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

Between the lines

First published in Republica Daily

Privatization in NepalIn the midst of the Great Depression of the 1930s, John Maynard Keynes wrote in his magnum opus The General Theory, “I am sure that the power of vested interests is vastly exaggerated compared with the gradual encroachment of ideas…. Soon or late, it is ideas, not vested interests, which are dangerous for good or evil.”
I am taking this reference from Keynes to explore some recent arguments from intellectuals on Dr Govinda KC’s recent fast to ‘purify’ health and education sector, and subsequent attacks on the privatization drive post-1990. I want to clarify that I am not against KC’s admirable steps for the sake of the country’s poor people, who cannot afford quality health service at private clinics.
The debate begun by KC’s fast is not just limited to health and education sectors now. It has touched a wide range of issues, from the country’s post-1990 privatization drive to the difficult political philosophical question of whether political parties are shopkeepers. I take Yubaraj Ghimire’s “Should political parties be running profit making ‘institutions’?” from Setopati and Mahabir Paudyal’s “Alarming signs,” (Republica, Jan 30) to build arguments.
Both the articles give enough reasons for a strong government mechanism that can ensure quality health services to people. Yes, the government should provide quality health services to people, mostly to the needy. The argument goes that the health sector is going to be polluted by corruption and politics. True, but these are the results of vested interests, and they do not hold much meaning in the long run. But the dangerous thing is denouncing the whole privatization drive that was started in 1990 and attacking political parties with the provocative question of whether they should run profit making institutions. The latter question demands careful and honest debate in society. We have to be clear that political parties are the result of our civil society, media and entire composition of people.
Yes, political parties are shopkeepers, and even the nation-state is a collective force of many shopkeepers. If we go back to the history of human civilization in the 17th and 18th centuries, progress has been made by small and large shopkeepers. Slowly states started to do what shopkeepers used to do, from providing health services to selling fuel. And most of them are inefficient; we have enough examples of that.
On the one hand, shopkeepers are not as bad as Ghimire connotes in his piece. On the other hand, political parties are not interested in keeping a distance from state-owned agencies, in a country where a Finance Minister’s success is measured by his ability to raise higher amount of revenue. Our dual nature of demanding everything from the government and asking political parties to stay away from appointments does not work. Of course, political parties will play important roles in all sectors if you ask for everything from the government! Public’s lack of faith in the private sector gives enough space to political parties to get involved in businesses. Either we have to be careful about the government’s size and believe in the private sector, or let government and political parties do their business. There should be a balanced approach—that’s what Keynes suggests. The government should have the ability to monitor the private sector, but the private sector should be running business as usual.
The attack on people with vested interests should not dismiss ideas that largely drive the society and leave a long-lasting effect on the social, economic and political framework of the society. Dr KC’s fast and aftermath happened under a government led by the country’s Chief Justice Khil Raj Regmi. This is the result of the shameful act of having the same person head two institutions—judiciary and executive. This is just one result of our collective failure to stop that from happening. The Regmi-government was formed in the name of conducting the Constituent Assembly II election. But that was ‘rape’ of the beauty of democracy—the separation of powers. We will have to pay much more for this horrendous act. Political parties are not the only ones responsible for that action. History will hold each of us responsible. This gross sin will not go unstudied in the coming generations.
Regmi is a self-centered person with vested interests, who could not even give up one position for the sake of purity of democracy. And definitely he is not uncomfortable in letting the ‘vested interest groups’ flourish. That’s what forced KC to sit for a fast-onto-death.
Regmis will come and go, but intellectuals and philosophers in economic, social and political fields should be careful about protecting the ideas that we believe in.
The arguments from Paudyal in “Alarming signs” do not come from careful research. “Government health institutes and education establishments used to command respect until 1990,” he writes. This statement has come in a daily run by a fortune made in the country in post-1990 open society. The post-1990 privatization drive has definitely created a level of inequality in society, and it certainly has some vices. But we have to look at how much we have been able to achieve since then.
Public services are free to the people, but often unavailable to those who work hard to earn it. State-owned service providers are nothing more than brokers in the stock market. They spend one person’s money on another. If we think that privately run firms are making unnecessary profit, then we have to ask government to take actions against it, or civil society should stand up against it, as KC did.
Ideally, we look for better services at relatively low price from the government. At the same time, we should not forget that our society is hesitant to pay tax, let alone pay on time. And, even if we pay our tax on time, it might not be spent on any of the areas that we would like. As I am referring to Keynes and his words to explore the effects of vested interests and ideas in society, I definitely believe in some sort of government intervention. But denouncing the entire privatization process and its result just to get rid of people with vested interests in some sectors is short-sighted. The whole debate has been possible in privately run media outlets, which is the fruit of privatization drive. We should not forget that!
Of course, KC is a man of principles and high moral integrity. But he never denounced the private sector. The government officials involved in the monitoring of the sector might be corrupt, but that should be dealt with separately, not lumped with privatization.
Lastly, political parties definitely should not be running profit making institutions, but they always work with rigorous analysis of gain and loss. No matter how you define it, human history is the result of calculation of gain and loss. Our political parties will definitely turn all state-owned institutions into profit making institutions if we let ideas be killed in the name of controlling interest groups.