Nepal's prime minister, rebel chief hold first talks

KATHMANDU, June 16 (Reuters) Nepal's Maoist rebel chief Prachanda began talks with Prime Minister Girija Prasad Koirala today in a bid to iron out differences before holding landmark elections and drafting a new constitution.

The talks in Kathmandu between Koirala, who heads a multi-party, interim administration, and Prachanda was the first known high-level meeting between the rebels and the government since the revolt began 10 years ago.

''The main agenda for the meeting is to discuss early elections for the constituent assembly and solve the political hurdles for this,'' rebel spokesman Krishna Bahadur Mahara said.

The two leaders, assisted by their negotiators, talked for two hours before leaders of Nepal's seven main political parties joined them.

Prachanda, whose assumed name means Awesome, has led a bloody war against the monarchy in the impoverished Himalayan nation in which more than 13,000 people have been killed.

Speaking to Reuters in a rare interview in western Nepal yesterday, he said peace talks with the government which started in May were largely back on track after initial troubles.

But differences remained over disarming the rebel army and a Maoist demand for dissolution of the reinstated parliament before elections for a special assembly, he said. The assembly will draft a new constitution to decide the future of the monarchy.

Prachanda flew into Kathmandu today in a private helicopter and drove straight to Koirala's high-security official residence in the heart of the capital.

LASTING PEACE? He was accompanied by his second-in-command, Baburam Bhattarai, and Home Minister Krishna Prasad Sitaula as they arrived at Koirala's house.

Soldiers stood behind sandbag bunkers while dozens of Maoist guerrillas in plainclothes, and apparently unarmed, prevented media cameramen from taking pictures.

The government and the rebels are observing a ceasefire for more than a month after weeks of street protests in April forced King Gyanendra to end his absolute rule and hand power back to the seven mainstream political parties.

The Maoist insurgency and the subsequent political turmoil in Nepal has badly hurt the economy of the country, one of the world's 10 poorest which lives off aid and tourism.

It has also forced tens of thousands of people to flee the violence in the countryside and take refuge in the cities or in neighbouring India.

Some Kathmandu residents hoped the talks would bring lasting peace to the troubled nation, tucked in the mountains between Asian giants India and China.

''I pray that the talks are successful,'' said Tara Achhami, a 30-year-old labourer at a construction site not far from the prime minister's house.

''Many mothers have shed tears and many children have become orphans. That should end now,'' she said.

Others were not as optimistic and said the talks would take long to succeed.

''I don't think both sides are sincere,'' said Shyam Sundar Shreshta, 31, a private company executive.

''The parties are fighting for their posts while the rebels are putting up a list of demands,'' he said.

REUTERS SHR RAI1309