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The sanctity of the Nepal’s constitution has been breached.

The cracks in our young democracy became visible as the country prepares to stand up to India. It is in such times of national stress that the safeguards of democracy are truly tested.

Nepal’s democracy failed the test. Great danger lies ahead.  

Lack of accountability

In mid-May, Nepalis woke to discover that India had unilaterally built a road in Lipulekh, an area that Nepal claims as its own. Nepal has publicly disputed India’s claim to this area and is on record seeking a resolution through dialogue. This border dispute has been a sensitive issue for many years, high on the radar of our government.

There are many things that the government could have done as India was building the road. It could have drawn public and media attention to the transgression as it was underway. It could have protested more visibly and forcefully. It could have demanded urgent talks. It could have created border army posts in the area, as it has now done. If all these failed, the constitution should have been changed as the road was being built.

Instead, the government did nothing as India built the road.

After India inaugurated it, Prime Minister Oli said he didn’t know India was building the road as no one had told him.

Stretching over several months in broad daylight, a foreign power built 80-km road through difficult terrain (involving lots of blasting) crossing into Nepal’s (or at least disputed) territory and the prime minister didn’t know? The foreign minister didn’t know? The home minister didn’t know? The army chief didn’t know?

As office holders pledged to protect Nepal’s constitution, the prime minister and his ministers have a moral responsibility to defend, or at least try to defend, Nepal’s territorial sovereignty as it is threatened. Shouldn’t they be held responsible and accountable for this failure?

The failure of responsibility was instead turned into a narrative about India’s belligerence. In response, we rushed to change our constitution but failed to hold the government to account. The parliament failed to hold the government accountable.

India has not responded to Nepal’s call for a dialogue. The world has not responded. Nobody will. The constitutional amendment alone is not an indicator of how passionately Nepalis feel about this. The real measure of our strength and determination will come if we, the people, can demonstrate that we have the power to hold our government accountable for failing us.

To bolster the value of our constitutional amendment, we must get the prime minister and his entire council of ministers to accept moral responsibility for failing to protect Nepal’s sovereignty. We must demand an independent enquiry about who knew what and when, and establish if there was any treason.  

Without the prime minister and his council of ministers accepting moral responsibility for their failures, the constitutional amendment means nothing except a new emblem.

Constitution’s sanctity breached

The constitutional amendment passed easily and with amazing speed within days.

This was a constitutional amendment of symbolism. Why it didn’t happen earlier, or why India’s intrusion was needed to justify, isn’t clear. Constitutional amendments must be about us and who we are—it cannot be a symbol of retaliation.    

There was no public debate. No stakeholder discussion. No assessment of the social, political, or economic implications. Parliamentarians spoke and voted (almost) unanimously in favor. A lone voice of dissent was barred from speaking, ridiculed for being anti-national and threatened with expulsion from her party.

Other institutions should have stepped in to provide counsel. The president could have spoken. The army could have spoken. Provinces could have spoken. Civil society could have spoken. The courts could have spoken. Instead of first demanding accountability, everyone applauded.

A government that had failed to protect national sovereignty legitimized its failure by a constitutional amendment. No other institution objected.

The safeguards of democracy in our constitution all failed. These weaknesses will be exploited again.  

Tomorrow, another government will justify its failure to reduce poverty through a constitutional amendment that will nationalize all wealth that has been in a family’s ownership for more than a generation. Another government will justify its failure to bring prosperity through a constitutional amendment that will nationalize all private enterprises.

“Silly argument,” you say with a dismissive smirk. “Of course, we would never allow it.”

Look at what just happened. We showed how it will be done.   

The government decision to increase the excise and customs duty on electric vehicles (EV) was widely criticized as a reversal of the policy to promote electric transport. As a symbol of that protest, 17 eminent civil society leaders submitted a memorandum calling on the Prime Minister to reconsider.

Those protesting the EV tax have erred in their judgement. The new EV tax still retains the policy of promoting EV but ends an unreasonable subsidy to car buyers. Protestors have confused two objectives. First, the objective of promoting purchase of EV over conventional fuel vehicles. Second, the objective of making private vehicle affordable.

Promoting EV

Even with the new tax, EV remains comparatively cheaper than the equivalent conventional fuel vehicles.

The effective tax on EV has increased from approximately 30 percent to 140 percent. In contrast, the equivalent taxes for conventional fuel vehicle are 260 percent. Taxes on conventional vehicles are still 85 percent higher than for EVs.  

Consider this example. Suppose the base price of a petrol car is Rs 100: it will incur Rs 260 in taxes and cost the consumer Rs 360. The base price of an EV is approximately 30 percent higher than the equivalent petrol car. Starting at Rs 130, the EV will then pay Rs 182 in taxes and cost the consumer Rs 312.

Even with the new tax, EV still remains comparatively cheaper. And this is without accounting for the fact that EVs are cheaper to operate and run than conventional fuel vehicles. The new EV tax hasn’t changed the policy promoting EV.

Making private vehicles affordable     

The new taxes will increase the price of an EV.

An EV with a base pre-tax price of say Rs 15 lakhs will now cost the consumer approximately Rs 21 lakhs more in taxes. Previously, the taxes would have been Rs 1.5 lakhs. The consumer must now pay Rs 19.5 lakhs more.

It is this price increase that protestors are really arguing about. The new EV tax has made private vehicles unaffordable for many.

No government in Nepal has ever had a policy of encouraging private vehicle ownership. Only a small fraction of Nepalis can afford a private vehicle. With limited government revenue, reducing import taxes for private vehicle ownership can undermine spending on other development needs.

Put this into perspective. Last year, approximately 590 EV passenger cars were sold in Nepal. With the new EV tax, the government would have raised approximately Rs 115 Crores. Based on this year’s budget, that would have enabled it to educate 43,928 school and college students, or helped 605,526 women access institutional health care for safer motherhood, or provided 143,813 babies access to medical care, or distributed financial support to 191,863 farmers.

Making EVs, or for that matter private vehicle ownership in general, affordable for all Nepalis is a great goal. But it cannot come at the expense of depriving the basic needs and livelihoods of millions of poor Nepalis. The poor have as much a right to a future as protestors have to affordable cars.

Civil society activism    

The EV tax debate is a stark reminder of our harsh realities. Even a well-intentioned government with efficient honest systems (impossible to begin with!) will struggle to balance our multiple urgent needs and fiscal constraints.

Opposition to the EV tax must empathize with these broader challenges. It cannot merely be a revolt of the rich, by the rich, and for the rich.

As civil society, we must mobilize to pressure government to perform. But we must also supplement what the government cannot or will not achieve. Where government cannot, we must lead ourselves into the future we desire by collectively mobilizing voluntary individual action.

There are cheaper and better ways of reducing urban air pollution. EVs help—don’t get me wrong—but in Nepal, the bigger impact will come from reducing vehicles on the road.

We can do more to improve public transport (incidentally, tax on EV public transport has been left unchanged). Rich people can ride buses too! Create voluntary car-free days. Cycle or walk short distances. Popularize the pedal (or electric) rickshaw. Close urban centres to vehicular traffic.

We can put pressure on the government to reduce fuel imports by doubling taxes on conventional fuel vehicles, and impose a pollution tax on fuel oil.

We can demand greater accountability on the taxes we pay. If we will shell out 140 percent tax on EV, perhaps we should focus our protest to know precisely where it goes.

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The United States has offered Nepal $500 million through its the Millennium Challenge Corporation (MCC) for the construction of power transmission lines and strategic roads. The Nepali parliament must approve the agreement before implementation. A pre-condition to the agreement is a cross-border transmission line that will connect Indian and Nepali power markets.

The debate on the MCC compact has ignored the impact cross-border transmission lines will have on the growth of hydropower in Nepal. Such cross-border lines will undermine the long-term prospects for new hydro plants in Nepal and make us entirely reliant on power imports from India.   

An internal task force of the ruling Nepal Communist Party (NCP) reportedly found that the MCC’s support is part of the US’s Indo-Pacific Strategy and would undermine Nepal’s sovereignty. The taskforce’s findings are as much a broader indictment of all aid in Nepal as it is about the MCC itself.

Aid always comes with conditions and influences. Take procurement rules. When aid money is used, Nepal is often required to adopt procurement rules of the donor agency. Nepalis cannot challenge those rules: our courts will say that is outside their jurisdiction; the government will say, “what can we do, it is their rules!”

Procurement is just an example. There are many other rules and conditions that donors impose when disbursing their aid. But donors also have a legitimate right to safeguard the interests of their sponsors.  

Most aid invariably involves loss of sovereignty in some form. If we are not ready for a broader rethink of how we use aid, why single out the MCC? Rather, we should seek to utilize aid more effectively. Deploy it in ways that directly advance our development so that one day we can break free of the need for aid.

Where the MCC fails

The MCC compact requires Nepal to build a transmission line connecting Butwal in Nepal with Gorakhpur in India. This is intended to enable export of Nepal’s power to India. Such cross-border transmission lines connect the two power markets. It opens electricity trade for both countries. While Nepal can access India’s power markets, India can also access Nepal’s.

Unless Nepal sells its electricity dirt cheap—practically free—there is no way Nepal’s power can compete on price against India’s. No matter whether it is the wet or dry season, Nepali power will almost always be more expensive than that in India.

Recognizing that cheaper Indian power will be available to Nepal, investors will pull back from investing in large hydropower plants in Nepal. Small hydro plants may still be built, mostly for localized domestic consumption. But the contention that Nepal can attract large investments and generate thousands of megawatts to sell to India is based on faulty assumptions.

Interconnected power markets will increase India’s hold over Nepal’s energy sector. Investments in new hydro plants in Nepal will then require the explicit approval of Indian power market authorities and the implicit approval of its government.

There are smarter ways for Nepal to tap into India’s power market. Dedicated transmission lines that connect hydro plants directly to the Indian market, rather than cross-border transmission lines which connect Indian and Nepali power grids, is one way out. Dedicated transmission lines protect Nepali power markets against cheaper Indian power, thus allowing for domestic growth, while also providing opportunities for power exports to India.

Ten years hence

“The MCC project focuses on constructing lines that will bring Nepal’s power to the consumers who will pay Nepal good money for it. It is a simple fact of geography and economics that means India,” US Ambassador to Nepal Randy Berry wrote in an op-ed [Republica, 3 Oct 2019].

Fast forward ten years. Nepal’s hydro capacity is hovering around 2,500 MW, well below the national goal of 15,000 MW. Meanwhile, electricity imports from India meet 70-80 percent of Nepal’s power demand.

At that point, we could remind ourselves about what the ambassador had said: “the simple fact of geography and economics” will mean that India would pay “good money” for Nepali power exports. And we could ponder: “So, where are all our hydropower dollars?”

But then it will be too late. Let’s request the Government of Nepal to conduct a credible and independent evaluation of the impacts that cross border transmission lines will have on the growth of Nepal’s power sector.

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Nepalis were stunned by the naked display of the battle for power between the Prime Minister and his party colleagues even as the corona crisis was unfolding.

Despite that betrayal, we must retain our faith in the institution of government. It may be the last line of defence against the socialist-communist revolution of Nepal that is marching on.

A health and economic crisis of unimaginable depth and consequence has struck. Instead of devoting every single minute to addressing it, Nepalis were deeply disillusioned to learn that the Prime Minister and party colleagues were consumed in a struggle for who will be prime minister, who will be party chairman, and who will get what other post.

The horse trading, the power struggle, and the shifting alliances were all conducted in full public view, while a lockdown was in force. There was complete disregard for public sentiment and national interest.

Naturally, Nepalis lost faith, not just in the political leadership but also in the institution of government.

When you see a fight in full public display, the display is often far more significant than the fight itself.

That is exactly what the leadership tussle within the ruling communist party was all about. As the leaders traded, negotiated, cajoled and threatened, the outcome in terms of who would be prime minister, party chairman, or get this or that post wasn’t important.

The fact that the power struggle was played out publicly for everyone to see was extremely important.

In good and bad times, politicians all over the world battle one another for power. In that regard, there is nothing unusual about the power struggle between Prime Minister Oli and his colleagues.

The latest power struggle involved some 10 key leaders, all seasoned politicians with decades of experience managing their supporters, media, and the public. The entire thing could easily have been kept under wraps, away from public view.

Why fight in front of everyone, that too in the middle of an unprecedented crisis? Because this was about a fight that was meant to be seen; not a fight about who would win or lose.

Whether the players in the power struggle were aware of their larger role, or whether they were thrust into the cage to fight for the spectators to see, only they and history can know.

The power struggle in the middle of an unprecedented crisis was intended to erode our confidence in the government. We didn’t just lose faith in individual leaders. It did more: it eroded the political legitimacy of the government to lead and the moral authority of the State to govern.

It isn’t just with the executive branch of government. Institutions across the State are failing. Political interference within the judiciary, constitutional bodies, the Presidency, and the police have eroded public confidence in these institutions.

The army has now become the government’s civilian contractor and importer of choice for medical supplies. Its untarnished public image as the institution of last resort is being sullied. Many of its key leaders are under investigation. Several companies, including international firms, have filed suits challenging the army’s decision-making process in the selection of contractors in infrastructure projects.

These moments of failures add up, eroding inch by inch the moral authority of the State to govern. 

Recognizing that the socialist-communist takeover of Nepal would not be possible through force, the strategy now seems to be to erode the political legitimacy of the government and the moral authority of the State.

The socialist-communist revolution of Nepal marches on.

We have an opportunity to push back. A fight displayed for public view has no meaning if you don’t look at it.

We must turn away. As political leaders fail us and institutions crumble, we must reduce our reliance on government and draw more from the underlying fabric—us, ordinary citizens.

The only antidote against the government’s eroding political legitimacy and the State’s crumbling moral authority are stronger civil society institutions. We must push back against political encroachment in civil society; we must build and strengthen civil society institutions.

As we emerge from the lockdown, I hope we will return to meaningfully consider and reclaim our space as citizens of the Federal Democratic Republic of Nepal.

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