The possibilities of realignment in the coalition for the upcoming federal and provincial elections made headlines throughout the month. The Nepali Congress has decided to forge an electoral coalition with the member parties of the ruling alliance, while communist parties of the ruling alliance have decided to form a “Socialist Center” and keep both the possibilities intact – an electoral coalition either with the Nepali Congress or with the CPN UML. Earlier in the month, Liu Jianchao, head of the International Liaison Department of the Chinese Communist Party (CCP) visited Nepal and called the communist forces to reconcile their differences and form a single communist block or at least forge an electoral coalition. On the other side, following the controversy for allegedly allowing two unauthorized people to tweak taxes in the budget of the current fiscal year, Finance Minister Janardan Sharma resigned from his post. On July 28, the parliamentary probing committee released a report stating that the allegations against Sharma couldn’t be confirmed.

Timeline of Major Events

Early Indications of Parties’ Realignment for Electoral Coalitions

On 18 July, the central committee of the Nepali Congress officially decided to form an electoral coalition of the five ruling parties for the upcoming provincial and federal elections. The party also decided to come up with a strategic framework for candidates’ selection and seat sharing in such a way that Nepali Congress’ majority in both the provincial and federal polls could be ensured.

However, on the other side, the communist parties of the ruling alliance have decided to form a “Socialist Center”. And by doing so, those parties have aimed at exerting leverage collectively over both the Nepali Congress and the CPN UML. The Socialist Center includes CPN Maoist (Center), CPN Unified Socialist, and the Baburam Bhattarai-led faction which is expelled from the Janata Samajwadi Party. As of now, the socialist coalition remains open to the possibility of an electoral collaboration either with the Nepali Congress or with the CPN UML.

CPN Maoist Center’s leader Pushpa Kamal Dahal Prachanda has frequently claimed that his party intends to forge an electoral coalition with the Nepali Congress. Dahal visited India from 15 to 17 July, and during his visit, he met Nepali Congress’s leader Arju Rana Deuba who also happens to be the first lady, in the presence of Indian leaders. This meeting was met with speculations – that the two reached a consensus in the mediation of Indian leaders on power-sharing after the provincial and federal elections. Dahal has categorically denied this allegation – however, since the communist coalition isn’t in the interest of New Delhi, speculations are rife about the same.

The other leaders of the proposed “Socialist Center”, on the other hand, have claimed that the coalition with the CPN UML is equally likely. CPN Unified Socialist’s senior leader Jhala Nath Khanal and leaders of the CPN Maoist Center – Narayan Kaji Shrestha and Barsha Man Pun – have even gone on to say that the electoral alliance of the communist forces including the CPN UML is at the top of their priority. And that only if the communist coalition fails to materialize, the Socialist Center would join hands with the Nepali Congress.

While the CPN Maoist Center benefitted heavily from the electoral coalition of the ruling alliance in the local polls, the Nepali Congress had ripped off the maximum benefits. The rest of the parties, however, couldn’t benefit much owing to their own weak organizational base and shrunk vote bank. The communist coalition, on the other hand, appears attractive to communist parties of the ruling alliance – this is because a communist coalition could smoothly translate into electoral success, unlike the ruling alliance which consists of parties with conflicting ideologies and contrasting voter bases. Even the last time around, in 2017, the CPN Maoist Center had first contested the local polls forging an electoral alliance with the Nepali Congress, but then had switched the camp for the subsequent provincial and federal elections joining hands with the CPN UML. The communist coalition is also in the interest of the CPN UML because the party has undergone multiple splits and has been pushed to the distant second position in the local polls held last May.

As of now, both the ruling electoral alliance and communist electoral alliance seem equally likely and it is only plausible that the proposed Socialist Centre would eventually join the camp which would ensure the Center with a bigger share in the coalition.

The Head of the International Liaison Department of the Chinese Party, Liu Jianchao Visited Nepal

Liu Jianchao, the head of the International Liaison Department of the Chinese Communist Party, visited Nepal on July 10. The four-day visit of the eight-member team marked the second high- profile visit from Beijing within the span of four months after the ratification of the US’s MCC pact by Nepal in February. During this visit, Liu’s team is reported to have urged communist leaders to reconcile their differences and unite once again or at least forge an electoral coalition for the upcoming provincial and federal elections. Even Chinese Foreign Minister Wang Yi in March had made statements along the same lines.

These attempts/statements of China to push for the communist coalition amount to direct interference in the internal affairs of Nepal and cross all diplomatic lines that a nation is supposed to adhere to. On the other front, those issues that China should have prioritized in these high-profile visits have largely been sidelined. These proclivities hint that Beijing is preoccupied with attempts to reassert its lost influence over Kathmandu, which it enjoyed during the Oli administration, and is occupied with motives of scoring goals against the US-India camp, rather than genuinely seeking to deepen the Kathmandu-Beijing ties.

Finance Minister Janardan Sharma Resigned Amid Controversy

On 6 July, Finance Minister Janardan Sharma resigned amidst controversy for allegedly allowing two unauthorized people – a retired senior non-gazette officer and a chartered accountant – to make last-minute changes in taxation for the budget of the fiscal year 2022-23 with a purported motive of benefiting some business groups. A vernacular daily, Annapurna Post, had published a news report on the same – and parliamentarians from across the aisle had sought clarifications with Minister Sharma. The main opposition CPN UML had been demanding the resignation ever since the news broke out.

On 6 July itself, the House of Representatives formed the Parliamentary Probe Special Committee to look into the matter – the committee consisted of four lawmakers, two each from the Nepali Congress and the Maoist Center, and one each from the CPN (Unified Socialist), Janata Samajwadi Party and Loktrantrik Samajwadi Party. However, the Finance Ministry failed to provide the CCTV footage of May 28, the day prior to the budget announcement, with a claim that only 13 days’ recording was possible to store. The probe committee then reached the conclusion that the CCTV footage of May 28 and 29 was deleted in a premeditated manner. However, on July 28, the probing committee released its final report stating that the charges levelled against Sharma couldn’t be confirmed. Those two lawmakers from the opposition CPN UML in the investigation committee cried foul – and experts argued that there were multiple lapses and flaws during the investigation.

That the Finance Ministry deleted the CCTV footage of the day in a premeditated manner is telling in itself. On the other hand, PM Deuba failed to take quick actions against the finance minister which raises further doubts – if all this was done in a tacit agreement of the PMO. This isn’t the first time that the crony capitalist nexus has gamed the system to its advantage while eroding institution procedures and the rule of law. In this regard, this entire controversy, on a broader level, is reflective of the extending crony capitalist nexus which has paralyzed the system.

The House of Representatives Endorsed an Amendment Bill to the Citizenship Act, 2006.

On 22nd July, the House of Representatives endorsed an amendment bill to the Citizenship Act, 2006 with a majority vote despite objections from the main opposition, CPN UML. The amendment bill has been a matter of controversy ever since the promulgation of the constitution in 2015 – a couple of previous attempts to amend the act had failed. The main bone of contention was about the cooling-off period for foreign women married to a Nepali man. Previously, both CPN UML and the CPN Maoist Center were for a cooling-off period of at least seven years. However, this time around, the CPN Maoist Center backtracked from its position, and then the ruling alliance had enough numbers to amend the bill.

The parliamentary endorsement of the bill, however, has triggered a debate – while some argue that having no provisions for the cooling-off period would do more harm than good, others rightfully claim that the amendment remains gender-biased as it gives the continuity to preferential treatment for males. Despite this bias, the bill is important in the sense that it has addressed major demands of the Madhes-based parties: allowing citizenship of dissent for children of those who acquired citizenship by birth and naturalized citizenship to foreign women married to men. On the other hand, the CPN UML – a communist party catering to the conservative/ethno-nationalist vote bank – has made attempts to politicize the bill to its electoral advantage. The CPN UML has claimed that this amendment would encourage an influx of foreign females by marrying Nepali males with the motive of gaining Nepali Citizenship – and with this, the party has aimed at consolidating its base amongst the hill-based conservative constituencies.