Published in the Hindu on March 4, 2023

Coalition politics in Nepal increasingly resembles the game of musical chairs; in Kathmandu too, it is the same cast of characters who have been taking turns for nearly two decades. The tragedy is that scant attention is paid to critical issues like rising unemployment, growing national indebtedness and development challenges.

A coalition collapses again

The last coalition government, formed in December, after the elections last November, has lasted just two months. It was stitched together by UML leader K. P. Sharma Oli with the idea of breaking away the Maoists by promising the prime-ministership to their leader Pushpa Kamal Dahal ‘Prachanda’.

Mr. Prachanda had formed an alliance with Mr. Oli in 2018 that broke down in 2020 after a series of decisions by Mr. Oli (he was then PM) seeking to marginalise Prachanda and other senior leaders. Later, Prachanda and the Madhav Nepal led breakaway faction of UML, rechristened as the CPN (Unified-Socialist), joined with the Nepali Congress (NC) and formed an electoral alliance in 2022.

The Nepali Congress emerged as the largest party with 89 seats (the House strength is 275) and Maoists were a distant third with 32.  Power-sharing talks collapsed because Prachanda insisted on becoming Prime Minister first. Knowing Prachanda’s weakness, Mr. Oli made him an offer, he could not refuse. On December 26, Mr. Prachanda was sworn in as PM and in return, he assured support to UML for the posts of House Speaker and the President. Six other parties had joined the coalition. These included disparate groups like the Rashtriya Prajatantra Party (14 seats) that espouses a pro-monarchy and pro-Hindutva agenda and the newly created Rashtriya Swatantra Party (20 seats) consisting of professionals who professed disenchantment with the rampant opportunism reflected in the traditional Nepali politics. However, both were tempted with offers of Deputy Prime Minister-ships and Prachanda’s cabinet had four deputy PMs, one each from Maoists, UML, RSP and RPP!

Within weeks, Prachanda started chafing as Mr. Oli reverted to his old autocratic ways of calling the shots from behind the scenes. Realising that with Oli nominees as President and Speaker, he could easily be manoeuvred out, Prachanda reached out to the NC. Anticipating this, NC had voted in support of Prachanda in the confidence vote on January 10, announcing that it had done so in the interests of national consensus governance that could provide stability.

Prachanda saw his opportunity to return the favour by espousing the idea of a national consensus presidency and promised support to the NC candidate Ram Chandra Poudel. UML called it a “betrayal” and pulled out of the coalition. However, other than the RPP, the other members of the Oli-led coalition declined to follow, announcing their support for Poudel’s candidature.

Presidential elections

The Election Commission has announced that presidential elections will be held on March 9, followed by elections for the Vice-President on March 17. Since the Code of Conduct will be in effect till March 19, no overt political activity is possible. Given that Mr. Prachanda is now heading a minority government with 16 vacant cabinet positions, power sharing talks will gain momentum though the final outcome will remain a matter of speculation.

Mr. Prachanda has till month end to seek a fresh vote of confidence. Once Mr. Poudel is elected, the NC is likely to throw its weight behind Prachanda. RSP, Janata Samajbadi Party (12 seats), Janmat Party (six seats) and the Nagrik Unmukti Party (three seats), earlier with the Oli coalition have switched their support to Poudel. In addition, NC coalition members Loktantrik Samajbadi Party (four seats), CPN (U-S) (10 seats) and Rashtriya Janamorcha (one seat) will also support Mr. Poudel.

UML has put up former speaker Subhas Nembang as its presidential candidate. The electoral college for these elections is made up of 275 members of the House of Representatives and the 59 members of the National Assembly together with the 550 members of the seven provincial assemblies, with votes being weighted. Given the current assurances of support, Mr. Poudel will win with nearly three-fourths of the electoral college. In the election for the Vice-President,  it appears that the JSP candidate will obtain the coalition backing. 

Prachanda’s real challenge will emerge the following week. Managing negotiations between the competing demands of NC and these seven parties will not be easy. This is his third stint as Prime Minister; his first time in 2008 was the only time he came to power on the basis of his electoral victory but his coalition collapsed in less than a year because he failed to make the transition from being Comrade Prachanda to an elected leader. Both the second and third times have been purely opportunistic gambles of teaming up with Oli and then getting burnt. After the second time, he even naively merged his party with the UML in 2018. Fortunately for him, the Supreme Court annulled the merger in 2021 giving him a political lifeline. However, he candidly admits to being easily tempted.

On the other hand, NC leader Sher Bahadur Deuba, nearly 78 and a five-time PM, is convinced that he should be PM again. Hopefully, the events of the last two months should have a sobering influence on both because while Deuba’s intransigence led to the breakdown of talks in December, Prachanda should realise that his bromance with Oli will always be short lived.

The foreign hand

Since 2008, when Nepal declared a republic, the game of political musical chairs has been a regular phenomenon. In fifteen years, Nepal has had three NC Prime Ministers (G. P. Koirala, Sushil Koirala and Sher Bahadur Deuba twice), two Maoist Prime Ministers (Prachanda, now thrice, and Baburam Bhattarai), three UML Prime Ministers (Madhav Nepal, Jhala Nath Khanal and K. P. Oli twice), and a Chief Justice as caretaker PM in 2013. It is the resulting disenchantment of the electorate that spawned the emergence of new political forces in the 2022 elections.

Normally, it is during these rounds of musical chairs that Nepali politicians start wearing their ‘nationalist’ colours by looking for the convenient scapegoat of the ‘foreign hand.’ While India has often been blamed, China has played a visible hand in seeking to keep a united communist front but failed to find a compromise between Oli’s egoistical tendencies and Prachanda’s opportunistic impulses. 

In recent years, India has retrieved some of the lost ground by focusing on project implementation such as the Jayanagar-Bardibas railway and the Motihari-Amlekhgunj oil pipeline. Power export from Nepal has picked up: the agreement for 364 MW signed in June has yielded export earnings of $60 million in 2022 whilelooking at increasing power transmission on the 400 kV Muzaffarpur-Dhalkebar line to 800 MW. The 900 MW Arun 3 is expected to be operational later in 2023.  

Meanwhile, some of the high-profile infrastructure projects undertaken by China have generated concerns about their economic viability and resulting long term debt implications, a concern shared by other countries in South Asia and beyond.

A good ‘neighbourhood first’ policy for India is to focus on connectivity and development while letting the Nepali politicians continue with their game of ‘musical chairs.’

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Published in the Hindu on December 29, 2022

The general elections in Nepal held in November passed off peacefully but prospects for a stable government remain elusive. Neither of the two electoral coalitions managed to secure a clear majority. Maoist leader Pushpa Kamal Dahal ‘Prachanda’ who had broken up with United Marxist- Leninist (UML) in 2020 and joined the Nepali Congress (NC)-led coalition, once again switched to the UML. On Christmas day, he was appointed Prime Minister for the third time. To demonstrate his majority within 30 days, Prachanda will have to satisfy the demands of UML and six other political parties with widely diverging agendas.

With 89 seats in a House of 275, NC had emerged as the largest party. It had an opportunity to form both the federal and six of the seven provincial governments with its coalition partners but missed the bus, thanks to the NC leader Sher Bahadur Deuba’s ego (he is 76 and after five stints, remains convinced of his destiny to be PM six times) and poor advice. Yet, thirty days is a long time in Nepal’s politics and Prachanda may again realise too late that he had been manipulated by UML leader K P Oli.

A messy transition

Nepal’s transition from a monarchy to a republic began in 2008. In fifteen years, Nepal has had three NC Prime Ministers (G. P. Koirala, Sushil Koirala and Mr. Deuba twice), two Maoist Prime Ministers (Prachanda twice and Baburam Bhattarai), three UML Prime Ministers (Madhav Nepal, Jhala Nath Khanal and Mr. Oli twice), and a Chief Justice as caretaker PM in 2013. In such a fluid environment, political horse trading has been rampant.

Following the adoption of the new constitution in 2015, elections were held in 2017. Then too, Prachanda was in a coalition government with the NC but a month before the elections, switched to form an electoral alliance with the UML. He soon realised that he was relegated to being the junior partner with 53 seats compared to UML’s 121. Mr. Oli assumed the post of PM in 2018 and despite promising Prachanda, never ceded control of the merged Nepal Communist Party.

Mr. Oli’s authoritarian traits soon antagonised some of his senior colleagues, Madhav Nepal, Jhala Nath Khanal, and Bhim Rawal who made common cause with Prachanda. However, Mr. Oli had a clear run till early 2020 because under the constitution, a no-confidence-motion cannot be entertained for the first two years. By summer of 2020, intra-party rumblings came to the fore, creating a showdown by the end of the year. Fortunately for Prachanda, a Supreme Court judgement in early 2021, annulled the merger of Maoists with the UML, enabling Prachanda to claim his party back.

As Mr. Oli realised that he was losing his majority, he tried to retrieve the situation by recommending dissolution of the House. President Bidya Devi Bhandari has been Mr. Oli’s close comrade since she entered active politics after the untimely demise of her husband Madan Bhandari, a charismatic UML leader, in a car accident in 1993. Mr. Oli had taken on the role of her political mentor and in 2018, backed her elevation to the presidency. She reciprocated the favour by ignoring constitutional propriety and approving dubious ordinances that were repeatedly struck down by the Supreme Court.

Maoists under Prachanda and the dissident group of the UML led by Madhav Nepal eventually jumped ship and backed the NC Sher Bahadur Deuba’s appointment as PM in July last year. The three coalition partners had fought the elections as an alliance but Mr. Oli succeeded in splitting the alliance by weaning away Prachanda, who by his own admission, admits to being easily tempted.

Election results of 2022

The 2008 elections saw the emergence of two new political actors, Maoists who had come overground after waging a decade long insurgency and Madhesis who spearheaded the call for federalism. Over the years, they have lost their ideological moorings and have aligned with whichever group forms the government. From being the single largest party in 2008 with nearly 40% seats in the first Constituent Assembly, Maoists are today reduced to 11%; the Madhesis have come down from 15% to 10%.

The 2022 elections have seen new political actors emerge. Rashtriya Swantantra Party (RSP), a creation of Rabi Lamichhane, a popular TV talk show host, became the platform for the millennial Nepalis, especially the diaspora. They were disenchanted with the self-serving leaders of the NC, the UML and the Maoist parties. However, the RSP MPs are a diverse group who campaigned on their individual platforms and with their own resources.

Similar disenchantment with the Madhesi parties led to the emergence of the Janmat party, led by C K Raut, a former supporter of Madhesi secessionism, and Nagarik Unmukti Party set up by a Tharu leader Resham Chaudhury who is behind bars but his wife Ranjeeta Shrestha campaigned successfully in his name. RSP, Janmat and NUP managed to win 20, 6 and 3 seats respectively.

This fragmentation of votes has led to a lot of ‘floaters’ who can switch allegiances, just as Prachanda has done. Upendra Yadav (Janata Samajbadi Party) was in talks with the NC when it appeared that it would form the government but shifted back to the UML-Maoist group. The pro-monarchy pro-Hindutva Rashtriya Prajatantra Party supporting the secular Communist alliance reflects the opportunism in Nepali politics!

Prachanda may think that he has a secure two-year term but with barely 32 seats (UML has 78), it is clear that Mr. Oli will call the shots. He will ensure his own candidate as the president once Smt Bhandari’s term ends in March 2023. In the provinces, Maoists will be lucky to get one chief ministership.

India’s role

It is at times of political instability that Nepali politicians start looking for the convenient scapegoat of ‘foreign interference’. India was conspicuously missing during the election campaign and Prime Minister Narendra Modi was the first to congratulate Mr. Prachanda on his appointment. Post-2018, China had played a major role in bringing about a UML-Maoist alliance but failed to keep it intact. Senior Maoist leader Barshaman Pun was in China was medical treatment recently and reportedly played a role in the new UML-Maoist rapprochement.

In recent years, India has retrieved lost ground in Nepal by focusing on project implementation. Since 2022, the Jayanagar-Bardibas railway started with India providing technical support. In 2019, the long awaited Motihari-Amlekhgunj oil pipeline was inaugurated. Power generation in Nepal has picked up. The agreement to export 364 MW signed in June has yielded export earnings of $60 million in 2022. According to Nepal Electricity Authority, the figure could quadruple in 2023 with the 900 MW Arun 3 becoming operational.

Yet there are some issues that need to be resolved. Foremost is the demonetised Indian currency issue, pending since 2016. Talks between the two central banks need a political nudge. The second is the recruitment for the Gurkha regiments, held up since the launch of the Agnipath scheme. As PM Modi declared during his last visit, the relationship needs “equality, mutual trust, respect and benefit” to sustain it, irrespective of who resides in Baluwatar.

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Published in the Hindu on April 7, 2021

Nepal Prime Minister, Sher Bahadur Deuba, paid a long-awaited visit to India last week (April 1-3). Sworn in July 2021, this was his first bilateral visit, in keeping with tradition. The outcome might appear modest but what is significant is that both sides effectively managed to steer clear of divisive issues. At 75, Mr. Deuba is a political veteran and first became prime minister in 1995. In his fifth stint, he is no stranger to the complex relationship between the two countries.

Positive outcomes

Among the highlights was the operationalisation of the 35 km cross-border rail link from Jayanagar (Bihar) to Kurtha. Two further phases will extend it to Bijalpura and Bardibas. The Rs. 787 crore project had been ready for over a year but operationalisation was held up because of necessary administrative requirements in Nepal to set up a company that could recruit staff. The Konkan Railways Corporation will provide the necessary technical support, initially.

The second project that was inaugurated was the 90 km long 132 kV double circuit transmission line connecting Tila (Solukhumbu) to Mirchaiya (Siraha) close to the Indian border. Constructed with an Exim Bank concessional loan of Rs 200 crores, there are a dozen hydro-electric projects planned in the Solu corridor for which the Nepal Electricity Authority has concluded PPAs of 325 MW.

In addition, agreements providing technical cooperation in the railway sector, Nepal’s induction into the International Solar Alliance, and between Indian Oil and Nepal Oil on ensuring regular supplies of petroleum products were also signed.

The Mahakali Treaty, signed in 1996 during Mr. Deuba’s first visit as Prime Minister, covers Sarada and Tanakpur barrages as well as the 6700 MW (approximately) Pancheshwar Multipurpose project. Both sides have agreed to push for an early finalisation of the DPR. An ambitious $7 billion project, it needs political will to move it forward. The Joint Vision Statement on Power Sector Cooperation recognises the opportunities for joint development of power generation projects, together with cross border transmission linkages and coordination between the national grids; it can provide the momentum.

China’s growing role

On February 27, Mr. Deuba pushed through the ratification of the agreement with the U.S. Millennium Challenge Corporation (MCC), despite reservations of his coalition partners, the Maoists and the UML (Unified-Socialist). The agreement provides a grant of $500 million for building 318 kms of high voltage transmission lines along with sub-stations and maintenance of 300 kms of the East-West highway. The Chinese Embassy in Kathmandu had actively sought to sabotage the agreement by planting stories that it was part of the U.S.’s Indo-Pacific strategy aimed at containing China. The agreement had been signed in 2017, during Mr. Deuba’s fourth stint as prime minister and was awaiting ratification. Together with the Pancheshwar project, it provides a welcome synergy.

During the Monarchy, China maintained a link with the Palace and its concerns were primarily related to keeping tabs on the Tibetan refugee community. With the abolition of the monarchy, China has shifted attention to the political parties as also to institutions like the Army and Armed Police Force and considers Nepal an important element in its growing South Asian footprint.

In recent years, India’s relations with Nepal have had both ‘highs’ and ‘lows’. Prime Minister Modi has often spoken of the “neighbourhood first” policy. He started with a highly successful visit in August 2014 but then saw the relationship take a nosedive in 2015, with India first getting blamed for interfering in the constitution drafting process and then for an “unofficial blockade” that generated widespread resentment against India. It reinforced the notion that Nepali nationalism and anti-Indianism were two sides of the same coin that Mr. Deuba’s predecessor, Mr. K P Sharma Oli, exploited successfully.

In 2016, Mr. Oli visited Beijing to negotiate an Agreement on Transit and Transportation. Three years later, a Protocol was concluded with China providing access to four sea-ports and three land ports. The first ever visit of the Chinese Defence Minister took place in March 2017, followed by joint military exercises a month later. A military grant of $32 million was also announced.

China has overtaken India as the largest source of FDI and in 2019, President Xi Jinping visited Kathmandu. Annual development assistance was hiked to $120 million. Today, China is also engaged with airport expansion projects at Pokhara and Lumbini. Rather than compete with China, India needs to up its own game.

The growing Chinese presence means that India cannot afford to let issues linger but reach out actively to find resolution.

Managing differences

Over the years, a number of differences have emerged between the two countries that need attention. The political narrative has changed in both countries and these issues can no longer be brushed under the carpet or subsumed by invoking a ‘special relationship’ based on ties of a shared culture, language and religion. Part of the success of Mr. Deuba’s visit was that none of the differences were allowed to dominate the visit. Yet, to build upon the positive mood, it is necessary these issues be discussed, behind closed doors and at Track 2 and Track 1.5 channels.

As one of the oldest bonds, the 1950 Treaty of Peace and Friendship was originally sought by the Nepali authorities in 1949 to continue the special links they had with British India. It provides for an open border and right to work for Nepali nationals in India.  However, it is today viewed as a sign of an unequal relationship, and an Indian imposition. The idea of revising and updating it has found mention in Joint Statements since the mid-1990s. It has been discussed sporadically, but in a desultory manner, by the Foreign Secretaries beginning in 1997 and even at the ministerial level at the 2014 Joint Commission.  

In 2016, an eight-member Eminent Persons Group was set up to discuss it. The report is available with both governments but a perception has been created in Kathmandu that it be formally presented to the two governments. As long as it is clearly understood that this only a report by well-intentioned experts in their individual capacity and not binding on governments, it should be possible for the two Foreign Ministers to acknowledge it publicly. It could even be made public to kickstart Track 2 conversations.

Demonetisation is another irritant. In November 2016, India withdrew Rs 15.44 trillion of high value (Rs. 1000 and Rs. 500) currency notes. Today, over Rs 15.3 trillion has been returned in the form of fresh currency. Yet, many Nepali nationals who were legally entitled to hold Rs 25000 of Indian currency (given that Nepali rupee is pegged to the Indian rupee) were left high and dry. The Nepal Rashtra Bank, which is the central bank, holds Rs. 7 crores and estimates of public holdings are Rs. 500 crores. After more than five years, it should certainly be possible to resolve this to mutual satisfaction.

On the boundaries

In 2019, Mr. Oli, facing domestic opposition within his party, needed a distraction and found one in the Kalapani boundary issue. These boundaries had been fixed in 1816 by the British, and India inherited the areas over which the British had exercised territorial control in 1947. While 98% of the India-Nepal boundary was demarcated, two areas, Susta and Kalapani had remained pending. In November 2019, India had issued new maps following the division of the State of Jammu and Kashmir Union Territories, Jammu & Kashmir and Ladakh. Though the new Indian map did not affect the India-Nepal boundary in any material way, Mr. Oli expanded the Kalapani area dispute. By whipping up nationalist sentiment, he got a new map of Nepal endorsed by the legislature through a constitutional amendment. While it did not alter the situation on the ground, it soured relations with India and added a new and emotive irritant.

The need today is to avoid rhetoric on territorial nationalism and lay the groundwork for a quiet dialogue where both sides display sensitivity as they explore what is feasible. India needs to be a sensitive and generous partner for the “neighbourhood first” policy to take root.  

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