Ralph Frank, US Ambassador to Nepal

Nepali Times: It's been a sort of a tradition for your predecessors to come out strong with everything they wanted to say during their tenures here before they leave Nepal. Was your speech last week a part of this tradition?
Ralph Frank: I'm saving that for later, I'm not ready to leave quite yet.

But were you surprised by the fallout of that speech?
Quite so, we had not planned to have such a big splash. It was really meant to be a wish for the future of Nepal. It was not directed at the government, it was not directed at the palace. In fact when the speech was written we did not know if either of those institutions would be represented. We did not plan on it, we did not expect it.

So when are you actually leaving?
It is completely a function of the new adminstration. I suspect it will be mid- to late-summer. But it is not imminent.

In the speech you were very passionate about the whole process of develoment, and the obstacles created by bad governance. Is your government rethinking aid?
I would say that's absolutely not a case in terms of rethinking aid, or anything of that sort. Over the years the focus has been between infrastructure vs people-to-people programmes. We tend to adjust our programmes as our confidence in a particular ministry or particular government changes. We also adjust our programmes, to be honest to you, depending on what our values are in our own government. Since the time of President Carter, there has been a lot more emphasis on human rights, individual rights.

Are we going to see some change with the new administration in Washington?
Not going to be noticed here. I think there is going to be the same strong emphasis on South Asia as a whole. That happened in the previous administration and will continue, we've certainly got strong indications of that. Our primary goal in Nepal has been supporting democracy through institutions such as the Election Commission, pushing for the Human Rights Commission and the CIAA (Commission for the Investigation of Abuse of Authority).

Is there a sense of cynicism or even negativity about Nepal in the donor community, or within your own policy-making circles?
Rather than cynicism, I'd say there is frustration with unrealised possibilities. I'm working on my sixth year here and the potential is still fantastic, but it is still unrealised.

Who do you blame for that?
Actually I was thinking about this question earlier. It's the government, it's the parties, it's none of those, it's all of those. Almost every party has ruled in the last 10 years. When I came here the RPP had all the powerful positions, the UML's had their shot, Nepali Congress has had plenty of opportunity. Part of it is the growing process, people have to demand the fruits of democracy, they have to go crazy when they see corruption. I think corruption-I'm using the C-word this time-is more rampant now than anytime I've been here. I don't think you can get a driver's licence without paying a bribe, you can't get things across the border without a bribe, it's everywhere. It affects businesses, it affects attitude towards Nepal. The negativism (comes from) the frustration that it could be better.

Do you see the Maoist problem as a sort of a backlash to this?
I've never addressed the Maoist situation directly. (But) the conditions that have bred the Maoist movement are very serious, and most of them should be addressed. I would tell you quite frankly that if you look at the (Maoists') 40 points, I think most sane people would agree with a large percentage of it. You can quote me if you want, but I do look at them regularly: should there be property rights, should discriminatory treaties be abandoned? But there's also a lot of it that is pretty awful, and pretty undemocratic. You probably saw in the press in the last couple of weeks that the Maoists in certain areas have prohibited the right of assembly. Unfortunately what they're actually coming up with is probably worse, the medicine is worse than the illness.

They've also come out very strongly against economic globalisation, the activities of multinationals, the expansionist tendencies of foreign countries.

I think they are incredibly naive about what most of that means. For example, identifying the US with imperialist desires on Nepal. I cannot imagine what they are referring to. With the globalisation issue it's really a choice of whether Nepal wants to be a part of the world economy, or wants to put up barriers and continue protecting inefficient industries.

Have you had any direct communications that Americans are threatened by the Maoists?
Yes.

Is that why you have circulated advisories advising Americans to exercise caution.
Since we put out that advisory there has been the assassination attempt on the chief justice and there have been to the best of my knowledge, eight simultaneous attacks on US-identified facilities. I think the basis for our caution was absolutely on target. The suggestion that you made (editorial in Nepali Times #28, "Be Warned") to put the notice on the wall of the Embassy, that is exactly what we're not allowed to do. If you remember in the Lockerbie bombing incident, there was a warning similar to that which was not given broad distribution, but just put on the wall of the embassy. As a result of that a law was passed that whenever we receive information that Americans are at risk we are required to get that information to the public. I appreciate your concerns, but I would suggest that the problems with the tourism industry in Nepal have a whole lot more to do with the government than with the US Embassy.

But you would admit that this would have a negative impact.
I would admit that the hotel strike, transportation strike, the problem with airlines flying or not flying last year, the Maoist problem all have a whole lot more to do with what's happened to the tourism industry than our travel advisories.

But no Americans have actually been harmed so far.
We have had Americans present when Maoists have attacked, called on tourist facilities. The Maoists have attacked tourists, and we've had Americans as part of the groups.

But they were not targeted because they were Americans.
Not until now, but now we have a situation where American-identified facilities have been attacked.

When were the American facilities attacked?
They'll probably become pretty evident in the next few days. I hear about it all over town. It's not for me to say who they are.

All this is having a very negative impact on foreign direct investment as well.
I think the Maoist problem is only a part of the investment climate problem. There have been many other circumstances which also do not encourage investors. We've had numerous American companies that have wanted to come in and invest. Some have decided not to because the rule of law is not clear. It is not carried out because of bribery. Nepali institutions that manage those segments made up regulations, requiring large deposits which have no basis in law. In a couple of cases the companies agreed under certain conditions, but they are still unable to do business here. Maoists are a factor, but nowhere near the only factor.

What were the sectors those Americans were considering?
I think you're well aware of those: hydropower, financial services, you probably know the story of Kodak.

Speaking of which, Kodak has taken the matter to the Supreme Court. We've heard that the US had made attempts to talk to India.

Yes, when the president went to India our secretary of commerce raised the issue. And at the time there was a commitment to assist, which has never come to fruition. Yes, we have raised it at the highest level we could.

Is Kodak going to have a fallout on other potential US investors?
It's clear that word gets around very quickly. I think they have around a six-million-dollar investment, which they are going to close and lock the door and move out.

For ten years things were deadlocked on the problem of Bhutanese refugees, and suddenly doors started opening. Was it US initiative that set it off?
A lot of that is wrapped in some sort of diplomatic arm-twisting. We'll best leave it at that.

But the letters.

There have been a number of letters to the Bhutanese, the Nepalis. There was a proposal on the part of Assistant Secretary (Julia) Taft, there were visits by Ms Ogata (of UNHCR) and letters by Ms Ogata. A lot of it was very, as they say in diplomatic terminology, frank and open discussions. It was pretty blunt talk all the way round-not only to the Bhutanese, it was with our colleagues here as well.

How about India?
I believe that was raised with India, and the response was the same as that
of Nepal.

Have you analysed why there is a problem raising money needed for investing in hydropower?

Like every Nepali I share the hope that Nepal will develop its hydropower potential, and as frustrated as they are that we're still talking about potential. I salute those few folks that are on line now, Khimti, Bhote Kosi and some of the others that are moving along. Over time, the political governments (in Nepal) have changed how they look at this issue. When I got here there was the perception that the developing company should go and negotiate Nepal's hydropower costs and benefits. I found that quite outrageous because it was a national issue, and should not be re-negotiated every time there was a new company. Nepal should be negotiating with India and those views changed with changes in government. We've had everybody from Pashupati Rana to Shailaja Acharya to Govinda Raj Joshi and they all had different views.

Excerpts from interview by Kunda Dixit and Binod Bhattarai on 5 February, 2001.