Military

`DATE=05/07/04

TYPE=CORRESPONDENT REPORT

TITLE=NEPAL/RESIGNATION (L-ONLY)

NUMBER=2-315703

BYLINE=PATRICIA NUNAN

DATELINE=NEW DELHI

CONTENT=

VOICED AT:

/// EDS: Please watch CN wire to update intro as needed. ///

INTRO: Nepal's prime minister has offered his resignation after 11 months in office, amid weeks of violent protests in the capital. Surya Bahadur Thapa announced his decision on state-run television and radio, but it is not yet clear whether the resignation has been accepted by the king. V-O-A's Patricia Nunan has more from New Delhi.

TEXT: Prime Minister Surya Bahadur Thapa says he is stepping down to protect democracy in Nepal, and to pave the way toward peace in the troubled nation.

Mr. Thapa's decision comes after weeks of violent protests in Nepal's capital, Kathmandu. Student groups, linked to five political parties, have been calling for the removal of the current government.

Nepal has been in political turmoil since King Gyanendra fired the former prime minister in October 2002, used his executive powers to dissolve parliament and appointed a new government, including Mr. Thapa last June.

The editor of the weekly news magazine, "Samay," Yuvraj Ghimre, says he believes the king sacrificed Prime Minister Thapa to appease those political parties.

/// GHIMRE ACT 1 ///

Their main demand was that the government should be removed first. And after that, the process of reconciliation between the king and agitating political parties could begin. The king has basically accepted their demand.

/// END ACT ///

Mr. Ghimre says it is too soon to tell whether Nepal's political situation will stabilize. It will depend on whether the five rival political parties and the king reach a consensus on who is to be appointed the new prime minister.

/// GHIMRE ACT 2 ///

If that doesn't happen, then the political party in power will always have to face protests of other political parties, which don't have, which could not get, the share in power.

/// END ACT ///

The political conflict in the capital is set against the backdrop of an eight-year insurgency in the countryside, where Maoist rebels have been fighting to overthrow the government.

Aid donors to Nepal have warned that peace cannot be achieved with the rebels, until a solution is found to the political crisis in Kathmandu. (SIGNED)

NEB/HK/PN/JJ/TW