May 2024 Analysis

International Relations and Foreign Affairs

News Brief

Japan’s Foreign Minister, Kamikawa Yoko, made a one-day visit to Nepal on May 5, where she called on President Ram Chandra Poudel, Prime Minister Pushpa Kamal Dahal, and Deputy PM and Foreign Minister Narayan Kaji Shrestha. The topics of the discussions included geopolitics, bilateral relations and cooperation, climate change, and so on.

May 12 marked the seventh year of Nepal signing China’s flagship Belt and Road Initiative (BRI). However, there has been no progress on its execution in Nepal, with the controversial BRI Implementation Plan yet to materialize; Geopolitical factors and Nepali leaders’ reluctance to accept loans, instead of grants, are often cited as the major factors causing the delay.

Speaking at the Fourth International Conference on Small Island Developing States (SIDS04) in Saint John’s (May 27-30), Foreign Secretary Sewa Lamsal highlighted the worsening “consternation, vulnerabilities, risks, and challenges” faced by SIDS, such as climate change, geopolitical rivalries, and a rising cost of living. As the Chair of the Global Coordination Bureau for the Group of Least Developed Countries (LDCs), she also called for “stronger and enhanced global support” to address the challenges.

Comemorating 100 years of the Nepal-Britain Friendship Treaty on May 20, British PM Rishi Sunak thanked the British-Gurkha’s important role in the bilateral relations and committed to further enhancing it in the upcoming days by providing support in sectors like trade, investment, and climate change.

In the statement released on the eve of the 2024 EU-Nepal Business Forum, held on May 15 and 16 in Kathmandu, Sweden expressed a commitment to help Nepal achieve Sustainable Development Goals.

News Analysis

Diplomatic Code of Conduct in Nepal: An Arduous Pursuit

Less than two months ago, the Ministry of Foreign Affairs (MoFA) wrote to all line ministries reminding them “to strictly adhere to the diplomatic code of conduct,” which highlighted Foreign Minister Narayan Kaji Shrestha’s active interest and initiative in streamlining the activities of government officials and leaders dealing with foreign diplomats and actors. Shrestha’s concern for a successful execution of the code, which he had introduced in 2011, was not only natural but essential for the geopolitically sensitive Nepal that has seen external actors’ growing presence and willingness to engage political parties and leaders. However, some recent developments highlight how far behind Nepal currently stands in terms of diplomatic capacity and practices, let alone the implementation of the diplomatic code of conduct.

The first incident involves Sandeep Lamichhane, the rape-accused Nepali National Cricket player who was acquitted by the high court after a district court’s initial verdict against him. When the U.S. denied him a VISA, the Cricket Association of Nepal (CAN) lobbied for it, with the government, apparently getting the MoFa to write a diplomatic note for his second VISA application. The MoFA’s involvement in this matter (and its failure) speaks volumes about Nepal’s diplomatic maturity, which is often guided by populist ventures.

The second incident that shows Nepal’s poor diplomatic capacity, or misplaced priority, is the MoFa’s failure to even speak up against foreign diplomats’ undiplomatic activities and endeavors. Most recently, a social media brawl ensued between the Chinese Ambassador to Nepal, Chen Song, and Taksar New’s chief editor, Gajendra Budhathoki; the latter had written a post on X, claiming that the interest rate on the concessional loan for PIA’s construction was 5%, not 2%. Not only did Ambassador Song demand “a formal apology” from Budhathoki and “whoever people” he represented but he went on to also mock his disability in a separate X post, which he soon deleted. Although the Ambassador received heavy criticism for threatening, intimidating, and mocking a Nepali journalist known for his honest and fearless reporting, the MoFA remained silent on the Ambassador’s undiplomatic public engagement.

Domestic Politics and Governance

News Brief

The chairman of Kantipur Media Group(KMG) Kailash Sirohiya was arrested from the office premises on 21 May. He was arrested on the basis of a complaint filed at Dhanusha Police Station, accusing him of holding multiple citizenships.The media fraternity and the Nepali Congress has condemned the arrest of Sirohiya, accusing the current government of being autocratic. Many audiences also perceive the arrest as an attack against press freedom- to suppress the news of Rabi Lamichhane in relation to the cooperative scam.

The main opposition party- Nepali Congress had been obstructing the House since two months, demanding investigation against Rabi Lamichhane for alleged misuse of cooperative funds.The Nepali Congress has been obstructing the parliament since the Maoist government broke the alliance with the party and brought CPN(UML) on board. Home minister Lamichhane later defended himself by counter accusing the opposition leaders on other matters instead.

Despite opposition’s protest during the session, prime minister Pushpa Kamal Dahal (Prachanda) was able to gain his vote of confidence for the fourth time in the House of Representatives (HoR). Out of 275 Members of Parliament(MPs), 157 votes were cast in favor, while only one abstained. The opposition party- Nepali Congress’ MPs did not participate in the voting. Prime Minister Dahal sought for a vote of confidence after Janata Samajbadi sought an exit from the current government.

The Janata Samajbadi Party(JSP) has left the coalition government led by CPN(Maoist Centre) to become an opposition party. The situation came forward after JSP split into two-one led by Ashok Rai and another led by Upendra Yadav. After the split, Upendra Yadav led JSP submitted a formal letter of withdrawal of support to the government to speaker Devraj Ghimire on 13 May.

Finance Minister Barshaman Pun presented the budget for the fiscal year 2024-25 at the federal parliament, without any restrictions. The total budget amounted to NPR 1.860 trillion, which is 6.2% larger than the unrevised budget of the current fiscal year.

News Analysis

Opposition Obstruction Creating Chaos in Domestic Politics

The opposition party Nepali Congress has been obstructing the parliament since the past two months, creating disruption in smooth functioning of the house. Demanding an investigation against Rabi Lamichhane, they claim that Lamichhane has misused funds during his tenure at a cooperative institution.

Lamichhane in his defense, did not clarify how he was not involved in the cooperative scam, but instead used a ‘whataboutery’ approach, through which he counter accused members of the opposition party being involved in other scams. Experts have termed his defense as unusual and odd. The Congress leaders termed his presentation rude, misleading, fabricated and violent.

A day before Lamichhane presented himself in front of the parliament, Nepali Congress had obstructed the parliament against the vote of confidence of prime minister Pushpa Kamal Dahal. Despite obstructions, prime minister Dahal was successful in gaining his vote of confidence.This was his fourth vote of confidence in 16 months. Dahal had to ask for a vote of confidence after Janata Samajbadi Party withdrew their support to the current coalition government.

Moreover, in recent developments, Kantipur Media Group Chairman Kailash Sirohiya was arrested in allegations of misusing his citizenship. Sirohiya in his statement claimed that the arrest was not in connection with his citizenship but against Kantipur Publications for publishing news relating to home minister Rabi Lamichhane. Chairman Sirohiya was taken to Dhanusha for further proceedings, where the district administration officer confirmed that the signature on Sirohiya’s citizenship was his. Sirohiya was airlifted to Kathmandu on May 28 citing health concerns. Experts, media houses, editors and others have condemned Sirohiya’s arrest, demanding his release and alleging misuse of power. Sirohiya was released on 29 May on the condition that he presents himself in front of the police when summoned.

A lot of political disbalance has been creating a lot of chaos in domestic politics. The opposition party and the ruling parties have been playing the blame game, with attacks getting personal. Until and unless the parties discuss in a civilized manner, domestic politics will continue to spread wide in mess.

Federalism

News Brief

Amidst Kedar Karki of Koshi Province refuting the floor test, Hikmat Karki of the CPN-UML has been appointed the province's Chief Minister for the third time in seventeen months. The change in coalition demanded Kedar Karki either take a vote of confidence or step down, however, Karki resisted. With no nod from Kedar Karki, the Province Speaker called for government formation under Article 168(5). Hikmat Karki won with support from 52 lawmakers. With Congress boycotting the vote of confidence, Kedar Karki has filed a writ petition at the Supreme Court claiming Hikmat Karki’s appointment as unconstitutional.

In Gandaki province, Surendra Raj Pandey from Nepali Congress has been appointed the Chief Minister, for the second time in seven months. Pandey was appointed as per Article 168(3) of the Constitution since the Supreme Court declared the vote of confidence obtained by Khagaraj Adhikari of the CPN-UML as unconstitutional.

Madhesh Province in Nepal is facing a political crisis. The current Chief Minister, Saroj Kumar Yadav, needs help to maintain his position. As the CPN-UML and the CPN (Maoist Centre) withdraw their support to the Saroj Yadav-led government, JSP-N led by Yadav is only left with the backing from the Nepali Congress and potentially the Unified Socialist Party. Since the vote of confidence for Yadav is scheduled for June 5, the Unified Socialist Party holds the deciding vote.

Dirgha Bahadur Sodari, Chief Minister of Sudurpaschim Province, won a trust vote in the provincial assembly. Opposition parties boycotted the vote. Sodari received 28 votes, exceeding the required majority of 27. Lawmakers from the CPN-UML, CPN (Maoist Centre), CPN (Unified Socialist), Nagarik Unmukti Party, and an independent supported him. It was the fourth attempt for Sodari, Chief Minister of Far-West Province, to secure a vote of confidence.

News Analysis

Provinces involved in forming and breaking the governments

Provinces in Nepal have been the victim of coalition change at the federal level. The Koshi Province has seen six Chief Ministers in just 16 months, reflecting the ever-changing alliances at the national level. The political leadership is focused on forming and breaking governments, largely ignoring lawmaking and development projects. This fuels public disillusionment with federalism.

The Gandaki Province is in similar turmoil. It is to be noted that since January 2023 up until now, the Chief Ministership in Gandaki Province has been a tug of war between Khagaraj Adhikari and Surendra Raj Pandey.

The Lumbini Province, similarly has seen 3 Chief Ministers and 26 ministers in just 18 months. The Provincial Assembly has only passed 4 laws: 2 annual laws, 1 amendment, and just 1 new bill. It is highly possible that ongoing instability weakens federalism and discourages public participation.

This pattern is not unique to these provinces; similar issues of political, fiscal, and administrative instability are prevalent across other provinces in Nepal. The recurring turbulence undermines the foundations of federalism and poses a significant challenge to public engagement and confidence in the system. The continuous disruptions and the focus on political maneuvering over substantive governance weaken the federal structure and discourage public participation in the political process.

Economy and Development

News Brief

Finance Minister Barsha Man Pun, unveiling the Economic Survey for the fiscal year 2023/24, disclosed a projected economic growth rate of 3.9%, with the per capita national income expected to hit $1,456. Minister Pun assured that inflation remained in check, hovering at 6.08% for the initial eight months of the fiscal year. In his presentation of the fiscal year 2024/25 budget, Minister Pun emphasized the formation of a consumer court, with allocated budgetary provisions. He pledged to clamp down on illicit activities like black-marketing and market syndicates.

The government introduced a green tax on petroleum products, coal, and related goods through the Economic Bill 2081, spearheaded by Finance Minister Barsha Man Pun. The objective is to curb fossil fuel usage, with taxes set at Rs. 1 per liter on petrol and diesel, 0.5% on furnace and base oils, 1% on lubrication oil, and 1% on petroleum oil and derivatives containing 70% or more petroleum oil content.

The General Federation of Nepalese Trade Unions (GEFONT) reported a 6% rise in industrial enterprises failing to meet minimum wage obligations, reaching 21.7%. GEFONT released its Labour Audit Report-2080 BS, underscoring the plight of laborers and daily wage earners. Despite setting the minimum wage at Rs 17,300 per month, enforcing these standards and worker benefits has become increasingly challenging.

According to the 2024/25 Economic Survey, social security allowance recipients surged by 5.5% to 3.8 million by February 2024. This includes various demographic groups such as senior citizens, Dalits, single women, people with disabilities, and children from designated areas.

The government greenlit a concessional loan of around Rs 13.33 billion from the World Bank, as announced during a Ministry of Communications and Information Technology press conference on May 3.

Nepal conducts its international trade via 29 customs points and dry ports, with Birgunj Customs Office as a pivotal node. However, data from the Department of Customs revealed a revenue deficit of NRS 67.82 billion compared to the targeted NRS 181.99 billion during the first nine months of the fiscal year, despite Birgunj Customs Office exceeding NRS 100 billion in revenue collection. Additionally, Chobhar Dry Port reported imports worth NRS 836.56 million from mid-July to mid-May but no exports. Import figures for the 2023/24 fiscal year amounted to NRS 1.33 trillion, while exports stood at NRS 126 billion.

News Analysis

Economic Survey for the fiscal year 2023/24

Finance Minister Barsha Man Pun's recent presentation of the Economic Survey for the fiscal year 2023/24 has initiated a robust discussion, inviting thorough scrutiny from various sectors. The focus of this examination primarily revolves around the forecasted economic growth rate of 3.9 per cent for the ongoing fiscal year. While this figure is commendable to some extent, it falls short of addressing the broader economic challenges crucial for bolstering resilience against crises and significantly enhancing living standards. Although the projected per capita national income of $1,456 indicates an increase in average income levels, a deeper analysis is necessary to determine if this surge translates into tangible improvements in the populace's standard of living. Factors such as income distribution, adjustments for the cost of living, and purchasing power parity require meticulous examination to understand their genuine impact on individual welfare.

Minister Pun's assertion regarding controlled inflation, citing a sustained rate of 6.08 per cent over the initial eight months of the fiscal period, demands closer scrutiny. While maintaining inflation at a relatively stable level is desirable, a rate of 6.08 per cent remains significant and could potentially adversely affect purchasing power, particularly for households with low to moderate incomes. Furthermore, evaluating the sustainability of inflation control measures and their potential repercussions on other economic indicators, such as employment and investment, is crucial.

To achieve a comprehensive understanding, it is vital to contextualise these projections and statements within the broader economic landscape and external influences. Factors such as global economic trends, geopolitical events, domestic policy efficacy, and structural reforms exert considerable influence on economic performance and the accuracy of forecasts. While Minister Pun's statements provide valuable insights into the government's economic outlook and policy priorities, a critical analysis is indispensable to assess the underlying assumptions, potential constraints, and broader ramifications for the economy and the populace. Addressing these challenges requires meticulous consideration of strategically nuanced approaches.

During the fiscal year 2024/25 budget presentation, Minister Pun's remarks on establishing a consumer court, allocating funds for it, and pledging to tackle issues like black-marketing and syndicates warrant thorough examination. While the proposal for a consumer court is a positive step for safeguarding consumer rights, its effectiveness hinges on various factors such as its structure, jurisdiction, and enforcement mechanisms. Ensuring that the court is adequately empowered and resourced is vital for addressing consumer grievances in a fair and timely manner. However, the government's strategy for combating illicit practices like black-marketing remains unclear, and mere budget allocation may not suffice. A comprehensive approach involving regulatory reforms, robust law enforcement, and effective public awareness campaigns may be necessary to achieve tangible results.

While Minister Pun's statements indicate the government's intent to address consumer protection and market integrity, their actual implementation and impact remain to be seen. Decisive action and active involvement of stakeholders are imperative to ensure tangible progress in these areas.

The introduction of a green tax on petroleum products, coal, and related goods, as outlined in the Economic Bill 2081/82 by Finance Minister Barshaman Pun, warrants critical evaluation. While the intention to reduce the consumption of fossil fuels aligns with global efforts to mitigate climate change and transition towards sustainable energy sources, several aspects of the green tax implementation raise concerns. The specific tax rates mentioned appear relatively low compared to the scale of environmental damage caused by the consumption of fossil fuels. Additionally, the effectiveness of the green tax hinges on how the revenue generated will be utilised. Without clear mechanisms to ensure that the funds are directed towards initiatives promoting renewable energy, environmental conservation, or mitigating the impacts of climate change, the tax may be perceived as merely a revenue-generating measure rather than a genuine effort to address environmental concerns. Careful consideration of the potential impact on lower-income households is essential, as any increase in the cost of petroleum products and related goods could disproportionately affect marginalized communities.

The recent report released by the General Federation of Nepalese Trade Unions (GEFONT) highlights concerning issues regarding labour rights and minimum wage enforcement in Nepal. The revelation that a significant portion of industrial enterprises are failing to adhere to mandated minimum wage standards underscores systemic challenges facing workers in the country. GEFONT's findings shed light on the gap between policy intentions and ground realities regarding labour rights. While the report underscores the dire situation faced by labourers and daily wage earners in Nepal, it also presents an opportunity for concerted action to address systemic challenges and uphold the principles of social justice and human dignity in the workplace.

The data presented in the Economic Survey for 2024/25 regarding the increase in social security allowance recipients provides valuable insights into the state's efforts to support vulnerable segments of the population, a critical examination of these statistics raises several pertinent points. Addressing the underlying socio-economic factors driving reliance on social security allowances requires concerted efforts to foster a more equitable and just society.

National Security and Climate Change

News Brief

Nepal's agriculture and water resources are under severe threat due to climate change. There have been projected economic losses totaling Rs 415.44 billion over the past five years. Many households remain unaware of the causes behind these dramatic shifts. The impacts are particularly harsh on agriculture, water resources, and biodiversity, undermining the livelihood and sustainability of affected communities.

The event, titled "International Expert Dialogue on Mountains, People, and Climate Change: Local Leadership for Adaptation—From Mountains to the Sea," was organized on May 22-23 2024 in Kathmandu. It emphasized the need for immediate intervention in local adaptations with the active participation of local communities, especially women and indigenous groups. The dialogue resulted in concrete actions aimed at enhancing the resilience of mountain ecosystems.

Forest fires are on the rise in Nepal this year, with over 5000 incidents recorded over the past ten months. The lack of rain and drought conditions exacerbate the issue. Additionally, the intentional setting of fires to clear land and drive away wildlife is adding to the problem. Authorities emphasize the need for increased public awareness about the dangers of forest fires and urge the implementation of existing forest fire management strategies.

Finance Secretary Madhu Kumar Marasini urged multilateral development banks, particularly the Asian Development Bank, to prioritize financing for climate actions. He asked for support to complement existing initiatives and enhance infrastructure projects aligned with climate objectives. Speaking at the 57th annual meetings of the ADB in Georgia, Marasini emphasized Nepal's commitment to good governance, social justice, and economic prosperity. He highlighted efforts to align financing with ongoing projects while addressing climate change integrally.

Nepal Government is launching the President Climate Change Adaptation and Mitigation Program. Finance Minister Barshaman Pun announced the program during the budget presentation, highlighting the program's integrated implementation. Additionally, the budget statement emphasizes the integration of disaster management and climate adaptation efforts. The government continues its campaign 'Save the mountains: save humanity,' engaging in dialogues nationally and internationally on climate change's Himalayan impact. The budget also underscores the use of appropriate technology to mitigate climate change's impact on agriculture.

News Analysis

Government to Establish Peace Fund for Conflict Victims

To address the plight of conflict victims amidst a stagnant transitional justice process, the Nepali government has announced the establishment of a peace fund. Finance Minister Barsha Man Pun revealed during the budget presentation for the upcoming fiscal year that Rs 1 billion will be allocated to this fund. The objective is to provide compensation and financial aid to victims of human rights violations during the decade-long insurgency that ended in 2006.

Despite previous relief efforts, many victims, including families of the deceased and forcibly disappeared, have not received adequate support. The Commission of Investigation on Enforced Disappeared Persons has documented numerous cases, with only a fraction receiving compensation, mainly neglecting victims of sexual violence due to social stigma. From the Conflict Victims Common Platform, Suman Adhikari urges prioritizing amendments to the Enforced Disappearances Enquiry, Truth and Reconciliation Commission Act to ensure justice and compensation.

However, the transitional justice commissions have remained defunct since July 2022, with little progress on the amendment bill. Although the government claims to expedite the transitional justice process, challenges remain in reconciling political differences and addressing victims' concerns effectively.

Prime Minister Pushpa Kamal Dahal has committed to concluding the peace process but acknowledges the need for significant improvements in the transitional justice framework. As Nepal seeks to move forward, establishing the peace fund represents a step towards addressing the long-standing grievances of conflict victims and fostering reconciliation.

To further enhance the effectiveness of the peace fund, there is a pressing need for broader societal awareness and engagement on the issue of transitional justice. Comprehensive reforms to ensure inclusivity and accountability within the transitional justice framework are crucial to ensure justice. Additionally, international cooperation and support could play a pivotal role in augmenting resources and expertise for the successful implementation of peace-building initiatives. As Nepal endeavors to navigate its complex post-conflict landscape, concerted efforts towards truth, reconciliation, and sustainable peace are imperative for fostering long-term stability and resilience.

Gender, Social Inclusion & Human Rights

News Brief

A national seminar titled "Shaping Nepal's Future: Prospect and Roadmap for Feminist Foreign Policy," held in the capital on Tuesday, focused on the integration of Feminist Foreign Policy (FFP) into Nepal's diplomacy. Organised by the Centre for Social Innovation and Foreign Policy (CESIF) with support from the Australian Embassy in Nepal, The Asia Foundation, and UNDP, the seminar brought together a diverse array of stakeholders, from policymakers to civil society leaders, to deliberate on fostering a more inclusive and equitable foreign policy framework for Nepal. The aim was to explore ways to embed FFP principles into Nepal’s foreign policy to make it more inclusive and equitable, and to examine how a feminist approach can enhance Nepal’s presence in international forums.

The "Institutionalizing Gender-Based Violence Response in Federal Nepal Project" was launched by Nepal's Minister of Women, Children, and Senior Citizens, Ms. Bhagbati Chaudhary, and World Bank Country Director for Maldives, Nepal, and Sri Lanka, Mr. Faris Hadad-Zervos. This three-year initiative aims to improve access to gender-based violence (GBV) response services, such as legal aid, psychosocial counseling, and medical support, for women and girls in six municipalities in Koshi and Lumbini provinces. The project seeks to benefit 49,000 women and girls who have experienced violence by enhancing the availability and quality of these services.

The government has announced that the forthcoming fiscal year will be designated as the 'Year for Investment in Women'. This was disclosed in the budget estimates for 2024/25, presented by Finance Minister Barsha Man Pun at a joint session of both houses of the Federal Parliament on 28,May.Notably, this year's International Women's Day was observed with the slogan, "Invest in women: Accelerate progress".The government is promoting the 'Year for Investment in Women' as a campaign against violence towards women. Additionally, 'Koseli Ghar', or gift shops featuring local products, will be established to support women entrepreneurs, according to the finance minister.Moreover, the government has allocated Rs 100 million for the 'Prime Minister's Daughter Programme'. The 'Yuwa Mahila Rashtriya Mahila' programme will continue from the previous year. A total of Rs 1.6 billion has been allocated for the Ministry of Women, Children, and Senior Citizens.

News Analysis

Addressing Gender Violence on Social Media

The Patan High Court cited a lack of evidence in reversing the decision of its subordinate court. Overturning the verdict of the Kathmandu District Court, a division bench of judges Surya Darshan Dev Bhatta and Anju Uprety Dhakal acquitted Lamichhane, who had been suspended from the national cricket team. When the Patan court cleared Lamichhane of the rape charge, it sparked significant controversy on social media. Opinions were sharply divided: some argued that hiding the victim's identity was unnecessary, while others vehemently disagreed. Despite these differing views, Lamichhane's supporters celebrated the court's decision. The case drew further attention as the victim, an 18-year-old, remained anonymous under the name “Gausala 26.”

Many people in the past have tried to reveal the identity of the victim, and police cases were lodged against those who attempted to do so. Revealing the victim’s identity is punishable under various laws, including the Crime Victim Protection Act, the Privacy Act, and the Electronic Transaction Act. Section 6 of the Crime Victim Protection Act guarantees the right to privacy for victims of rape, incest, human trafficking, sexual harassment, and other specified offences, as announced in the Nepal Gazette.

Similarly, Section 3(4) of the Privacy Act, 2018 prohibits publishing or causing to be published any matter related to a person’s bodily privacy and personal life that could affect or insult them, by any means including writing, speaking, or electronic methods.

Additionally, Section 47(1) of the Electronic Transactions Act, 2008, prohibits publishing illegal materials in electronic form. This includes content that is banned by law, contrary to public morality or decency, incites hate or jealousy, or disrupts harmony among various communities. Violators face fines up to One Hundred Thousand Rupees, imprisonment up to five years, or both. Section 47(2) stipulates that repeated offenses will incur progressively harsher penalties, with each offense attracting one and a half times the punishment of the previous one.

Despite the high-profile nature of Lamichhane's case, rape remains a critical issue in Nepal. Police reported approximately 2,300 rape cases in the 2021-22 fiscal year, but rights advocates believe the actual number of assaults is significantly higher due to underreporting.