News Analysis


Oli-Dahal discuss

April 2019


The government continued to pursue the agenda of economic development and prosperity by emphasizing foreign direct investment and international relations, particularly with China and the United States. However, there were several worrying signs in the home front, which saw a continued constriction of the space for civil society, democracy, and human rights; widespread debates about corruption; increased concerns about security; and questions about the future of federalism. Even as the Nepal Communist Party (NCP) continued with the unification process, opposition parties came up with efforts to reorganize themselves with some using the platforms of Hindu religion and corruption to strengthen their political base. 

The incumbent government, the first federal one, historically, has an opportunity to deliver aspirations of the people, provided they manage threats and risks that could spoil the peace process and ensure investments to fund development.  The Investment Summit, as a mechanism to reach out to the world, has been a major event for Nepal since 2017, the first of its kind to be organized. The second one was organized on the 29-30 March in Kathmandu, which fuelled interests in projects amounting to nearly NR 1200 billion.

The state visit of the President to China for the Belt and Road Forum brought in some good news with the inclusion of Nepal-China Multi-Dimensional Inter-Connectivity Network including Nepal-China Cross-Border Rails. However, an issue related to the use of Chinese online payment systems Wechat and Alipay trespassing the Government’s revenue system was also in the news.

The contention around citizenship remains unresolved as the Act seems to have a long way to go until endorsement. The Home Ministry circular came out as a solution for the time being, but the Supreme Court verdict stalled.

In the political domain, the unification of Nepal Communist Party moved one step ahead with the finalization of the key positions for all 77 districts. Nepali Congress postponed its National Revitalization Campaign until the second week of May to mourn the demise of its former treasurer Ram Krishna Tamrakar. RJP-N and Naya Shakti meanwhile drew closer to each other.

The challenges around corruption and good governance continued to generate widespread discontent as the government remained indifferent to resolving the wide-body and gold scams, sugar cartel, Budhi Gandaki project funding, and the public land grab.

As the country implements federalism, the government’s plan to mobilize army in the delivery of resettlement plan in Bara and Parsa overlooking the roles of province and local governments is an example of its anti-federalist intentions. The tornado havoc on 31st March opened up lapses in the state’s disaster response system. Putting aside the slow progress made in reconstruction and rehabilitation victims of the Gorkha earthquake on April 25, 2015, the country has yet to act on the lessons on early preparedness, rescue, and relief in times of natural disasters. After four years, the rehabilitation and resettlement of the Gorkha earthquake victims are only half complete and the fate of the Bara-Parsa victims also remains uncertain.  

Events and Trends

A.1 Investment Summit

One day after the Investment Summit, Prime Minister Oli, at a program organized at the Reporters’ Club in Kathmandu, said that the event was quite encouraging and fruitful for infrastructure development.[1] The Summit, attended by over 600 participants representing 40 different countries, ended with investors showing interest in investing in 11 out of the 50 projects (Estimated Cost NR 5000 billion) showcased at the summit.[2]  Seventeen applications were received for 11 projects in six sectors:

  Sector Projects Estimated Cost in billions
1 Transportation 2 223.54
2 Hydropower 2 313.1
3 Health-Dhulikhel Medicity 1 8.18
4 Airport 1 331.92
5 Convention Centre-Bhaktapur 1 1.77
6 Agriculture Sector-Banepa, Chitwan, Hemja, Urlabari 4 11.71

Donors and the private sector expressed interest in 17 projects and 15 MoUs were signed. The objective was to attract foreign investment, but Nepali investors and non-resident Nepalis, too, expressed their interest. Chaudhary Group announced its intention to bring in foreign companies in the telecom, solar, and logistics sectors.[3] NRNA signed an agreement to bring in Rs 10 billion[4] investment in the infrastructure sector, by establishing an NRNA Infrastructure Investment Fund with GoN’s co-financing. Further, International Finance Corporation with a commitment of NR 110 billion[5] expressed interest in the Special Economic Zone in Simara. Likewise, State Bank of India together with Nepal’s Nabil Bank and Everest Bank signed an agreement to invest in 900-MW Arun III.  The key product attracting the investors was the energy sector that includes generation of 464 MW hydroelectricity, 568 MW solar power, and 10 MW wind power. In the same line, Power China expressed its readiness to invest in 25 projects.

The energy minister held separate meetings with investors from China, Korea, and Austria after the summit,[6] urging them to invest with full trust.[7] The investors, while sharing their experiences, claimed Nepal to be an appropriate destination for investments considering the availability of skillful labor, political stability, and investment friendly environment.[8] Hydro Solutions Nepal and China’s Yunan Xinhua Water Company signed an MoU for a 164-MW hydro project in the Kaligandaki River.[9]

Despite the government’s claim that it was a successful event, former finance minister Dr. Prakash Chandra Lohani said that the Investment Summit was a ritual recalling that the new commitment of NR 1700 billion was little compared to the early figure 1400 billion and was skeptic about investment coming, given the way the government is performing, emphasizing that investors consider risks and security situation.

The GoN is notorious for fleecing commissions from foreign investors, reason enough to scare the investors away.[10] Critics maintain that there were no investment commitments on the ambitious projects of the government[11] and the government is using the platform to relay the message of a stable government.

Notwithstanding all this, the government claimed Nepal has become an appropriate place for investment with procedural and institutional reforms and the investment friendly environment created.[12] The key development partners, including the ADB and the World Bank, have talked about their upcoming plans of long-term investments in Nepal and their readiness to push the goal of ‘Prosperous Nepal, Happy Nepalis’. 

A.2 Belt and Road Initiative

President Bidya Devi Bhandari’s State Visit to China during the second Belt and Road Forum raised public expectations as she signed multiple agreements with the northern neighbor. The Forum issued a joint statement saying the BRI respects openness, transparency, inclusiveness, a level playing field with respect affirmed for each other’s sovereignty and territorial integrity. The annex of the statement has listed economic corridors including Nepal-China Trans-Himalayan Multi-Dimensional Connectivity Network and Nepal-China Cross-Border Railway.[13]

The BRI is driving the formation of new global initiatives, cooperative mechanisms, institutions, and investment projects that are likely to become significant elements of an emerging global system.[14] Nepal and China first signed an agreement to build a railway linking Kathmandu with Xigaze on June 22, 2018. It is part of a broader trans-Himalayan connectivity network that includes ports, railways, highways, aviation, and telecommunications[15] and Chinese companies are already engaged in the construction of several high-profile infrastructure projects, including Pokhara Airport, Bheri-Babai Diversion Multipurpose Project[16], and Nawalparasi-Butwal section of the East-West Highway.

A.3 Security and Strategic Affairs

Nepal has announced that it would host the dialogue forum ‘Sagarmatha Sambad’ to discuss regional and global issues. Informed policymaking and coherent message to the world on issues of international concerns could be the outcome of such a forum. However, the government is yet to furnish details on the purpose and the expected outcome of such a forum.

Stability and connectivity remain the key concerns in the international relations of the developing world and the developed world alike. However, much remains to be done in terms of connectivity in developing countries. In a situation where there is so much interconnectedness including the language, culture, traditions, and open borders, the challenges become more complex and often beyond control. This has specifically been seen in terms of the spread of terrorism. The recent attack in Sri Lanka has been stated to be linked to international terrorist networking, mainly working to create havoc through local terrorist groups.

Recent reports have indicated increased (Lashkar-e-Toiba) LeT activity due to the porous border between Nepal and India, an advantage for the terrorist groups. Nepal on its own may not breed terrorist groups but can be used as a launchpad, by outfits across the borders, as also for human trafficking for flesh trade, since the border remains porous. Traffickers find it easy to lure women and get across foreign lands through India. Several Nepali women in pursuit of employment and a better life abroad have become prey to traffickers.

Women, especially from the rural areas and living in deprivation, ensnared by traffickers land in different countries to face physical, psychological, and sexual exploitation, and unimaginable hardships with no hope of escape. In April, twelve Nepali women were rescued from a club in Kenya, and 69 more from Mizoram (India), while trying to cross over to Myanmar. Several NGOs such as Maiti Nepal and Shakti Samuha are active to prevent the human trafficking and rehabilitate victims and there is more responsibility on the government to raise awareness and ensure job opportunities for those returning home.

Nepal-India-China Relations

The international relations of Nepal, by and large, is influenced heavily by India, China, and the US. Nepal has struggled to strike a balance and find a way to safeguard its interest as a primary objective rather than as a proxy actor of the three.

As a signal of increased US interest, US Ambassador to Nepal, Randy Berry has maintained an active presence in the media to retain a strong influence and not to lose its grip in the Indo-Pacific region. The move could well be a strategy to counter China’s thrust for global leadership using the BRI card.

In an interview, Berry gave a picture of the United States’ intentions in Nepal as being more humanitarian and less political, denying that China’s engagement in Nepal is disturbing, but his Twitter thread #closewhereitcounts speaks otherwise.

As a beneficiary of large US aid, Nepal seems harried to act according to the prescribed format. The US has pledged $150 million supposedly to be invested in development projects to promote American values universally acceptable, but when Nepal holds the power and the will to provide its citizens with these universal values, the US funds would appear redundant.

With the US and China alike, Nepal needs to be careful in its dealings and should decide in the best interests of the country.Chinese business agencies and tourists have been reported to be using digital wallet to pay in Nepal. The government seemed to have been caught unaware of the digital transaction as such a model of payment has not yet been registered in the country. After it came to light, the government claimed that the issue is completely under the government’s reach to regulate it. This can be a lesson for the country as it prepares for the Visit Nepal Year 2020 project to bring in two million tourists home. 

A.4 Biplab and Tharuhat Movement

Political movements linked to Biplab and Tharuhat struggle remained unresolved. The government announced a ban on Biplab’s party on March 12, 2019. The prime minister, on various occasions, stressed that the government would move ahead strongly if the outfit doesn’t hand over all the arms within 35 days. Two weeks on, after the deadline passed, both sides have remained silent, but the conflict is affecting a large number of communities in western Nepal.

A personal clash between Home Minister Ram Bahadur Thapa (Badal) and Netra Bikram Chand (Biplab) is reported to have influenced the government’s approach to the outfit alleged to be rooted in Badal’s ego clash with Chand, a stand in stark contrast with the groups raising secessionist voices[17].

Reminding that the people’s war has not achieved its goal and calls for another revolution, as a splinter of the former Maoist party, Biplab claims that his party is the real revolutionary one and would retaliate with force if the government becomes coercive.  However, with the deadline for the submission of arms to the approaching government,[18] there is no reaction from either side that could be the silence before a storm.

Meanwhile, the Supreme Court (SC) scrapped a writ petition demanding the release of Hemant Prakash Oli, the mid-central command leader of the party. In private conversations, human rights activists working in Karnali Province report that the police is cracking down on Biplab sympathizers, using fake evidence to detain them and tracking individuals who come into contact with the Biplab supporters. “We had to remind the police that they had used the same technique in the 1990s, but they express helplessness,” a human rights worker said. The issue has become a major concern of human rights activists in the region.

Launching a campaign on ‘Save Resham Chaudhary’ to ensure the right of identity, justice, and self-respect, the Tharu Welfare Society District Committee of Saptari has announced a national conclave in the second week of May, to bring in national leaders from across the country. The verdict against Resham Chaudhary has been defended by Tharu organizations through peace protests, demonstrations, and press releases in various districts including Kathmandu. 20

A. 5 Transitional Justice

In a long letter to the Government of Nepal, the UN signaled its discomfort over the state of Transitional Justice (TJ) in Nepal, expressing its concern regarding the amendment of TJ Act and underscoring the need for transparency in selecting appointees for the two commissions, TRC and the Commission of Investigation on Enforced Disappeared Persons (CIEDP). Nepal’s failure to solve issues regarding TJ necessitated the UN probe into the internal matters of Nepal and the selection process for the TJ Commission. The fear lingers that solving the TJ could put the leaders of NCP, formally Maoists, in a difficult situation as per the international law, forcing them to seek China’s help (a permanent UN member) to sideline the TJ issues with minimal individual damage to them in a bid to seek individual safety first at the cost of the justice for the victims.

The transitional justice process in Nepal appears to be on a tardy path since the current government includes leaders from a party previously at war. The former UML which merged itself with the former rebels appears reluctant to lose the political gain it now enjoys in leading a government of the two-thirds majority.

The unsolved issue of TJ does not assure one that justice would prevail, evidenced by the lack of follow-up on the cases filed. Some of the victims have already died, waiting for justice and some cases have been politically dismissed. The government has formed a recommendation committee selecting appointees in the commission, as a ritual, but affiliated to the party in power and under their influence, not representing the victims and human rights defenders.

A.6 Citizenship and Nationality

The Sub-committee of the State Affairs and Governance Committee, set up to resolve the issues pending on the citizenship bill, has failed to achieve its goal in its tenure of fifteen days.   The Chair of the sub-committee, Bijay Subba maintained that although three meetings were held, they could not finalize their report on the settlement of issues pending on the Bill.21 Likewise, an Apex Court verdict, through the single bench of Justice Purushottam Bhandari issued an interim order not to implement the Home Ministry’s circular on issuing citizenship certificates.22 Home Minister Ram Bahadur Thapa defended the circulars, claiming that the government was taking up the responsibility to issue citizenship certificates.23

A.7 Hindu Movement/King Gyanendra

As we bade farewell to the Nepali Year 2075, former King Gyanendra, in his New Year message, wished good health, peace, and progress to all Nepalis and stressed the need to maintain national unity with prosperity through a political system they chose. Furthermore, RPP, demanding the restoration of Hindu state and monarchy, sat for talks with the Government and withheld its announced protests programs in response to their 22-point memorandum submitted to the Prime Minister in February.

Some of the leaders of Nepali Congress, the main opposition, have regenerated the old version of status quo politics demanding Hinduism. It was reported that some 43% of Mahasamiti leaders are in support of Hinduism, which has created confusion as it seemed to be endorsed with grave silence by the top leadership

The ruling party doubts the alignment and motive of the main opposition. Claiming that Nepali Congress, in its bid to revive Hinduism, has joined hands with reactionary forces. NC Chairman Deuba remarked that the prime minister was turning into an autocrat.

A.8 Reconstruction, Disaster Response, and Resilience

Four years after 25 April 2015, when a devastating earthquake took lives and destroyed settlements with a huge impact in 14 districts across the country, reconstruction of settlement is just halfway, leaving the marginalized and poor people under temporary shelters[19] who are still awaiting government grant to rebuild their homes.

Commemorating the day, the news coverage in the mainstream media was on the loss, grants, reconstructions programs, and transformations but there was no coverage on the discriminatory picture. The marginalized Dalits remain helpless as the reconstruction of their houses is yet to begin.

Further, in the aftermath of the tornado havoc in Tarai, a huge amount of relief assistance reached the victims and assurance of help were expressed by the President, the PM, and the political leaders.  The relief, as promised and premised, has reached the affected places but victims are still awaiting assistance and relief. Most of the victims complained about improper and unequal distribution of relief with those close to the administration benefiting the most.  There is confusion with regard to who the primarily responsible authority is in recognizing the victims and distributing relief funds. As per the spirit of Nepal’s federal setup, the local governments should have been able to take prompt action in rescue, relief, and rehabilitation works. But for the want of a plan and disaster preparedness, they seem to be idling as mere spectators. The reconstruction of the damaged infrastructure, especially individual houses, is yet to start, and as the monsoon looms near, the woes of the victims may increase. Meanwhile, the federal government has announced handing over the reconstruction work to the army and not to the province or to local governments, raising questions on the government’s intention.

A.9 NCP Unification

The merger of the erstwhile CPN-UML and MC as NCP reached the final stage after nearly 11 months of discussions. On April 22, on the eve of 70 years of establishment of Communist Party in Nepal, the merger came to a conclusion with the finalization of district leaderships across the country. As per the deal between the two parties, 44 districts committees are to be chaired by the UML leaders and 33 districts by the erstwhile Maoists.[20] In every district, when one party chairs, the other would get the secretary’s post.[21]

The co-chair duo, KP Oli and Prachanda have claimed that they have broken the Iron Gate in the merger process. However, most of the former leaders of both sides disagree and expressing discontent as some of the senior leaders had to accept the secretary’s post. Standing Committee leader Ghanashyam Bhusal remarked that greed for power brought the two parties together.[22] The leaders of other political parties have termed it a marriage of convenience rather than a result of a conviction.   

Post KP Oli Camp Pushpa Kamal Dahal Camp Madhav Nepal Camp Ram Bahadur Thapa Camp Narayankaji Shrestha Camp
District Chair 28 27 16 5 1
Secretary 14 35 19 8 0

The report[23] that presents the allocation of quotas in the district leadership among the camps of the five leaders in the NCP (PM Oli, Dahal, Home Minister Badal, Senior Leader Madhav Kumar Nepal, and NCP Spokesperson Narayankaji Shrestha), reveals the unified party split into two large camps of Oli and Nepal, a small one with Thapa, with a negligible presence of Shrestha and Dahal wielding the strongest position.

In terms of inclusion, in the 77 districts, Brahmins and Chhetris hold the leadership roles in 50 districts as chairpersons, and in 43 districts as secretaries; Madhesis lead in 6 districts as chairpersons, and in 4 districts as secretaries. In the remaining areas, Gurung, Tharu, Thakali communities and other castes occupy the positions, and in five districts, Dalits are secretaries. Among women, only three lead as chairs and to as secretaries.[24]   

A.10 Nepali Congress

The beauty of democracy lies in strong opposition that checks and balances the ruling party. The opposition also functions as a shadow government raising voice against the wrongdoings of the ruling government and pushing for correction. The engagement of NC in the past one year in the parliament has been weak, however. The party seems to be running after the populist agenda. The leadership of the Nepali Congress appears moribund in carrying the agenda of democracy and good governance. There are ample grounds to doubt its leadership, especially NC president Sher Bahadur Deuba’s role in the cases of corruption reported along with the top leaders of the ruling parties. Ironically, in Nepal’s political arena, a small number of individuals have been found changing hands in power for the last two to three decades repeatedly and alternatively and sharing the pie.

In a dramatic comeback, to the parliament, Deuba lambasted the communist-led government, claiming that it has failed in delivering the results, has misled the institutions and development projects, is embroiled in rampant corruption, has done nothing to resolve the Nirmala Pant rape case, power concentrating in the PM’s hands.

Asking the government to correct its past mistakes and use the historic opportunity to deliver prosperity, and protect the democratic norms and values, Nepali Congress appeared to play a strong role in delivering its and effective opposition message on the first day of the pre-budget session of the federal parliament.

A.11 Land Scam

Amidst the heavy criticism of the way the government is performing, the land scam came up as another setback to PM Oli as the party’s influential leader Bishnu Poudel, NCP General Secretary, was reported to be involved in a major financial scam apart from the gold scam, widebody Airbus deal, NCell Taxation, Budhi Gandaki Project, sugar cartel etc. The names of various former prime ministers including Sher Bahadur Deuba, Madhav Kumar Nepal, Baburam Bhattarai cropped up being involved directly or indirectly in approving the scam, that remains to be verified. A recent government report on the embezzlement of 113 ropanis at Baluwatar, under the nose of the Prime Minister’s residence, sparked another furor.[25]

Analysis and Conclusion

Although Nepal needs foreign investments and funds to achieve a high rate of economic growth, people are raising questions about how and where the money is spent. Nepal’s agreements with China regarding various projects within and outside the rubric of BRI has also generated questions about the selection of projects bypassing regular planning process, their potential economic returns, and their impact on Nepal’s international relations, particularly with India. For example, The Hindustan Times noted[26] that Beijing’s’ announcement of BRI projects with Nepal, which coincided with the dropping of the BCIM corridor from the project list, indicates China’s emphasis on bilateral approaches. India, meanwhile, dropped out of BRI citing concerns about the China-Pakistan Economic Corridor (CPEC) that passes through Kashmir.

China would not want just to connect but also reach India and the rest of the world through Nepal which underscoring the rationale for Chinese Aid rather than a loan on the rail project. China is emphasizing the logistical linkages between Nepal, Pakistan, and other south Asian countries regarded as a huge market for Chinese commodities made in western China. The land routes to these countries from Lanzhou of Gansu province are four times faster than the sea routes[27].

Nepal also has to consider getting prepared for the projects that are to come. For example, China wants infrastructure for Chinese vehicles to enter Nepal’s main market. China has agreed to provide access to seven ports for Nepal. With the opening of these entry points, challenges would lie in language barrier, trade policies, VISA systems, and maybe at the minimal, left/right hand drive and the competitive advantage of doing business. On the Kerung-Kathmandu Railway Project, the Chinese experts prefer in the form of loans, not grants. While China insists that loans would reduce the potential of corruption and inefficiency, Nepal wants more investments in the form of grants to manage the risks of a potential ‘debt trap.’ 

After eleven months of dilly dallying and internal power-sharing agreements and negotiations among the key leaders, the NCP unification moved a step ahead with the finalization of the key leaders in the district committees. In the aftermath of the declaration, some leaders within the party expressed their frustration and dissatisfaction concerning the hierarchy with certain newcomers bagging larger roles and the senior ones left behind. The discontent is likely to influence the internal dynamics of the party.

Within the party and outside the NCP as well, riding on the majority, the government has been found to be ignoring the minorities and the opposition parties alike. The appointments to the constitutional bodies and the ban on Biplab are cases where the opposition parties’ opinion have been ignored.

Likewise, the government seems indifferent in the citizenship issue. As the federal law on citizenship still remains to be enacted, the children of citizens by birth have yet to enjoy their fundamental rights; delay in the enactment of the Citizenship Bill is fuelled by the fear of foreigners exploiting loopholes in the bill. The new provisions could be regressive compared to the one in the Interim Constitution.

With the history of armed conflict, mediated peace, and then a constitution through the constituent assembly, the political leaders are well aware that the use of arms is not a solution. It has always been talks, negotiations, and agreements at the end. But, instead of negotiations and talks, the government has opted for aggression on Biplab. Both the government and the outfit seem reluctant to sit for talks and are bent on confronting rather than opting for a peaceful settlement. The government overrules talks while the outfit is up with arms. The stalemate continues. The government has arrested some 500 cadres but has taken no action against them. Despite the ban, the leaders of the outfit have been found making public speeches in Kathmandu.

On the land grab issue, the government formed a committee to investigate in June last year following complaints by the public which was to be appreciated, but the investigation process seems to have got. The Ncell taxation issue awaits the final hearing of the Apex Court (on June 4), and the status of the Wide Body and Gold scam too remains undecided, apart from the contention on the citizenship. The circular of Home Ministry on facilitating the process faced defiance of the Apex Court. The third decision in a row from the Supreme Court has stayed the implementation of the circular that ordered issuance of citizenship by descent to the children of citizenship by birth.  Women and men, as equals, must raise voice to ensure the rights for themselves, and the government, as well as the judiciary need to demolish discrimination on the basis of gender.

The dream of prosperity within our lifetime would be possible with a robust increment in investments in infrastructures, employment, and growth in private and public sectors, with concerted efforts from all the three tiers of government supported by development partners and foreign investors. In terms of investment as per the intent expressed at the Investment Summit, investors need to translate their commitment and intent into an investment, which is likely only when the government guarantees a risk-free, safe, and supportive environment in the country.  The investment commitment since the first Investment Summit, however, appears to be at lacking. The lack of an investment friendly environment in the country appears to have changed with the passing of new laws right ahead of the event.

To err is human, but learning from mistakes and improved actions should be the way forward. The party at the helm must learn from its mistakes. Defending the voices of the miscreants and the wrongdoings of the party leaders including the various forms of misdemeanors is not an indication of good governance. To realize the vision of dreams of peace and prosperity, the ruling party has to minutely discuss the mistakes, correct them, and do so with due consideration of upholding rule of law and upkeep of good governance.

Panicking and blaming the government is not the rational path for the opposition. If the hard-earned political achievements are not to be jeopardized, the government must heed the opposition, the media, and the public voice and come up with corrective measures and keep the elected representatives on track until the voters elect or reject them in the next elections.




























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