NEPAL Prime Minister Babu Ram Bhattarai will be on an official visit to India for three days in the third week of October. He had a meeting with Prime Minister Manmohan Singh at the UN and the latter had reportedly expressed India’s support for completing the peace process in Nepal.
Mr Bhattarai will have both economic and political agendas when he meets the Indian Prime Minister. In the political agenda, the peace process, and India’s support for its successful completion are bound to have the highest priority. Prime Minister Bhattarai will probably want to be re-assured of the Indian government’s backing for the ongoing peace process in Nepal so that the configuration of political forces in Nepal remains conducive to the promulgation of a new democratic constitution at the earliest.
A politically stable Nepal is in the interest of both Nepal and India, the South Asian region as a whole, and also Nepal’s northern neighbour, China. We, therefore, feel that India and other concerned international powers would be well advised to use their friendly influence, jointly or severally, to persuade all political formations of the country to agree to complete the peace process and strengthen national institutions for Nepal’s stability, democracy, development and progress.
On the economic side there are two major issues that are of concern to Nepal both from a short-term and long-term perspective. First, the rising imbalance in trade between Nepal and India, a problem that requires urgent and cooperative corrective action. In the short run, Mr Bhattarai will perhaps ask for the removal by India of the non-tariff barriers which crop up from time to time to hinder the flow of Nepal’s exports to India. Internally, to boost production and reduce supply disruptions, the Nepal government has to rein in trade unions in both industrial and transport sectors where Mr Bhattarai’s own party remains influential.
The other major issue pertains to the Nepal-India trade arrangements and the need, from a medium-term to long-term perspective, for Kathmandu and New Delhi to engage in discussion to work out a new model of interaction that will lead to the sharing of prosperity through adequate spill-over in Nepal of India’s high economic growth rate in the form of increased exports of Nepalese products to India, and vigorous flow into Nepal of direct investments by Indian companies. In this context, the India-Nepal trade treaty, signed in the mid-1990’s, which had helped increase Nepalese exports to India and also Indian investments in Nepal, could be the model. On its part, the Nepal government should create a receptive political and economic environment for investment by Indian business houses. The two governments should jointly discuss ways and means of reviving the liberal trade and investment regime of the mid-nineties.
Proper, mutually agreed harnessing and utilisation of Himalayan water resources will be to the benefit of people in both countries. Economic growth in the Gangetic plain of India with over 400 million people will require an increasing volume of water for irrigation and power, and for industrial and urban use. Himalayan waters are the most important natural resource of Nepal that must be tapped for energy, irrigation, navigation and flood control for Nepal’s growth and development. Utilisation of this resource should be viewed in an integrated manner for the benefit of the people of both countries. In doing all this, experiences of the past, which still rankle in Nepalese minds, must be borne in mind.
Flood-control measures in the border areas, which cause inundation or other damage in one or the other country, must be avoided. Water resource utilisation models of the 1950’s are no longer relevant. An independent non-governmental agency, with participation from the apex organisations representing industry and commerce in both Nepal and India, could be set up to look at the issues of trade and water resources in a holistic framework and come up with suggestions that are geared to new realities.
In a study of this kind, the necessity of involving Indian states of Bihar and UP, the two states that have the most interest in the way the Himalayan water resources are harnessed, should be given due consideration. In a short-term perspective, however, Prime Minister Bhattarai may sound India for the export of power to Nepal for the next four or five years till the new hydro-projects in Nepal, now being constructed with both Nepali and foreign capital, become operational. India should consider any such request favourably.
One important issue that has been of concern to India is security. The two countries have not been on the same wave-length in their perceptions of the term “security”, and misunderstandings persist in this regard. Nepal is an independent and sovereign country that borders the two would-be super powers of the world in the 21st century. This is a ground reality. Another ground reality is that Nepal’s long border with India is an open one, and there have been cases of infiltration of undesirable elements that have carried out activities against the national interests of both nations.. There was also the high-jacking of an Indian plane from Kathmandu airport by terrorists.
While China’s interest in Nepal and the importance of Nepal-China relations is to be recognised and understood, India’s concern about undesirable activity, across the open border, must also be given serious consideration. Nepal should leave no stone unturned to ensure that Nepali soil is not used for any kind of terrorist and other destructive and undesirable activities directed against India. In this context, Nepal and India had signed, more than a decade ago, an agreement to institute a monitoring mechanism ( record keeping and a registration system, etc) all along the border without giving up the traditional free border concept between the two countries. That agreement should be reviewed with a view to its operationalisation. Our open border should continue to be our strength and not become a source of undesirable activities harming Nepal-India relations.
In a fast-changing world, it is incumbent on the leaders of the two countries to start a new era of understanding and cooperation that takes cognisance of the changing dynamics of economic and power relations in the region. This would mean, in our view, efforts by both countries to promote the idea of “shared prosperity” as an umbrella concept for their relations in the 21st century.
Adjustments are needed in the perceptions and thought processes of both countries. While India should re-examine the existing assumptions defining its unbalanced economic relationship with Nepal, the latter’s political elite should, in the context of the present geo-strategic realities, forge consensus and unity and shed the “small nation psychology” to define Nepal’s national interests with clarity and vision, so that India as a close southern neighbour comes to trust the capability and strength of the Nepali state to remain sensitive to its vital interests.
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