PM Sher Bahadur Deuba reappointed by King Gyanendra 2 June after political parties failed to agree on candidate to replace former PM Surya Bahadur Thapa. Opposition parties split on support for Deuba. Main opposition communists, called for constitutional convention, agreed 30 June to join Deuba’s government. Maoist leadership rejected Deuba appointment. Nepali Congress president Girija Prasad Koirala refused to join government, continued to call for return to multi-party democracy. Bomb exploded in Kathmandu Indian-run school in apparent enforcement of indefinite school and college strike called by Maoist student group. Deuba claimed willing to hold ‘meaningful dialogue’ with Maoists in 9 June address to nation. Clashes between Maoists and Armed Police Force (APF) continued, as did Maoist abductions. Thirty-five APF and 4 civilians killed in separate Maoist attacks in western Nepalgunj district 14,19 June.

Pakistan’s PM Zafarullah Khan Jamali resigned 26 June under pressure from President Musharraf and dissolved cabinet. In 2-step succession plan, premiership will pass to outgoing finance minister Shaukat Aziz, after interim period of 45-50 days under leadership of Chaudhry Shujaat Hussain, who heads ruling pro-military Pakistan Muslim League party. Jamali’s removal signifies Musharraf’s desire to improve his government’s domestic image, and to also retain Western support through Aziz’s appointment. Major South Waziristan military operation against al-Qaeda suspects and local supporters left 72 dead, including 17 security officers. Operation launched after foreign militants killed 15 security officers near town of Shakai, 350km west of Islamabad. Pakistan continued tests of nuclear-capable Ghauri ballistic missile 4 June.

Unexpectedly smooth election process concluded 23 June as Congress declared President Gloria Macapagal Arroyo winner of 10 May elections. Supporters of defeated Fernando Poe Jr. protested against result, claimed fraud. Post-election security fears heightened as 3 explosive devices found in Manila outside Catholic church, interior and defence department buildings 20-21 June. National security adviser Norberto Gonzales said new government to give leaders of Moro Islamic Liberation Front less than 6 months to expel 30 Jemaah Islamiah members believed to be using its hideouts in southern Mindanao island. Government held talks with Communist National Democratic Front (NDF) in Norway 22 June. Talks focused on social/economic reforms, support from government for removal of NDF from EU and U.S. terror lists, and release of prisoners. No significant advances - talks to resume in August.

Peace process remained stalled. 2002 ceasefire between Tamil Tigers (LTTE) and government at risk as latter admitted elements of military unofficially supported breakaway LTTE rebel commander V. Muralitharan, aka Karuna. LTTE political wing leader S.P. Thamilselvan told Norwegian envoy Erik Solheim 30 June peace process would not go forward. President Kumaratunga’s government 5 seats short of simple majority, unable to press ahead with legislative agenda.

Tension across Strait remains despite softening of Taipei rhetoric since March presidential election. Chinese media lashed out at U.S. following Pentagon report noting argument that Taiwan could deter Chinese military action by threatening strike on high-value targets, including China’s Three Gorges dam.

Violence continued in restive south. In policy about- face PM Thaksin Shinawatra announced government to form panels of villagers and officials to work on security and development and cancelled talks with Bersatu, Muslim separatist umbrella group. 3,000 teachers demonstrated for improved security after teacher in Pattani province shot dead in front of students 7 June. At least 5 policemen, 1 soldier and village leader killed in separate incidents.

Preliminary border agreement signed with Indonesia at meeting of Association of South-East Asian Nations in Jakarta 30 June. President Xanana Gusmao’s government not to pursue UN prosecutors’ arrest warrant for Indonesian presidential candidate Wiranto (indicted for crimes against humanity).

Political instability intensified. Opponents within ruling Socialist Party of PM Fatos Nano, led by former PM Ilir Meta, launched Socialist Movement for Integration campaign 14 June, and reportedly threatened to form new party. Opposition Democratic Party also facing challenge to support-base from new monarchist Movement for National Development party. Political manoeuvring - likely to intensify up to May/June 2005 elections - continued to undermine any progress toward EU’s Stabilisation and Association Process.

Opposition announced protest campaign to remove President Robert Kocharian would be suspended for foreseeable future due to insufficient public support.

Armenian and Azerbaijani forces exchanged fire in several incidents 6-8 June, killing at least 2. Peace talks remain frozen.