Nepal update (June 18, 2011)

1) In IDSA, we have this comment on how its all the same-old even after weeks of agreement on extension: Linky

However, till date, no progress has been seen as far as implementation of the five-point agreement is concerned. Rather, the concerned parties have started interpreting the clauses of the agreement on their own. The clauses are ambiguous and lack clarity and detail on crucial issues. For instance, Clause 1 of the agreement states that “basic tasks related to the peace process will be concluded.” There is no precision about what “basic tasks” means. According to the Maoists, Clause 1 is related only to the issues of management of its combatants, removing the dual security provision of its leadership, and in reaching an agreement on the modality of integration. Clause 1, as per the Maoists, deals with the number of combatants to be integrated, the ranks of the combatants after integration, the rehabilitation package, and the regrouping of combatants. But, the Nepali Congress (NC) and other non-Maoist parties link this clause with other issues such as surrendering of arms to the state, returning the seized property to the owners, dismantling the Maoist’s paramilitary force (the Youth Communist League), etc. Also, there is party-wise and individual-wise interpretation about when the Prime Minister must resign, and who would lead the country after his resignation.

And more:

The three major parties have agreed to form a State Restructuring Commission (SRC) to recommend the model of federation. However, the decision has not materialised as yet. There is speculation that the Maoists, the NC and the CPN-UML may agree to promulgate a new constitution without declaring the form of the federal set-up. Rather, they would agree to have a federation only after the recommendation of the SRC. On the contrary, Madhesi parties and ethnic organisations, doubting the intention of the three major parties, have said that they will not allow promulgation of the new constitution without a clear-cut provision on federation.

Also, the issue of mass integration of Madhesi youth into the Nepal Army seems to have complicated Nepal’s political transition. Though no numbers are mentioned in the recent agreement, Madhesi parties are demanding that 10,000 Madhesi youth should be given a chance to join the Nepal Army. This agenda will be initially backed by those who oppose Maoist combatants’ integration, thus complicating the integration issue. Eventually, all hill people including the Maoists are likely to oppose the proposal to integrate Madhesis in the army, though the move will help the army become an inclusive institution.

Concludes with a stark warning:

As a consequence, it is likely that the achievements of the Janaandolan-II would be endangered. Also, ethnic violence in the hill and Tarai areas is likely to spread. In fact, it will lead to chaos, which will further intensify youth migration towards India and the Middle East as happened during the Maoist’s “people’s war”.

2) Prashant Jha has this a bit of an optimistic take with which I will have to disagree quite vehemently, but in any case: Linky

A fortnight after Nepal's Constituent Assembly's term was extended for three months, there is good news from Kathmandu. All parties have shown a degree of urgency and seriousness, which was missing in the past two-and-a-half years. The peace process, largely understood as settling the future of Maoist combatants through a process of integration into security organs and rehabilitation into society, is finally moving forward. And the political class has been mature enough not to immediately get into another round of wrangling for power, but focus on the bigger picture.

But there is a caveat. Difficult decisions regarding the details of the peace process have yet to be taken. The same urgency is not quite visible in the constitution-drafting exercise. And a new power-sharing arrangement will have to be worked out at some point. All of this is complicated by the inner divisions within the Maoists, the key driver of the process.
...
However, another party vice-chairman Mohan Vaidya “Kiran” and his supporters kept the PLA fighters meant for their security and refused to turn in the weapons. Mr. Kiran, who represents the dogmatic faction in the party, alleged that this was tantamount to “surrender” and has now put forth an 18-point criticism of the party chairman accusing him of betraying the revolution.
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Here is the dilemma for the decision-makers. If handouts are high, the incentives for combatants to opt for rehabilitation packages and even integration diminish. But donors are unwilling to underwrite direct monetary transfer since they fear that a part of the money will go straight to the Maoist party; this will also set a wrong precedent. This is a fear shared by many non-Maoists. On the other hand, if the golden handshake amount is not appealing, Maoist combatants may ask for integration in greater numbers — which will complicate the overall deal. Special Committee members are learnt to be working on a compromise formula which will encourage combatants to opt for rehabilitation and skills training, and transfer a limited amount of money to them in instalments.

3) More on the dissension within the maoist ranks: Linky
4) Elsewhere, ToI sensationalizes the diplomat issue, as usual: Linky

China's new ambassador to Nepal, Yang Houlan, arrived in Kathmandu on Saturday, triggering speculation by the local media that Beijing was beginning a new innings in the Himalayan republic, elevating it as a priority country in the scheme of Chinese foreign affairs.
...
Three of his predecessors, Sun Heping, Zheng Xianglin and Qiu Guohong had seen an escalation in anti-China protests in Nepal by Tibetan protesters and had not been able to stop them despite urging the government of Nepal to take stern action against the protesters.
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With India also having named Special Secretary (Public Diplomacy) in the External Affairs Ministry, Jayant Prasad, as the new ambassador to Nepal, the Nepali media has begun speculating that in the days to come, with both its giant neighbours according priority to Nepal, the tiny republic could become a helpless yam squeezed between two boulders.

5) This yam type alliterative comparisons come straight from the insecure Nepali media from which ToI must have sourced this commentary. Actually, I can point out the exact article which came up with the yam comment: Linky

The ground reality that Nepal is a yam between two boulders is uncontestable. Its location is uniquely strategic viewed through the lens of security of India and China, Nepal’s neighbors to the south and north. Since both of them have acquired enviable significance wielding power to influence global agenda, the conduct of a prudent neighborhood policy for Nepal has become a Herculean task.

6) Writing on India's Economic Miracle and its Impact on Nepal, Haribansh Jha has this to say: Linky

Significantly, India’s share in total direct investment in Nepal accounts for 45%. Some of the major joint ventures with India in Nepal include Surya Nepal - a joint venture with ITC India, Dabur Nepal, Nepal Lever and United Telecom Nepal, Everest Bank, SBI Bank, LIC Nepal, Asian Paints, GMR India, IL&FS and Manipal.

Considering the growing demand for power both in Nepal and in India, Satluj Hydro Electric Project of India has made investment for the construction of 402 MW in Arun III. On the other hand, GMR, an Indian infrastructure developer has made investment for the construction of 300 MW Upper Karnali at Tunibagar in Dailekh district. Also, Himtal Hydropower Company Pvt Ltd (in which GMR has 80 per cent share and the Nepalese have 20% share) has made investment for the construction of 600 MW Upper Marshyangdi-II hydropower. IL&FS has 15 per cent share in 750 MW West Seti project. Besides, the Indian government has also offered to construct 240 MW Naumure project under its grant assistance.

Indian investment has given Nepal access to new technologies and management skills. It also generated substantial revenues to the national exchequer. Besides, it promoted import substitution and exports of Nepalese goods to the Indian market. More significantly, about 30,000 Nepalese have been provided direct employment and twice this number have got indirect employment in various industries run through Indian investment. Bilateral trade between Nepal and India doubled to US $ 4 billion during last five years. Credit for the surge in trade between the two countries largely goes to the treaty of trade signed between Nepal and India in 1996.[7] There is provision of preferential treatment for the Nepalese products in India at par with the Indian producers.

More on how the Indian investor thinks:

There have been reports of diversion of third country goods from Nepal to India during the transit. Perhaps, affixation of an additional one time lock by Indian customs could resolve this problem, but it is not getting materialized. Besides, there is growing practice of copying the popular Indian brands and trademarks by certain unscrupulous Nepalese manufacturers. Such activity has eroded the reputation of the Indian brand. Besides, this created doubts in the minds of the Indian investors about the nature of fragile legal framework of Nepal in regard to the protection of intellectual property. This prevented the Nepalese consumers from getting quality goods from India. Some of the Indian business community also grudge that there is erosion in the margin of preference by the Nepalese government on import of goods from India.

There are reports that many of the Indian investors have already started deserting the country as they feel that they have had to face certain tariff and non-tariff barriers and that they were being discriminated in the country in different ways. Some Indian companies who have made investment in Nepal feel that they were trapped as the concerned Nepalese wings hardly fulfilled their obligations made during the time of agreement. Meanwhile, certain forces have mixed up politics with economics and obstructed the implementation of different development projects, including the hydro-power projects undertaken by India in Nepal. Because of the negative perception of Indian companies, no new Indian investment has made their entry into Nepal since 2003 when Indian companies at the global level have made a commitment to make investment to the tune of US$ 70 billion. All this led to the decline in investment, production and exports of goods resulting into deficit in balance of trade with India and affecting the economic growth of the country as a whole.

Now who stands to lose more by endangering India-Nepal relations? Even the most viscerally India-baiting maoists understand that there is a rubicon to be crossed and life will not go on as usual after that. So, for fellow ToI newswaalons, relax and have a chai-biskoth.