Road to progress

This article was first published in The Kathmandu Post, Jun 7, 2015.

In the aftermath of the April 25 earthquake, a section of people have already started discussing if Nepal would repeat the fate of Haiti and become more vulnerable and poorer in the future. But given Nepal’s geographical position, its youth population and other factors, such a bleak outlook seems improbable.

Demographic dividend

If nothing, Nepal is blessed with well-educated young generation that is well aware of the

country’s political situation, global trends and development debates. Similarly, even those

deprived of quality education are toiling hard in the Middle East. In fact, the remittance they send

back to the country is the backbone of Nepal’s economy.

What makes Nepal different from many other poor countries is that it has a vocal civil society, a

politically-aware young generation, a pushy media, and vibrant public debates on subjects

ranging from governance to feminism. Nepal has two ambitious neighbours that support it and

the goodwill multiple countries, including Japan, the UK, and the US. The only thing that seems

to be largely missing is a coordinated, consistent and visionary political leadership and an efficient

bureaucracy.

Additionally, Nepal’s unique geographical position could prove to be lucrative for the country’s economy. Both its neighbours, China and India, aspire to become world leaders, and it is not in their favour to let their immediate neighbour remain poor. This is the opportunity that Nepal needs to tap.

Geographic dividend

India and China were active in  rescue and relief efforts in Nepal. This effort, it is believed, will

continue throughout the long-term reconstruction process as well. Even the lingering doubt of

whether China and India would work together in Nepal was clarified when Indian Prime Minister

Narendra Modi made it explicit in his speech at Tsinghua University in Beijing, during his recent

visit to China, that Nepal would be their common priority. The Asian Infrastructure Investment

Bank (AIIB), which is likely to come into operation soon, has China and India as its largest

stakeholders. Right after the quake hit Nepal, damaging more than one-third of the country’s

GDP and taking more than 8,000 lives, a section of policymakers and development activists in

Asia started arguing that the AIIB should launch its first development project in Nepal. This could

indeed be possible given that the two largest shareholders of the bank are well aware about the

dire need for reconstruction in Nepal.

If Indian and Chinese leaderships are serious about pursuing an Asian Century, they cannot let

countries like Nepal remain poor. Though India might still have some misgivings about Chinese

investment in Nepal, it should realise that Indian foreign direct investment alone will not be

adequate for Nepal’s infrastructure development at this point.    

Similarly, Japan’s Prime Minister Shinzo Abe has announced that his government and the Asian Development Bank (ADB) would together provide $110 billion in the next five years for ‘innovative’ infrastructure development in Asia. Although this has a lot to do with the China-Japan rivalry, Nepal should be able to use this rivalry between the two Asian powers for its own benefit. Both the ADB and Japan have already invested in Nepal’s infrastructure development, including hydropower projects. This investment should be diversified to other sectors as well. Similarly, assistance from European countries for social development and education will certainly go up in the coming days

Plan to succeed

The Nepali government has already announced that it will host an international donor’s

conference to collect funds worth around $2 billion for long-term reconstruction projects. During

the conference, the government should be able to come up with a sound plan. Further, the Nepali

government should coordinate with all the major stakeholders, countries such as China, India,

Japan, the UK and the US and different development agencies.

If Nepal does aim to become a shining example in the future, it has to be a place where young

Nepali people who have been forced to labour in the Middle East can return and make a fortune

in their own country. Nepal has the opportunity to become a successful example in the world, a

thriving economy, by utilising this crisis and its geographical location to its own benefit.

It is easy to be pessimistic when an unimaginable disaster hits the country, but every crisis should be a learning opportunity for us to move forward. This is the time to rebuild our country in such a way that our next generation will not have to live in the fear of another devastating earthquake.

What matters the most at this moment is how much sincerity Nepal’s political leadership can display and how well they can coordinate with each other and lead the country. The extent to which China, India and other development partners demonstrate their interest in helping Nepal rebuild its infrastructure and enhancing the capacity of its institutions will also matter.

Most of all, it is the responsibility of the Nepali leadership to work together with the Nepali youth to build the nation.

Poudel is a researcher at ThinkIN China, an academic community in Beijing

Time to act

First published in Republica Daily

Regulating NGOs
In June 2013, leaders of Nepal’s political parties—except UCPN (Maoist)—jointly issued a press release against the then government’s decision to upgrade the capacity of Upper Trishuli III ‘A’ hydropower project from 60 to 90 megawatts. The press release was prepared in a Kathmandu based office of an INGO working in Nepal. Finance Minister Dr Ram Sharan Mahat was one of the senior leaders in the meeting and had signed that release.
The event was reported by all the major news media. Since upgrading the capacity of the project was not in the favor of country’s economy and power sector, the press release was seen as having good intentions and the move was, quite rightly, not questioned by anyone, including the media. But the question arises: Why did senior leaders of major political parties issue the press release from an INGO office?
What’s wrong in doing that in a country where more than 60 percent of the fiscal budget comes from donor agencies, you may argue. You are right in a way. But it raises some serious questions: Aren’t we an independent nation? Don’t we have to deal with our issues ourselves? What sort of development practice are we undertaking? What is the distinction between government agencies, political parties and I/NGOs? What is their role in country’s development? How should they be working and what kind of moral and ethical codes should the political parties follow when it comes to I/NGOs?

Dr Mahat, who engineered the development plan that yielded record high economic growth rate and created an environment for entrepreneurship post-1990, has recently assumed the office of Finance Minister for the sixth time. But we must not forget his inability to limit the level of corruption which partly caused the increase in the gap between the rich and the poor. This created a fertile ground for Maoist insurgency. Now is the right time to ask him about his policy toward I/NGOs as well as bilateral development agencies that are hesitant to funnel money through government mechanisms.
It is an understood fact that the Maoists exploited massive inequality in the country in order to further their movement. Former Prime Minister Baburam Bhattarai, the chief architect of Maoist insurgency, drafted his political-economic rationale based on inequality that could not be addressed in post-1990 development. The result of the recent election, where Nepali Congress and CPN-UML emerged as the two major parties, is not a mandate for them to hobnob with the elites and sideline the marginalized people. While democracy and capitalistic system are the most convincing systems in the modern development course of the world, it should not be an instrument to create a vacuum, again, for another kind of ‘unjust’ society.
Development institutions like World Bank and Asian Development Bank are trying to help Nepal build infrastructure that the country needs at this moment. There are other genuine bilateral development partners, who are our long-term friends, and who definitely want to see Nepal become a prosperous country. But we should think about I/NGOs that work without much of a rationale to their work. It might be hard to make a black and white judgment about their contribution in country’s development but political leaders should try to stay away from these sorts of I/NGOs.
There might be an argument that these I/NGOs are a part of civil society. But the question has already been raised about funded organizations being part of the civil society. It becomes more and more difficult to draw a line between a genuine development-oriented organization and a mere propaganda machine of some group when it comes to I/NGO movement. The question, again, is what kind of moral and ethical ground can be built to have a meeting to issue a press release against the government’s decision in an office of an INGO. Moral and ethical questions may sound vague, but we have the right to expect answers from our leaders. Who in today’s society can show a sense of morality and ethical behavior if the leaders cannot?
It is not justifiable to put all I/NGOs in the same basket but what is our standard to measure them and figure out which one is working in whose interest? Mahat is right in what he has written in his book In Defense of Democracy: Dynamics and Fault Lines of Nepal’s Political Economy about the loss of Arun III because of INGOs against the project. What about his attitude towards I/NGOs now? Are politician Mahat and author of the book two different people?
The incumbent government, particularly Finance Minister Mahat, has shown an unprecedented interest and enthusiasm in hydropower sector since the formation of the government. It’s appreciable. It is also true to a large extent that the economic decision that made by this government will be an outcome of what Mahat believes in and does. For that matter, it is important to ask him some fundamental moral questions at this time. Any small mistake that we make now will have a long-lasting impact in country’s economic course.
This one case in the hydropower sector demonstrates how we largely fail to comprehend the dynamics of development. Development and prosperity are more accessible to a large section of people in a free and democratic society. But the execution of programs and policies should be done carefully.
In this backdrop, we also have to be considerate about the difficult coalition government and its limitation. But that does not give the leaders an excuse to be too accessible to I/NGOs in the country. The present government has to be bold enough to ask all the bilateral development partners including India to spend development aid through the Red Book of the Finance Ministry. This will not only help us be more transparent but also develop a system that will be institutionalized in the long run.
Lastly, we have to learn from African country Lesotho. It is still a poor country despite the fact that it has been receiving development assistance from more than 30 developed countries and is a hub of I/NGOs in the name of development. According to the anthropologist James Ferguson, the people of Lesotho have been subject to experiment and the joy-ride of development money. Let’s hope Mahat will not let the Nepalis be subject to similar experiment for ‘development anchors’.

On wrong track

First published in Republica Daily

Nepal-China-India
Last January, the Department of Industry (DoI) released updated statistics showing that China had overtaken India to become the largest contributor of foreign direct investment (FDI) to Nepal over the previous six months. Does this increased FDI inflow from China mean anything at all, or is it just another statistic? Is it time for Nepal to rethink its economic and political ties with its two giant neighbors?
Yes, we believe this is the right time.
It is naïve to believe that China and India are interested in a prosperous and stable Nepal. The only thing they care about is their interests, whether security-related or geostrategic. The idea of being a ‘vibrant bridge’ between the two rising economies seems a distant fantasy, since Nepal can neither bring them to a common table, nor are they interested in any such mechanism.
Traditionally, compared to China, Nepal has been much closer to India. But Nepal needs to revisit at least the last few decades and evaluate what it gained by being closer to India. Nothing!
If Nepal wants to speed up its economic development by attracting FDI from both China and India, first it has to maintain ‘equi-proximity’ with the two neighbors. Nepal needs to work on scientific management of its border with India, and India needs to support Nepal in the same since border issues have been a major problem for both the countries.
The establishments of China and India are not very interested in dealing with Nepal and acknowledging it as a partner in development. Rather, both of them are inclined to deal with Nepal through their intelligence agencies and bureaucracy. Nepal has to understand this and be firm in dealing with its neighbor with clarity and respect. This is also the reason Nepal should maintain an organized border with India.
It can be argued that Nepal has gained a lot from the open border, but it has also lost a lot. In bilateral talks, Indian officials use issues of illegal re-export of beetle nuts and Chinese umbrella to Indian market to bully Nepali government officials. It is reported that Nepali businessmen import lentils from India and re-export to Bangladesh. Officials at Indian Embassy in Kathmandu try to humiliate Nepali officials for letting businessmen carry out these illegal imports, but do not take action against Indian businessmen who export those lentils illegally in the first place.
The South Block does not hesitate to deploy officials in its Kathmandu embassy to deal with journalists, opinion makers, and of course, businessmen and political cadres. Officials at the Indian Embassy allegedly distribute money from their drawers. But their beneficiaries would rather cover their eyes than admit this dirty truth.
Coming to China, it does not seem interested in dealing with Nepal as a special case and as a neighbor. Rather, it puts Nepal in the basket of ‘least developed countries’ along with many African countries. A good example is China’s decision to provide zero-tariff facility to 7,787 goods and services from all LDCs. China does not give any special treatment to Nepali goods and services—in which Nepal has comparative advantage—that it does not give to other LDCs. China is more interested in African countries to counter the West and prove its rising economic and political power in world politics.
In September 2013, Prof Wang Jisi from Peking University gave a talk in Beijing, China’s dilemma: marching West, thinking East. He mentioned India and other neighboring countries like Burma several times as he talked about China’s development, its foreign policy and neighbors, but there was no mention of Nepal. When asked about his views on Nepal, he briefly stated that Nepal is important to China because of Tibet. This shows that China and Chinese scholars are not much interested in Nepal.
Nepal neither has military strength to compete with its neighbors, nor the ability to deploy intelligence officials in Beijing, Delhi or border areas. Being a poor country between two giants, it has let itself be used by its ‘friendly neighbors’. Sometimes, they seem gentle and sometimes anything but..
Political parties should understand that the country’s future relies largely on their policies. They are the ones who should steer the country’s economy and politics.
The China-Nepal-India trilateral cooperation proposed by Nepal in 2010 has been taken very lightly in both Beijing and Delhi. That means neither country is ready to sit down with Nepal again. China and India are emerging giants in world politics. The two compete in many areas, from trade to military strength. Nepal should understand there is no space for it in the same table. It should not take any kind of action to please the southern neighbor at the cost of alienating the northern neighbor, or vice-versa.
Nepal should understand that having a scientifically organized border with India and allowing Chinese investors into Nepal without the fear of India is the only way of filling the infrastructure gaps. If Nepal allows India to build a 1,450 km highway in Tarai with its own contractors, then why not let China build a railway network in northern Nepal?
This does not mean Nepal should allow its land to be used by either power as they want. But if it wants to maintain equidistance with its neighbors, it should be more organized in dealing with India. The long relationship with India didn’t help us develop, but rather made Nepal more vulnerable, both politically and economically. Now it is time to be more professional and diplomatic with both neighbors and focus on building the country’s economy.
Poudel is a graduate student at Tsinghua University and Sapkota is a PHD candidate at Renmin University in Beijing

Nepal Gets $ 1 billion Remittance in 2 Years

Nepal has gained around $ 1 billion amount of remittance within two years (2009 to 2011). This amount is quite bigger than the total amount of foreign aid that comes to Nepal. In 2009 Nepal had gained $ 2.985 billion and now in this year the total amount of remittance that comes to Nepal is estimated to be $ 3.951 billion. This amount is 23 % of our total budget of Nepal’s yearly budget in 2011/2012.

This is quite interesting to see that the 23% of our total budget comes through the remittance but we hardly can see any significant uses of it in the development sector. The remittance has been a driving force for the sustainability of Nepali economy.

• Remittance flows to developing countries are expected to total $351 billion this year.
• Worldwide remittances, including those to high-income countries, will reach $406 billion for the current calendar year, according to a newly updated World Bank brief on global migration and remittances.
• The top recipients of officially recorded remittances, estimated for 2011, are India ($58 billion), China ($57 billion), Mexico ($24 billion), and the Philippines ($23 billion). Other large recipients include Pakistan, Bangladesh, Nigeria, Vietnam, Egypt and Lebanon.
• While the economic slowdown is dampening employment prospects for migrant workers in some high-income countries, global remittances, nevertheless, are expected to stay on a growth path and, by 2014, are forecast to reach $515 billion. Of that, $441 billion will flow to developing countries, according to the latest issue of the Bank’s Migration and Development Brief, released today at the fifth meeting of the Global Forum on Migration and Development in Geneva.