February Analysis: National Security and Climate Change

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Timeline of Major Events

DateEvent
February 7The Home Ministry published a Home Administration Reform Action Plan -2078 through which it specified its plan to draft a ‘Border Security Act’
February 23The Home Ministry issued a statement urging Nepali citizens in Ukraine to return home.

Home Ministry Prepares to Draft a ‘Border Security Act’

The Ministry of Home Affairs has published a Home Administration Reform Action Plan -2078 with the objective of improving the departments under the ministry. The document has highlighted ten major areas for improvement including policy and legal reform, peace, security and crime control, institutional reforms and physical infrastructure, disaster management, and good governance among others. Under the policy and legal reform section, one of the actions that is outlined is drafting of a Border Security Act which is planned to be completed in a year.  Nepal Armed Police Force along with the Home Ministry will be responsible for drafting the act.

The plan to draft a Border Security Act comes after 20 years of drafting the Armed Police Act 2058 through which the Armed Police Force (APF) was assigned with protecting international borders. Similarly, the National Security Policy stipulates that Nepal Army is tasked with defending Nepal’s independence, sovereignty and territorial integrity from external infiltration and aggression. Although there are different organizations deployed for the protection of borders, there is no separate legal apparatus that binds these organizations together.

The news comes at a time when Nepal is having border issues with both India and China. One of the reasons for the ongoing border disputes with China is the lack of proper surveillance of the border pillars. Similarly, the open border between Nepal and India poses security concerns for Nepal like human and goods trafficking, smuggling, and unchecked migration. According to K.C. (2019), smuggling and illegal cross border activities have increased over the years. Although National Security Policy encompasses certain aspects of borders, border security primarily focuses on territorial integrity. Thus, a separate legal document concerning border security is important in addressing these issues. Apart from the act, the ministry is also planning to prepare a digital profile of border posts between India and China within the next two years.

To strengthen the border security of the country, the document proposes to increase the number of APF personnel in accordance with international standards and improve the existing infrastructure. A recent news regarding the lack of infrastructure for the APF personnel deployed at the Border Outpost (BOP) in Hilsa is indicative of the need to strengthen the existing infrastructure of APF.

Although the plan put forth by the ministry is important in addressing some of the pressing issues of the country, it is also very ambitious. For instance, the development of a software for thermal customized tracking system to monitor people and vehicular cross-border movement will require integrated planning and infrastructure. Amidst the political turmoil in the country, it will be interesting to observe how these plans will be implemented effectively.

Ukraine Crisis: Implications for Nepal

Photo: AFP

After the invasion of Russia on Ukraine, tensions have escalated around the world. Nepal’s Foreign Ministry has issued a statement urging all the parties concerned to exercise maximum restraint not to escalate tension. It has clarified that recognition of Ukraine’s Donetsk and Luhansk regions as independent entities goes contrary to the provisions of the UN Charter.

The immediate concern regarding the Ukraine crisis for Nepal is to ensure the safety of citizens living in Ukraine. The Ministry of Foreign Affairs has already issued a statement urging Nepali nationals living in Ukraine to return home. It is estimated that there are around 200 Nepali citizens living in Ukraine, however, the official number is unknown. Since Nepal doesn’t have an embassy in Ukraine, the embassy in Berlin oversees Ukraine issues. As the situation worsens, Nepal should plan on managing transportation facilities to bring them back to Nepal.

One of the major impacts of the ongoing crisis will be in the economic sector of the country. Ukraine is one of the important trading partners for Nepal. Nepal mainly imports raw materials like unrefined soybean and sunflower oil from Ukraine. Nepal’s industries are based on importing unrefined oils and exporting refined products. So, both import and export are likely to get impacted. Furthermore, Nepal is reliant on India for petroleum products, while India gets its majority petroleum from Russia. The price of petrol in Nepal has already reached historic level. The prices are further expected to rise in the coming days. This will add to the already worsening economic conditions of the country.

The long-term effects will be seen in geo-politics and foreign diplomacy. China’s failure to condemn Russia’s actions are reflective of its close ties with Russia, whereas America along with other NATO countries have heavily criticized the Russian move by imposing several economic sanctions and providing military support to Ukraine. The US along with the EU have also cut off several Russian banks from the SWIFT (Society for Worldwide Interbank Financial Telecommunication), which could ultimately result in ending the dollar’s hegemony in the East. This could intensify the US-China relations which will have direct implications for Nepal’s diplomacy as both the countries are important strategic partners.

Should Nepal legalize trading cryptocurrencies?

India has announced that it will implement a 30% tax on the income from digital assets including trading and transferring of the cryptocurrencies and NFTs (Non-fungible Tokens). Similarly, it has also revealed its plans to launch a digital currency. Nepal, on the other hand has banned the trading of all sorts of cryptocurrencies. However, after India’s decision regarding cryptocurrencies and digital currency, Nepal will be closely following how this decision pans out in India. Furthermore, Nepal Rastra Bank (NRB) has highlighted that it is conducting a feasibility study for introducing a digital currency of its own. There has been a huge debate within the country regarding the legalization of cryptocurrencies. As the countries around the world have moved towards legalizing cryptocurrencies, it is important for Nepal to conduct a study regarding its implications on the economy as well as the security of traders.

Although cryptocurrencies are banned in Nepal, it is estimated that the number of people involved in the trading could be in thousands. Recently, four people have been charged with the case of foreign exchange misappropriation for illegally investing in virtual currencies. The number of illegal traders has significantly increased in the last few years due to high returns in the investment. Even though traders have procured high returns in the last few years, it is highly volatile which could negatively impact traders (especially from low-income households). Additionally, it is unregulated which makes it an unreliable source for funds transactions. According to research, cryptocurrencies pose a significant threat to the financial market and the well-being of citizens through loss of investments due to market volatility, scams, and cyber-attacks. So, before legalizing cryptocurrencies, it is important to analyze the risks associated with the trading of cryptocurrencies. Similarly, financial institutions of Nepal should set up certain mechanisms to ensure the security of traders by focusing on trading literacy.

Another important aspect associated with cryptocurrencies is mining. Mining is a process of creating a cryptocurrency which requires high processing computers and extensive electricity. Nepal has a surplus of hydroelectricity which can be used to create cryptocurrencies, which would ultimately improve the economy. Similarly, legalization of cryptocurrencies could aid in the international payment system by eliminating all the current hassles created by a third party (banks). Nepal being a country that is heavily dependent on international funds could hugely benefit from it once proper mechanisms are in place with proper currency regulations. Finally, Nepal could set up a tax bracket (like India) on the profits made from cryptocurrencies which would help generate capital for the government. Cryptocurrency is still in its infancy phase. Although legalization of cryptocurrency has a massive upside, it also has certain risks associated with it.

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