go to a website for Dr. Raul Nath... he's a specialist in this area.
First of all, keep in mind that I am unable to diagnose you because I am unable to examine you, this forum is for educational purposes.
The nerves that go to the arm (C5-T1-brachial plexus) and the nerves that go to the diaphram (C3-C5-phrenic nerve) originate from the spinal cord at the level of the neck, then pass under neath the clavicle to their targets in the arm/chest respectively. When a traumatic birth occurs, the baby gets stuck in the birth canal (usually at the symphsis pubis) and great force is often needed to remove the baby. When the head is pulled, it stretches the nerves that are going to the arm/diaphram and can cause injury. the worse type injury is called avulsion injury, where the nerve roots are torn away from the spinal cord, this is the worst injury and does not recover. Second is a rupture injury, where the nerve is torn, but not completely, an prognosis is variable. The most common is the "stretch" injuries that can have different degrees of severity, but most recover in 3-6 months. Brachial plexus injuries are one of the most common obestrical injuries and they are sometimes associated with phrenic nerve injury as well. There are also other possibilities that should be considered by your doctors, including brachial plexus injury in utero by amniotic bands, infection such as chicken pox and/or uterine positioning (although these are much more rare). An EMG done in the first week can differentitate in utero vs birth trauma). Now at 35 days (It takes 3 weeks to evaluate birth trauma), an EMG can help to quantify the extent of damage, (axon loss vs demyelination/conduction block- effects of the stretch). The head moving is controlled by cranial nerve XI (spinal accessory nerve->sternocleido mastoid muscle) as well as support from cervical muscles and may be partially affected by the injury.
It is unfortunate that your nephew has had this complication, but you are not alone, this is a fairly common injury, overall. I would trust your doctors opinion about the surgery, and I hope all goes well.
I hope this has been helpful.