1. The present report is submitted pursuant to Security Council resolution 1825 (2008), by which the Council, pursuant to the request of the Government of Nepal and the recommendation of the Secretary-General, renewed the mandate of the United Nations Mission in Nepal (UNMIN), as set out in resolution 1740 (2007), until 23 January 2009. UNMIN was established as a special political mission with a mandate which included the monitoring of the management of arms and armed personnel of the Communist Party of Nepal (Maoist) and the Nepal Army.
2. This report reviews progress in the peace process and the implementation of the mandate of UNMIN since my report to the Council of 10 July 2008 (S/2008/454).
II. Progress of the peace process
3. There have been major political developments since my last report, including the election by the Constituent Assembly of the first President, Vice-President and Prime Minister of the Federal Democratic Republic of Nepal, and the formation of a Council of Ministers. These developments brought an end to a period of political uncertainty regarding the establishment of the new Government and paved the way for further progress on the peace process.
4. On 13 July, the Constituent Assembly, acting in its capacity as the Legislature- Parliament, adopted an amendment to the Interim Constitution which reflected the agreement reached on 25 June by the Seven-Party Alliance (see S/2008/454, paras. 6 and 7). This provided a basis for further negotiations towards the formation of a consensus government and power-sharing among the major parties elected to the Assembly. However, negotiations among the four largest parties represented in the Assembly, the Communist Party of Nepal (Maoist) (CPN (M)), the Nepali Congress (NC), the Communist Party of Nepal (Unified Marxist-Leninist) (UML) and the Madhesi People's Rights Forum (MPRF), proved difficult. CPN (M) and NC nominated rival candidates for President, and Ram Baran Yadav of NC was elected by the Assembly, with the support of UML and MPRF as well as NC, on 21 July. The Assembly also elected Parmananda Jha of MPRF, with the support of the same three parties, as Vice-President.
5. Disagreements regarding nominations and the election of the President adversely affected the climate for continuing negotiations regarding formation of a government. On 29 July, President Yadav invited the Chairman of CPN (M), Pushpa Kamal Dahal "Prachanda", as the leader of the largest party in the Assembly, to form a consensus government within seven days. The deadline was later extended by three days to allow additional time for the negotiations to achieve consensus. However, differences between the parties continued, NC stating its reluctance to join a Maoist-led government before the Maoists had fulfilled a number of key preconditions, including the return of seized property and reform of its Young Communist League; it also sought to be allocated the Ministry of Defence portfolio if it were to join the government. After the four parties failed to reach consensus, UML and MPRF, as well as a number of smaller parties, agreed to support the candidacy of Pushpa Kamal Dahal "Prachanda" for the position of Prime Minister and to join a Maoist-led coalition government.
6. In the absence of consensus, the election of a prime minister moved to the Legislature-Parliament, and was held on 15 August. It was contested by Pushpa Kamal Dahal "Prachanda" and NC candidate Sher Bahadur Deuba, a former prime minister. Dahal was elected by 464 votes, Deuba received 113. Subsequently, the NC central working committee decided that the party should not join a national government but should enter into opposition.
7. Pushpa Kamal Dahal "Prachanda" was sworn in as Prime Minister on 18 August. A Common Minimum Programme for implementation by the new government was subsequently agreed upon by the three principal coalition partners, CPN (M), UML and MPRF. On 27 August, the Prime Minister finalized the establishment of a 25-member Council of Ministers which includes 10 Ministers (in addition to the Prime Minister) from CPN (M), 6 from UML, 4 from MPRF and one each from four smaller parties. Bamdev Gautam, the senior UML nominee, was appointed Deputy Prime Minister and Home Minister. The MPRF leader, Upendra Yadav, became Minister for Foreign Affairs. Among the Ministries retained by CPN (M) were the Ministries of Finance, Defence, and Peace and Reconstruction. Only four members of the Cabinet are women.
8. The new Government faced its first major crisis on 18 August when the Koshi River in the eastern region of Nepal flooded large parts of Sunsari district and neighbouring Bihar State in India. More than 60,000 people in Nepal and 3.2 million in India were affected. The Government reacted promptly, ordering security forces to assist in flood relief and providing assistance to the victims. United Nations agencies also played a significant role in providing relief. In mid-September, the Government had to respond to the temporary displacement by severe flooding and landslides of some 180,000 persons in the Mid-West and Far West regions of the country.
9. From 23 to 27 August, the Prime Minister visited China to attend the closing ceremony of the Olympic Games. From 14 to 18 September, he undertook an official visit to India. In a joint communiqué issued at the end of the visit, the two Governments committed themselves to strengthening bilateral ties and expanding economic links. They agreed to set up a committee at the level of Foreign Secretaries to review, adjust and update the 1950 Treaty of Peace and Friendship and other agreements, while giving due recognition to the special features of the bilateral relationship. The Prime Minister also travelled to New York to address the United Nations General Assembly and participated in the high-level event on the Millennium Development Goals in New York on 25 September. I received the Prime Minister on 27 September, when he expressed appreciation for the support of the United Nations for Nepal's peace process and reiterated an invitation extended to me by the previous Government to visit Nepal, which I accepted.
10. On 11 September, the President presented before the Legislature-Parliament the policies and programmes of the Government, based upon the Common Minimum Programme agreed among the principal coalition partners: this was adopted after debate. On 19 September, the Finance Minister, Baburam Bhattarai, presented the Government's budget for the remainder of fiscal year 2008/09 to the Legislature-Parliament. The budget provides for socio-economic programmes aimed particularly at low-income communities, populations in remote areas and historically marginalized groups. During the budget debate the opposition NC as well as members of some other parties expressed concerns regarding the proposed levels of expenditure and required revenue. Following the presentation of revisions to address some concerns, the debate is due to resume on 19 October, after the Dashain festival.
11. Coalition partners, as well as the opposition parties, have expressed some public criticisms of the CPN (M) leadership of the Government and its future intentions, and there have been considerable tensions at the local level. On 2 October, the coalition parties agreed to form a high-level Political Coordination Committee. From 3 to 6 October, CPN (M) began a major meeting of its Central Committee to discuss its strategy following the formation of the Government. The meeting was adjourned until early November after a decision to hold a wider meeting of the party from 11 to 13 November.
Drafting the Constitution
12. Since the Constituent Assembly was first convened on 28 May, there has been little progress towards its main task of drafting a new Constitution. On 24 July, Subas Chandra Nembang of UML, who had been Speaker of the Interim Legislature-Parliament, was elected unopposed Chairman of the Assembly and Speaker of the Legislature-Parliament. In addition to the prolonged preoccupation of the political parties with the elections of the President and Prime Minister and the formation of the Government, the main reason for the protracted delay is differences over the rules of procedure, which had yet to be adopted when the Assembly was prorogued until 19 October. This delay is raising concerns about the prospects for the completion of the Assembly's task within the two-year period provided for under the Interim Constitution.
Integration and rehabilitation
13. The agreement reached on 25 June by the Seven-Party Alliance states that the future of Maoist army personnel verified by UNMIN would be decided by a reconstitution of the special committee provided for in the Comprehensive Peace Agreement and in article 146 of the Interim Constitution (see S/2008/454, para. 9). Verified combatants would have a choice between possible integration into security bodies "after fulfilling the standard requirements", an economic package or other alternatives for rehabilitation. Until integration and rehabilitation are complete, Maoist army personnel and weapons would be under the supervision, control and direction of the special committee, and from the beginning of the process the Maoist combatants would have no involvement with any political organization, having to opt for either political or military responsibilities.
14. Upon becoming Prime Minister, Pushpa Kamal Dahal "Prachanda" ceased to be Supreme Commander of the Maoist army, and commanders who hold positions in government or the Constituent Assembly have relinquished their military positions. Nanda Kishor Pun "Pasang", formerly a Deputy Commander, has been appointed Commander of the Maoist army: he remains Maoist army Vice-Chairman of the Joint Monitoring Coordinating Committee. However the special committee, which according to the agreement of 25 June is to be formed on a multi-party basis, including the opposition NC as well as the governing parties, has yet to be established. Meanwhile, strongly differing positions regarding the integration of Maoist army personnel into the Nepal Army continue to be expressed publicly by leaders of political parties, retired military personnel and representatives of civil society, on an issue which remains central to the peace process.
15. Despite some improvements, problems have persisted at the Maoist army cantonment sites. The infrastructure of the cantonments is inadequate to meet some of the basic needs of a large number of combatants, especially during the monsoon season. Maoist division commanders reported that many combatants in the cantonments fell ill during the recent monsoon season. They have frequently complained of lack of government support in three critical areas - in meeting the food requirements of the combatants because of the low daily allowance, in the availability of clean drinking water and in the provision of adequate health facilities. The new Government has reconstituted the Cantonment Management Committee under the chairmanship of the Minister of Peace and Reconstruction, former Maoist army Deputy Commander Janardan Sharma "Prabhakar"; the Committee is expected to address the issue of improving conditions in the cantonments, and has decided to increase the daily subsistence allowance to the combatants.
16. The substantial arrears in payments of monthly salaries to verified combatants has been a long-standing source of grievance for the Maoist army, linked by the previous Government to the failure of the Maoists to return property they seized during the armed conflict. The outgoing Government released three-month salary payments in August. The new Government has now released the 12-month arrears for the period to August 2008, and has decided to increase the monthly payment.
17. UNMIN and the United Nations Children's Fund (UNICEF), as well as my Special Representative for Children and Armed Conflict, have continued to insist upon the urgency of fulfilling the commitment to discharge from the cantonments those who were minors in May 2006, along with other personnel disqualified by UNMIN verification. Maoist ministers have stated that there is no political hurdle to the discharge going ahead as soon as they are satisfied that appropriate arrangements are made to support the reintegration of those discharged. UNICEF, the United Nations Development Programme (UNDP) and UNMIN are engaging the Ministry of Peace and Reconstruction in order to discuss United Nations preparations to assist, which are already of long standing.
Other challenges affecting the peace process
18. Many other peace process commitments were not implemented before the Constituent Assembly election of 10 April 2008 or the change in government, and remain unfulfilled. These include compensation to victims, investigations into the fate of those who disappeared, return of displaced persons and property seized during the conflict, and the establishment of several commissions provided for in the peace agreements. The new Government has reiterated most of those commitments and has reflected them in its budget, but commitments regarding the return of property and reform of the Young Communist League remain of particular concern to critics of CPN (M), as does the commitment to equitable compensation to all categories of victims of the conflict.
19. The peace process faces continuing challenges at the local level. There has been considerable competition between party cadres over control of local development budgets and district-level tender processes for State-funded programmes. Donors have expressed concern about possible improper intervention in the process of funding development and reconstruction programmes. Such interventions have resulted in a number of clashes, particularly in hill districts. Most have reportedly been initiated by the Young Communist League. Other political parties have also activated or formed new youth wings. The UML Youth Force, in particular, has been involved in activities claimed to prevent corruption, as well as competition for control over local-level decision-making and resource allocation. There have been several clashes between cadres of the youth wings and these could escalate if effective local authority is not soon put in place. The Government is committed to establishing interim multiparty local government bodies, as well as local peace committees, which have so far been effective in only a few districts.
20. Rule of law remains particularly weak in the Tarai, where abductions and killings are continuing and the distinction between politically motivated incidents by illegal armed groups and criminal actions is becoming increasingly blurred. On 2 October the Government decided to extend an invitation to talks to Tarai armed groups, some of which had declared a ceasefire for the festival period, and appointed a team of three ministers to enter into dialogue with them.
21. During the reporting period, a series of strikes and other protest actions over a range of issues caused significant disruption and economic loss. These included protests over the Vice-President's decision to take the oath of office in Hindi instead of Nepali, price increases and shortages of fuel, food and other commodities, transportation-related problems, seizure of land by Maoist cadres, opposition to the establishment of a federal and secular State, and budget cuts for festival-related expenditure.