Oli will have to convince Indian establishment that a politically strong and prosperous Nepal is the best guarantee of safeguarding India’s interests.
CPN-UML chairman KP Sharma Oli is set to become the new Prime Minister of Nepal. There is a sense of cautious optimism that the nation will finally enter an era of political stability and, hopefully, economic prosperity. Oli’s past rhetoric on development and his stand against coercive diplomacy has projected him as a leader capable of dealing with our neighbors with a focus on Nepali national interests.
Nepali leaders of all political parties have been good at inventing new slogans to express their commitment to a model of development that cares for the downtrodden and the poor. And yet decisions on economic policies and plan execution have remained disappointing. Leaders of all major political parties who have had the opportunity of leading the nation viewed governance as an opportunity for private gain at public cost with very little concern of its effects in the bureaucracy and the investment atmosphere in the economy.
Blatant promotion of individual or party interest has become the “new normal” in administration and policy-making with negative consequences on the capability of the bureaucracy to work in line with the rising aspirations of people. Worse still, the tendency to ignore discipline in public spending with the hope that enough money will somehow always be there at the treasury makes a mockery of country’s commitment to inclusive development. In fact, government spending is virtually out of control and no one seems to take it seriously. At present government, revenue is not enough to meet regular expenses and the treasury has been forced to raise money from the public. If this becomes the new norm, all the recent humbo-jumbo about a double-digit growth will turn out to be a cruel joke on the people.
So far the rapid increase in remittance income and the concurrent increase in government revenue through imports have made it easy to avoid economic discipline and good governance practices while enriching a small class of politicians, bureaucrats and government patronized businessmen. But this new culture of corruption and cronyism is spreading the rot within the whole socio-economic system. Manufacturing is on decline and agricultural development remains anemic. The economy has become an import machine with very little concern for exports. Naturally the so-called “demographic dividend” has become a textbook mirage that is at the service of other nations. For the ruling elite exporting manpower is the most important economic event in the economy: It reduces the possibility of protest and social turmoil because of unemployment and it generates the revenue base for the ruling elite to continue their loot and corruption in the name of development.
It is sad to note that the government of Sher Bahadur Deuba remained totally oblivious of the need for fiscal discipline in the nation. The current finance minister is such a good person that he has successfully proved himself to be virtually good for nothing. Similarly over a dozen ministers have not even bothered to declare their assets confident that this blatant violation of law will remain unchallenged. As for the Commission for the Investigation of Abuse Abuse of Authority (CIAA), it remains paralyzed to act against the high and the mighty. An atmosphere of impunity pervades the political scene. The common people sense this ugliness and dishonesty while the rhetoric of double-digit growth continues at full blast in political speeches all over the nation.
Opportunity in disguise
For the new left alliance now headed by Oli and Prachanda the current political and economic reality of the country is both an opportunity and challenge to virtually reinventing themselves. Nepali people have known both of them for over two decades and their performance while they were in power leaves much to be desired. Therefore the current success in the polls reflects more a protest vote against the dismal performance of the Nepali Congress rather than a vote of confidence in the reliability and capability of the left alliance to deliver good governance.
People will be watching both Oli and Prachanda keenly to see if they show the moral integrity and courage to rise above partisan interests for the benefit of the whole country. For both of them, the coming hundred days will be an opportunity to define a new perspective that is based on political values in line with the development aspirations of the people.
In foreign policy, Oli has the difficult task of gaining the confidence of both India and China as a leader who remains sensitive to their national interests in Nepal while simultaneously remaining focused on the interests of Nepali people. He has the task of convincing the Indian foreign establishment that a politically strong and prosperous Nepal that is able to benefit from India’s economic growth is the best guarantee of safeguarding India’s interests. This would mean a new paradigm of “neighborhood economics” where Nepal is more than a nation exporting its youth to the Middle East so as to import manufactured products from India. This change in direction is consistent with Prime Minister Narendra Modi’s ‘neighborhood first’ policy that has yet to take off in a meaningful manner.
From a slightly long-term perspective, a joint collaborative arrangement in improving connectivity between India and China via Nepal may be an idea worth striving for. Both India and China are rising economic powers of the 21st century. Economic interaction between the two is destined to increase rapidly irrespective of occasional friction on the border. To support the expected increase in mutual trade a land route is vital and this is where Nepal enters the picture. A Trans Himalayan railway from the Nepali northern border in Rasuwa district to Birgunj-Raxual could immensely benefit all the three countries. The railway could be owned and managed by the private sector of all the three countries with shares listed on the stock exchange.
Bureaucrats with a traditional mind who visualize relationship with neighboring small countries in the framework of the sphere of influence doctrine of the 19th century may view this as a pipe dream. Nevertheless, the economic logic can be expected to prevail since leaders in both these two great nations are determined to reap the huge benefit of cheap connectivity and the spillover effects that it will have on their respective economies.
As the incoming Prime Minister, Oli will have to prove his integrity and character for reforming the bureaucracy and institutionalizing financial discipline. Externally he needs to regain the confidence of both our neighbors and other close allies without compromising in any way the interest and dignity of Nepali people.
The author is a former foreign and finance minister of Nepal.