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Political Development
in Nepal: 2000
Nepal completed 10 years of
democracy established in the Spring of 1990. During these years,
the country witnessed changes in 10 governments. Except a 9-month
rule by Communist Party of Nepal Unified Marxist-Leninist (CPN-UML),
Nepali Congress ruled the country most of the years either alone
or with coalition with political parties of many hues—the right,
the left and the center. Still, governmental instability continues.
In 2000, political situation in the country remained highly
unstable caused by in-fights within the ruling Nepali Congress
party, growing Maoist insurgency, regular Nepal Bandh (shut
down) program organized by smaller parties and industrial unrest.
Concerned with the country’s worsening law and order situation,
His Majesty King Birendra, in early March, instructed the parliament
to focus on three important subjects—reach concrete agreement
regarding the free and fair election in the future; promulgate
act on political parties and seek solution of Maoist problem.
Prime Minister Krishna Prasad
Bhattarai initiated moves on all these fronts and set up commissions
to solve Maoist problems and suggest ways to make elections
free and fair. But, on March 14, sixty-nine out of 113 Nepali
Congress Members of Parliament (MPs) close to Congress President
Girija Prasad Koirala registered a no-trust proposal against
premier Bhattarai in their parliamentary party, accusing him
of poor performance, failure to show leadership qualities and
heading a directionless government. Three days later, premier
Bhattarai resigned. Subsequently, on March 18, election took
place for parliamentary party leadership of Nepali Congress
in which Nepali Congress President Girija Prasad Koirala defeated
former Prime Minister Sher Bahadur Deuba (69 versus 43 votes,
with one vote declared invalid). On March 20 king Birendra appointed
Girija Prasad Koirala, the new Prime Minister of Nepal. Law
and order, good governance, corruption control, poverty alleviation
and negotiation with Maoist were his topmost priorities.
Former premier Sher Bahadur
Deuba formally opened a contact office in Kathmandu for those
dissatisfied with Koirla government and on August 7 he collected
the signatures of about 50 MPs against Prime Minister Koirala.
The next day premier Koirala sacked Water Resource Minister
Khum B. Khadka from his cabinet as he was leading the rebel
with Deuba and was putting the following demands: a) premier
Koirala should resign from the party president and appoint Sher
B. Deuba as acting president; b) initiate full-fledged reshuffle
of the Central Working Committee of the party (CWC); c) reshuffle
the cabinet for the formation of new government in consultation
with Bhattarai and Deuba which means inclusion of equal number
of people from rebel camp; and d) postpone the party’s general
convention scheduled for November.
Premier Koirala postponed
the party’s general convention by January 19, 2001 as well as
set up a five-member election committee for the election of
central committee members of the party and the president.
On December 28, fifty-six
members of the ruling Nepali Congress, led by former premier
Deuba, registered a no-trust motion against Prime Minister and
Party President Girija Prasad Koirala in his parliamentary party
office with the signature of 57 MPs. Deuba said: Koirala had
failed to fulfil the pledges he made when he took office as
Prime Minister. He also implicated Prime Minister’s involvement
in the controversial Lauda Air deal.
In a no-trust vote that took
place on January 4, 2001 premier Koirala survived. The 41rebel
members of parliament who boycotted the vote questioned the
validity of the voting. 69 votes went against no confidence.
"We have decided to boycott the voting as we don’t want to be
a part of the conspiracy to split the party" said Deuba. He
also said that the voting was invalid because no-trust proposal
was not debated in the parliamentary party.
On January 22, 2001 in the
10 General Convention of Nepali Congress Party, Prime Minister
Girija Prasad Koirala has been elected to the post of Nepali
Congress party for the second term by scoring 64 percent of
the votes. Koirala obtained 936 votes out of the total valid
1,453 votes and defeated his two rivals Sher Bahadur Deuba (507
votes), and Ram Hari Joshi (10 votes). Out of 18 elected Central
Committee members of NC, 12 are from Koirala side while 6 from
Deuba-Bhattarai side. On February 7 premier Koiral reconstituted
37-member council of minister in which only one member from
Bhattarai-Deuba side was taken. This fuelled the ire of Bhattarai.
Upon resumption of office
Premier Koirala took a number of initiatives:
- On May 26, 2000 a five-member Human
Rights Commission had been set up.
- On August 17, the House of Representatives
passed the bill to regulate the activities of political parties.
The Party Act allows the party chairman to nominate 50 percent
members to the apex bodies of the political party.
- On July 26 the House of Representatives
passed the sixth amendment to Citizenship Act 2056.The Act
guarantees citizenship rights to a person on the basis of
birth. The Bill was passed with 108 votes of Nepali Congress
MPs in the presence of 5 Nepal Sadbhavana party MPs. Other
parties boycotted this move.
- On July 17 the government abolished the
bonded labor system existing in the country. Though forced
labor and slavery is banned and punishable by up to 10 years
in prison, the human right groups claim that they are up to
40,000 who for generations have been working as bonded laborer.
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Maoist problem
The six years of Maoist insurgency
caused the death of many people and billion dollars worth of
property and affected both political stability and development
process. Until December 2000, according to human rights reports,
1513 persons were killed in the Maoist People’s War (out of
which 251 were police, 999 innocent public by the police and
263 Maoists). Out of 75 districts in the country, four districts
are in Maoist control, in 46 districts they are active and in
25 they are expanding their activities. Due to pervasive poverty,
inept handling of the issue, governmental instability, growing
corruption and mis-governance in the country, Maoist activities
are rapidly expanding. Maoists' targets are local feudal, corrupt,
informant, police, bank and occasionally party worker of major
political parties. They had looted property and guns.
The government took a number
of initiatives to curb Maoist problem: addition of portfolio
of defense minister to finance minister Mahesh Acharya; appointment
of Pradeep Shumsher Rana to the Acting Inspector-General of
Police so that he can coordinate with the Chief of Army Staff
Prajwal S. Rana in anti-Maoist maneuver; deployment of the army
in 13 districts (according to Defense sources, the army men
would be mobilized at the discretion of the appropriate Chief
District Officer to protect the district headquarters); convening
all party meetings and calling the insurgents for dialogue.
Accordingly, on October 16 the Cabinet meeting had appointed
Health Secretary Srikant Regmi as the new Home Secretary.
On August 31 Deputy Prime
Minister Ram Chandra Poudel announced Integrated Development
Program for those districts hit by Maoist insurgencies. A first
class government officer, who will coordinate the development
administration, police and the army, would implement the development
program. The major objective was to avert the corruption in
the development budget. On October 27 Poudel held "unofficial
talks" with central committee member of Maoist party Rabindra
Shrestha. The Maoist demanded the release of all detainees by
the government as a pre-condition for talks. On November 3 the
government released two Maoist leaders Dinesh Sharma and Dinanath
and brought to the press where they said that they are renouncing
violence. Later they refuted and their whereabout is unknown.
Maoist Pary General-Secretary Prachanda said "the possibility
of our party talking with the government and our faith in it
is nearly over."
The initiative taken by former
Prime Minister and coordinator of High Level Consensus Seeking
Commission to resolve the Maoist problem, Deuba’s initiative
could not bear fruitful result for what he said "he was neither
helped by the government nor by the party to go ahead for dialogues
with the underground rebels." Due to infighting in the party,
the dialogue was interrupted after one meeting at Himalaya Hotel
in Kathmandu.
On January 22, 2001 His Majesty
the king with the consent of Council of Ministers, promulgated
an "Armed Policy Ordinance 2057 B. S." designed to immediately
institute an armed police force and make arrangements for its
functioning. The force will be armed with modern weaponry and
provided training in anti-insurgency operations. It will also
be mobilized to control armed struggles, armed insurgency or
secessionist activity, terrorist activity and religious and
communal riots taking place or likely to take place in any part
of the Kingdom of Nepal.
Scandal
In October a controversial
deal between the Royal Nepal Airlines Corporation (RNAC) and
Lauda Air for the lease of Boeing 767 aircraft surfaced in the
Public Account Committee (PAC) of the Parliament. The PAC probed
into the matter and asked RNAC and Civil Aviation Ministry to
scrap the proposal. The RNAC defying this instruction directly
entered into negotiation with the Lauda Air and even sent a
bank guarantee amounting to one million US dollars to the Lauda
account without considering the security of the account. The
PAC asked the civil aviation minister, premier Koirala and chairman
of RNAC to furnish information regarding their decision. Two
civil aviation unions also exerted pressure to scrap the deal,
which they considered, was against the national interest. The
chairman of RNAC was suspended from his job while Civil Aviation
Minister resigned. The five main opposition parties joined hands
to demand the resignation of premier Koirala. They are: CPN-UML,
Rastriya Prajatantra Party (RPP), National People’s Front, Nepal
Workers and Peasants party (NWPP), and United People’s Front
(UPF) for his alleged involvement in the Lauda Air Deal and
blocking the proceeding of the parliament.
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Trade Unions News
The three main trade union
federation of Nepal are: Nepal Trade Union Congress (NTUC),
Democratic Confederation of Nepalese Trade Unions (DECONT) and
General Federation Nepalese Trade Unions (GEFONT). Nepalese
trade unions are gradually developing professionalism and are
becoming active in a number of areas, such as eliminating child
labor, rehabilitation of bonded labor, organization of agricultural
workers, unionization of women workers and running trade union
schools for the children of workers and a number of similar
welfare programs. Some of labor issues surfaced in 2000 were
as follows:
On January 22 International
Confederation of Free Trade Unions (ICFTU) and Nepal Trade Union
Congress (NTUC) which brought together 60 representatives from
29 countries jointly organized an international conference on
Burma. The Kathmandu declaration issued on the concluding day
said "restoration of democracy in Burma will not be possible
without political and economic pressure against military junta."
General-Secretary of ICFTU Noruyuki Suzuki noted that a plan
to organize such a conference in India and Thailand did not
materialize, as those countries did not give permission. For
the first time General Federation of Nepalese Trade Unions (GEFONT)
participated in such conference.
On March 7 the Nepalese parliament
passed the Child Labor Prohibition and Control Bill by a majority.
The Bill was to prohibit the use of child labor in hazardous
working conditions like that in factories and mines and establish
their right to education.
On April 3 Democratic Confederation
of Free Trade Unions (DECONT) handed over a 21-point memorandum
to State Minister for Labor, Surendra Hamal stating that not
much has been done for the upliftment of laborers ever since
the restoration of democracy and that laborers are deprived
of various legal rights. Their demands include: representation
of laborers at the managerial level, immediate rise in the minimum
wage of laborers, enforcement of accident insurance for them,
implementation of all labor laws, creation of a National Welfare
Fund, etc.
In January, the government
fixed minimum wage for agricultural workers. Accordingly, a
worker gets Nrs. 60 per day (Nrs. 7.50 per hour). On April 25,
the Nepalese government fixed the minimum wages for laborers
and employees working in institutions other than the tea industries.
The minimum wage for unskilled laborer has been fixed at Rs.
1,450 per month, Rs. 1,500 for semi-skilled, Rs. 1,610 for skilled
and highly skilled and Rs. 1,144 for child workers. The above-mentioned
minimum wage also includes an additional dearness allowance
of Rs. 666 for adults and Rs. 500 for children. Likewise, adult
workers working on a daily basis is entitled to receive Rs.
74 per day while children will receive Rs. 60 per day.
Third National Congress of
General Federation of Nepalese Trade Unions (GEFONT) that took
place on May 1 passed a 16-point resolution that promised welfare
measures to the workers. The resolution protests against non-implementation
of Labor Act, blind privatization of public enterprises, immediate
stoppage of unfair labor practices and demands to end of sub-contracting,
compulsory security provisions for workers in risky jobs, provision
for issuing identity cards to workers, formation of permanent
wage board, diplomatic protection to Nepalese migrant workers
and guarantee on the right to unionize. The Congress also elected
new national committee of GEFONT chaired by Mukund Neupane.
The Congress elected Lalit Basnet, Bishnu Rimal and Binod Shrestha
on the posts of Vice-Chairman, Secretary-General and Treasurer
respectively.
Industrial Unrest From
May 10 DECONT leaders started series of peaceful agitation programs
against Nepal Civil Aviation Authority in response to suspension
of 27 low-level workers from their job. These workers were members
of Nepal Custom and Airport Workers Union (NCAWU) affiliated
to DECONT. On June 28 four police van arrived at the airport
and threw all the 47 workers who were sit in strike to van and
took to police custody. Among them were 2 deaf, 4 infants and
many women. Police also manhandled labor leaders including DECONT
president, vice-president, secretary and central committee members,
wounded 7 workers and also kept them in custody thus numbering
70 persons. A day later the detainees were released.
On July 1 nine police and
three ordinary person were injured as police and labor confrontation
blocked the Nepal-India border at Jogbani. Police fired 14 cells
of tear gas, five rounds of gas grenade and 4 rounds of blank
fire to disperse the agitated workers. The incident occurred
as the government planned to close Biratnagar Jute mill, the
oldest factory of the nation. On July 4 an agreement was reached
between the workers and the management and the stalemate ended.
Management agreed to run the mill according to Labor Act and
provide facilities to the workers accordingly.
On August 16 employees of
the public enterprises who had been pressing the government
to fulfill their demands called off their weeklong strikes.
The apparent reason behind the strike was that while the new
pay scale increased salaries, it has done away with all other
allowances and perks. The striking employees affiliated with
the Inter-Corporation Employees Association, Inter-Banking Employees
Association, Nepal Financial Corporation Employees Association
and Nepal Inter-Corporation Employees Association had their
score settled when the Ministry of Finance constituted a five-member
committee. The committee reviewed the institutional structure
and financial capacity and recommended for additional perks
and facilities.
Since mid-November Hotel Workers’
Association of Nepal related to major trade unions strongly
demanded with the government and hotel owners, to impose 10
percent additional service charge to be given to workers’
welfare with immediate effect. If their demand is unmet they
threatened to go for an indefinite strike beginning December
11. The government set up a high level committee under the vice-chairman
of National Planning Commission to study in detail on the issue
of the 10 percent additional service charge. The committee submitted
its report in its stipulated time but it did not endorse the
10 percent service charge. Instead, it only recommended the
"regularization" and "institutionalization" of tips. Restaurant
and Bar Association of Nepal (REBAN) had raised it’s concern
over the imposition of 10 percent charge on hotel bills stating
that foreign and local tourists will be greatly affected which
will affect tourism industry in the nation.
NTUC-GEFONT Dialogue
On August 27 two major trade
unions of the country NTUC and GEFONT had held their second
dialogue aiming to form apex trade union. Ineffective implementation
of Labor Act, Policy, Rules and regulations gave birth to the
concept of forming an apex body of trade unions. Safeguard of
rights, well being and interest of workers prompted them to
come together. GEFONT has proposed "National Labour Senate-Nepal"
which will have one representative each from labour organizations
and five from each trade union federations. The senate will
at least make comprehensive supervision of trade unions, constitute
an administrative board for the management of the Senate through
multi-lateral agreement. However, NTUC proposes to establish
an authorized union at every enterprise and to form similar
types of unions at the national level. GEFONT also wants the
participation of DECONT while NTUC wants to avoid.
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Social and Economic Development
Indicators
With about 23.9 million population
and having a per capita income of US$ 210, Nepal remains one
of the poorest countries of the world. It ranks 144th
position in UN Human Development Index out of 174 countries
listed in the Human Development Report. Nepal’s Human Poverty
Index is 51.3 percent. More than fifty percent of its population
live on less than a dollar a day. Over 80 percent of population
live in rural areas, pursuing agriculture as a source of livelihood,
most on small plots that produce insufficient food for survival.
If the current growth rate (2.4 percent) of population continues,
the population of Nepal will reach 40 million by the year 2020.
The Human Development Report concludes that in Nepal the rich
are getting richer and the poor are getting poorer. While the
richest 20 percent of the population earn 44.8 percent of income,
the poorest 20 percent earn 7.6 percent of the income only.
Adult literacy is 39.2 percent and school enrolment ratio is
61 percent. The social sector still receives a low priority
in budgetary allocation. At present, the human expenditure ratio
in Nepal is less than 3 per cent of GNP that is very low as
compared to the internationally recommended ratio of 5 per cent.
The average annual Gross
National Product (GNP) growth rate of 3.4 percent roughly balances
the population growth. The population growth is higher than
food grain production (2.2 percent). Until 1975, Nepal used
to be a major food grain exporting country. Despite heavy investment
and top priority given to the agriculture sector, the country
now imports food grain every year from abroad. Ironically, this
sector still dominates the economy viewed from the share in
GDP contribution. More than 60 percent of its development budget
comes from foreign aid and aid constitutes a major instrument
for Nepal to escape from poor income, low saving (about 10 percent)
and low investment trap. The growing fiscal deficit gap in the
economy indicates a trend towards debt spiral. Debt is so huge
that even four years of revenue collection cannot pay back the
debt. About 90 percent of population do not have access to adequate
health services, 29 percent do not have safe drinking water
and 85 percent of population do not have access to sanitation.
The infant mortality rate is 83 per thousand, and the average
life expectancy of male is 57.6 and that of women 57.1. Nepal
is the only country in the world in which life expectancy for
women is lower than for men. The literacy rate for women is
28 percent and for men 62 percent. Only 23 percent of women
above 15 years of age in Nepal are literate, as against 58 percent
of males.
The Ninth Five-Year Plan Document
(1998-2002) defines three broad objectives of the state: poverty
alleviation, employment generation and promotion of balanced
development in the country. The Report of Nepal Development
Forum 2000 reports that "fiscal management has been poor; and
the budget has been balanced largely at the expense of development
activities. And, there has been little tangible progress in
reducing widespread poverty—Nepal’s principal development challenge—as
well as in addressing structural problems which are hampering
Nepal’s longer term development."
The statistics in Nepal are
very confusing. The data produced by Central Bureau of Statistics,
National Planning Commission and Nepal Rartriya Bank are not
consistent to each other. On September 5 Nepal Rastra Bank claimed
that Fiscal Year 1999-2000 marked acceleration in economic growth
and a sharp deceleration in inflation rate. The real economic
growth stood at 6 percent due mainly to improvement in the agriculture
sector followed my marked growth in the manufacturing, trade
and electricity sectors. Broad money registered a decelerating
growth of 19.2 percent amounting to Rs. 182,211.6 million compared
with the growth of 20.8 percent during the previous year. The
growth of time deposits decelerated from 25.1 percent in the
previous year to 20. 6 percent during the review period. Narrow
money growth accelerated from 13.1 percent in 1998-99 to 16.
6 percent during the review year. Total domestic credit of the
banking system decelerated slightly to 16.1 percent from 16.4
percent in the preceding year. The flow of bank credit in the
private sector increased by 20.1 percent compared with 18.9
percent in the preceding year.
The government expenditure
increased by 9.9 percent, against 8.8 percent in the preceding
year. Of the total expenditure, regular expenditure increased
by 10.4 percent, development expenditure by 7.8 percent, and
freeze expenditure by 43.1 percent. Resource mobilization marked
a growth of 9.1 percent, against 18.1 percent in the preceding
year. Revenue mobilization stood at Rs. 42,870.0 million, marking
a 15.1 percent growth against 13.1 percent in the preceding
year. Budget deficit amounted to Rs. 10,214.3 million, which
is 13. 5 percent higher than during the preceding year. The
government issued treasury bills worth Rs. 2,510.0 million,
national saving certificates worth Rs. 2,200.0 million and development
bonds worth Rs. 790.0 million during the review period. The
annual average National Urban Consumer Price Index recorded
a rise of 3.3 percent, against 11.3 percent in the preceding
year. A fall in the prices of food and beverages helped lower
the annual average inflation rate to a single digit. The annual
average price index of Kathmandu, hills and Terai increased
by 3.6 percent, 3.7 percent, and 3.0 percent respectively.
Exports increased by 44.7
percent and imports by 22.2 percent. Exports of pasmina increased
significantly while the exports of pulses, tanned skin and nigerseed
declined. The export-import ratio, which was 40.8 percent in
the preceding year, improved to 48.3 percent. Trade deficit,
which had declined in the previous year, increased by 6.7 percent.
The overall balance of payment recorded a surplus of Rs. 14,047.6
million. As a result, foreign exchange holdings of the banking
system increased by 22.6 percent as of mid-July 2000.
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Budget at a Glance
On May 30 Finance Minister
Mahesh Acharya announced a package of 91.62 billion rupees annual
budget for the Fiscal Year 2000/2001.The new budget identifies
poverty alleviation as its prime objective. To achieve this
goal, the budget aims at enhancing public expenditure management,
continuing financial sector reform and improving institutional
efficiency. The new budget, up by35.6 percent from the revised
estimates of the current fiscal year ending mid-July, would
launch various pro-poor programs in the spirit of "Income to
the Poor and Justice to the Downtrodden". 48.10 billion rupees
had been allocated for development and 43.51 billion rupees
for regular expenditure. The share of the development and regular
expenditure is 52.5 percent and 47. 5 percent respectively.
Out of 43.51 billion rupees allocated for regular expenditure,
a major chunk (12.76 billion) will go for debt servicing, 3.89
billion rupees for defense and security, 5.27 billion for police
force, 8.20 billion rupees for education and 1.66 billion rupees
for health. On the development side, 35.1 percent will go for
the social service, 7.1 percent for education, 6.3 percent for
health, 8.0 percent for drinking water and 10.7 percent for
local development. The economic service sector constitutes 63.4
percent of the total development fund, 13.8 percent for transportation,
22.0 percent for hydropower development and 19.6 percent for
agriculture, irrigation, land reform and forest sector. As the
sources of financing, revenue mobilization projection stands
at 47.92 billion rupees, while the contribution of foreign grants
and bilateral and multilateral debts would be 11.84 billion
and 19.79 billion respectively. Twelve and a half billion rupees
would remain as deficit.
Critics blame that the whole
budget is like a subsidy, given importance to defense spending
rather than poverty alleviation, regionally unbalanced and unrealistic.
It will widen the gap between the rich and the poor. The general
expenditure is higher than development expenditure—the latter
is purely based on foreign aid.
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Foreign Affairs
Nepal-India Relations
India is Nepal’s most important
neighbor and for historical, economic and geopolitical reasons,
both the countries maintain good relations. The Peace and Friendship
Treaty of 1950, Trade and Transit Treaties signed in every five
years and the Arms Assistance Agreement of 1965 define open
border, common security provisions, national treatment to each
other’s citizens in matters of trade, commerce, job and movement
of population and a common foreign policy orientation in a number
of areas, such as nonaligned movement, the UN, WTO and regional
cooperation in South Asia. Despite these commonalities, there
are a number of issues that affect bilateral relations of two
countries:
On December 24, 1999 an Indian
plane IA 814 carrying 178 passenger from Kathmandu to New Delhi
was hijacked by 5 Kashmiri militants to pressurize the Indian
government to release 3 Kashmiri rebels from New Delhi Jail.
The plane first landed in Amritsar, India, Lahore, Dubai and
finally in Khandar in the early hours of December 25. In Dubai
they released 27 passengers, killed one Indian and took the
rest to Afghanistan. After nearly 7 days of negotiations 3 Kashmiri
militants were released from the Indian jail and the passenger
were set free. There were 8 Nepali passengers on board. Indian
government blamed Nepal for its security lapses while Nepali
government resented. The Nepali government constituted a task
force under former police chief Hem B. Singh to inquire into
the problem. On January 24, the task force submitted its report
and, accordingly, on January 27 departmental action had been
taken against airport general manager, airport police chief
and deputy superintendent of police. The Indian plane resumed
its flight after 6 months of suspension from the second week
of June 2000. This event badly hit Nepal’s tourism sectors.
In the first week of July,
an agreement between the home secretaries of Nepal and India
concluded in Kathmandu in which the two sides agreed to introduce
travel document requirement for the nationals of both countries
from October 1 who are traveling by air. This does not apply
to surface travelers. The meeting decided to send Nepali immigration
and police officers to India for training to control criminal
activities at the border areas.
On May 7 Foreign Minister
Chakra Prasad Banstola left for a two-day visit to India. Matters
of bilateral relations including Bhutanese refugees, 1950 treaty,
water resources, etc were discussed. They also agreed to control
criminal and terrorist activities in their respective borders.
On June 27 Minister for Water
Resources Khum Bahadur Khadka urged the Indian ambassador to
Nepal to work for the speedy resolution of Rapti river inundation
problem. He added over 9,500 families in Banke district would
be affected by Indian built-in Laxmanpur dam on the Rapti river.
The construction of this dam that began in 1983 and completed
in 1998, was undertaken by India in its territory without considering
the effects it would have on the Nepali side.
PM’s India Visit: At
the friendly invitation of Indian Prime Minister Atal Bihari
Bajpayee, Nepalese Prime Minister Girija Prasad Koirala made
a week-long visit to India on July 31. PM Koirala was accompanied
by Foreign Affairs Minister Chakra Prasad Banstola and a host
of secretaries who were set to talk on various issues including
inundation of Nepali villages in Banke districts following the
construction of the Laxmanpur Dam by India without Nepal’s concurrence
and army withdrawal from Kalapani (On April 10 nine left-parties
combined staged a sit-in outside the Indian Embassy for two
hours demanding a removal of Indian troops from Kalapani area
stationed in the early 1960s and a complete halt in the encroachment
of Nepali lands in 64 different places). Nepal felt that India’s
move amounted to violating the international principle on border
management. Other issues discussed were India’s mediation in
the repatriation of 1,00000 Bhutanese refugees stranded in Nepal.
India was, however, silent on Nepal’s suggestion that India
intervene to facilitate the return of Bhutanese refugees. India
on its part insisted Nepal on checking "Pakistani-inspired activities
against India." India assured Nepal that it has no intention
of occupying "even an inch of its territory" but refused to
accept Nepal’s demand that Indian army be withdrawn from Kalapani.
The British imperial map and Nepal’s evidences show Kalapani
under Nepalese territory. India insisted that Kalapani issue
should be left to the same Joint Technical Boundary Committee
and requested Nepal not to politicize the issue.
Premier Koirala’s goodwill
visit also covered many topics that included Nepal’s insistence
for a review of the 1950 Treaty of Peace and Friendship. The
two countries agreed to leave the issue of revision or possible
replacement of the 1950 Treaty to the foreign secretaries. Meanwhile,
Nepal was to study alternative model, impact of the replacement
of treaty and the status of the exchange of letters and other
agreements between the two sides based on the Treaty of 1950.
Similarly, both sides agreed to leave the issue of border disputes
to the Joint Technical Boundary Committee with the instruction
that it would complete fieldwork latest by 2002. They also agreed
that final preparation to prepare strip maps in place of riverine
border should be completed by the year 2003. On August 3,
Nepal-India Joint Press Statement has been issued stressing
on mutually beneficial future-oriented cooperation.
India acknowledged Nepalese
apprehension about the likely damage that construction of Laxmanpur
barrage on the Indian side of Nepal’s western Banke district
and promised to undertake damage control exercise (Foreign Affairs
and Human Rights Committee of Parliament had reached the conclusion
that the Dam should be demolished). Nepal has insisted on a
joint commission headed at the secretary level and technical
experts be constituted to measure the damage and suggest precautionary
measures. Both sides also agreed to set up joint committees
to explore potential of hydel power projects in Nepal which
is in high demand in India and which should be environmentally
sustainable. Both the Prime ministers were keen on a Detailed
Project Report (DPR) for 2001 complete the purpose of utilizing
the hydro-power of non-controversial river. They hoped that
the unresolved projects would be resolved soon indicating that
tangible solution was found on the Mahakali and Pancheshwor
projects soon. Both the PMs directed that the work on the preparation
of Detailed Project Report be completed latest by the end of
2001. On Saptakoshi high dam and Sunakoshi-Kamala diversion
projects, they agreed that the ongoing process be expedited.
India was vocal on raising
its concern about the alleged growth of anti-Indian activities
from Nepal and identified Pakistani ISI as being the main culprit.
Nepal felt that Maoist had got a base in India to carry out
"terrorist activities" in Nepal. Both sides agreed to intensify
the anti-terrorist activities and instructed their respective
home secretaries to co-operate each other in the field of security
and strengthen information sharing. India agreed to take a positive
stance regarding Nepal’s demand to wave four percent custom
duties imposed on its goods in the Indian market. In exchange,
Nepal agreed to relax the rule for certification procedures
for imports of Indian vehicles into Nepalese markets. The Indian
side conveyed that emission testing facilities were being set
in the borders—Gorakhpur in India and Raxaul in Nepal, which
would help streamline procedures for Nepali food exports to
India. The Indian side agreed to assist in upgrading the testing
facilities in Nepal as well as to help Nepal in IT, diary development,
technology and development.
Both the PMs directed the
inter-governmental committee on trade, transit and unauthorized
trade, headed by commerce secretaries of the two governments,
be convened soon to effectively address the remaining issues
in a constructive manner so as to promote economic links between
the two countries. It was agreed to conclude a bilateral investment
protection and promotion agreement at the earliest.
In response to the request
made by the Indian side for the regularization of the services
of Indian schools and college teachers employed in Nepal, the
Nepali side assured that the decision taken by the Nepalese
government in 1988 in this regard would be implemented. Responding
to the long-standing Indian request for the setting up consulate
general of India at Birgunj, the Nepali side informed that the
request was under consideration of the government.
[Up]
Bhutanese Refugees:
The secretary level talk between
Nepal and Bhutan on March 13 in Kathmandu focused on
terms of reference, composition of the verification team, pro-forma
and the verification modalities. The United Nations High Commissioner
for Refugees Sadako Ogata visited Nepal and Bhutan in the first
week of May with the possibility to resolve Bhutanese refugees
problem. She said that "There has been a change in Bhutan’s
stand since 1998," expressed UNHCR’s "willingness to act as
a facilitator and welcomed any other international mediation.
India with its presence, interest and influence would be very
welcome to lend its support."
The tenth-round of Nepal-Bhutan
bilateral talks took place on Dec. 25,2000. Bhutanese Foreign
Minister Jigmi Thinley said that the recent American proposal
to verify Bhutanese refugees would be considered bilaterally
during the 10th round of Nepal-Bhutan Talks. During
their visit to Bhutan and Nepal, two U.S. assistant secretaries-Karl
Inderfurth and Julia Taft—had suggested the validation of 1,00000
refugees before actually verifying them. On December 27 Nepal
and Bhutan agreed to verify the refugees on the basis of family
units in one of the seven refugees camps in eastern Nepal within
January 2001. A Joint Verification Team (JVT) was set up with
five members from each side. The MJC also directed the leaders
of the two teams to visit eastern Nepal within January 2001
for logistic, security and other arrangements to ensure smooth
functioning of JVT. On the modality of verification, both sides
agreed on a common definition of a family unit, maintaining
family integrity and all valid documents will be looked up.
For Nepal, there is one more hurdle, the issue of Bhutan’s position
on the four agreed categories-- of the bonafide Bhutanese citizens,
voluntarily emigrated, Bhutanese who have committed crimes and
non-Bhutanese. So far, Bhutanese has insisted on taking back
only the refugees of the first category-bonafide Bhutanese.
Relations with Other countries
China is landlocked Nepal’s
next door neighbor in the north. Nepal’s relations with China
are based on pragmatic grounds. Relations with China are determined
by security, economic and political considerations. Nepal wants
to diversify its relations and China offers one alternative.
Before 1990 China and former Soviet Unions were the two major
countries supporting Nepal’s industrialization, expansion in
road, electricity, communication and education. Tibet Autonomous
Region of China provides a small outlet for its trade and transit
diversification and tourism expansion. Nepal has also requested
China to open four more passes besides the traditional passes
and the modern 113Km long Kodari (Arniko) Highway links Nepal
with Tibet. Chinese and Nepalese officials are working to speed
up the Syabrubensi-Rasuwagadi highway project. If constructed,
the highway will link Nepal with Tibet’s Kerung, which lies
next to Rasuwagadhi. China has agreed to provide necessary financial
assistance for the project. Experts say that only 19-kilometers
long road need to be constructed in the central mountainous
district of Rasuwa.
China constructed a Buddhist
temple in Lumbini, the birthplace of Lord Buddha in the year
2000. It has also agreed to support equipment maintenance facilities
in BP Koirala Cancer Memorial Hospital as well as to provide
six Chinese technicians for a period of two years to the development
of Nepal Television. Chinese motivation to support Nepal is
only to turn Nepal into an independent state, rather than becoming
a conduit for anti-Chinese activities through free Tibet movements
and succumbing to anti-Chinese pressures.
On August 27 Foreign minister
Chakra Prasad Banstola upon returning from his week-long visit
to China said that Nepal and China had agreed in principle to
add two more routes in the Nepal-Tibet border to facilitate
increased trade between the two countries. The two new transit
points are Kimathanka and Lizi, besides the existing Tatopani,
Yari, Kerong and Olanchungola. He also raised the issue of trade
imbalance between Nepal and China. He told, "I told the Chinese
the imbalance has to be given a serious thought and they have
assured to look into it." Chinese also showed interest to cooperate
in Nepal’s hydropower resources and trade expansion through
the avoidance of double taxation. Nepal’s relations with Bangaldesh
remained cordial as usual. Bangaldesh provides Nepal transit
facilities in Chittagong and Khulna-Chalna Ports. Both the countries
are exploring to utilize Kakarbhita-Fulbari transit route (a
land route that links Nepal with Bangladesh through India) to
expand trade, commerce and investment opportunities.
Japan is the largest donor
country in Nepal, which provides aid in the field of road, hospital,
community development, agriculture, education and tourism. Each
year over fifty thousand Japanese tourists visit Lumbini, the
birthplace of Lord Buddha. Japanese interest in Nepal lies in
economic development, market expansion and protection of heritage,
environment and culture of Nepal. On August 25 Prime Minister
of Japan Yoshiro Mori made a one-day goodwill visit to Nepal
and discussed the matters of mutual interests with the Nepalese
premier G. P. Koirala. Prime minister of Japan urged premier
Koirala to provide security to 300 Japanese volunteers working
in Maoist-infested areas and improve law and order situation
in the country. His visit highlighted IT sector and 50 Nepalese
youth would be provided IT training in Japan under Mori Fellowship.
Besides, five thousand youths would also be invited under educational
and cultural exchange program from the South Asian region. Japan
also pledged a number of economic assistance for Nepal, according
to which Nepal will get a grant of Rs 1.14 billion rupees during
the Japanese fiscal year for the construction of primary schools
and debt relief measures and 300 thousand US dollars for the
relief of flood victims.
German cooperation to Nepal
is based on the promotion of "rule of law, democracy, human
rights, political participation and development orientation
of state action." On February 17, a three-day bilateral meeting
between Nepal and Germany took place in Kathmandu. The German
delegation was led by Dr. Karl Kirchhof, Director of South Asia,
Federal Ministry of Economic Cooperation and Development. Germany
agreed to provide a total of DM 59 million during 2000-2001
period, including DM 33 million under financial cooperation
and DM 26 million under technical cooperation. On July 12 the
government of the Federal Republic of Germany agreed
to provide Nepal a grant assistance of DM 42.0 million. The
assistance will be used to support four different project activities:
biogas support program, town development program, the renewable
energies development program and the upgrading of the Makalu-Dhadingbesi
road. On November 21, the government of Germany informed the
Nepalese government that in addition of funds for financial
cooperation for the two-year period 2000-2001 committed (totaling
DM 33.0 million) a further amount of DM 12.0 million would be
made available to implement a medium-sized-run-of-the river
hydropower station (DM 8.0 Million) within the framework of
the project "Renewable Energy" and the establishment of small
hydro-power plants (DM 4.0 million). On November 29, German
Development Bank, KFW, acting on behalf of the German government,
agreed to provide grant assistance of DM 31 million for three
development projects-biogas projects, Urban development program
and upgrading of road between Malekhu and Dhadingbesi road.
Nepal-International Monetary
Fund Enter Into Crucial Negotiation
On November 29, Nepal concluded
a crucial negotiation with the International Monetary Fund (IMF)
sponsored Poverty Reduction Growth Framework (PRGF), that will
guide the country’s economic decision-making, including social
spending for the next three years. Nepal’s entry into PRGF will
particularly expedite the pace of economic reform initiated
by Nepali Congress government in 1992 but slackened due to ensuing
political uncertainty in the second half of 1990s. PRGF mainly
focuses on macro-economic stability (low fiscal deficit, low
inflation and comfortable foreign exchange reserve), structural
reform (privatization of public enterprises, civil service reform
and restructuring of financial sector among others) and poverty
reduction. Though the IMF mission and high-level government
officials concluded, it will have to be endorsed by the cabinet
and IMF Board of Directors before Nepal enters into PRGF, possibly
by April 2001. Besides, Nepal should pass through three crucial
requirements to qualify for the entry: it should award the management
contract of Rastriya Banijya Bank and Nepal Bank Ltd; conclude
the mid-term Budget review and finalize Poverty Reduction Strategy
Paper before April. With the entry into PRGF, IMF will extend
Nepal an annual assistance of US $ 20million for the next three
years, which will be spent in reducing poverty and pursuing
reforms.
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