Washington: US Secretary of State Condoleezza Rice says Washington is working in close cooperation with India on the possibilities of a peace agreement in Nepal that includes a demobilisation or a disarmament of Maoist rebels.

"Well, our closest international partner in working on affairs in Nepal is India, where we have very close cooperation," she told a House appropriations subcommittee at a hearing on the International Affairs Fiscal Year 2008 budget.

0US ambassador to Nepal, Jim Moriarty, Rice said, has worked with the Nepalese through an extremely difficult period in which US was trying to get the government to be more responsive to the possibilities of a peace agreement.

"I think there is a little concern now that any peace agreement makes certain that there is a demobilisation or a disarmament of Maoist rebels, so that is the peace that is being worked through. But the situation is still, I would say, somewhat tenuous there, though there are possibilities," she said.

Responding to a question from Republican Ander Crenshaw, Rice said she recognised the problem of the Bhutanese not being able to go back and not wanting to stay in a refugee camp. She believed Bhutanese refugees are covered under US general refugee policy, but promised to provide the committee an update on the issue.

Crenshaw spoke of the plight of some 110,000 Bhutanese refugees at a settlement camp in East Nepal where they had spent almost a generation, 17, 18 years and asked about the possibility of some of those refugees being resettled in the United States.

"They very much wanted to go back to Bhutan. We went on to Bhutan and talked to the leadership there, and there's not much hope that they will change their mind, they're pretty set," he said seeking a brief about their situation.