US aid threat angers Nepal rebel

Prachanda's group could join an interim government

Maoist rebels in Nepal have accused the United States of trying to undermine the peace process.

Washington has threatened to withhold aid to Nepal if the rebels join an interim government without giving up their weapons first.

US ambassador James Moriarty said his country considered the Maoists to be terrorists, despite their ceasefire.

Negotiations are under way for the Maoists to join an interim government ahead of elections next year.

More than 13,000 people have been killed since the rebels began their revolt against the Nepalese monarchy 10 years ago.

Accusations

"If the Maoists continue to use violence and then enter the government, our law says we can't supply assistance to those who support [terrorism]," Mr Moriarty told reporters in Kathmandu.

Even now, they [the US] are creating an atmosphere of suspicion and trying to stop a peaceful atmosphere from building up Prachanda

"We have to consider [the Maoists] a terrorist group until they give up arms."

The US gives $45m (£24m) a year in aid to Nepal.

Maoist leader Prachanda accused the US envoy of not wanting peace in Nepal and of creating an atmosphere of suspicion between the rebels and the governing parties.

Washington, the UN and some politicians say the rebels have killed several people during the current ceasefire.

The Maoists admit to only one such killing and say the perpetrator is being punished.

While the government has declared an indefinite truce the rebels have not yet said their ceasefire will last beyond late July.