In a speech that is seen as a significant statement of current US government thinking on Nepal, US Deputy Assistant Secretary of State Donald Camp told a conference in Washington last week that "from a humanitarian standpoint alone, the US does not wish to see (the Maoists) prevail". He was speaking at a 1? hour meeting in Wasington DC on 28 February titled "Preventing a Communist Overthrow of Nepal" organised by the conservative think tank, Heritage Foundation. The panel also had Dinesh Bhattarai of the Royal Nepali Embassy and Chitra Tiwari, who recently interviewed Baburam Bhattarai for the rightwing Washington Times newspaper. In a statement to media, the Maoists reacted strongly to Camp's reference to the Khmer Rouge, saying it was "motivated and ill-intentioned". Significantly, Camp twice draws attention to the fact that Washington is coordinating its Nepal policy with New Delhi.
US concern with events in Nepal has increased over the past couple of years, and our assistance levels have gone up accordingly. In January 1951, we became Nepal's first bilateral donor. Since then we have contributed more than $1 billion bilaterally and multilaterally to Nepal. Over the decades we have helped to virtually eradicate malaria from the tarai, diversify agriculture, lower child mortality, and attract investment in hydropower.
Nepal hosts one of the largest Peace Corps contingents in the world, and former Nepal Peace Corps Volunteers seem to turn up in all branches of government and many areas of business. We have watched Nepal evolve from a closed, rigid, monarchy-dominated society into a budding democracy, open to the world. Unfortunately, as we all know, the Maoist insurgency that has plagued Nepal for the past seven years threatens to destroy so much of this progress.
We welcome the announcement of the ceasefire, which we hope will lead to the peace that all Nepalis desperately want and need.
The Maoist insurgents in Nepal have ruthlessly shattered security throughout the country-particularly in the countryside. In their attempt to overthrow the government and replace it with an autocratic, single-party state, the insurgents have destroyed schools, tortured and killed civilians, bombed buildings, looted food from humanitarian aid projects, devastated infrastructure and forcibly conscripted children. An estimated 40 percent of rural government infrastructure has been destroyed. Last month's ceasefire is a big step in the right direction, but we must remain on guard-after all, the Maoists broke a similar ceasefire in November 2001. From a humanitarian standpoint alone, the US does not wish to see these insurgents prevail.
But the Maoists threaten US interests for other reasons as well. The leadership has made clear that it seeks to replace the constitutional monarchy with an absolutist communist regime-one that would be overtly hostile to the United States. Recent Maoist statements defending the Khmer Rouge give one indication of the kind of instability and humanitarian catastrophe that might follow a takeover. Such a development could destabilise the wider region, and Nepal could quite easily turn into a failed state, a potential haven for terrorists like that which we have transformed in Afghanistan. This possibility is made more acute by Maoist statements expressing common cause with other South Asian extremist groups sharing similarly violent agendas.
We are meeting this challenge with an integrated strategy that involves a number of elements. On the assistance side, we are increasing our development aid to Nepal, in an effort to alleviate the legitimate grievances that helped give rise to the Maoist insurgency in the first place. At the same time, we have begun supplying the government with security aid intended to give the Royal Nepal Army the ability to contain the Maoist threat-including rifles, basic equipment, and military training. This combined assistance strategy, along with our political and diplomatic efforts, is designed to help create a more secure environment in which Nepal can continue its badly-needed socio-economic development, as well as to stave off a Maoist victory, convince the insurgents that they cannot win militarily and pave the way for a political settlement.
The economic development element of our strategy is crucial. The insurgency is fueled by grievances over corruption, vast inequalities in opportunity, access to government services, and poverty, and any real solution must address these problems. In FY 2002 and 2003, we will provide Nepal with over $70 million in development assistance, a portion of which will support local development to create needed employment. Engaging Nepalis at this level helps to inculcate democratic norms and ensure that our money is getting to the people who need it most. Another portion of our development assistance will support the government's efforts to reassert its authority in rural areas, allowing NGOs to work more effectively. 
While the development aid is the greater part of our assistance program, it is our security assistance that has received the most attention lately. The Royal Nepal Army is a dedicated, professional fighting force, but is sorely under-equipped and in need of specific training. In coordination with other donor countries, including India and the UK, we have begun helping the RNA to meet its critical basic needs. The US military assistance budget to Nepal is $14 million for FY 2002, aid that will help the government reestablish control in the countryside and persuade the Maoists to lay down their weapons and work peacefully toward a political solution. Connected to this aid are steps that encourage human rights improvements among the security forces. We have unfortunately seen an unacceptable number of abuses over the last year-on both sides. The US has successfully pushed for the establishment of a human rights cell within the RNA, and all of our joint exercises undergo comprehensive human rights vetting before they can take place. At the same time, the training we provide to the military and civil police includes a human rights component.
Behind our development and economic assistance programs lies a diplomatic and political strategy designed to keep the Maoists and the government talking. Unfortunately, differences between the palace, the interim government and the political parties threaten to undermine the chance for dialogue that the ceasefire provides. The dangerous situation facing Nepal is no time to let such differences prevent a unified front. We are encouraging all sides that support multiparty democracy and the constitutional monarchy to work together, for the good of the nation.
We have other political instruments at our disposal as well. So far, the US government has not included the insurgents on any of its terrorism designations, but we have made clear that we reserve the right to do so. In addition, we are coordinating our political and aid efforts with other donor countries. Our diplomatic personnel in Kathmandu have taken the lead in intensive dialogue with their counterparts from India and the UK, and in regular consultations with other missions. Indeed, it has been said that Nepal is one part of the world in which Indian, Chinese and American interests are in almost perfect consonance. Our complementary policies will encourage a political settlement, assist in alleviating the root causes of the insurgency and help bring peace to Nepal. The United States unambiguously supports a political solution to the crisis in Nepal.
We believe that the recent Maoist decision to talk, rather than fight, is a tangible demonstration of our policy success. A number of elements undoubtedly informed the decision to suspend hostilities, but we believe that the international community's support for the government-including our own security assistance-played a key role. We will continue to help Nepal defend itself, and will maintain our assistance programs to ensure that the Maoists remain convinced that violence is not the answer. Whether or not this ceasefire holds, we will support the government in its efforts to retain control of the country and protect the Nepali people.
The Maoist insurgency has seriously exacerbated the tremendous challenges Nepal already faces in strengthening its young democracy and developing economically. The United States faces a number of foreign policy challenges around the world, and Nepal is on this list. We keep our eyes on the situation daily, and work constantly to ensure that our policies pursue US national interests and the interests of the Nepali people.
In close coordination with India and Britain, we plan to continue our efforts to help Nepal right itself, end the violence, and return to the path of peace and democracy."
