Pakistan, Bhutan and Nepal have been to the polls in recent months. India’s relations with Bangladesh have taken a new turn (and one for the better) with the resumption of two-way rain services. And India’s relations with Sri Lanka remain as complicated and critical as they have always been. As India tries to grow its influence, both political and economic, in the region, even as it tries to do the same thing at the global level, Mint looks at the significant issues shaping and affecting its relations with its immediate neighbours. In the first part of the series, we look at Nepal.
India misread the 10 April elections in which the extreme Left-wing Communist Party of Nepal (Maoist) won an unprecedented majority, and is now scrambling to recover its position of influence in the Himalayan kingdom.
New role: Maoist leader Prachanda addresses his first public meeting after the 10 April elections in Kathmandu on Monday.
According to media reports, at a victory rally on Saturday in Kirtipur, a small town just south of Kathmandu that has been home to Nepal’s Shah dynasty, Maoist leader Prachanda announced that the first meeting of the constituent assembly after the elections would declare Nepal a republic and abolish the country’s 240-year-old monarchy.
Television footage showed his face smeared with vermilion as he announced that the Maoists would lead the government.
Former rebels who waged a “people’s war” in which 13,000 people are said to have been killed, the Maoists look all set to rule the country after a largely peaceful election in which 67% of the population took part, according to Nepal’s election commission.
Former US president Jimmy Carter, who observed the election as one of several thousand international observers—India’s chief election commissioner N. Gopalaswami was also present—has described it as the “most transformational’’ he has seen so far.
Royalty to republic: A file photo of royal guards exchanging duty at Narayanhiti Royal Palace in Kathmandu. Maoist leader Prachanda announced at a victory rally that the first meeting of the new constituent assembly would declare Nepal a republic and abolish the country’s 240-year-old monarchy. (Gopal Chitrakar / Reuters)
According to the latest results, the Maoists have won 118 out of 240 seats that went to the polls in the “first past the post” system. Of the remaining 361 seats (the total strength of the house is 601), 26 members will be nominated, while the remaining 335 seats will be filled through a system of proportional representation— voters vote for parties, not candidates, and the seats will be filled on the basis of the proportion of votes received by each party.
India’s National Security Adviser M. K. Narayanan had told journalists in New Delhi in the run-up to the elections that India had put a “great deal of faith” in the Nepali Congress and was unsure about where it stood with the Maoists.
As it turned out, the Nepali Congress (NC) was more or less wiped out, winning a mere 36 seats and the moderate-Left Communist Party of Nepal (United Marxist-Leninist), or CPN-UML, didn’t do much better and won just 32 seats.
NC stalwart and Prime Minister G.P. Koirala, one of the eight members of the Koirala extended family who fought the elections, kept his seat, but CPN-UML leader Madhav Nepal lost.
Within 48 hours of the first results showing a surprising Maoist sweep, external affairs minister Pranab Mukherjee was on the phone with Prachanda, congratulating him as well as offering support.
Indian ambassador to Nepal Shiv Mukherjee was the first foreign envoy to meet the Maoist leader after the elections in the country.
The China syndrome
Senior government officials who sought anonymity admitted they had “egg all over their faces” as they got the Nepal verdict wrong, but pointed out that they had moved quickly to rectify their mistakes.
“India is a republic, so we understand the republican sentiment. We have always accepted the people’s verdict in Nepal,” Shiv Mukherjee said over telephone from Kathmandu. “That is why these elections have been such an important moment.”
A senior government official in Delhi said the “old Nepal”, a reference to the monarchy, had never really been “friendly with India”.
Other officials admitted to geo-strategic concerns that made Nepal, and relations with it, critical to India. “China is a big, influential power on Nepal’s other side. We cannot afford to put one foot wrong,” another government official said. Some other government officials acknowledged that India was already trying to persuade all political parties in Nepal, including the Madhesi parties in the Terai region, to join the new government so that they could be a “moderating influence” on the Maoists in power.
According to one school of thought in the Indian establishment, the Maoists could either create an executive presidency after they abolish the post of the King, or simply have the prime minister lead the country in a republican form of government.
Either Prachanda or his second-in-command Baburam Bhattarai could take the post of prime minister. If Bhattarai takes over as prime minister, Prachanda could remain chairman of the party.
Traditionally, in Nepal, prime minister retains the post of defence minister, and people familiar with developments in Nepal said that this time around, the Maoists would like to keep the “power” ministries, that is, the finance, home, foreign affairs and defence portfolios.
The army factor
Experts agree that the biggest challenge facing the new government will be the integration of the 100,000-strong People’s Liberation Army (the Maoist cadres) into the Royal Nepal Army (RNA).
So far, the RNA has outright refused to integrate the Maoist cadres, as a result of which they are living in camps under UN supervision.
The Indian government officials said they hope that this will happen slowly after the Maoists take charge, so that the RNA has enough time to adjust to the change.
During his telephone conversation with Prachanda last week, Pranab Mukherjee invited him to visit Delhi and offered all the support he wanted.
The government officials said India is willing to consider financial aid to help the new government tide over any immediate economic crisis, but were waiting for a response from the Maoists.
After the “jan andolan” or “people’s movement” in April 2006, when thousands of Maoist cadres peacefully marched through the streets of Kathmandu demanding the end of the monarchy—King Gyanendra gave in to the demand— India pledged 10%, or Rs150 crore, as budgetary support for Nepal’s Rs1,500 crore national budget. Last week, Prachanda said India must ensure a steady supply of goods to landlocked Nepal, in view of the “sensitive political situation”.
According to media reports, speaking to the Federation of Nepali Chambers & Commerce (FNCCI), Prachanda said: “If a proper atmosphere for cooperation (with India) can be created, it will certainly help in taking the bilateral relationship to a new high.”
If India delayed in the supply of essential goods, he warned, it would have “a long-term negative political impact”.
In the past three months, the cost of cooking oil in Nepal has jumped by 50%, while prices for rice, wheat and pulses have increased significantly. Subsidy to petroleum products in the country costs the government Rs3 crore a day. An Asian Development Bank report has forecast annual growth of just 3.8% for Nepal and an inflation rate of 7%.
Both Prachanda and Bhattarai believe a new economic agenda could transform the country. “Within 10 years, let us work magic for an economic revolution and mesmerize the whole world…We will allow private investment and also promote foreign investment. Don’t lose confidence, we are not going to capture industries, but we need your cooperation to gain economic prosperity,” Prachanda told FNCCI.
In an interview with theNepal Times, Bhattarai was even more explicit. “When we say we want to end feudalism, we don’t mean we want to end private ownership. ...collectivisation, socialization and nationalization is not our current agenda...,” he said. “We would like to assure everyone that (in power) the investment climate will be even more favourable.’’
FNCCI president Kush Joshi said Nepali businessmen had decided to forge “a common agenda’’ with the Maoists. “They have given us guarantees that our investment will be secure. We will try and implement a labour policy that will be balanced between employer and employee,’’ he added.
Meanwhile, the Indian government officials admitted the economic situation in Nepal was dire, and that they had already told the Maoists that India was “ready and willing to assist Nepal in any way it wanted’’.
However, considering the ban on export of essential commodities back in India, a political decision was needed to make an exception for Nepal, they added. They said India was supplying Nepal’s entire demand of petroleum and petro products.
It isn’t clear whether there will be a significant change in the new Nepalese government’s thinking on economic relationships with India.
Before the elections, it did seem like India’s long-term strategy, to build modern-day connections so as to reinvigorate old ties, was beginning to bear fruit. Apart from the integrated checkpoint under construction at Raxaul-Birgunj and cross-border railway lines, hydropower investment has become a big ticket item. India needs power for a growing economy and Nepal has significant hydropower potential.
The 300MW Upper Karnali project is being built by the GMR Group, and the 402MW project on the Arun III by Satlaj Nigam Ltd Power Trading Corp. (PTC) has committed to buy 750MW from a project being developed by an Australian company on the West Seti, and another 300MW from the Lower Arun project being developed by a German company.
“India is hungry for power and we are willing to pay for it. Nepal has the second largest hydropower potential in the world,’’ said Jairam Ramesh, India’s minister of state for commerce and power.
“It’s a win-win situation for both of us”.
Part 2: Pakistan