chance of achieving their goals.
The end of Nepal's monarchy, or its reduction to a
ceremonial vestige, is increasingly likely. It is still not
inevitable but any other outcome would depend on a
reasonable compromise, something that the palace is
unwilling to countenance. The king is not like his late
brother, Birendra: he is likely to see any concessions to
the parties as a personal indignity, and these feelings
will be reinforced by the clique he has surrounded
himself with.
In the absence of compromise, there is a real danger that
hardcore monarchists will conclude that a final, brutal
crackdown is their only option. Ifthe monarchy is backed
into a comer — something the king's consistent ruling out
of concessions makes more likely ~ and they feel they
have nothing to lose, the growing street protests could be
much more bloodily suppressed than in 1990. A sudden
collapse of palace authority would bring with it the risk of
a power vacuum, potentially allowing the Maoists to seize
a decisive advantage. The only acceptable option in this
case would be to ensure the RNA accepts the direction of
an emergency all-party government strongly supported by
a united international community.
D.      RESPONDING TO THE CEASEFIRE
The Maoists' 3 September 2005 declaration of a three-
month ceasefire has been widely welcomed and has
raised new hopes of serious talks to end the conflict. The
seven-party alliance and civil society groups have
urged the Maoists to observe the ceasefire sincerely
and the government to respond in kind. But the royal
administration met the declaration with a studied silence
and questioned the Maoists' intentions. Some members
of the cabinet and palace advisers reportedly support a
reciprocal truce but for the time being the war party,
including most ofthe RNA's senior officers, has more
influence, and it has urged the king to keep on fighting.46
Observers report efforts by the RNA to expand its
activities into rural areas that had been ceded to Maoist
Crisis Group interviews with political leaders, diplomats
and journalists, Kathmandu, September 2005.
control and believe this is designed to force the insurgents
to break their ceasefire.47
India offered the first international response, stating, "we
hope that the ceasefire announced by the Maoists will
contribute towards creating an environment in which
a peace process can begin".48 The use ofthe term "peace
process" brings Delhi's language more into line with that
of the Europeans; who would be involved in such a
process or what form it would take, however, was left
deliberately vague.49 Donors and the European Union
also welcomed the ceasefire, with the latter calling for
a "democratically based peace process...involving a
national consensus and reintegration of the CPN-M
[Commnist Party of Nepal-Maoist] into a multi-party
democracy",50 while the U.S. made no comment.
Mainstream political parties, the Maoists and civil society
representatives have called for a more active UN role.51
Secretary-General Kofi Annan noted this in his response
to the Maoist ceasefire, saying he hoped that, "all sides in
Nepal will take all measures which will lead to peace
talks".52 The UN could now take the initiative to broker a
wider ceasefire between the armed parties, a move that
would receive broad support within Nepal and much of
the international community.
V.     THE INTERNATIONAL CONTEXT
The royal government has antagonised its traditional
allies. The coup had been widely predicted, and India, the
U.S. and UK had firmly warned the king against it. Not
surprisingly, the coup met with stiff external opposition.
The king could have redeemed himself had he played
his cards carefully but his diplomacy has been
counterproductive. While the palace courted Washington,
it boasted of support from China, North Korea and Cuba.
While royal associates worked their Hindu fundamentalist
connections, others were busy talking up the chance of
Crisis Group interviews with human rights workers and
political leaders, Kathmandu, September 2005.
48 "Press release by MEA, GOI, New Delhi regarding recent
developments in Nepal", Indian Embassy press release No.
Kat/64/2005, 5 September 2005.
49 Crisis Group interview with Indian diplomats, Kathmandu,
September 2005.
50 "Declaration by the Presidency on behalf of the European
Union in response to the statement of cease-fire by Chairman
Prachanda, CPN(M)", Brussels, 6 September 2005,11988/05.
51 For example, leaders of the seven-party alliance wrote to
Kofi Annan on 6 September 2005 asking for the "greater
support and understanding of the international community to
stop our country from sliding towards a failed state".
52 Statement attributable to the Spokesman for the Secretary-
General on Nepal, New York, 5 September 2005. Nepal: Beyond Royal Rule
Crisis Group Asia Briefing N°41, 15 September 2005
Page 11
arms from Pakistan. India, despite certain apparently
conciliatory gestures, will not enthusiastically support
this government and does not believe it can last long.
As noted, it was quick to offer a guarded welcome to the
Maoist ceasefire, while noting the shifts in Congress and
UML policy as well as the views of civil society.53 UK
and EU positions against royal autocracy have hardened,
and the U.S. is realigning itself more unambiguously in
favour of democracy.
A.    India
India led the condemnation ofthe royal coup and largely
set the tone for a firm international response. However,
it lacks a clear longer-term policy, and its positions
have been the result of much debate within the Delhi
establishment, some of it embarrassingly public. The
army has pushed hard on behalf of the RNA, while the
palace has frantically worked its Indian aristocratic
connections to buy more breathing space. The left
parties supporting the ruling United Progressive Alliance
coalition, however, have strongly pressed the government
to support restoration of democracy and a negotiated end
to the conflict. India has sustained its freeze on lethal
military assistance since February 2005 and despite
announcing resumption of non-lethal aid has delivered
very little. At the same time it has encouraged the Maoists-
parties dialogue, much of it conducted on Indian territory.
While frustration with the king has mounted, the Indian
leadership is unwilling to renounce its traditional support
for the "twin pillars" of monarchy and multiparty
democracy. Nevertheless, strong suggestions that it
is time to move towards a new line have come from
influential and knowledgeable quarters. Former
ambassador to Nepal Deb Mukharji has urged replacing
the "twin pillars" with a policy that puts Nepal's people
at the centre.54 Such thinking echoes private discussions
in government policy circles, where scepticism that the
monarchy will survive King Gyanendra's adventurism
has grown significantly but is yet to be reflected in
public statements.55
The change in mood was underlined when Defence
Minister Pranab Mukherjee, who is sympathetic to the
RNA and palace, publicly voiced his disappointment at
the former's ineffectiveness and linked it to the derailment
"Press release by MEA, GOI, New Delhi regarding recent
developments in Nepal", Indian Embassy press release No.
Kat/64/2005, 5 September 2005.
54 "Initiate action for talks", The Kathmandu Post, 13 August
2005.
55 Crisis Group interviews, New Delhi, May and August 2005.
ofthe constitution and multi-party democracy.56 When
the RNA reacted to its embarrassing loss in Kalikot in
August 2005 by blaming its Indian-supplied rifles, Delhi
responded icily that, "our extensive experience of conflict
situations has taught us that success does not depend on
the weapon alone... .If the Royal Nepalese Army is of
the view that its understanding of this weapon is still
incomplete, then the Government of India will be happy
to again make arrangements to address their doubts".57
Policy has consistently suffered from indecisiveness and a
lack of serious planning; there is still no sign that recent
actions form part of a coherent longer-term strategy.
Moreover, continuing wariness of cooperating too closely
with the U.S. and UK, let alone the UN and smaller
countries, has hampered efforts to increase international
leverage. There have been signs, such as behind-the-scenes
collaboration in the run-up to the Commission on Human
Rights session, that a more collaborative multilateral
approach is possible but follow-through has been limited.
As a senior third-country diplomat puts it, "India's
analysis and actions just do not match. They insist that
Nepal is in crisis but they don't appear to have a plan to
deal with it. Maybe they are planning quietly but it would
be good if they could reassure us".58
B.     China
China has maintained quiet but not unconditional support
for the palace. The royal government's hopes that it will
meet all financial as well as military equipment needs are
not realistic, though it has received $12.5 million in
budgetary support.59 Delhi has most reasons for concern
about Beijing's role but senior diplomats remain confident
that bilateral ties are too important to be upset by bickering
over Nepal. China may well try to increase its influence
but only within limits, and with the understanding it
cannot supplant India and has no reason to try.60
Beijing may well respond to the request for military
assistance by selling ammunition and aircraft — it is keen
to prevent a growth of U.S. influence in Nepal. Apart
from concern for the stability of Tibet, however, its
principal focus is on business opportunities rather than
politics. Its support for the palace reflects historically
56 "Nepalese Army not effective to quell Maoists: Mukherjee",
www.kantipuronline.com, 8 August 2005.
57 "On the INSAS Rifle", Indian Embassy press release No.
Kat/59/2005, 13 August 2005.
58 Crisis Group interview, New Delhi, September 2005.
59 "China to provide grant assistance of Rs 870 m",
www.kantipuronline.com, 16 August 2005.
60 Crisis Group interviews, New Delhi and Kathmandu, March
and August 2005. Nepal: Beyond Royal Rule
Crisis Group Asia Briefing N°41, 15 September 2005
Page 12
close ties but does not preclude backing alternative
arrangements should it become convenient. As a diplomat
observed, "Nepalis view China with a sense of awe rather
than familiarity. China knows there will be little price
to pay for supporting the king as any future democratic
leadership will reconcile itself to dealing with them
regardless".61
C.    The United States
The U.S. criticised the royal coup but came to be widely
seen as close to the palace and lukewarm about restoration
of democracy. It gave the appearance of having swallowed
uncritically the king's false dichotomy of "me or the
Maoists" and his assurances of commitment to democracy.
Unlike India and the European Union, it did not welcome
the seven-party alliance's call for restoration of parliament.
Instead it urged the parties to adopt policies more
acceptable to the palace. According to a senior envoy, the
U.S. also worked behind the scenes to try to block Indian
efforts to support the Maoist-parties dialogue.62
The U.S. position — influenced by sympathy for the RNA
as much as for the palace ~ has changed somewhat,
primarily because of domestic concerns. The State
Department's Donald Camp used his June 2005 visit to
focus more clearly on democracy and question the king's
true intentions. However, some pro-palace bias remains.
Opposition Senator Patrick Leahy complained the
following month that the embassy in Kathmandu was
still "sending mixed messages that have been widely
interpreted as giving equal consideration and validity
to the views and actions of the King and the political
parties", while the king himself was "using the army and
police to crush the forces of democracy".63
Ambassador James Moriarty not only argues that
cooperation between the "constitutional forces" of palace
and parties is the sole possible alternative to a Maoist
victory but also insists on describing the palace as a
"legitimate political actor".64 He sees the corrupt and antidemocratic actions of the royal government as going
"against its core principles" rather than being in line with
its true nature. Nevertheless, his sharp criticism ofthe
course since February 2005 suggests that the U.S., UK
and India have come closer to a common assessment.
D. The United Kingdom
The UK's condemnation of the royal coup was
accompanied by much more scepticism about the king's
attitude towards democracy than Washington showed.
Ambassador Keith Bloomfield has been trenchantly
critical ofthe march towards authoritarian consolidation.
Looking back at six months of post-February rule
under the pretext of restoring peace and strengthening
democracy, he noted:
... [a] new and very different mentality...in which
those who argue for a negotiated peace with the
Maoists are publicly attacked for advocating giving
in to terrorists, where democracy is presented as
something that has to wait until the Maoists have
been dealt with militarily, where there is no room
for moderation and compromise ~ you either
support those in power or you are seen as being
sympathetic to the Maoists.65
Following former Prime Minister Deuba's conviction on
corruption charges, Bloomfield wrote him a personal
letter of support, which was leaked to the press. The UK
plays a pivotal role in shaping international cooperation,
having the ear of both Washington and New Delhi while
maintaining the largest Kathmandu mission of all EU
member states. It has taken a firm public stance for
democracy and a negotiated settlement to the conflict.
However, it is uncertain how to adjust policy to conform
to its revised analysis.
E. EUROPEAN UNION
The EU is a major developmental aid player but has
struggled to find a major political role. The UK
presidency (July-December 2005) may be the best chance
to draw Brussels into higher-level collaboration with
other key countries and the UN. The EU's newly-agreed
strategic partnership with India could prompt closer
dialogue with New Delhi on the regional security
implications of Nepal's conflict.66 A major reason for
the EU's ineffectiveness is the limited representation
of member states in Kathmandu. The only sizeable
presence is the British, who often prefer to emphasise a
Crisis Group interview, Kathmandu, July 2005.
62 Crisis Group interview with Western diplomat, Kathmandu,
July 2005.
63 Statement of Senator Patrick Leahy, "The United States and
Nepal", U.S. Senate, 28 July 2005.
64 Ambassador James Moriarty, "Remarks to the Nepal Council
of World Affairs", 9 August 2005.
65 "Nation can go for referendum: FM Rana", The Kathmandu
Post, 6 August 2005.
66 The strategic partnership, launched during Tony Blair's
September 2005 visit to India, calls for EU-India cooperation
on regional security issues, democracy and human rights and
effective multilateral action "in which the UN plays a central
role". See "The India-EU Strategic Partnership Joint Action
Plan", British High Commission, New Delhi, 7 September
2005. Nepal: Beyond Royal Rule
Crisis Group Asia Briefing N°41, 15 September 2005
Page 13
complex and long-standing bilateral relationship at the
expense of joint initiatives. Yet, the EU is a potentially
crucial member of a better coordinated international front,
and it will surely contribute to peace process support and
post-conflict assistance. The appointment of a senior
envoy as an EU Special Representative would encourage
more serious political engagement with international
partners as well as prepare the ground for closer
cooperation once a peace process is underway.
F. JAPAN
Tokyo avoids high-profile diplomacy but is a significant
donor and has consistently diverged from the line taken
by other major aid givers. It has continued to provide
substantial direct budget support to the royal government.
Japan will not offer military aid but does ally closely with
the palace, primarily as a fellow Asian monarchy. It has
not criticised the royal coup and invited Crown Prince
Paras to visit in July 2005. Like India, Japan has been
keen to secure Nepal's vote for UN reform and expanded
permanent membership ofthe Security Council.
G. The United Nations
The UN has long been significant for development
but the conflict has drawn it toward new roles. The
agreement signed by the royal government and Louise
Arbour, High Commissioner for Human Rights, in April
was a major event that authorised establishment of a
large mission with broad powers to engage both armed
parties and to monitor and report on their conduct. The
Maoists welcomed this, and it will be the first time they
have had to face a concerted test of their sincerity and
capacity to cooperate. While the mission will not be
fully operational until October, key staff have been
appointed and it has started work on the ground. The
UN is also increasingly coordinating humanitarian and
other contingency planning.
Nevertheless, the UN's political role remains unclear.
Secretary-General Annan has repeatedly expressed
concern at the deteriorating situation and offered his
good offices to help resolve the conflict. In July 2005
this concern was underlined by the six-day visit of his
special adviser, Lakhdar Brahimi, which raised the level
of attention given to Nepal although India resisted it.
Brahimi's subsequent visit to New Delhi revived hopes
for closer cooperation between these two key players.
The UN retains broad respect among the parties to the
conflict and would be best placed to push for a wider
ceasefire and assist a negotiating process.
VI.   A NEW ENGAGEMENT
King Gyanendra's actions have demonstrated that the
choice he has advertised between democracy and stability
is a false one. His own autocratic measures have palpably
increased instability, not restored a degree of order.
Meanwhile, the Maoist ceasefire declaration has raised
the question of what kind of peace process the international
community should support. Most influential members
refused to accept the royal coup as a fait accompli. Their
criticism moderated the initial crackdown and has
continued to act as a brake on the most excessive
behaviour. But their pressure has been neither well
coordinated nor related to clearly defined benchmarks. If
the international community is to be an effective force for
peace it must address its lack of unity, lack of clarity on
longer term goals, poor communication and unimaginative
policy formulation.
It must also face up to the fundamental questions about
the monarchy that permeate Nepali society. Outsiders
should not decide the country's political institutions,
but to insist that Nepal must retain a "constitutional
monarchy" is to do just that. It hands the king a veto on
any progress to peace and prejudges the outcome of
any constitutional revision process. It also seems
increasingly out of step with domestic opinion. It may
well be that the king's control ofthe army buys him
a place at any negotiation but that depends on his
willingness to talk. Furthermore, as with the Maoists,
power should not in itself legitimate a political actor.
While domestic actors reshape the political landscape,
the international community can help. As long as internal
dynamics remain in flux and may throw up their own
peace opportunities, there is no need for heavy-handed
external mediation. But Nepal's friends should be clearer
about their principles and the role they may play in
helping a negotiated peace as and when the opportunity
for substantive talks arises. They should:
Prepare for a Peace Process
□ welcome the Maoist ceasefire, urge its indefinite
extension, government reciprocity, and for all
parties to the conflict to seize the opportunity for
substantive talks;
□ press the UN to take the lead in brokering an
extended and unconditional ceasefire between
the armed sides and with the backing of
mainstream political parties;
□ support the dialogue between the mainstream
parties and the Maoists if it shows signs of leading
towards a negotiated, democratic peace; Nepal: Beyond Royal Rule
Crisis Group Asia Briefing N°41, 15 September 2005
Page 14
□ plan to facilitate talks if requested by the
participants, as well as to provide technical and
financial assistance in the later stages of a peace
process; and
□ make a thorough assessment on the ground of
the military situation and specifically of the
RNA and be prepared to mitigate its potential
role as a peace spoiler.
Maintain Pressure on the Palace
□ press the royal government to revive democratic
institutions and open the path to a negotiated
peace settlement; and
□ continue the freeze on military aid, suspend all
general budgetary support, introduce targeted
sanctions such as travel bans for palace advisers,
ministers, generals and their families and prepare
to freeze royal assets held abroad.
Develop Fresh Policies
□ recognise that the traditional recipe of calling for
the "twin pillars" ~ king and parties ~ to work
together has not worked, and there is a need for
a new, more open-minded, policy;
□ as long as there remains a chance that the king
may see sense, continue to search for imaginative
compromises that can keep him in the picture and
lead to a democratically negotiated peace; but
□ agree to work together to advance a set of basic
common principles for a democratic peace
settlement, which should centre on a negotiated
peace, multiparty democracy, respect for human
rights and a military accountable to civilian
control.
□ hold a follow-up to the 2002 London International
Conference on Nepal to discuss common principles
and policies;67 and
□ increase the EU's role, perhaps by appointing a
Special Representative for Nepal to improve
European policy coordination and work alongside
other major players.
Make Contingency Plans
□ prepare for a possible reconfiguration of power
in Kathmandu and develop contingency plans for
the collapse ofthe royal government, including
coping with a possible power vacuum and
escalated violence; and
□ prepare to meet greater humanitarian needs
and, while continuing development work where
feasible, support the UN's Consolidated Appeal
and its efforts to engage the government, donors,
NGOs and others in contingency planning.
Kathmandu/Brussels, 15 September 2005
Support Democracy
□ continue visible engagement with democratic
political forces, including the parties, the media
and civil society; and
□ press for the RNA to start the process of
democratisation and conversion into a national
army accountable to elected civilian control.
Coordinate Better
□ ensure more effective multilateral action, preferably
through a loose contact group that can follow a
common policy; in particular, the EU, U.S. and
India should work more closely with the High
Commissioner for Human Rights and the Secretary-
General's special adviser;
The 2002 London International Conference on Nepal was
the first attempt to coordinate the international community's
response to the growing crisis in Nepal. It brought together
the security, political and development policymakers of
twenty governments and international bodies. Nepal: Beyond Royal Rule
Crisis Group Asia Briefing N°41, 15 September 2005
Page 15
APPENDIX
ABOUT THE INTERNATIONAL CRISIS GROUP
The International Crisis Group (Crisis Group) is an
independent, non-profit, non-governmental organisation,
with over 110 staff members on five continents, working
through field-based analysis and high-level advocacy
to prevent and resolve deadly conflict.
Crisis Group's approach is grounded in field research.
Teams of political analysts are located within or close by
countries at risk of outbreak, escalation or recurrence of
violent conflict. Based on information and assessments
from the field, it produces analytical reports containing
practical recommendations targeted at key international
decision-takers. Crisis Group also publishes CrisisWatch,
a twelve-page monthly bulletin, providing a succinct
regular update on the state of play in all the most significant
situations of conflict or potential conflict around the world.
Crisis Group's reports and briefing papers are distributed
widely by email and printed copy to officials in
foreign ministries and international organisations and
made available simultaneously on the website,
www.crisisgroup.org. Crisis Group works closely with
governments and those who influence them, including
the media, to highlight its crisis analyses and to generate
support for its policy prescriptions.
The Crisis Group Board ~ which includes prominent
figures from the fields of politics, diplomacy, business
and the media — is directly involved in helping to bring
the reports and recommendations to the attention of senior
policy-makers around the world. Crisis Group is chaired
by Lord Patten of Barnes, former European Commissioner
for External Relations. President and Chief Executive
since January 2000 is former Australian Foreign Minister
Gareth Evans.
Crisis Group's international headquarters are in Brussels,
with advocacy offices in Washington DC (where it is
based as a legal entity), New York, London and Moscow.
The organisation currently operates fifteen field offices
(in Amman, Belgrade, Bishkek, Dakar, Dushanbe,
Islamabad, Jakarta, Kabul, Nairobi, Pretoria, Pristina,
Quito, Seoul, Skopje and Tbilisi), with analysts working
in over 50 crisis-affected countries and territories across
four continents. In Africa, this includes Angola, Burundi,
Cote d'lvoire, Democratic Republic ofthe Congo, Eritrea,
Ethiopia, Guinea, Liberia, Rwanda, the Sahel region,
Sierra Leone, Somalia, Sudan, Uganda and Zimbabwe;
in Asia, Afghanistan, Indonesia, Kashmir, Kazakhstan,
Kyrgyzstan, Myanmar/Burma, Nepal, North Korea,
Pakistan, Tajikistan, Turkmenistan and Uzbekistan; in
Europe, Albania, Armenia, Azerbaijan, Bosnia and
Herzegovina, Georgia, Kosovo, Macedonia, Moldova,
Montenegro and Serbia; in the Middle East, the whole
region from North Africa to Iran; and in Latin America,
Colombia, the Andean region and Haiti.
Crisis Group raises funds from governments, charitable
foundations, companies and individual donors. The
following governmental departments and agencies
currently provide funding: Agence Intergouvernementale
de la francophonie, Australian Agency for International
Development, Austrian Federal Ministry of Foreign
Affairs, Belgian Mnistry of Foreign Affairs, Canadian
Department of Foreign Affairs and International Trade,
Canadian International Development Agency, Canadian
International Development Research Centre, Czech
Mnistry of Foreign Affairs, Dutch Ministry of Foreign
Affairs, Finnish Ministry of Foreign Affairs, French
Mnistry of Foreign Affairs, German Foreign Office, Irish
Department of Foreign Affairs, Japanese International
Cooperation Agency, Principality of Liechtenstein Ministry
of Foreign Affairs, Luxembourg Ministry of Foreign
Affairs, New Zealand Agency for International
Development, Republic of China (Taiwan) Mnistry of
Foreign Affairs, Royal Danish Ministry of Foreign Affairs,
Royal Norwegian Ministry of Foreign Affairs, Swedish
Mnistry for Foreign Affairs, Swiss Federal Department of
Foreign Affairs, Turkish Ministry of Foreign Affairs,
United Kingdom Foreign and Commonwealth Office,
United Kingdom Department for International
Development, U.S. Agency for international Development.
Foundation and private sector donors include Atlantic
Philanthropies, Carnegie Corporation of New York,
Compton Foundation, Ford Foundation, Fundacao Oriente,
Fundacion DARA International, Bill & Melinda Gates
Foundation, William & Flora Hewlett Foundation, Hunt
Alternatives Fund, Korea Foundation, John D. & Catherine
T. MacArfhur Foundation, Moriah Fund, Charles Stewart
Mott Foundation, Open Society Institute, Pierre and
Pamela Omidyar Fund, David and Lucile Packard
Foundation, Ploughshares Fund, Sigrid Rausing Trust,
Rockefeller Foundation, Rockefeller Philanthropy
Advisors and Sarlo Foundation ofthe Jewish Community
Endowment Fund.
September 2005
Further information about Crisis Group can be obtained from our website: www.crisisgroup.org Internationa
Crisis Group
WORKING TO PREVENT
CONFLICT WORLDWIDE
International Headquarters
149 Avenue Louise, 1050 Brussels, Belgium • Tel: +32 2 502 90 38 • Fax: +32 2 502 50 38
E-mail: brussels(@,crisisgroup.org
New York Office
420 Lexington Avenue, Suite 2640, New York 10170 • Tel: +1 212 813 0820 • Fax: +1 212 813 0825
E-mail: newvork@crisisgroup.org
Washington Office
1629 K Street, Suite 450, Washington DC 20006 • Tel: +1 202 785 1601 • Fax: +1 202 785 1630
E-mail: washington(@crisisgroup.org
London Office
Cambridge House - Fifth Floor, 100 Cambridge Grove, London W6 OLE • Tel: +44 20 7031 0230 • Fax: +44 20 7031 0231
E-mail: londougicrisisgroup.org
Moscow Office
ul. Fadeeva 6-1-32 - Moscow 125047 Russia • Tel/Fax: +7 095 251 44 85
E-mail: moscow(@,crisisgroup.org
Regional & Local Field Offices
Crisis Group also operates from some 20 different locations in Africa, Asia, Europe, the Middle East and Latin America:
See: www.crisisgroup.org for details.
www.cnsisgroup.org

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