25 Sep - 1 Oct 2015 #777

Vicious cycle

Politics affects the economy which in turn impacts on politics

After waiting eight years Nepal’s politicians finally patched together a new constitution and it was promulgated on 20 September. There is now a glimmer of hope that one of Asia’s poorest countries can make up for lost time to ensure political stability and economic growth for its long-suffering people.

However, the fact that it was greeted with fireworks in Kathmandu and police firing in Janakpur drew attention to an unprecedented and dangerous ethnic cleavage within Nepal. It also exposed a divergence in the international community: India and the United Nations were isolated as the only two not to welcome the constitution.

Indian Foreign Secretary S Jaishankar’s frantic and futile last-minute visit to Kathmandu, the official Indian statement and subsequent pronouncements and leaks by the Ministry of External Affairs in New Delhi have chilled bilateral relations to a point not seen since the Indian blockade of Nepal in 1989-90.

Eschewing diplomatic lingo and resorting to blunt verbiage has all but obliterated the gains made by Prime Minister Modi in smoothening relations between India and Nepal during his visits here last year. By giving the impression that they were passing on instructions to Nepal’s leaders about what to do, and by discounting a democratic exercise in constitution-building, India come across as being needlessly mean. Across social media, it has provoked an angry reaction antagonising even Nepalis otherwise sympathetic to India. Politics is about perceptions, and the perception in Nepal is that New Delhi has gone too far.

This is bad for both countries. Nepali leaders do tend to play victim and won’t pass up the chance to play up Indian heavy-handedness to mask their own shortcomings. Our leaders provoked the Indian reaction by ramming through a constitution without listening to Tarai voices.

But the Nepali public’s understanding is that India is bullying us again, and this is most counterproductive for India’s own national interest. We understand there is no monolithic ‘India’, and there are many factors at play here. The divergence in Nepal policy within the Indian administration among various MEA factions, the rivalry between intelligence agencies, the interest of the Indian Army which has 60,000 Nepalis in its ranks, the open disagreement between Prime Minister Modi’s advisers and the bureaucrats, and the interests of the state governments bordering Nepal. State assembly elections in Bihar next month also seem to be a factor.

Nepal has gone through dramatic political transformation in the past ten years. Prime Minister designate K P Oli has his work cut out to: immediately tone down the self-congratulation, urgently bring the dissenters back into the fold and kick-start the economy.

The three parties must go out of their way to start to heal the ethnic polarisation between hills and plains. Compromise amendments to the constitution, especially regarding federal boundaries, could be one move. But Nepal’s politics will always be unstable as long as development is stagnant, and there are no jobs – politics affects the economy which in turn impacts on politics.

If we finally get our politics right, Nepal has everything going for it. It is a mid-sized country situated between the world’s two most populous nations, it has vast potential for hydropower and tourism, Nepalis are a hardworking people with lots of international goodwill. The country is an exuberant democracy with a vibrant free press, and registers over 80% turnout in elections.

Nepal is small only compared to its giant neighbours, India and China. Otherwise, with its 28 million people it is the world’s 40th most populous and has the economy of scale for a viable domestic consumer market. Nepal can benefit from its location to be a trade corridor between China and India, and a major destination for tourism and investment from both giant neighbours.

Due to the conflict and government mismanagement, electricity generation has not kept pace with rising demand, leading to crippling 12-hour daily power rationing. Cooperation with India on electricity and water-sharing is a win-win for both countries. Asymmetry in past bilateral river schemes has made water a politically sensitive issue in Nepal. But after the Modi visit projects on the Mahakali, Karnali and Arun Rivers that had been delayed for decades are finally moving ahead. Future growth in this rugged and mountainous land will also depend on fast-tracking transportation.

Investors are just waiting for the right political climate to push highway, airport and railway infrastructure. Two new international airports in Pokhara and Lumbini are going ahead, and a proposed third will decongest Kathmandu to create alternative economic hubs.

Nepal’s tourism industry is underperforming because of poor facilities, inadequate marketing and security fears. A Marshall Plan for infrastructure and tourism development can create jobs so Nepalis don’t have to migrate to India, the Gulf and Malaysia in such large numbers for work, and it can start with post-earthquake reconstruction.

We don’t need to reinvent the wheel. In the 1990s, Nepal opened up its economy, streamlined regulations and attracted a flood of investors in hydropower, manufacturing and tourism. An innovative decentralisation and self-governance legislation devolved power to the grassroots, with positive impact on development. Nepal has shown the most remarkable improvement among developing countries in reducing maternal and infant mortality. We would have been much further ahead had it not been for the war, instability and corruption.

The new constitution marks an important milestone, a chance to fix the politics, bring dissenters back, and together focus on economic development.

Read also

The Great National Unraveling (GNU), Foreign Hand

Costly constitution, Anurag Acharya

Hashtag revolutions, Tsering Dolker Gurung

Making the best of it, Editorial

A constitution, like it or not, Bidush Dhungel

Call for talks, Om Astha Rai

CA passes Nepal’s constitution, Om Astha Rai

Needed: A Marshall Plan, Editorial

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