Sensing a possible gang-up of senior leaders against him, Prime Minister and co-chairman of the ruling Nepal Communist Party (NCP) KP Oli has of late adopted a policy of placating both senior leaders Pushpa Kamal Dahal and Madhav Kumar Nepal.Besides Dahal and Nepal, other senior leaders Jhala Nath Khanal, Bam Dev Gautam and Narayan Kaji Shrestha are also dissatisfied with what they see as Oli’s monopoly in the party and the government. These four leaders are coming closer to check that monopoly. Though there has been progress in forming intra-party structures and picking leadership of the party’s sister organizations, Oli’s monopoly, his governance failure and the question of the future leadership of the party and the government remain contentious.

On Jan 25, when Oli was in Switzerland to attend the World Economic Forum summit, Nepal, Dahal, Gautam and Shrestha had met to discuss various issues related to the functioning of the party and the government. Oli projected this meeting as a ploy to remove him from power. Now, the same four leaders are trying to mount a collective challenge against Oli’s monopoly. PM Oli of course feels this undercurrent of discontent and has reached out separately to Nepal and Dahal, each of whom has strong command in the party. “PM Oli has started reaching out to senior leaders individually in order to foil a possible alliance against him,” says a NCP leader on condition of anonymity.

Soon after Nepal returned from the second Belt and Road Initiative (BRI) forum in Beijing, Oli had a one-on-one with him for over four hours on a range of issues related to party unification. Such a long meeting was the first of its kind following the unification of two communist parties in 2018. The two leaders discussed the ups and downs in their relationship, mainly after party unification, and agreed to take measures to keep their relations cordial. On internal power-sharing, Shrestha, Gautam and Khanal support leader Nepal in his bargaining with Oli.

There is wider dissatisfaction as well. Says a former Maoist leader who now occupies a senior position in the NCP: “We are barred from speaking in party meetings and instructed not to speak even in the parliament. This is a serious issue.”

"PM Oli has started reaching out to senior leaders individually in order to thwart a possible alliance against him"

An NCP leader

Don’t rock the boat

To clear the air of suspicion, Oli and Dahal are meeting on a regular basis. But that does not mean everything is hunky-dory between them. Perhaps Dahal is aware that Oli is hedging his bets. “As part of his appeasement policy, Oli is assuring support to both Nepal and Dahal as they bid for party chairmanship in the general convention,” as another NCP leader put it. However, mistrust between the two leaders is mounting.

When PM Oli was in Vietnam, Speaker of the federal parliament Krishna Bahadur Mahara, who is close to Dahal, directed the parliament secretariat to remove ‘unparliamentary’ remarks made by the PM before his foreign trip. Leaders close to Oli saw this as a ploy to remove him.

Dahal’s soft approach to main opposition Nepali Congress is also a bone of contention. In recent weeks, in public forums as well as in the parliament, Dahal has been highlighting the need for collaboration between the government and the opposition, while Oli has been strongly criticizing opposition leaders.

Whoever secures Oli’s support is likely to win party chairmanship after Oli gives up the post during the next General Convention. He has reportedly intimated to both Nepal and Dahal that due to his poor health he will not stand for party chairperson again.

Oli is thus using the general convention as a bargaining chip to perpetuate his stronghold in both the party and the government. The recent finalization of district chairs and secretaries had helped bridge the gap between Oli and Nepal.

Bamdev Gautam in particular feels cornered. First, he claims he lost the parliamentary election from his Bardiya-1 constituency in 2017 due to the betrayal of party leaders close to Oli. He had lost to Sanjay Kumar Gautam of the Nepali Congress by 753 votes even though he represented the strong UML-Maoist alliance. Now, Bamdev Gautam is in constant touch with Dahal, Nepal and Shrestha.

Last year, co-chair Prachanda had floated a proposal to get Gautam elected to the federal parliament by asking lawmaker Ram Bir Manandhar, elected from Kathmandu-7, to resign. Oli, however, rejected Dahal’s proposal, which further widened his rift with Gautam. Even before party unification, Oli used to criticize Gautam as being unnecessarily close to the Maoist party. Of late, hinting at Oli, Gautam has been speaking of systematic efforts at ending his political career.

No presidential pardon

Following the three-tier elections, Jhalanath Khanal had claimed the post of the country’s president in 2018. Oli opposed it, while Madhav Kumar Nepal stood neither in favor nor against Khanal’s candidacy. Of late, he is leaning toward the Nepal camp. But Khanal, a former prime minister, does not have much hold on the party organization, where power is shared between Oli, Nepal and Dahal.

Another senior leader Narayan Kaji Shrestha has also been criticizing the federal government’s working style. Last August, he resigned as party spokesperson following disagreements with PM Oli over the demands of Dr Govinda KC. Later, Dahal and Oli urged him to continue as spokesperson. Nepal and Shrestha are on the same page on several issues; they had a cordial relationship even before the unification. “Some of my ideas related to party- and government-functioning remain unaddressed,” says Shrestha, who has been urging top leaders not to engage in factional politics.

Again, from the outside, Dahal and Oli seem to have a cordial relationship. But the rift between them is widening, especially over federalism. Dahal is displeased with the centralization of power and resources under PM Oli’s watch.

Maoist leaders meanwhile complain of Oli’s interference in ministries led by former Maoist leaders. A few months ago, the Home Ministry had come up with a proposal to regulate NGOs but the PM got the Home Secretary to halt it. Recently, political appointments in the Alternative Energy Promotion Center, which falls under the Ministry of Energy under Barsha Man Pun, became a bone of contention. Oli rejected Dahal’s recommendation and made one himself. Dahal and Oli also differ on issues related to transitional justice and how they view the Maoist insurgency.

The former Maoist leaders want the ‘people’s war’ recognized in the official party charter. Yet the former UML leaders, and particularly those close to Oli, now say there should be no deviation from the UML line of ‘people’s multiparty democracy’. This has been another source of the Oli-Dahal rift.

The power tussle within the NCP is likely to grow as the General Convention draws closer. While other senior leaders want to hold the General Convention as soon as possible, Oli is not in the mood. When the party was united a year ago, the convention was slated to be held within two years. But it is difficult, as the central level convention cannot take place before the local and provincial ones.

Shifting sands

Dahal wants to hold the convention soon because next year Oli will complete his two and half years as prime minister—when, as per an agreement, Oli has to hand over either the party’s leadership or the prime minister’s post to Dahal.

“We will think of the General Convention only after we settle organizational issues,” says spokesperson Shrestha. But speaking at a program on May 6, Dahal said the party leadership was obliged to hold the General Convention in the next seven to eight months. This means Dahal wants to hold the convention within one year to ensure he gets either the party chairmanship or the prime ministership.

What cannot be ruled out either is an agreement between Nepal and Dahal over party chairmanship and prime ministership by sidelining Oli completely. If Dahal and Nepal come together, Oli will be in a minority both in the parliament and in party structures. Of the three clear factions led by Dahal, Oli and Nepal, Dahal has greater numbers than does either Oli or Nepal. Sources say if Oli continues with his monopoly and refuses to hand over power even after a year, other senior leaders will start ganging up against him.

“I see the possibility of big changes in internal alliances. Dahal, Nepal, Khanal and Gautam have all suffered at Oli’s hands,” said political analyst Shyam Shrestha in a recent interview with APEX. “If these four come together, there would be a change in power balance in favor of this alliance.”

Despite some differences over the formation of intra-party structures and sister organizations, the disgruntled factions agree on the need for an early General Convention. Otherwise Oli could indefinitely extend his tenure as he has vowed to quit only after the convention.

According to party insiders, Dahal knows Oli won’t easily transfer power to him as per the gentlemen’s agreement. As such he has already started reaching out to leaders who are unhappy with Oli. The power tussle inside the ruling party is set to escalate.

4 Defense ties

APEX Series

EVOLVING NEPAL-CHINA RELATIONS

  1 Post-1950 turning points (April 5)

2 The 2016 transit and transport treaty (April 19)

3 China’s relations with political parties (May 3)

4 Defense ties (May 17)

5 Nepal and BRI (May 31)

 As a part of his policy of expanding the scope of Nepal’s foreign policy, King Mahendra, particularly after the 1962 India-China war, started reaching out to western countries for military assistance. Western countries, mainly the US and the UK, responded positively to Mahendra’s request for military assistance, and in 1964, Nepal signed an agreement with the US, under which the Americans agreed to provide logistical support to the then Royal Nepal Army. Subsequently, the UK also started providing some military assistance to Nepal. India was already a major defense supplier to Nepal. Since 1950, Nepal and India have also been awarding the Army chiefs of each other the honorary rank of General in recognition of the harmonious relationship between the two armies.

Three countries—India, the US and the UK—have long been Nepal’s major defense partners, both in terms of grant and sale, and have helped meet the requirements of the Nepal Army (NA). But in the last three decades, there have been many changes in Nepal’s defense cooperation. China has emerged as another major defense partner.

Recent engagement between the two countries suggest China is all set to overtake Nepal’s traditional defense partners. Observers say these changes should be viewed both from domestic and international angles. First, Nepal’s internal political changes are conducive to enhancing ties with China on all fronts, including defense collaboration. Second, China has taken assertive steps to expand its military influence in neighboring countries.

Since the establishment of diplomatic relations between Nepal and China in 1955, the armies of the two countries have had cordial ties. Although Nepal and China signed an understanding on military cooperation in 1988, bilateral defense cooperation gained momentum mainly after King Gyanendra’s royal takeover in 2005, and particularly after the abolition of the monarchy in 2008. For instance, on 24 Oct 2005, China pledged military assistance worth $989,000 to Nepal, primarily to curb the Maoist insurgency.

Between 2001 and 2005, the Nepal government also purchased military hardware from India, the US, the UK and Belgium to fight the rebels. But after the 2005 royal takeover, India, the US and the UK suspended their military aid to Nepal, demanding the restoration of democracy. The NA faced a shortage of military hardware to be sent to its peace missions abroad.

In order to address its security interest in Nepal after the abolition of the monarchy, China adopted a policy of deepening collaboration with Nepal’s security forces. Officials from China’s People’s Liberation Army (PLA) started cultivating relations with Nepal’s defense minister and army chief—something which continues to date. In June 2017, China handed over the National Armed Police Force Academy, which it built, to the Nepal government. In the handover ceremony, then Chinese Ambassador to Nepal Yu Hong said, “China is always willing to conduct pragmatic cooperation with Nepal in the field of talents, development and national security.”

Even before 1990, both Nepal and China had made efforts to enhance military collaboration, but those moves were opposed by India. In 1989, Nepal bought anti-aircraft guns, medium range SSM, and AK- 47 rifles from China—much to the chagrin of India, which argued that the purchase goes against the spirit of the 1950 Peace and Friendship Treaty. After the restoration of democracy in 1990, during the visit of interim Prime Minister Krishna Prasad Bhattarai to New Delhi, Indian officials asked him why the Nepal government purchased weapons from China. “Because we got them cheap and India did not meet all our requirements,” Bhattarai reportedly told the Indian officials.

After 1990, the defense collaboration between Nepal and China did not gain much momentum. However, Nepal continued to convince India that it has the right to purchase military hardware from third countries. Along with regular military assistance from China, it would be worthwhile to discuss some vital developments that contributed to increased military cooperation between the two countries in the past decade.

After the first Constituent Assembly (CA) elections in 2008, then Defense Minister Ram Bahadur Thapa signed an agreement in December 2008 with China on military assistance worth $ 2.6 million for the modernization of the NA. After that, Chinese military officials, including the PLA chief, have continued to visit Kathmandu. A close analysis of trends shows that soon after the formation of a new government in Nepal, either China invites our defense minister for a visit or high level Chinese officials come to Kathmandu. In the case of the NA chief, there is a tradition of visiting India first after assuming office.

Another turning point, according to observers, is the Indian blockade in 2015-16. First, the PLA heavily supported Nepal’s rescue and recovery efforts. Second, political parties have reached a consensus that collaboration with China in defense, like in other sectors, should be enhanced.

Two vital developments in 2017 deepened the military cooperation between Nepal and China. After a long hiatus, Chinese Defense Minister and State Councilor Chang Wanquan paid a three-day visit to Kathmandu in March. He announced a grant assistance of $ 32.3 million to Nepal, to be spent on building Nepal’s capacity to deal with natural calamities and purchasing equipment for Nepali peacekeepers deployed in conflict-affected areas.

In the same year, the armies of the two countries conducted the first-ever joint military drill, paving the way for further collaboration. After the formation of the new government led by Nepal Communist Party (NCP) Chair KP Sharma Oli, Deputy Prime Minister and Minister for Foreign Affairs Ishwor Pokhrel visited China in October 2018. During the visit, Pokhrel and Chinese State Councilor and Defense Minister Wei Fenghe signed a Memorandum of Understanding (MoU). “Minister Pokhrel mentioned the importance of military co-operation in military training, hardware in humanitarian and disaster management, and medical equipment and peace-keeping operations, and requested for Chinese support in establishing Defense University in Nepal,” reads a press release issued by the Nepali Embassy in Beijing after the visit. As per the agreement, China increased its military support by 50 percent to strengthen Nepal Army’s capability in disaster management and to better equip Nepal’s UN peacekeeping missions. China also announced an assistance worth RMB 150 million (Rs 2.53 billion) for the NA for the next five years. Nepali army officials say the relationship between the two armies is cordial.

“The Chinese side always respects Nepal’s sovereignty, which has helped make relations cordial,” says former NA Spokesperson Brigadier General Deepak Gurung. For instance, even when Tibetan rebels were conducting raids inside Tibet from Mustang back in the 1950s and 60s, the Chinese PLA had asked Nepali security forces to take care of the problem rather than get involved itself.

Today’s collaboration between the NA and the PLA, Gurung says, should be seen in the larger context of China opening up and its assertive foreign policy. “There have been many changes, mainly after the restoration of democracy in 1990, and also after 2008,” he told APEX.

Observers say growing Chinese military influence should be understood in the larger context of the Science of Military Strategy unveiled by China in 2013, which talks about developing a modern and capable military. “China has since been assertive in all areas of foreign policy, including military diplomacy,” says Deepak Prakash Bhatta, a military affairs expert.

Vital milestones

• Bilateral military cooperation started in 1988

• Nepal purchased military hardware such anti-aircraft guns, medium range SSM, and AK- 47 rifles among others in 1989

• Soon after the royal takeover in 2005, China pledged military assistance of $989,000 to Nepal to fight the Maoist insurgency

• In December 2008, Nepal and China signed an agreement on military assis­tance worth $ 2.6 million for the modern­ization of the Nepal Army

• In 2009, China agreed to provide military aid worth 20.8 million Yuan (approxi­mately Rs 220 million)

• In 2011, during his visit to Nepal, then Chi­nese Army Chief Chen Bingde announced military aid of $7.7 million for the Nepal Army

• In June 2013, Nepal and China agreed to construct the National Armed Police Force Academy during Chinese State Councilor Yang Jiechi’s visit to Kathmandu

• In 2017, China pledged an assistance of $32.3 million to the Nepal Army

• In 2017, Nepal and China began the first ever joint military drill, which was a major turning point in bilateral defense cooper­ation• In October 2018, China announced to pro­vide an assistance worth RMB 150 million (Rs 2.53 billion) to the Nepal Army for the next five years  

 Kathmandu—Naya Shakti Party, Nepal led by Baburam Bhattarai and the Federal Socialist Party-Nepal (FSPN) led by Upendra Yadav have merged, giving birth to the Samajbadi Party Nepal (‘Socialist Party Nepal’), which aspires to emerge as an ‘alternative political force’.In recent years, it has become fashionable for new political parties to claim they are an alternative force. But their success remains limited, at best. For Yadav, the merger is an attempt to emerge as a national leader from his current status as a regional leader. For Bhattarai, it is simply a survival strategy. The merger is unlikely to have an immediate impact on national politics, but observers say it could lead to new political alignments in the days ahead.

Ethnic plank

The Samajbadi Party Nepal seems all set to employ the ethnic agenda as a major political tool. The party has proposed the current seven federal provinces be changed to 10+1, in line with the 2012 report of the High Level State Restructuring Commission, which had recommended delineating the provinces in accordance with the settlements of various ethnicities. (Some members of the commission had rejected this proposal and had submitted a separate report, arguing that the number of provinces should not exceed six.) Federalism based on ethnicity was a prominent demand during first phase of constitution drafting, but it lost charm after the Nepali Congress and the CPN-UML emerged as the two biggest parties in the second CA elections in November 2013.

Of the 11 points in the unification document of the Samajbadi Party Nepal, point number eight, nine and 10 are related to ethnic, marginalized and backward communities. “But the demand for increasing the number of provinces will invite conflict, because no current provincial government is ready to lose its territory,” says Rajesh Ahiraj, a Madhes analyst. Janajati organizations, however, could support the new party. Co-chair of the ruling Nepal Communist Party (NCP), Pushpa Kamal Dahal, still has a soft corner for the demands of the Janajati organizations.

Longevity of unification

Observers are skeptical about the sustainability of the new party as the two leaders have separate political and ideological backgrounds. However, some Madhes watchers say the unity could endure as Bhattarai and Yadav are unlikely to have a clash of interests. “Past experiences show parties split due to differences while forming or joining a government. Bhattarai is a former prime minister, so he would not accept a ministerial position, which gives Yadav the freedom to join a government until the new party reaches the position of forming a new government,” argues political analyst Chandra Kishore. “On power-sharing, Yadav is in a comfortable position. Bhattarai is a prominent national-level leader, which would help Yadav expand his organizational base,” he adds. If Bhattarai and Yadav get along, no other leader is likely to challenge them in the new party. Whether the unification lasts hinges on this crucial factor.

Question of acceptability

In the new party, there are three top leaders—Baburam Bhattarai, Upendra Yadav and Ashok Rai—who belong to separate ethnic constituencies, respectively the Khas Arya community, the Madhesi community and the hill ethnic community.

In the past as well, these leaders had tried to increase their acceptability in communities other than their own. Six days after the promulgation of the new constitution in September 2015, senior Maoist leader Baburam Bhattarai severed ties with the then UCPN (Maoist) led by Pushpa Kamal Dahal. He also resigned as a member of parliament. He then tried to win over Madhesi sentiments by supporting the movement launched by the Madhes-based parties against the constitution. Bhattarai formed a new party in 2016, arguing that the Maoist ideology was no longer relevant to Nepal.

In June 2015, the Upendra Yadav-led Madhesi Janadhikar Forum and the Ashok Rai-led Federal Socialist Party announced unification, giving birth to the Federal Socialist Party Forum Nepal (FSPN). Rai was a senior CPN-UML leader who had left the party arguing that it would not advance the Janajati agenda. The merger reflected Yadav’s ‘look hill policy’ aimed at expanding his support base.

So this is the second attempt at party expansion for both Bhattarai and Yadav. After the Madhes movement, the Madhesi people showed some sympathy for Bhattarai, but it is still difficult for him to get their full support. Will Bhattarai dare contest an election from a Madhes constituency in the next election? Or Yadav from a hill constituency for that matter? Observers doubt it. Despite the earlier unification with the Rai-led party, Yadav did not recommend any Madhesi leader from his party to fight elections from a hill constituency. But with the recent unification, Yadav has tried to project himself as a national—and not just a Madhesi—leader.

 It seems Bhattarai and Yadav agreed to merge with the next election in mind

Impact on national politics

The federal and provincial elections held in December 2017 were a litmus test for both the Bhattarai- and Yadav-led parties. In the federal parliament, the Yadav-led FSPN secured 16 seats, all from Madhes. The party did not do well in hill constituencies. Altogether, the new party has 17 seats in the federal parliament, which makes it the third biggest political force after the NCP and the NC.

The Bhattarai-led Naya Shakti faced a humiliating defeat in the elections, with Bhattarai its only contestant to win a seat in the federal parliament. Even that victory was made possible because of his alliance with the Nepali Congress. Some Maoist leaders who supported Bhattarai earlier have left him. Some former government and security officials who had joined Naya Shakti have also severed ties expressing dissatisfaction with Bhattarai’s working style.

Under the proportional representation category for the federal parliament, the FSPN and Naya Shakti had secured 470,201 and 81,837 votes respectively. Naya Shakti could not get the status of a national party.

Now the Samajbadi Party Nepal heads the government in Province 2; and it is unlikely to quit either the provincial or the federal government immediately. The Oli-led federal government will lose its two-third majority if the new party leaves it, but it will still enjoy a comfortable majority. It seems Bhattarai and Yadav agreed on unification with the next election in mind. In the meantime, the party’s priority is to press for a constitution amendment.

RJPN: Alliance or unity?

While Yadav and Bhattarai were discussing unification, the Rastriya Janata Party Nepal (RJPN) had also expressed an interest in merging with the new party. Both Bhattarai and Yadav decided against it. According to leaders from both the sides, although the chances of unification with the RJPN are slim because of leadership issues, there could very well be an alliance to put pressure on the government to amend the constitution. The RJPN, which recently withdrew its support to the Oli-led government, is preparing to hit the streets for a constitution amendment.

Closer to the ruling party?

The new party has warned that it would quit the federal government if its demand for a constitution amendment is not addressed. Yadav continues to hold the portfolio of deputy prime minister in the federal government. According to sources, NCP Co-chair Pushpa Kamal Dahal has urged Yadav not to leave. “The unification could also be a part of Dahal’s ongoing efforts to become prime minister by ousting Oli, but by keeping the current parliamentary setup intact,” says a ruling party leader requesting anonymity. Analysts believe that if the Samajbadi Party Nepal and the RJPN together stage street protests to press for a constitution amendment, it would be easier for Dahal to wrest the prime minister’s chair from Oli.

3 China’s relations with political parties

 APEX Series

EVOLVING NEPAL-CHINA RELATIONS

  1 Post-1950 turning points (April 5)

2 The 2016 transit and transport treaty (April 19)

3 China’s relations with political parties (May 3)

4 Defense ties (May 17)

5 Nepal and BRI (May 31)

In the first week of 2019, a 15-member team of the ruling Nepal Communist Party (NCP) led by Dev Gurung visited China at the invitation of the Communist Party of China (CPC). According to Gurung, Chinese leaders the Nepali delegation met underlined the need for strengthening the relationship between the two communist parties and suggested further consolidation of communist forces in Nepal. Chi­nese leaders also shared their views on ways to win the hearts and minds of people and to strengthen a party’s organizational base. It was one of several such visits by NCP leaders.

In the past one year, senior ruling communist party leader Madhav Kumar Nepal and Spokesperson Narayan Kaji Shrestha have each visited China twice. Co-chair Pushpa Kamal Dahal went to China last Sep­tember. Former Prime Minister Jhala Nath Khanal, who was in Beijing during the unification between the erstwhile CPN-UML and CPN (Maoist Center), has visited China twice after the unification.

It’s not just senior politicians who get invited; leaders of all levels in the party hierarchy have gone. Two pro­vincial chief ministers—Mahendra Bahadur Shahi (Karnali) and Prithvi Subba Gurung (Gandaki)—have also gone to China recently. In the sec­ond week of April, NCP General Secretary Bishnu Poudel, along with some other leaders from his party, made the trip.

China seems keen on welcoming NCP leaders particularly after the 2017 party unification. This may have more to do with the fact that the NCP is the ruling party than that it is a communist force. But leaders from other parties are also invited by the CPC, which shows China’s willingness to enhance rela­tions across the political spectrum in Nepal. China seems to have adopted a policy of working closely with whichever party comes to power, never mind their ideology.

Observers say Nepal’s new status as a republic prompted China to expand its relationship with various political parties

Two-way traffic

It’s not just Nepali leaders who go to China; visits to Nepal by Chinese leaders have also intensified over the past one decade. Accord­ing to observers, Nepal’s new status as a repub­lic prompted China to expand its relationship with political parties in order to secure its interests in the absence of a permanent power like the monarchy. They say frequent gov­ernment changes in Nepal led China to reach out to a wide range of political parties. All Nepali mainstream par­ties today express their firm commitment to ‘One China’, which is a major concern for the northern neighbor.

After the first demo­cratic movement in 1990, the Chinese government adopted a policy of main­taining close ties with the monarchy, the Congress and the UML, the three main political actors in Nepal at the time. After the second democratic movement in 2006, China slightly changed its policy and the CPC started cultivating ties with a growing number of political parties. A recent trend is that the CPC, rather than the Chinese government, is actively engaged in building ties with Nepali political forces.

Historically, China has not taken much inter­est in Nepal’s domestic affairs. But that seems to be changing. China had expressed its con­cern over Nepal’s fed­eral setup during the constitution-drafting process. It was of the view that Nepal should not have too many provinces and they should not be delineated based on ethnicity. In 2013, when senior Maoist leader Mohan Baidya revolted against Pra­chanda and formed a separate party, China had reportedly requested the two sides not to split, and following the split, repeatedly suggested that they unite.

More recently, leaders from different parties claim China was actively engaged in convincing the erstwhile CPN (Maoist Center) not to quit the KP Oli-led government in 2015-16. Chinese dissatisfaction over the toppling of that government had been reflected in some Chinese newspapers, including the Global Times. Similarly, China had report­edly advised the erstwhile UML and Maoists to build an electoral alliance and ultimately unite.

NC, NCP, what’s the difference?

There is a general perception that communist parties of Nepal are closer to China, and other demo­cratic forces to India. But leaders of the main opposition Nepali Con­gress say it’s a faulty perception and that they too have a strong and cordial relationship with the Com­munist Party of China.

The 1950 manifesto of the Con­gress had unequivocally supported the Chinese revolution and the dawn of the People’s Republic of China. Relations between the NC and the CPC were strengthened when then prime minister and party president BP Koirala visited China in 1960 and met Chairman Mao. “The Nepali Congress has firmly backed One-China policy since the 1950s and has always had a cordial relationship with the CPC,” says Ram Chandra Pokharel, a NC leader and former lawmaker who closely follows developments in NC-CPC ties. He was also a part of a 15-mem­ber Congress team who had gone to China in 2016 at the invitation of the CPC.

In 2016, media reports about Con­gress President Sher Bahadur Deuba sharing a dais with representatives of the Tibetan government in exile in Goa, India had generated some mistrust between the NC and the CPC. Deuba tried to make amends by telling the Chinese that he did not meet any representatives of the Dalai Lama and reiterating his party’s unequivocal commitment to One-China.

China has cultivated strong ties with Madhes-based parties as well. “China is open to work­ing with any political dispensa­tion in Kathmandu as long as it is prepared to take strong action against political activities of the Tibetan refugees. Significantly, China has also begun taking an active interest in Tarai politics,” writes Nihar Nayak of the IDSA, a New Delhi-based think tank, in his book Strategic Himalayas.

Plain projects

When Nepal promulgated a new constitution in September 2015, India backed the demands of the Madhes-based parties, which were protesting fiercely against the stat­ute. But China welcomed the con­stitution and suggested that Nepal resolve the issues raised by the Mad­hesi forces through dialogue. In March 2016, Madhes-based parties submitted a letter to Chinese Ambas­sador in Kathmandu Wu Chunta in order to draw Beijing’s attention to their demands. When China wel­comed Nepal’s constitution, some cadres of the Madhesi parties tried to burn Chinese flags. While Upen­dra Yadav strongly denounced such acts, other Madhes-based parties were silent.

The CPC is in touch with lead­ers of the Federal Socialist Par­ty-Nepal, which Yadav leads. FSPN leaders frequently visit China at the invitation of the CPC. However, the CPC has only minimal contact with other Madhes-based parties, including the Rastriya Janata Party Nepal (RJPN). “It seems China engages with leaders of other Mad­hes-based parties, but not much with us,” says RJPN Secretary Kes­hav Jha. He adds that China, of late, has reached out to Madhesi people with various developmental projects and programs.

 Nearly four years after the promulgation of the consti­tution, the National Natural Resources and Fiscal Commission (NNRFC), a constitutional body man­dated to ensure just and equitable distribution of natural and fiscal resources among the three tiers of government, has started its work after the appointment of former secretary Balananda Poudel as its chairman last month.

Earlier, the NNFRC Secretariat consisting only of government offi­cials had conducted some prepara­tory work but the commission was largely dysfunctional in the absence of a chairperson. The government is yet to appoint the other four mem­bers of the commission, which is also likely to affect its work. After taking charge of the commission, Poudel has started consulting with stakeholders to prepare a work plan that would guide the commission’s short- and long-term tasks.

“It has been a month since I joined. In this time we have prepared a draft of a law relating to natural resources, and are working on both our short-and long-term goals,” says Poudel. He adds that his office is also working out a strategy for effective communi­cation with federal, provincial and local governments.

 Major duties of the commission as identified by the constitution and law

• To make recommendations on equalization grants to be pro­vided to the provincial and local governments out of the federal consolidated fund.

• To carry out research and define parameters for condi­tional grants to be provided to the provincial and local gov­ernments in accordance with national policies and programs, norms, standards, and the state of infrastructures.

• To determine a detailed basis and modality for the distribu­tion of revenue between the provincial and local govern­ments out of the state consoli­dated fund.

• To recommend measures to meet expenditures of the feder­al, provincial and local govern­ments, and to reform revenue collection mechanisms.

• To analyze macro-economic indicators and recommend ceilings on internal loans that the federal, provincial and local governments can take out.

• To review the basis for revenue distribution between the feder­al and provincial governments and recommend revisions.

• To set bases for the determi­nation of shares of the feder­al, provincial and local gov­ernments in investments and returns and in the mobilization of natural resources.

• To conduct research on pos­sible disputes between the federation and the provinces, between provinces, between a province and a local level, and between local levels, and make suggestions on ways to prevent such disputes.

• To carry out environmental impact assessment required in the course of distribution of natural resources, and make recommendations to the government.

Underpinning federalism

The commission’s role is crucial in the transformation of the old unitary state structure into a functional fed­eral one. While the unitary system had the provision of distributing projects from top to bottom, funds would be transferred from one level of government to another under the federal model. An effective NNRFC can significantly reduce the chances of disputes among the three levels of government—federal, provincial and local. Most such disputes are over natural resources and revenue distri­bution; and the commission is man­dated to make recommendations on revenue distribution, equalization grant, conditional grant, internal borrowing and sharing of natural resources among the three govern­ments. An equitable and fair shar­ing of natural and fiscal resources among the three governments is a challenge, but is a prerequisite for the effective functioning of the new federal model.

As the commission is a constitu­tional body, its recommendations are binding on all three levels of government. The commission can essentially force any level of government to imple­ment its recommendations. Addi­tionally, the role of the commission is akin to that of ‘a referee’ when it comes to implementing fiscal federalism. If the NNRFC functions effectively, it will enable all levels of government to make informed and evidence-based decisions.

The constitution has made pro­visions regarding the distribution of revenue among the federal, pro­vincial and local level entities. Taxes such as custom duty, excise duty, Value Added Tax (VAT) and income tax are under the federal government’s jurisdic­tion, while house and land registration fees, motor vehicle tax, agro-income tax and local taxes are within the remit of the provin­cial and local govern­ments.

Three levels of funding

There are clear fiscal gaps at the provincial and local levels as they have to deliver services that require much more money than what they can collect in revenue. As such, the central gov­ernment has to make fiscal transfers to the provincial and local lev­els to bridge the gaps. Similarly, the center needs to mobilize the provincial and local lev­els to implement com­prehensive national pol­icies and programs. This is where the NNRFC comes in.

While recommending revenue distribution, the commission will have to take into account certain criteria and frameworks such as population and demographic fac­tors, area, human development index, expenditure needs, revenue collection efforts, infrastructure development, etc.

The commission is working on forming four thematic divisions, namely Revenue Sharing Division, Research and Management Division, Sharing of Natural Resources Divi­sion, and Grant and Loan Manage­ment Division. The Intergovernmen­tal Fiscal Management Act (2017) is already there to manage matters related to revenue rights, revenue sharing, budget management, pub­lic expenditure and fiscal discipline among the federal, provincial and local level entities.

This Act has identified issues such as revenue and expenditure respon­sibilities, intergovernmental fiscal transfers and internal loans provin­cial and local entities can take out as the important elements of fiscal federalism. Last year, the commis­sion recommended the government on revenue sharing and fiscal equal­ization grants for the fiscal 2018-19— before Poudel joined it.

Poudel says his immediate prior­ity is to settle issues related to the distribution of revenues and royal­ties collected from natural resourc­es. Observers say the commission needs collaboration from all three tiers of governments to function effectively.

Lack of seriousness on the part of political par­ties and their ‘delay tactics’ have increased the risk of ‘international intervention’ in Nepal’s Transitional Justice (TJ) process, which has not made substantial progress since the sign­ing of the Comprehensive Peace Agreement (CPA) in November 2006. Experts and observers say failure to amicably settle war-era human rights cases would attract the wrong kind of international attention. Avert­ing such a scenario requires Nepal to address the issue through credible national mechanisms by taking all stakeholders on board. But major par­ties that have been in power since the start of the peace process seem indifferent.

Of late, the international community has piled up pressure on the government to settle the tran­sitional justice process, a vital part of the peace process, at the earliest. In January, the United Nations in Kathmandu, together with nine foreign embassies, urged the government to clarify how it intends to take the TJ process forward, to great annoyance of the government and the ruling party leaders.

This month, five special rapporteurs under the United Nations High Commissioner for Human Rights wrote a 10-page letter to Foreign Minister Pradeep Gyawali seeking transparency and close consultation in selection of members of the two transitional justice mechanisms, namely the Truth and Reconciliation Commission (TRC) and the Commission on Investigation of Enforced Disappeared Persons (CIEDP). Gyawali has repeat­edly assured the international community that there will be no blanket amnesty, but the commit­ment has not been translated into action.

 'I have an impression that the army will keep its cards close to its chest until there is a broad political agreement'

Binoj Basnyat,a retired Nepali Army major-general

Dare not fail us

Conflict victims, though divided on some issues, are getting impatient and losing hope. “Parties want to derail this process by employing delay tactics. They are yet to consult with us on how to amend the law and conclude the TJ process,” says Suman Adhikari, former Chairman of the Conflict Victims Common Platform, an umbrella body of activists seeking justice and repa­rations.

Conflict victims say if national mecha­nisms fail them, they will have no alterna­tive but to internationalize this issue. In fact, some have already approached the UN and other international organizations for justice. The recent visit of the Nepal Communist Party Co-chairman Pushpa Kamal Dahal to the US, ostensibly for his wife’s treatment, also highlights the gravity of the TJ process. A complaint was filed at the Federal Bureau of Investigation to arrest Dahal and investigate war-era human rights violations, which forced the US government to issue a ‘no investigation’ circular.

Those complicit in rights violations can be arrested anywhere in the world under the principle of ‘universal jurisdiction’ of human rights. Earlier, Kumar Lama, a senior Nepal Army official, was arrested in the UK on charges of war-era violations. (He was later tried and acquitted.)

“If the ongoing national process fails to end pervasive impunity and deliver justice and reparations to the victims, they will knock on the doors of the United Nations or international courts,” says Geja Sharma Wagle, a political analyst who has been closely involved in the peace process. “But internationalizing the TJ process would be suicidal for the government as well as the ruling and opposition parties. As such, this process should soon be concluded by tak­ing conflict victims into confidence.”

It has been almost 13 years since the CPA was signed, but one key aspect of the peace process—providing justice to conflict victims—is still prickly. As per government data, around Rs 166 billion has already been spent on the peace process. But there has been little progress on the TJ front. The office bearers of the two commissions—the TRC and the CIEDP, which were set up in 2015—recently took retirement, and the government has formed a panel for new appointments.

Deadly delay

Experts, however, say having new faces would not be sufficient. They are of the view that the TRC Act should be amended in line with the Supreme Court verdict, which means the TJ process should meet interna­tional standards, and amnesty should not be given on serious rights violations such as rape, torture, killings, and disappearances. Additionally, the commissions should be empowered to recommend legal action against those involved in grave violations.

A former TRC member blames lack of support from political leadership, failure to amend the law, and inadequate resources for the two commissions’ dysfunction. No amendment to the law means a continu­ation of the same tendencies for the next five years. “It seems that some ruling party leaders think they can kill this process by using delay tactics, but that is not possible. The delay would only erode trust in our national mechanisms and attract interna­tional interest,” says a high-level official familiar with the process.

Mounting international and domestic pressure has made some leaders from both the ruling and opposition parties realize the importance of concluding the TJ process through national mechanisms. But ex-Mao­ist leaders are reluctant to go by the SC ver­dict. By and large, the former rebels want to settle the process through reparations, but this alone will not be acceptable to the international community or to the conflict victims. Although the erstwhile CPN-UML leaders are receptive to the idea of amend­ing the law in line with the SC verdict, Prime Minister KP Oli is under pressure from co-chair Dahal not to do so.

Among others, the issue of transitional justice was one reason for the unification in 2017 between the two communist par­ties led by Oli and Dahal respectively. Oli has reportedly assured Dahal that no case would be filed against him in national or international courts.

On war-era cases, the Nepal Army and the main opposition Nepali Congress hold sim­ilar positions to that of the government. NC President Sher Bahadur Deuba had served as the prime minister while the Maoist conflict was at its peak and had imposed an emergency; he fears he could be dragged into war-era cases, and therefore prefers almost blanket amnesty in those cases.

Binoj Basnyat, a retired Nepali Army major-general, says, “The army proceeds as per the government’s decision regarding gross rights violations during the conflict. So, first, a common political direction that meets international principles and national rules on human rights needs to be charted. I have an impression that the army will keep its cards close to its chest until there is a broad political agreement.”

The politicization of war-era cases in the past decade has also complicated the TJ process. Initially, the cases were used by the parliamentary parties against the Maoists as a bargaining tool. Mainly, the former insur­gents were threatened that war-era cases could be taken to international courts. Not only political parties, some human rights groups and individual activists also created unnecessary uproar about transitional justice. While some advocated blanket amnesty, others talked about international courts, both of which were against the principles of transitional justice. Now, such voices have become faint.

Currently the two transitional justice commissions are without leadership. The government on March 25 formed a five-member committee led by former Chief Justice Om Prakash Mishra to select two chairpersons and members. The govern­ment claims to be working to amend the transitional justice laws in line with the SC verdict, but there is no public discussion on it. Together, the two transitional justice commissions have received around 66,000 war-era complaints but preliminary inves­tigation has been conducted on very few of them.

2 The 2016 transit and transport treaty (April 19)

 APEX Series

EVOLVING NEPAL-CHINA RELATIONS

 1 Post-1950 turning points (April 5)

2 The 2016 transit and transport treaty (April 19)

3 China’s relations with political parties (May 3)

4 Defense ties (May 17)

5 Nepal and BRI (May 31)

The four-month-long blockade imposed by India in 2015-16 was a wake-up call for Nepal to diversify its India-centric trade and transit arrangements. Politi­cal parties as well as the general public were of the view that there should be no delay in pushing for transit access for third-country trade via China.

The then government led by CPN-UML’s KP Sharma Oli was deter­mined to strike an agreement with China. PM Oli had dispatched then Foreign Minister Kamal Thapa to Beijing for talks on a possible transit treaty between the two coun­tries. But reaching an agreement was not easy.

First, China wanted to avoid pro­jecting the transit agreement as a response to the Indian blockade. China was seeking assurances that Nepal would not backtrack from negotiations after the end of the blockade and a rapprochement with India. Second, Nepal also needed to convince India that a treaty with China was not targeted against it.

In December 2015, Thapa held talks with high-level Chinese officials and reached a tentative agreement. “We tried to per­suade India that the treaty was not aimed against it and that China was also obliged to provide port access to a landlocked country like Nepal,” says a senior official involved in the negotiations.

India did not object to the treaty, at least not openly. But some Indian officials expressed displeasure and argued that transit from Chinese ports is not feasible for Nepal due to distance- and cost-related issues. “We signed a treaty with China not only because of the Indian block­ade, but largely because it was a geopolitical necessity for Nepal. The treaty remains a fundamental survival strategy for Nepal,” says former minister Thapa.

Earlier, in the 1960s King Mahendra had introduced the approach of a balanced foreign policy

The ’89 itch

There had been efforts to diver­sify trade and transit following the 1989 Indian blockade as well. “In a cabinet meeting at the time, King Birendra had made two important proposals, namely strengthening national capacity for storing essen­tial items for three months, and looking north for alternate transit routes. But they were totally forgot­ten after the restoration of multi-party democracy in 1990,” recalls Thapa, who was also a minister in the royal cabinet of 1989.

Earlier, in the 1960s King Mahen­dra had introduced the approach of a balanced foreign policy, ending the era of ‘special relations’ with India. Nepal was a strong advocate for the rights of landlocked coun­tries. Although there were talks about diversifying trade even back then, Nepal had no substantial dis­cussion with China about alternate international transit facilities. But after Nepal started making noise about diversification, India became serious about providing it with bet­ter trade and transit facilities. In 1966, India provided separate space at the Kolkata port for cargo to and from Nepal.

But Nepali politicians paid no attention to trade diversification after 1990, which further deepened our dependence on India. Only after the months-long agonizing blockade of 2015-16 did the issue resurface, ultimately leading to the signing of Nepal-China Transit and Transport Treaty, which has been hailed as an historical accord.

No progress in implementing the treaty was made during the premier­ships of Pushpa Kamal Dahal and Sher Bahadur Deuba. Negotiations on giving a final shape to the treaty protocol were initiated only after the left alliance won a thumping victory in the 2017 elections and Oli once again became prime minister. Now, preparations are underway to sign the treaty protocol during President Bidhya Devi Bhandari’s upcoming visit to China starting April 24.

China has agreed to open for Nepal seven transit points—four sea ports (Tianjin, Shenzhen, Lianyungang and Zhanjiang) and three land ports (Lanzhou, Lhasa and Xigatse)—for third-country export and import. Under the agreement, China will be obliged to permit trucks and containers ferry­ing Nepal-bound cargo to and from Xigatse in Tibet. The two sides have also agreed that Nepal would have access to Chinese territory from the six checkpoints.

From us, not them

Following this trade and transit agreement, India has offered addi­tional ports to Nepal, arguing that the Indian ports are more cost-ef­fective than the Chinese ones. In 2016, India gave Nepal the right to use the Visakhapatnam port for third-country trade, in addition to the Kolkata port which Nepal had been using for a long time. The Indian side has frequently highlighted the additional benefits Visakhapatnam offers to Nepal.

Although Nepal and China have signed the transit treaty, it is a hard reality that Chinese ports are much farther from Nepal than Indian ports, the nearest one being about 4,000km from Kathmandu. By contrast, the distance between Visakhapatnam and Kathmandu is about 1,500km.

Similarly, the driving dis­tance between Kolkata and Raxaul is 748 km. Of late, India has also offered Nepal the use of the Dhamra seaport in the state of Odisha. Nepali officials have conducted a preliminary feasibility study of the Dhamra port, which is about 956km from Biratnagar. Another option is the Chittagong seaport in Bangladesh.

Onus on Nepal

Experts argue that although Chi­nese ports are far, Nepal can still benefit from their use in the long run. They say the current burden of cost and distance could be sig­nificantly reduced with proper infrastructure in place. Efforts are underway to build road and railway connectivity with China. Negotiations are underway for a railway line between Kathmandu and Keyrung—President Bhandari is reportedly pushing this issue in her discussion with President Xi in Beijing—on what is the traditional trade route between Nepal and its northern neighbor. Infrastructure development along this route, how­ever, started taking place only in recent decades.

Nepal and China are also holding talks about the possibility of reopen­ing the border at Tatopani, which has been closed since the 2015 earth­quake. The Rasuwagadi-Kerung bor­der point, currently the only oper­ational trade route between Nepal and China, has been developed as an international crossing point with the goal of connecting China with the larger South Asia.

As such, when the Tatopani bor­der comes back into operation, Nepal will have two viable trade routes to China. The trade and tran­sit treaty between Nepal and China has, at least in principle, put an end to India’s monopoly on Nepal’s sup­ply system.

Although the agreement is unlikely to reduce Nepal’s depen­dence on India in the near future, it will come in extremely handy in case the southern neighbor imposes another blockade. With a viable trade route open with China, a blockade on Nepal might not even be an option on the table.

After the signing of the transit treaty with China, India has given Nepal more options. Ideally, Nepal can now choose the ports—both Indian and Chinese—that are most cost-effective. There are obvious reasons why two-thirds of Nepal’s trade is with India: geographical proximity and a well-connected border. Officials, however, say that highly-profitable trade with East Asian countries like Japan and South Korea could be carried out via Chinese ports.

Soon after a devastating windstorm swept across the districts of Bara and Parsa on the evening of March 31, security forces, other government agencies and the general public rushed to the affected areas to mount rescue operations. Adequate manpower was necessary to take the injured to hospitals and provide support to those who lost family members. All political parties should have employed their cadres to support government agencies, but only a few did. Instead of collaborating on rescue efforts, cadres of different parties competed to gain public and media attention.

Top leaders of major parties including Prime Minister KP Sharma Oli, Nepal Communist Party Co-chairman Pushpa Kamal Dahal and Nepali Congress President Sher Bahadur Deuba rushed to the devastated villages for inspection. Some senior leaders reached the affected areas with bags of food grains and fruits. Security forces were compelled to give greater priority to these leaders’ safety than to relief efforts.

Social media were filled with suggestions to leaders to avoid such visits and allow government agencies to do their tasks. As in the past, top leaders pledged aid but only a small amount has been deposited so far. This suggest the real purpose may have been to attract future voters.

It is uncertain when the victims will get the money. And it’s not just the aid pledged by the political parties; there are several cases where even the promises made by the government have gone unfulfilled. Victims are in immediate need of temporary shelter, food, medicine and clothes, but past experiences show that they have to go through endless red tape to receive aid.

Not just national organizations but even international bodies have exposed the excessive politicization of aid and relief materials in the aftermath of a crisis

Gorkha earthquake

Relief efforts in the aftermath of big natural disasters in the past one decade have been heavily politicized. Such politicization of aid was much more pronounced after the Gorkha earthquake in 2015, which claimed more than 8,000 lives and injured or displaced thousands more.

Following critical media reports and widespread complaints, the National Human Rights Commission (NHRC) had monitored aid distribution in some places. The monitoring found dirty politics at play, which led the NHRC to publicly urge the government and other stakeholders to prevent the politicization of aid distribution to quake victims. The constitutional body also asked the government to ensure that victims can access aid directly without having to beseech the politicians acting as middlemen. A parliamentary committee had also found excessive politicization in the distribution of relief materials in some districts.

“We have been closely following the process of relief distribution and urging concerned stakeholders to stop the politicization of aid, but we have not been able to completely curb such tendencies,” says Mohana Ansari, a commissioner at the NHRC. “The politicization of aid and relief materials was even more evident in Bara and Parsa this time. It is unnecessary for everyone to reach the spot; victims can access relief materials through government agencies later. Now that a federal setup is in place, the government should undertake relief and rehabilitation with this reality in mind,” says Ansari.

Not just national organizations but even international bodies have exposed the excessive politicization of aid and relief materials in the aftermath of a crisis. A report published by Amnesty International in June 2015 reveals how humanitarian aid was used as a political instrument. It says, “There are reports of discrimination in the distribution of relief, including on the basis of caste and gender, as well as political favoritism and patronage without regard to actual need. This is a particular risk where one party is dominant, where a VDC is demographically heterogeneous with different religions, castes or ethnic groups represented, lacking a coherent and fair decision-making mechanism, and where local political actors compete for status through the provision of relief.”

Unspent aid

On 3 October 2017, a settlement in then Makha Village Development along the Arniko Highway was completely swept away by a landslide. A district-level trust fund was set up, in which people willing and able to help could deposit money. Within three months, approximately Rs 3 billion was collected from national and international donors. When the Chief District Officer started the process of aid distribution, there was a clash of interest among major parties. Cross-party lawmakers tried put pressure on the administration not to hand out money without their consent, painfully delaying the decision-making process.

While the Nepali Congress argued that land should be purchased for each family seeking aid from the government, the then CPN-UML claimed adequate research on the affected people had not been carried out. And the then CPN (Maoist Center) said money from the trust could not be given before the government provided aid of its own. All these were populist agenda meant to gain voters’ sympathy. The money deposited in the trust has still not been provided to the victims.

“Earlier, the administration failed to hand out aid because of disputes among political parties. Now, the bureaucracy is the biggest hurdle in aid distribution,” says Yubaraj Puri, a local journalist, who is closely following the matter. “I have seen many cases where political parties distribute aid and relief materials so as to influence voters. They provide aid during a crisis and come election time, they seek support claiming that they were the ones who helped,” says Puri.  

Myriad problems

There is rampant politicization in rescue and rehabilitation process after any natural calamity. Yet another problem is that political parties try to distribute aid only to those victims who are party sympathizers. For example, if the NC distributes relief materials, it is unlikely to provide aid to those who vote for the Nepal Communist Party, and vice versa. There is also a tendency or providing relief materials along religious and caste lines.

Lack of coordination among various aid providers is another matter of concern. Similarly, in the aftermath of a disaster, people start collecting money but there is no proper study of whether the money is being rightly spent. The government needs to introduce clear legal provisions to regulate rescue and rehabilitation so that genuine victims can access humanitarian support promptly.