Ramesh Nath Pandey, the man appointed foreign minister by the king, met the then American ambassador to Nepal, James Moriarty, saying the royal regime wanted a long-term relationship with the US and would respond better to "engagement" rather than pressure.
The American ambassador emphasised that the Congress was considerably concerned about the Tibetan refugees escaping to Nepal from China-held Tibet and urged the royal minister to ensure the refugees' transit was proceeded without hindrance.
At time, there were about 1,000 Tibetan refugees at the Tibetan Refugee Reception Center, that facilitates the forward journey of the refugees to India and other countries, and the envoy said Nepal needed to make sure that the process of transiting refugees to India resumed.
The US had earlier proposed it would resettle the Tibetan refugees in Nepal in American cities but the proposal remains stuck officially after Nepal declined, due to Chinese pressure.
The ambassador also pushed for an NGO - the Tibetan Welfare Society - to be given registration. The society, believed to be a new form for the office of the Dalai Lama's representative in Nepal, was shut down in January 2005.
The leaked cables said the Nepal minister's response was ambiguous.
He first said Nepal needed to have a close relationship with the US and then indicated that given the Chinese support, Nepal might not act on the issues raised by the ambassador unless Washington changed its Nepal policy.
The king's messenger reportedly said Nepal's long-term interest was in a relationship with the US, not China or India. He also claimed that though India and the US had stopped providing military assistance to Nepal after the coup, "Nepal would not be short of arms" and that "a plane of material from one of your best friends" would arrive.
The American ambassador advised the king, who was waging a war on the Maoists with little result, to declare a cease-fire with international monitoring and to reconcile with the political parties.
The royal minister countered that saying the party leaders were a major problem and the king should bypass them and ally with middle-tier leaders. He also said the Maoists would exploit the parties against the king and dump them when they had their way.
The ambassador noted that Pandey's proposal meant "essentially... decapitating the parties and was unacceptable".
The ambassador also emphasised that Tibetan refugee issues were one of the administration's and Congress's key concerns regarding Nepal, and if there were no progress, Nepal could put at risk other parts of the relationship, including development
The new revelation comes even as the controversial memoir of a former military secretary to the palace claimed China wanted Nepal to deploy its army to prevent Tibetan refugees from escaping and proposed the army should be strengthened for that.