Murari Sharma: Black-and-white world

Are you worried about your future? About the future of your children? We live in a grey world, but when you have leaders that tend to see things only in black and white, you have to worry.  I am talking about the reactions to what Prime Minister KP Oli and President Donald Trump, both sorts of cult personalities, do. 

Cult personalities command blind loyalty from their supporters and aversion from others. Some sections of Nepal praise Mr. Oli to the sky and others view him as someone on the steroid, of course, to treat his illness. Likewise, Mr. Trump is a hero for arch-conservatives, while for others, he is a crazy moron. 

Take Mr. Oli’s recent India visit, for example. Mr. Oli’s party colleagues and supporters have characterized the visit as a grand success. The Nepali Congress Party has said it was a lost opportunity and his detractors have faulted him for leaving out many important issues from the conversation. What is the truth? 

Hegemons often extract advantage from their smaller counterparts during high-level visits or official negotiations. India and China, the regional hegemons, do the same. Who does it overtly and widely, who does it covertly and narrowly, depends on their political systems, level of transparency required by them, and on the scope of engagement with other nations.  

If the leader of a small country comes home from a trip to bigger countries without unduly compromising his national interest, that is a success. If he comes with substantial assistance as well, that is a remarkable success, assuming that the assistance will materialize.

We do not know what transpired between Mr. Oli and his Indian counterpart Narendra Modi in the one-on-one talks. If Mr. Oli has not made any undue compromise in those talks, then the visit should be deemed as a success, because he did not give in anything publicly and secured promises of support for his pet projects, rail, and waterways. It is a different question how quickly India implements its commitment.

Those areas were not probably the most urgent needs for Nepal, but when the next election arrives in five years, we will ask Mr. Oli what promises he had made in the last election were fulfilled. Besides, it is a matter of approach to development.

For good reasons, some believe in balanced development; others in unbalanced growth, in which two or three key sectors lead the way to take off. The Soviet Union, which focused on power, roads, and railways, was the best example. So it becomes a question of an ideological bend of commentators.

It leads me to the second subject: Mr. Trump.

As we have witnessed, Mr. Trump is constantly in the news. Whatever he says or does polarizes the United States. For instance, his immigration pronouncements and policies. His arch-conservative base blindly supports his racist, anti-immigration comments and policies as if they are coming from God. His opponents see him and his words as racist.

Similarly, Americans are divided over the Special Counsel investigation into Mr. Trump’s collusion with Russia during the presidential campaign. Mr. Trump and his close supporters view the investigation as a witch hunt. To safeguard the integrity of American democracy, his opponents find the investigation legitimate and essential. Even most Republican leaders want the investigation to proceed to its logical conclusion. 

Mr. Trump’s tariff on import of steel and aluminum and on Chinese goods has received a similarly divided reaction. His core supporters believe he is right, but his opponents worry about the potential trade war that will hurt America, China and the rest of the world. China has already announced its own tariff on American products. 

Ditto about Mr. Trump’s treat to tear the six-country nuclear deal with Iran.

In any democratic political system, differences across the political divide are common. But cult leaders evoke a more visceral reaction from their supporters as well as opponents because of their provocative words and deeds.  Unfortunately,  they often end up harming themselves, like committing suicide or pushing others to do it to make their point or to escape a concocted apocalypse.

That is what worries me. Both Mr. Oli and Trump have become sort of cult leaders due to his unmeasured words in Mr. Oli’s case and his unmeasured words and whimsical deeds in Mr. Trump’s case. They are prone to interpreting national interest  — protecting sovereignty and independence and promoting the prosperity and welfare of citizens — as they see fit and act accordingly.

Obviously, that could prove dangerous if there are no people around them to check their impulses by reminding them that the world is more grey than black and white.

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Murari Sharma: Stand for the Country

Bal Krishna Sama has said one’s patriotism does not die even if his country is miserable and a wife’s devotion does not die even if the husband is sinful. There is absolutely no reason why Nepal should feel inferiority complex and conduct its foreign relations with dignity. As Prime Minister KP Oli prepares to visit India from this April 6-8, he will, I hope, make us proud, as he has done twice before on different foreign policy issues.

First, he called the Indian economic blockade of 2015/16 by its name and asked the Indian government to lift it while other senior leaders kept loud silence while the Nepali people suffered. The Nepali Congress did not. Again, Mr. Oli stood up to the European Union when it sought to foment ethnic strife through its election observation report, undermining the hard-won Constitution of Nepal. This time, the Nepali Congress did it too.

Does this mean Mr. Oli has made a paradigm shift? The biggest test of it will be his India trip in a few days. Like all other countries, Indian will try to maximize its national interest during this visit. We will see whether Mr. Oli can take the right stand to advance our national interest.

We did not have enough of him the last time he was prime minister for a year. But before that, when he was deputy prime minister and minister maker in his party, he was known as a close friend of India. He has been far from consistent in standing for national interest.

For example, Mr. Oli first opposed the Mahakali Treaty and then supported it. Though he called the Indian economic blockade of 2015/16 what it was, he has never expressed his concern when China has closed the Nepal-Tibet transit points repeatedly. Evidently, he had been part of Nepali political culture.

Broadly, it means if you belong to a communist party, anything China does is good and acceptable. If you are part of a non-communist party, anything India or the West does is good and tolerable. More specifically, foreign intervention is welcome if it benefits you or your party and unwelcome if it benefits your opponents.

The spokesperson of the Indian External Affairs Ministry had once briefed Nepali journalists that Nepali leaders often visited New Delhi with personal agendas rather than national.

Such personal favors include support to gain or retain power, scholarships for their children or relatives, free medical treatment facilities for their family and friends, observation tours for them, projects in their constituencies, new vehicles for them, etc.

It is a chronic disease in Nepal, and it has only become severer with the passage of time. Started with King Rana Bahadur Shah,  the disease deepened with the rise of Jang Bahadur Rana, widened after 1990, and reached its utmost depth and openness after 2006.

Some examples. Indian counselor Mehta’s advice to unleash a storm for One Madhesh, One Pradesh and the Indian blockade of 2015/16 to support it. The EU’s recent comment on the Nepali Constitution to foment ethnic tension. The previous British ambassador Spark’s comment on freedom for conversion. China’s objection to Nepali NGOs working with the Taiwanese NGOs.

Has Mr. Oli steered Nepal’s foreign policy ship into a new direction with his stand against the Indian economic blockade and the recent EU’s suggestion?  Will he maintain his new position as a matter of policy? Until we have a stack evidence, we have no way to know.

As it appears from outside, Mr. Oli has the political strength to do it. His government enjoys nearly the three-fourths majority in the federal government and the coalition of the UML, Mr. Oli’s party, and the Maoists lead six of the seven state governments.

However, Mr. Oli might not be as strong and confident as he appears from outside. Inside his party, he faces entrenched opposition from the factions led by other senior leaders. The Madheshi parties have supported him to entice Mr. Oli to amend the Constitution, as they want.

More importantly, the Maoist leader Pushpa Kamal Dahal is a wild card. Mercurial and unreliable, he might abandon Mr. Oli and the UML-Maoist integration process mid-course and fall back into his default character. His recent demand that both parties must have 50-50 officeholders in the merged party is a clear pointer.

Considering his party’s strength, his demand lacks the sense of proportion and justice. They have taken cabinet positions on 70-30 ratio, and it seems right given their electoral performance and number of seats in the federal and state legislatures. However, Mr. Dahal made that demand anyway.

The Nepali Congress Party has thrown its support to Mr. Dahal for prime minister if he broke from the UML-Maoist integration. Most external powers do not want the merger either; they have been sending feelers to Mr. Dahal. At a critical juncture, Mr. Oli’s strength might prove the Potemkin’s village.

Therefore, let us appreciate Mr. Oli for his stand against external intervention and urge him to maintain it the future. Let us hope Mr. Dahal will not be a foreign pawn.  Let us expect the Nepali Congress not to knock on foreign doors to destabilize the Oli government.

And finally, let us hope the Oli government does not flout the fundamental norms of democracy and freedom. If he did it, we might have to ask the international community for their moral support to put a spanner into his plan. Because power corrupts, it is entirely possible.

Consequently, the world has produced a surfeit of Ferdinand Marcos, Robert Mugabe, Pervez Musharraf, Zia-ul-Haq, Zia-ur-Rehman, Suharto, Than Shwe, and so on. Who had thought President Xi Jinping of China would change the Chinese Constitution to open the door to keep him in power for life. Leaders like Mahatma Gandhi, George Washington, and Nelson Mandela have been rare.

Every progress starts with the first step. Let us hope Prime Minister Oli will continue following the spirit of Bal Krishna Sama’s poem and put Nepal and its people front and center, not succumb to the diseased political culture.

Murari Sharma: Make federalism sustainable or face conflict

Your idea and my idea of federalism might have been different, but you and I are now stuck with the bill. The bill will make politicians richer and everyone else poorer and sow the seeds of conflict for the future.

I have supported the idea of federalism ever since I visited Brazil in 2002. Brazil has a few, economically sustainable states that compete in delivering development and services to their denizens. For Nepal, my idea was to have fewer and largely self-sustainable states, which would compete to make us richer and our country prosperous.

Since 2009, I have been making this point along with a few others. Citing the examples of the United States, United Kingdom and India, I had argued that since federalism is expensive, Nepal must have just three — at most four — states.  Several political pundits, living in a fantasy, rebuffed my analysis and suggestion. Now the reality has just begun to bite, and it is painful.

Have you recently paid the land tax? If you have, then you would know the land tax has increased 1,000 percent under the new system. The local government used to issue several certificates to citizens free of cost before; now every service costs you. What cost 20 rupees before now costs you around Rs.500 or more.

This is just the first bite. It will be ten times worse after the newly elected central, state, and local governments envisage the expenditures needed for their new structures and human resources and for development activities. At the central and federal level, 884 politicians will be members of legislative bodies, more than ever. Ministers will have their political advisors in hundreds, most of them new posts.  All 753 local governments will have paid politicians unlike in the past when they were voluntary positions.

While some existing government employees will be transferred to the state and local levels, a large of new people will be necessary to make the new governments functional and effective. Political and bureaucratic officials require salaries as well as allowances, offices, rent, fuel, vehicles, and so no.

Nepal’s revenue is not enough to cover its pre-existing recurrent expenses if you include the stealthily hidden significant chunk of recurrent costs under capital expenditures.  Such hidden costs include the costs of buying weapons, helicopters and equipment, protecting the forest, etc. of the army; the regular salaries of teachers; the fuel and travel expenses of the ministries that have development projects, and so on.

Even if we stick to the published budget figures, the picture looks frightening. In 2015/16, Nepal’s revenue collection was Rs.4.85 billion and total recurrent expenditure Rs.3.71 billion. It left only 24 percent of the revenue for the capital expenditure — roads, new power projects, new schools, new hospitals, and so on.

In 2016/17, the revenue and recurrent expenditures were Rs.5.81 billion and Rs.5.62 billion respectively, leaving only 3 percent for development activities. In 2017/18, the estimated revenue of Rs.7.30 billion is insufficient to cover the recurrent expenditure of Rs.8.04 billion.

Evidently, all genuine development expenditures came from foreign assistance, most of it loan, and internal loan in 2015/16, all development and part of recurrent expenditures came from the external and internal loans in 2016/17, and all development and a large chunk of regular expenditures will come from those to sources in 2017/18. It is getting worse every year, and if you count the hidden recurrent expenses, the picture turns uglier.

We or our children must pay back the external and internal loans; Nepal will not be rich in next five-ten years; money does not grow on trees because we have pleased our leaders with hundreds of paid posts. So all three levels of government will tax you and me to death to pay for their expenses and to implement development projects, which take years to create jobs and earn a new stream of revenues.

When you have to choose between paying the taxes and feeding your children, you will certainly to choose the latter. Sooner or later, the increasing taxes, the declining services, and dead-end before you frustrate you so much that you will revolt, inviting a conflicting and the need for another political transition. It looks like our 30-year political transition is not the last one.

Can we prevent another revolt and another transition? If we have the will, we can. We must push our elected leaders to reduce the number of states, merge local bodies, or privatize public services.

I understand where the identity politicians come from. If we apply their logic, then Nepal should have 12o plus ethnic states. If we have accepted multi-identity states,  why the unsustainable seven and why not sustainable three — at the most four — states? The number of paid politicians and staff will be reduced by half, reducing the expenses on their salaries, allowances, offices, housing, vehicles, fuel, and so on. And such states will also offer the economy of scale.

Another choice could be merging the local bodies. Due to their financial constraints, the boroughs in the United Kingdom have been doing it, for instance. In the first round, several boroughs, facing a financial crunch, merged with the adjoining boroughs. For instance, in London, Kensington and Chelsea merged to become Kensington and Chelsea borough and Hammersmith and Fulham to become Hammersmith and Fulham borough.

In the second round, adjoining boroughs, such as Wandsworth and Richmond in London, have been merging their administrative functions to reduce the duplication of costs and services.

Yet another choice is to privatize most government activities so the government expenses in those activities are saved and taxes would not go through the roof though you pay to the private sector for the services they provide. We have privatized some of our public enterprises, but other countries have gone much further.

The United Kingdom is the case in point again. After the rise of Margret Thatcher as prime minister, most public services, including rail, prison, and some roads, were privatized. The mail service went into private hands only recently. The government is stealthily pushing parts of the National Health Service into private hands too. Chile and several other countries have gone down this route.

Sure, you end up paying more for the same services once they go to the private sector. But you would not complain about the government taxing you too much, and if you do not regularly consume those services, may not feel too bad about it.

Anyway, the federalism we have embraced is unsustainable. We have created too many states where tons of political officials and thousands of additional employees will be on the public payroll, who will demand allowances, vehicles, fuel, pension, office space, and so on, siphoning off every penny from the revenue for their own maintenance.

Unsustainable federalism is a source of conflict and secession: Look at Sudan. Nepal should strive for successful federalism, not a dysfunctional one that will only breed another revolt and another transition and will bankrupt the ordinary Nepalis.

Murari Sharma: Trump, May, and Oli

The world is hurtling towards an unfamiliar territory or the territory that was thought left behind as not good and un-visitable anymore.  It is happening in politics and economics, and it will only end in tears and pain, as before.  Nepal will be no exception.

We are once again going back to rabid nationalism and identity politics that had given us wars, chaos, economic disruptions, and poverty for the majority across the world. From Roman wars, intra-European wars, and European colonial wars across the world, as well as the intra-Asian wars and Asian wars against Europe were all geared to control resources for the rich and powerful countries. This series effectively ended after World War II, when a rule-based global governance emerged to use the global resources for the benefit of all.

The United Nations, GATT, the World Bank, the International Monetary Fund,  the World Trade Organization, regional cooperation, such as the European Union, as well as international conventions and covenants were the products of the rule-based global governance. Unfortunately, some powerful countries have been ditching them for their narrow national interest, on course back to the pre-World War II chaos and possibly wars and misery.

Leading this regressionist trend is the US President Donald Trump with his America First slogan. He has threatened the United Nations and the countries that opposed the US decision to transfer its embassy in Israel from Tel Aviv to the disputed Jerusalem with serious consequences. He withdrew from the hard-earned Paris climate treaty and the Trans-Pacific Partnership trade; has threatened to pull the US out of the North American Free Trade Agreement.

He encouraged Britain, as a presidential candidate, to exit the European Union, which had ended the centuries of wars between European countries and made them prosperous. He has now slapped 25 percent and 10 percent tariffs on the imported steel and aluminum, which may trigger a trade war. Amazingly, he has even tweeted that trade war would be good for America.

The bulk of the Conservative leaders, spurred by the recidivist nationalist impulse to old nationalism and mercantilist desire, inveigled the British people to vote for Brexit promising the freedoms and goodies they cannot deliver and hurt a regional mechanism that has been a bulwark of peace and prosperity in Europe. Now Theresa May, the current prime minister, to have a cake and eat it, has come with red lines that will hurt the British economy and its standing in the world.

Both Donald Trump and Theresa May despise the rule-based political engagement and trade and economic exchange that benefits all, not just a few, though the larger chunk still goes to the big and powerful. For instance, the larger the trade of a country, the higher the benefits for it; the larger the coastal area of a country, the larger the exclusive economic zone and the right to exploit marine resources further afield. But that has not been enough for Mr. Trump and Mrs. May.

While they are leading the journey to old nationalism, they are not alone on this trip. China has been stepping on the toes of other countries in the Pacific as far as the Spratley Islands, triggering territorial discord with more than half a dozen countries, thanks to reviving Chinese nationalism, especially under President Xi Jinping, who has also thrown out the term limits for himself.  Narendra Modi, the prime minister of India, is imitating Xi in South Asia. While he started on the right foot, he quickly assumed a hegemonic policy and has now lost Sri Lanka, Maldives, and Nepal.

If Mr. Modi had not imposed the economic blockade against Nepal in 2015 and his functionaries had not directly interfered in Nepal’s politics, as his predecessors were doing, the anti-Indian sentiment, a.k.a. nationalism in Nepal, might not have flourished and the left alliance would not have obtained a nearly two-thirds majority in the general election for the national parliament and victory to the alliance in six of the seven states.  While nationalism has brought the left alliance this far and let it form the government at the center and six states, what will Prime Minister KP Oli and his government will do from this point onwards? Will they follow the toxic nationalist bandwagon or take a pragmatic tack?

Nationalism is necessary to arouse the public to come together, and sometimes, to draw a wedge between them. However, it will not deliver growth to the country and prosperity to the Nepali people. Growth and prosperity require wise management of national resources, unobstructed transit facilities and economic assistance from the neighbors and capital assistance from other development partners from across the world.

For this, Nepal needs a careful domestic policy, balanced foreign policy, and productive external economic policy. Our immediate neighbor’s preferences are different in terms of Nepal’s domestic policy. For instance, Beijing wants strict security control to prevent Tibetans from crossing the border between Nepal and China. New Delhi and Western capitals want just the opposite. China wants Nepal to restrict human rights, whereas India and Western countries stand on the opposite side.

Similarly, in the foreign policy domain, China wants Nepal to be close to it; so does India. Neither will be Nepal’s best interest. In external economic policy, both countries, more India than China because of the geography, want control over Nepal’s natural resources. Siding with one against the other would be counterproductive irrespective of which neighbor did what before now. Maintaining the right balance in these three areas for the best advantage of Nepal and the Nepali people is the challenge to KP Oli, the new prime minister of Nepal.

China would want a return on its political and economic investment in the left parties now. India, having invested in the other parties, would want to weaken the left government and destabilize Nepal. Mr. Oli needs to find a modus vivendi with India so that New Delhi remains a constructive partner of his government to maintain peace and promote investment and prosperity in Nepal. If too much dependence on India has not been good for Nepal, too much reliance on China will not be either.

The question is: Whether Mr. Oli and his government can overcome the nationalistic hangover from the election time and govern is a way that is in the best interest of Nepal. Which is to say strike a balance between opposite external interest, so the national interest can be served optimally. Will he imitate the nationalist leaders like Donald Trump, Teresa May, Xi Jinping, Narendra Modi and a number of communist leaders who have been one-sided and dictatorial after getting the levers of power or will he put democracy and progress at the front and center and govern as a wise leader who would go down in history as one of the greatest statesman of Nepal. 

Murari Sharma: Nine-Point Program for Prime Minister KP Oli

Lee Kwan-Yew transformed Singapore from a fishing village at its separation from Malaysia in 1960, into one of the richest and most advanced countries in the world, in his lifetime. I hope Prime Minister K. P. Sharma Oli will make Lee his role model, not the greedy and failed Third World leaders, because his health is poor and he does not have children.

Mr. Oli has become prime minister at an extremely difficult time. The treasury is empty, his predecessor has announced new welfare measures without costing them, financial discipline is non-existent, revenue collection is below the target, and the seven states have been asking for resources left and right. This situation could have been avoided. 

For instance, some, including me, had called for financial discipline, as well as fewer states from as soon as the federalist agenda came to the fore. Actually, when I was in the Home Ministry, I had drastically reduced doling out of public money from the ministry and reduced the fake claims drastically. When I was head of the Budget Division of the Ministry of Finance, I had introduced new measures to improve financial discipline with support from the government and the National Planning Commission. But susequently, the the Nepali Congress, the UML, the Maoists and other parties destroyed the financial decision. 

Federalism, done right, is beneficial, and I have supported it all along.  It generates competition among states and makes unity in diversity possible. But it is also incredibly expensive, requiring political and administrative structures and people, and their expenses at multiple levels. We cannot rely on foreign aid forever, especially as the people in developed countries are demanding a reduction in their foreign aid budget. For instance, now Britain gives out 0.7 percent of its GDP as foreign aid, but there is growing pressure on the government to reduce it substantially.

 Therefore, I had repeatedly warned about the expenses, citing the expenses of the United States, United Kingdom, and India and argued in favor of four states in the federal framework to make them financially sustainable. But politicians were more interested in expanding their paid employment opportunities than in making the country and the states financially sustainable. 

In this tight financial situation, Mr. Oli has two options. One, he can spend the next 3-5 years criticizing his predecessors for lack of growth, depletion of the treasury, and for increasing welfare expenses. He could announce new welfare programs the country cannot sustain for cheap popularity, as his predecessor Sher Bahadur Did just before he resigned. For it, Mr. Oli will have tax people to death, make the country bankrup, and lose power next time. It should be noted that, even the rich Western countries, including Britain, have been substantially slashing their welfare programs because they had become unsustainable. 

Two, Mr. Oli can make Lee Kwan-Yew as his role model, focus on long-term economic prosperity, and win power for him/his party for many years to come. Obviously, Mr. Oli can do better than Mr. Lee, who had children, and one of them, Lee Hsien Loong, is now prime minister of Singapore. He has no imperative to engage in political or economic corruption because his health is poor and he does not have children to promote or enrich. It is a great opportunity for him to go down in history as one of the greatest prime ministers of Nepal.

He had pronounced several programs — about gas supply, railway, ship, tuin, etc — when he was prime minister 19 months back. They were all good programs but the problem with them was that they were haphazard. Investment and growth require a pragmatic philosophy, a workable model, a deliberate program, and plenty of discipline.

A mixed economic philosophy, which allows the public and private sectors to flourish in sectors where they do best, will be best suited to Nepal. The state alone cannot transform the economy. If it could, China and Vietnam would not have done everything to promote domestic and foreign private investment.  As for the growth model, there are several of them, but let me mention two of them: Balanced growth model and Unbalanced growth model.

In the first model, you sprinkle resources across sectors without regard to comparative advantage, productivity, and multiplier effect. This model is politically more popular because all sectors feel that they have been given priority, but the results are often disappointing. Because this model is populist, most non-communist developing countries have followed this model and remained largely poor.

The second model calls for higher priority in investment in sectors in which your country enjoys comparative advantage vis-a-vis other countries and in which productivity and multiplier effect are high to build the investment and growth momentum. Such sectors then pull the other sectors. Most advanced or fast-growing countries have followed this route. 

For instance, among communist countries, the Soviet Union went for planned development of heavy industry and heavy power plants to transform its economy. The result was so good that other countries also followed the planned development model. China and Vietnam took a different path. They gave top priority to agriculture until the sector hit its limit before graduating to industry and services.

Among non-communist countries, France, Denmark, New Zealand and Netherlands gave high priority to their agriculture before diversifying to other sectors. Britain and Japan took a different path. They focused more on industry: They imported raw materials from other countries and exported high-value finished products.

For a fast growth, Nepal needs to follow the second model and accord higher priority to tourism and hydropower. In tourism, it enjoys enormous comparative advantage. No other country has 8 tallest mountains out of 14 in the world. Very few other countries are culturally and naturally as rich as Nepal. Goh Chok Tong, the former prime minister of Singapore, had advised Prime Minister Girija Koirala that Nepal should focus on tourism. 

In hydropower, Nepal has the second highest potential, just after Brazil. Hydropower can substitute fossil fuel as the source of energy, help expand irrigation facilities, acclerate invest and production, reduce turn-around time, and increase increase per person production and trigger further investment at high levels. When he was foreign minister, Abdullah Ahmad Bidwai, the former prime minister of Malaysia,  had told his Nepali counterpart, Prakash Chandra Lohani, to use water resources wisely to make Nepal rich.

These two sectors will pull other sectors of Nepal along. If you do not believe me, look at Maldives and Bhutan. High-end tourism has made Maldives already a middle-income country. Similarly, the high-end tourism and the Chukha and Tala Hydropower Projects have catapulted once poor Bhutan to an unprecedented level of prosperity.

Focusing on agriculture and land reform is politically popular in Nepal. We should invest in this sector up to a point to make the poor’s life bearable. But subsistence agriculture will not transform Nepal’s economy. The transformation will come from creating employment opportunities in agricultural industry, manufacturing, construction, and services. As the country develops, see how the share of agriculture’s gross value addition gradually declines:

                                         Sectoral Contribution to Global GDP

Sector/Year 2005 2010 2017
Agriculture (% of Gross Value Added – GVA) 12.3 9.1 9.3a
Industry (% of GVA) 30.6 25.8 24.2a
Services and other activity (% of GVA) 57.2 65.1 66.6a

     Note: a. 2015 (Source: UN’s World Statistics Pocket Book 2017, p. 210)

Based on the above analysis, here are the priorities for Prime Minister KP Oli to pursue if he wants to be the Lee Kwan-Yew of Nepal:

  1. Give the highest priority to sectors like hydropower and tourism where Nepal enjoys comparative advantage due to its resources endowment.
  2. Promote agricultural industry to add value to agriculutal products. This will push up agricultural production as well.
  3. Develop main transport corridors while letting the local levels do the local transport infrastructure.
  4. Improve and increase road and rail connectivity with the neighboring countries.
  5. Incentivize high-value and low-volume products and services such as information technology and finance and banking.
  6. Focus resources and attention on high-priority projects, monitor and evaluate them regularly, and reward/punish the best/worst performers.
  7. Create a private-investment friendly environment (even the communist China had to do it for progress).
  8. Deliver corruption-free, efficient and effective government.
  9. Maintain close and balanced relations with the immediate neighbors and friendly and cooperative relations with development partners. Stop whining about our country being small and weak because it is a mid-sized country with proud history.

I hope Prime Minister KP Oli will consider these priorities and become Lee Kwan-Yew of Nepal. He has the opportunity to become a statesman, and hopefully, he will take it.

 

Murari Sharma: Nepal needs to regulate transfer of power

The transfer of power has become a major problem in Nepali politics. It has demoralized politics, fueled economic recklessness, and increased unnecessary burden to the people and the country. Prime Minister Sher Bahadur Deuba has continued that culture. It must be changed.

Have you ever given away something you love voluntarily? Have you ever given up your power at home or in office? I can tell you from my experience that it is incredibly difficult.  Some people stick to power and position forever, going to any extent.

Therefore, democratic societies stipulate specific period and procedure for tranfering power. Some countries have made them more specific than others. For instance, the United States holds its elections on Tuesday after 1 November and requires the transfer of power on 20 January.

Nepal’s constitution lacks such specificities. Therefore, Mr. Deuba has been exploiting the loophole while promising to resign after the elections are finished. I can understand Mr. Deuba’s stand. The federal upper house, indeed, is yet to be elected and obtain its full shape.

However, Mr. Deuba stands on a shaky ground. Even if he had resigned a month ago, he would have continued as the interim prime minister. Mr. Deuba is too smart not to understand it. Then, why has Mr. Deuba not yet resigned resign? While no one can read his mind, we can rationally speculate a range of motivations behind his procrastination.

First, Mr. Deuba expects to become prime minister again during the life of the recently elected federal house of representative if he can break the CPN (UML)-Maoist Center alliance. A coalition of his party, the Maoist Center, the Federal Socialist Forum, and the Rashtriya Janata Party will constitute a majority in the house. Therefore, Mr. Deuba thrown a bait to the Maoist Center leader Pushpa Kamal Dahal by supporting him for prime minister for the next five years. If Mr. Dahal takes the bait, if would be the eighth wonder if Mr. Deuba did not ask him for a roatation and become prime minister again.   

Second, Mr. Deuba has already reaped the benefits by not resigning. If he had resigned, he could not have forced President Bidya Devi Bhandari to sign the upper house election ordinance, which incorporates his choice, the single transferable vote system, not the first-past-the-post favored by the UML. Under the measure, his party will have a respectable representation in the upper house, otherwise impossible. Mr. Deuba might also be able to wangle one or two members to be nominated to it by President Bhandari.

Third, Mr. Deuba has already appointed governors and chief secretaries in the provinces the people of his choice. While there is no guarantee that the government waiting in the wing would keep them all in their positions, some of them may survive, which would be a major gain for Mr. Deuba’s party, which has not won a majority in any of the seven states.

Fourth, Mr. Deuba, by sticking to power,  could announce several populist programs on the fly, without costing them. For instance, he has reduced the eligibility age for the old-age pension from 70 to 65 and for the single or widowed Dalit women to 55.  In addition, he has been spending money from the state coffers to reward his cronies, friends, and supporters in one pretext or another. Even the Finance Ministry and Home Ministry have expressed their concerns about Mr. Deuba’s reckless populism.

However, the left alliance (UML-Maoist Center) is not free from its own shortcomings that have allowed Mr. Deuba to continue in power and take these reckless populist measures. Even though the alliance members have agreed on power-sharing in six states where they would form the government, they are yet to agree on it at the center.

This is not the first time a prime minister has clung to power even though he has lost the majority. Prime Ministers Girija Koirala in 1994 and Man Mohan Adhikari in 1995 dissolved the house and called elections, so they stayed in power until the election as interim. When he lost the majority, Mr. Deuba did the same in 2002, though he knew he could not organize the vote owing to Maoist disturbances. 

After the 2008 elections, Prime Minister Girija Koirala showed no signs of quitting from April to September. Prime Minister Sushil Koirala clung to power by breaking his agreement with the UML until it became untenable for him to do so on the face of the Indian economic embargo and opposition from the UML. K.P. Oli waited for a no-confidence motion to mature and resigned on the eve of the motion hitting the house floor.

Such examples demonstrate that they occur frequently. To prevent such maneuvering and resulting damage to democracy and the treasury, Nepal should introduce specific dates for the election and transfer of power. If the specificity of the United States is impossible to follow for one reason or another, it out to be a limited timefame, so it would not be stretched as an elastic.   

We lock our doors to prevent the well-meaning people to be tempted to steal. Similarly, we should put in place rules for checks and balances, so well-meaning politicians would not be tempted to stretch their power as an elastic. Firm rules and strong institutions are the locks of democratic politics that help secure our democracy and freedoms. 

Murari Sharma: Selection of state capitals has not been wise

The government of Prime Minister Sher Bahadur Deuba has announced the temporary state capitals for Nepal’s newly created seven provinces, which are yet to be given their specific names. The decision has stirred protests in some of those cities that were also aspiring to the privilege. As people, should we be worked up against the selection?

For now, Biratnagar will be the capital of State 1, Janakpur for State 2, Hetauda for State 3, Pokhara for State 4, Butwal for State 5, Surkhet for State 6, and Dhangadhi for State 7. Dhankuta, Dharan and Itahari were competing with Biratnagar, Birgunj with Janakpur, Bhaktapur with Hetauda,  Dang with Butwal, and Doti with Dhangadhi. The protests have erupted in those places which were left out in this decision, barring in State 3. While politicians who rooted for the left-out cities are up in arms, political pundits have also joined the fray.

Some political pundits, like Krishna Khanal, have suggested that the squabble over the temporary state capitals of the newly federalized Nepal should not be a subject of fierce emotional outpour. Prima facie, it is true that temporary state capitals might be just temporary and not worth fighting against. It might also be true that if you already live in a privileged area or have enough resources to overcome the geographical distances, the issue is not worth crying over.

But for most other people, the location of state capitals matters. The state capital will bring investment, business opportunities, employment, good schools and hospitals, good transportation links, access to power, political influence, and so on. Besides, the temporary capitals may prove permanent in most situations because the people in these places would not easily abandon the privilege once they have achieved. Changing the status quo would bring even a bigger turmoil. So let us look at whether the selection of the temporary capitals has been wise.

A host of factors — political and non-political — needs to be considered while making such a momentous determination. The Deuba government, which is now in a minority and on its way out, could not garner support from the left alliance, the winner of the recent general elections. Besides, it seems that it did not give enough thought to some of the important of non-political elements essential for this important decision. They include the availability of transportation links, including air links, communication facilities, room to grow further, central location,  water supply, and security, mainly external.

Let me dwell on these elements specifically her. From the point of transportation links, the seven state capitals have been well thought out. They all have good roads linking to them to Kathmandu and to the provinces they will serve. Except for Hetauda, other places have air links as well. All seven state capitals have had good communication links, if not the best ones, within their respective regions. They all have room to grow into bigger cities as well.

In terms of the centrality of location, the decision is a mixed bag. While you cannot quibble much about Janakpur, Pokhara, and Surkhet, other places do leave much to be desired. Biratnagar, Hetauda, Butwal, and Dhangadhi are nowhere near the center of the respective provinces.

In addition, life needs water to sustain, and no wonder why most large cities are located near a river or sea. Unfortunately, except for Pokhara, no other temporary state capital is near a large body of water. While selecting permanent capitals for the states, we need to make sure that the source of water is within a manageable distance.

From the external security point of view, Makwanpur, Pokhara, and Surkhet are fine. They are far from neighboring countries, and this distance will shield them from the external threat of a quick aggression. But Biratnagar, Butwal, and Dhangadhi will be vulnerable to external threats as well as an internal criminal threat.

In the past, Indian police have come all the way to Kathmandu and other places in the name of a hot pursuit of criminals. Biratnagar, Butwal, and Dhangadhi will be under the direct range of fire for Indian security officials. If Seoul with 10 million people were not just 35 miles away from its border, South Korea could afford to be much tougher with its northern neighbor. Sure, in Europe, some capitals — for instance, Bratislava — are not far from their international borders, but the continent is not as volatile as the Asian continent where Nepal lies.

Among the various requirements for the ideal state capital, security must stand at the top. The reason is simple. You cannot change your geography but you can change all other elements through investment. For instance, India established New Delhi and the United States established the Washington DC, and both countries built the infrastructure to sustain their federal capitals.  In other words, Biratnagar, Janakpur, Butwal, and Dhangadhi should not be made permanent state capitals at all. They are too close to the border.

Among the candidate cities in State 1, Dhankuta has no airport and its land transport link is also tenuous. Itahari is ideal for transport links at the crossroads of the East-West Highway and North-South Highway but it is closer to the Indian border than Dharan.  Dharan has no room to grow without destroying the forest at its feet. But at any rate, Biratnagar should not be the permanent state capital unless we want Patna to be our de facto state capital.

From the security point of view as well as connectivity, Bardibas will be the ideal place for the capital of State 2. It is much farther than Janakpur from the border and is at the crossroad of the East-West Highway as well as Kathmandu-Bardibas Road. Besides, a new international airport is being considered in Nijgadh, which will be within a reasonable distance from Bardibas. Birgunj will be even closer than Biratnagar from the Indian border.

Hetauda needs a sizeable airport to become a permanent capital of State 3. Some heads of state and government visiting Nepal would want to visit state capitals as well, and we must have an airport that can handle much bigger planes than the Pilatus Porter, Twin Otters, and other small aircraft. For State 4, Tuslipur will be a better place than Butwal from the security point of view as well as from its relatively central location. Its airport should be extended for better air connectivity.

For State 7, Dhangadhi is too close to the border to feel secure and not centrally located for the province. But Doti is not a good substitute for Dhangadhi. Doti’s airport cannot handle big aircraft and is not a regional air link hub. State 7’s capital should be established anywhere north of the Eas-West Highway. Attaria could be considered as a possible choice, for instance.

While the Deuba government might have been under pressure to pave the way for provincial set up to start functioning and to choose places for state capitals that already have had some infrastructure, the decision should be treated as a stop-gap measure only. The new federal government and provincial governments must give serious attention to the elements that should be taken into account before making decisions on permanent state capitals.

While other countries are marching ahead on a long trajectory of political evolution and economic growth, Nepal has remained behind because we always go for the short-term political expediency rather than long-term vision. Our decision should be transformational: We should do what we want to be 10 or 20 years down the road, not cling to the status quo and expediency while deciding our permanent state capitals and our future. So the squabble over the state capitals is necessary to arrive at a rational decision.