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Along with government-to-government relationships, the Communist Party of China and India’s ruling Bharatiya Janata Party are competing to cultivate ties with Nepal’s political parties. Keeping their ideological positions at a bay, they are reaching out to all major parties in Nepal.  

High-level delegations from both the CPC and BJP are visiting Kathmandu, while leaders from various political parties in Nepal are also flying to China and India, with more party-to-party level exchange of visits on the cards. 

Political analysts say both New Delhi and Beijing are making a departure from their traditional policy of backing only specific parties and leaders and building ties with all political forces in Nepal, considering the political instability in the country.

The spectacular emergence of the recently formed Rastriya Swatantra Party and the resurgence of Rastriya Prajatantra Party—both of which are challenging the three traditional parties, Nepali Congress, CPN-UML and CPN (Maoist Center)—have also forced China and India to recalibrate their approach. 

The CPC has realized that by fostering and nurturing Nepal’s leftist forces is not going to secure China’s interests.  The BJP, which has been in power in India since a decade, also wants to achieve its agendas including Hindutva ideology in Nepal by roping in all political parties. For them, a favorable government in Kathmandu is not enough; they want the overall political environment of Nepal to be on their side.  

Political analyst Lokraj Baral says both the BJP and CPC are adopting “a realistic approach” in building ties with Nepal’s political parties. 

“There is no ideological foundation in such relationships because both sides want to appease each other to enhance their power.” 

Baral says the CPC is still more partial toward Nepali communist parties, even though it has increased its engagements with other political forces.

This week, Yuan Jiajun, member of the political bureau of CPC visited Nepal at the invitation of the ruling Maoist Center. During his stay, Jiajun met leaders from across the political spectrum. As Prime Minister Pushpa Kamal Dahal was out of the country, the Chinese leader held a virtual meeting with him. 

While the Chinese leader was in Kathmandu, a five-member delegation led by Phampha Bhushal of the Maoist party flew to India at the invitation of the BJP. The ties between the BJP and Maoist are only just evolving. Sources say lately, India's ruling party has also been approaching the UML.  

As for the Nepali Congress, it has always been close to India. Last year, the BJP had invited a group of leaders from the Congress party, which was led by Prakash Sharan Mahat. Former prime minister and Congress president, Sher Bahadur Deuba, had also visited the BJP headquarters in India before holding bilateral talks with Indian Prime Minister Narendra Modi. 

The engagement between China’s CPC and Nepal’s Maoist party has been there for a long time. During the insurgency period, Beijing largely supported Nepal’s monarchy, but it took no time to reach out to the Maoists, led by Prime Minister Dahal, after the party came to power following the fall of monarchy. Ideological proximity between the CPC and Maoist party brought them together. In the past six months, at least two Maoist delegations including one led by former speaker Agni Sapkota have visited China.  

Since the Maoist party is in power right now, Prime Minister Dahal is making utmost effort to strike a balance between India and China. He needs the support of both the CPC and BJP to stay in power.

But scores of Maoist leaders believe that they should step up engagement with China to reap the benefit from its economic development.

They are of the view that Nepal should immediately implement the Belt and Road Initiative (BRI) and other agreements reached between the two countries. Through cooperation with Nepal’s political parties, China wants to replicate its development model in Nepal, not export its political ideology, say some experts. 

Due to increased interactions, Nepali leaders too have started appreciating China’s development and its model.

During his talks with Nepali leaders, Chinese leader Jiajun said that China is willing to deepen practical cooperation under the BRI with Nepal, and deeply and solidly promote the strategic partnership of cooperation featuring ever-lasting friendship for development and prosperity between two countries.

China’s Xinhua news agency reported that the CPC is willing to strengthen exchanges and mutual learning with Nepali political parties to boost the development of China-Nepal relations. Jiajun told Nepali leaders that China is willing to enhance cooperation and exchanges with Nepal in agriculture, poverty reduction and education to enrich the relationship between the two countries through subnational exchanges.

Tanka Karki, former Nepali ambassador to China, says it is normal to build party-to-party relationships and there is nothing harmful about it. “Both countries want to enhance people-to-people relationship and political parties remain a key instrument of it.”

The relationship between Nepal’s Maoist party and the BJP is a new one. In July last year, as a party chair, Dahal visited the BJP headquarters in New Delhi and held talks with BJP President JP Nadda. After one year, BJP hosted the Maoists delegation in its party office for what they call to strengthen party-to-party relationship.

Perhaps, it is the result of cordial ties between the BJP and Nepal’s political parties, many Nepali politicians including Prime Minister Dahal are talking about protecting and promoting Hindu religion and culture.  

Not only India and China, the US, the UK and the EU countries are also trying to enhance their influence among Nepal’s political parties through bilateral exchanges and visits. They are mainly close with parliamentarians to influence the law-making process in Nepal.  

Political analyst Chandra Dev Bhatta says India and China’s increased engagements between the political parties of Nepal, can certainly be helpful to enhance relations at the political level which can also percolate at the peoples level.

“This is also particularly important when diametrically opposite political parties in terms of ideology are in power on both sides— BJP in India and Maoist Centre in Nepal. It will help resolve contentious issues between the two countries,” he says. “But if such engagements are done merely for other interests either to stay in power or to create a comfortable regime, they could backfire and damage the relations.”

The ongoing Central Working Committee (CWC) meeting of the ruling Nepali Congress underpins the fact that the grand old party is a deeply divided house. The party is not even one when it comes to the issue of investigating and prosecuting corruption scandals involving their own leaders. 

The CWC gathering also showed that its president, Sher Bahadur Deuba, for better or worse, remains a force to reckon with in the party, and that the general secretary duo, Gagan Kumar Thapa and Bishwa Parkash Sharma, are not as popular as one believes them to be—not at least among the CWC members.  

Remember the situation of the ruling Nepali Congress before the oft-deferred CWC? Scores of leaders including Thapa and Sharma were critical of Deuba for running the party like a hegemon, without a care for party statute or internal democracy. 

Thapa even contested and lost the Parliamentary Party leader election against Deuba. Other leaders in the NC meanwhile talked about convening the special general convention to replace Deuba.  

At the time it seemed that the Congress president had fallen out of favor, especially after he failed to give continuity to the electoral alliance forged with the CPN (Maoist Center) immediately after the general elections of November last year (the alliance did get continuity eventually after a short-lived ruling partnership between the CPN-UML and Maoists). Deuba took even more battering from his party colleagues following the by-election outcome in Tanahun-1, which was won by Swarnim Wagle of the Rastriya Swatantra Party. Wagle, a former Congress member, had only just quit his old party expressing displeasure with Deuba and his coterie. His electoral victory was resounding and that too in the traditional political base of the NC.    

Many Congress leaders and members demanded answers from Deuba. They wanted a meeting of the CWC, which had not been held for nearly a year even though the party statute requires it to be convened every two months. 

Meanwhile Deuba remained unfazed and continued to maintain silence, even when the fake Bhutanese refugee scandal broke out, which led to the arrest of his close confidant and former home minister, Bal Krishna Khand.    

When Deuba finally agreed to call the CWC meeting, many had expected that he would face harsh criticisms from the leaders for his wilful leadership. There was a litany of complaints against the NC president, ranging from taking unilateral decisions on party as well as national affairs to failing to fix the date of policy convention and not appointing the chiefs of party departments. 

But the CWC meeting saw a different—and unexpected—scenario. It was Thapa and Sharma who got the thrashing for airing the party’s dirty laundry in public. Ironically, the meeting was live streamed for the first time in the party’s history.

The two general secretaries were reprimanded for ruining the party’s image with their call for a leadership change. Several CWC members even excoriated Thapa and Sharma for supporting Khand’s arrest in the refugee scam. The majority of the CWC members are of the view that Khand should be protected and that he must not be suspended from the party. 

What transpired at the CWC meeting is a serious blow to Thapa, who is preparing to fight for party presidency in the next general convention. It is apparent that his party colleagues are not ready to back him.

Despite being popular at the cadre level, Thapa does not have a strong sway among central members of the party.

Senior leader Shekhar Koirala, another party leadership hopeful, remained largely silent throughout what could be dubbed as the trial of Thapa and Sharma. The scion of NC founding leader BP Koirala is said to be maintaining a distance from Thapa to win Deuba’s support in the party leadership race.

As a general secretary, Thapa presented a political document at the meeting, which also faced criticisms from several CWC members. Arzoo Rana Deuba termed the document as a “wish list of non-governmental organizations” that offers no clear direction to the party or the country.

Dozens of CWC members appreciated Deuba’s leadership. Surendra Pandey blamed Thapa and Sharma of spreading negativity against the party president. If Deuba sinks, he warned, both general secretaries and the party will sink.  

Leader Mohan Basnet, also the health minister, criticized Thapa and Sharma for trying to widen the factional rift in the party. 

Ahead of the CWC meeting, the two general secretaries had convened a meeting of district presidents which was boycotted by Deuba and his supporters

Another key agenda of Thapa and Sharma was fighting the next general elections alone, without forming any electoral alliance. Thapa had even suggested leaving the current coalition if the government fails to deliver on its promises.  

But the issue too did not get much support from the CWC members.  

Leader Badri Panday said as the elections are still four years away, there is no need to take any decisions on electoral alliance. 

According to CWC member Bhishma Raj Angdembe, the meeting indicates that the popularity graphs of both general secretaries are going down, while the graph of Deuba is going up. 

After listening to the largely unfavorable views of the CWC members for days, it was time for Thapa and Sharma to speak on Monday. Both of them appeared somewhat defensive. They even softened their positions on several issues. 

Regarding the issue of electoral alliance, Thapa said he was in favor of continuing the current alliance with the Maoist Center until the next general elections. On the issue of leadership change too, Thapa seemed flexible, saying that he wanted to promote internal democracy and the culture of healthy debate inside the party. 

He added that the Nepali citizens were increasingly growing despondent with the current political state of affairs, and that it was upon the Congress party to lead them out of this situation. But first, Thapa told the CWC meeting, the Nepali Congress party should put its house in order.

Sharma reiterated that the NC needs a deep retrospection in order to find its footing to lead the country.

What should be the size of the army in a country like Nepal?  Before the Maoist insurgency began in 1996, there were approximately 60,000 personnel in the Nepali Army. The number was significantly increased to fight the Maoist insurgents, and today the NA is 96,477 strong. In 2001, the government also founded the Armed Police Force, which acted as a paramilitary unit, to support counterinsurgency operations. 

Talks about resizing or ‘rightsizing’ the NA first found prominence after the Maoists joined the peace process with the signing of the Comprehensive Peace Agreement (CPA) in 2006. At the time, it was the right thing to do, since the former Maoist fighters were also being integrated into the national army, which would have increased the troop numbers and the budget.  

The CPA says: “... This includes, among other things, rightsizing, democratic restructuring reflecting the national and inclusive character and imparting training to the Nepali Army on the values of democracy and human rights.”  While the inclusive component of the CPA has already been implemented by the NA, the parts about rightsizing and restructuring have not. 

The size of the military has once again entered the national debate, and the NA is not taking it lightly. Responding to some media reports and opinion pieces, Army chief Prabhu Ram Sharma in March blamed “outsiders” for making comments about the required NA troop numbers. He didn’t name any particular individual or institution, but hinted that these “outsiders” were acting on the behest of foreign countries.

A few days back, the issue about the size of the Army was brought up in the National Assembly by CPN-UML lawmaker Bimala Rai Paudyal. Addressing the assembly, she said that there must be a review on whether the Ministry of Defense needs the current size of the national army.
“There aren’t any internal conflicts and there aren’t any chances of war from our neighbors,” argued Paudyal, also a former foreign minister.
Her remarks didn’t go down well with the military circle, as well as some politicians. Paudyal faced strong criticism, including from former Army generals, for stoking an unnecessary debate. 

Those against the idea of revising the size of the NA are of the view that this is not the right time to be debating about the issue. 

But Paudyal remains firm on her position. “Shouldn’t we evaluate the current scenario?” she says. “It is not necessarily a call for downsizing the army, but rather a suggestion to review whether to downsize or upsize the army.”   

She asks why there should be a controversy whenever we raise military matters. “These issues warrant serious deliberations and extensive research, especially considering our transition to federalism and the emergence of heightened border security threats,” says Paudyal. “Perhaps, we may even require a stronger army.”

The debate on the size of the NA is not a new one; it is a part of the CPA signed between the government and the Maoist party. The Interim Constitution 2007 had also mentioned about the size and democratization of the national army. The part 20 of Interim Constitution states talks about determining the appropriate number of the Army, its democratic structuring and inclusivity.  

In 2009, the Ministry of Defense had formed a committee to suggest ways for the democratization of the NA, but the report was never made public.

In compliance to the Nepali law which states that 45 percent of all vacant government positions be reserved for excluded groups, the Army in 2006, amended its Army Act. As per the amendment, out of the 45 percent reserved position within the NA, 20 percent of the seats are reserved for women, 32 percent for Janajati, 28 percent for Madhesi, 15 percent for Dalit and 5 percent for remote regions. But as far as the issue of rightsizing is concerned, there have been discussions in the academic sector but not at the state-level.

The Maoist party, which vehemently raised the issue of resizing the NA during the time of peace process, seems to have abandoned the topic now. As per the Maoist party’s demand, the Nepali Congress and UML too had agreed to mention this issue in the CPA, much to the displeasure of the Army. 

Deepak Prakash Bhatta, a security expert, says there can be discussions on resizing the NA only if the political parties, not individual leaders, officially make the position on it.  “Some people have spoken about it, but what is the position of political parties?” says Bhatta.

Both incumbent and retired NA officials suspect that some “foreign powers” are fuelling the debate.
One retired NA official says the NA does not have any objection to such a debate, but the recent noise about reviewing the size of the national army lacks maturity. “This is a very sensitive and comprehensive issue which requires in-depth study and deliberations,” he says.  

Purna Chandra Silwal, retired major general of the NA, says in a precarious geopolitical scenario marked, among others, by the Ukraine war and increasing Sino-Indian hostilities, countries have become more serious than ever before about their existence as their ballooning defense spending shows. “But, paradoxically, some of our leaders and opinion-makers are calling for downsizing of the national army,” he adds.

Major political parties have so far chosen to steer clear from the debate. UML senior leader Shanker Pokhrel says this is “an ill-timed debate” because we are passing through a political instability, and anarchism is creeping into society. “The size of Nepali Army is not only related to security aspects but also the international peace mission,” says Pokhrel.  

The current debate on the sizing of NA itself is problematic because it is too focused on downsizing it, instead of holding discussions on determining the right size. There could be discussions about the size of the army, experts say, but it can be decided only after assessing the long-term internal and external threats. Of late, beyond providing security, NA is also engaged in big development projects as well. 

Krishna Prasad Bhandari, NA spokesperson, says the Army is aware and informed about the ongoing discussions about the national army.  “The Nepal Army has been effectively and successfully performing the tasks provided by the government and mentioned in the constitution,” he says. 

Defense Minister Purna Bahadur Khadka has also defended the current number of NA in Parliament.  Speaking in the meeting of National Assembly Khadka on Thursday, he said the number of the army is determined on the basis of the country's geographical location, national necessity and current international scenario. He also said it is the government who decides the number of military personnel based on the recommendation of the National Security Council. 

Donald Lu, the US assistant secretary of state for South and Central Asian Affairs, visited Nepal this week to take stock of the progress on the Millennium Challenge Corporation (MCC).

The US embassy in Kathmandu said Lu’s visit was a part of his regular diplomatic engagement in the region. In Kathmandu, he met with various leaders and ministers to discuss the progress on the MCC Compact to date.

The Compact has two components: construction of a transmission line and road maintenance. The transmission line project under the MCC envisions construction of  around 315 km of double circuit high capacity 400 kV transmission lines and three new electricity substations. The transmission line will pass through Kathmandu, Sindhupalchok, Nuwakot, Dhading, Makwanpur, Chitwan, Tanahun, Palpa, Nawalpur, and Parasi districts. 

Similarly, the road maintenance project will focus on the East-West Highway in Dang district. Based on the results of the pilot, MCA-Nepal will further complete the Lamahi to Shivakhola section. At present, the total road segment proposed for maintenance in the East-West Highway is approximately 77 km.

These projects are set to commence in August with a five-year completion deadline or by 2028. The projects will be executed by Millennium Challenge Accounts Nepal (MCA-Nepal).

Lu had played a vital role in getting the MCC endorsed through Nepal’s parliament. Nepal’s political parties were heavily divided on the issue of ratifying the Compact through parliament. Those against the Compact, mostly communist parties, had raised unfounded suspicion that the US was trying to deploy its army in Nepal in order to contain China.

The Compact was ultimately endorsed by Nepal’s parliament with declarative interpretation (which the US has not recognized) amid protests in the streets, as Lu had warned that the US could review its relationship with Nepal if the MCC was discarded. 

China too was against the MCC ratification, and had openly fallen out with the US on the issue. Beijing suspects that the Compact is part of the US Indo-Pacific Strategy to stop China’s growing influence.  

Though Nepal’s parliament has passed the MCC, the US is still not wholly convinced it will move ahead smoothly. This skepticism is not just born out of continuing political opposition to the MCC in Nepal, but also of the technical hurdles at the local level.     

The main hurdle, according to an official at the Ministry of Finance, is land acquisition for the transmission line project. In some areas, people are urging the MCA-Nepal to change the route of the transmission line because it falls right over their homes and farmland, which they are unwilling to let go. The modality of compensation for acquiring land has also not been finalized yet.  

In April, Khadga Bahadur Bisht, executive director of MCA-Nepal, had informed the meeting of the MCA-Nepal board of directors that a technical survey of the electricity transmission line was completed, except on some segments due to social issues. Three months later, the problem remains as it is.

There is a lack of cooperation between MCA-Nepal office and Nepal government officials to resolve the local and technical issues. The task of land acquisition is being undertaken by district administration offices.

Regarding the land acquisition, field verification is going on in seven districts, except in Nuwakot, Sindhupalchok and Kathmandu. With the MCC implementation set to come into force in August, the task is unlikely to be completed on time.

There is also the task of forest census, which too remains incomplete. Forest clearance is one complicated task which needs to be settled in coordination with the Ministry of Forest and Environment and its subordinates. Here too the MCA-Nepal office has been unable to coordinate effectively with the concerned forest offices.

CPN-UML leader Pradeep Gyawali, who is also former foreign minister, says the MCC should be implemented honoring the deadline without any obstructions as it has already been endorsed by the Parliament.

However, both government and MCA-Nepal officials are uncertain about timely completion of the projects. They are brainstorming whether to commence the project in August and gradually complete the remaining tasks or commence the work only after all outstanding problems have been settled. 

Despite the challenges and risks, one official said MCA-Nepal has fixed August end as an entry into force date for the MCC.  

The MCC Nepal Compact is a five-year $500 million grant agreement signed between Nepal government and the MCC in 2017. The Nepal government has agreed to invest an additional $197m in the program, for a total of $697m.

Initially, the project should have come into implementation in 2018 which was delayed by four years due to the controversy surrounding its parliamentary endorsement. 

Mrigendra Bahadur Karki, Executive Director, Center for Nepal and Asian Studies, says the central focus of the US in Nepal at the moment is smooth implementation of the MCC. 

He adds since the MCC was protested by internal and external forces, the US is worried that the same forces would not delay its implementation. 

Currently, there seems to be no significant political opposition to the MCC, but technical issues at the local level are likely to delay the project. In case of a delay, the MCC project cost is likely to increase and may require additional Rs 5bn to complete, say some officials. 

It has been more than a decade since Chinese President Xi Jinping came up with the Belt and Road Initiative (BRI), a massive infrastructure project, to enhance both hard and soft connectivity with countries in the Global South. In this period, over 150 countries have signed the BRI documents, and Chinese foreign investment in those countries has exceeded $60bn.

Nepal signed up to the BRI in 2017, and ever since it has been a thorny subject that has divided the political parties and the public. Over the past few months, there has been a heated debate regarding the controversy over the Chinese side claiming the newly opened Pokhara International Airport being a BRI project. In the parliament as well as in public forums, ministers and politicians face this question: Is Pokhara International Airport under BRI? While they insist that it is not, many are not convinced. 

A few days back, speaking at a meeting of the Parliamentary Committee, Foreign Minister NP Saud said that Nepal has not executed any projects under the BRI. Tourism Minister Sudan Kiranti has also been making a similar statement. But the Chinese side seems adamant in their position that all of its recent bilateral cooperation with Nepal falls under the BRI framework. In meetings with Nepali politicians and officials, the Chinese side has even presented some basis for such a claim. But top leaders of major parties have not spoken a single word about it, nor has the Nepal government officially taken up this issue with Beijing.  

China is of the view that since Nepal has become a BRI member, whatever cooperation happens between the countries falls under the broader framework of the BRI. This not only includes the development of  infrastructure projects, but also the aid that Nepal received during the Covid-19 pandemic. For China, the 14-point agreement signed during President Xi’s 2019 Nepal visit is the basis of that claim. 

The second paragraph of the first point in that agreement says: “Nepal and China take the Belt and Road Initiative as an important opportunity to deepen mutually-beneficial cooperation in all fields in a comprehensive manner, jointly pursue common prosperity, and dedicate themselves to maintaining peace, stability, and development in the region.”

On the basis of this point, according to a senior diplomat who recently met with Chinese Ambassador Chen Song, the Chinese side is claiming that all projects are under the BRI.  

During Xi’s visit, Nepal and China agreed to elevate the bilateral relationship into a Comprehensive Partnership of Cooperation. A few months ago, in a closed-door discussion with editors, the Chinese ambassador said they regard Pokhara International Airport as a BRI project, but it is okay if the Nepal government does not say so.

As the BRI debate rages on, China has come up with Laws on Foreign Relations, which is likely to complicate the matter.  The law shall apply to the conduct of China’s diplomatic relations with other countries, its exchanges and cooperation with them in the economic, cultural, and other areas, as well as its relations with the United Nations and other international organizations. 

Article 18 of the laws says: “China calls for putting into action the Global Development Initiative (GDI), the Global Security Initiative (GSI), and the Global Civilizational Initiative (GCI), and endeavors to advance a foreign affairs agenda on multiple fronts, at a different level, in various areas and of multiple dimensions.”  

Programs under the GDI, in collaboration with the UN agencies, have already been implemented in Nepal. As far as the GSI and GCI are concerned, the Nepal government has not made any position on it. 

China is seeking Nepal’s support in GSI and GCI, but Nepal is not willing.  But Beijing has already put the GSI and GCI under the broader framework of BRI. 

China’s BRI claim resembles the Indo-Pacific Strategy (IPS) of the United States in Nepal. Since 2018, American officials have been saying that whatever bilateral grants and assistance the US provides to Nepal is under the broader IPS framework. The US officials often say that there is no military component in Millennium Challenge Corporation (MCC), though it is a part of the IPS. So, like the IPS, the BRI is gradually becoming a hard-to-understand issue after 10 years of its launch.  

Upendra Gautam, a China expert, says like the US is saying that all its assistance falls under the IPS, China too is saying the same thing regarding the link between its support to Nepal as part of the BRI.

“It is either IPS or BRI, it is up to us how we deal with those countries,” says Gautam. “Now the Chinese officials are linking the BRI with financial institutions. If there are any issues, we can communicate with the Chinese side.”

The debate and controversy surrounding the BRI has also been fueled by the lack of homework and research that Nepali leaders and government ministers lack. The form and nature of BRI is gradually evolving with more components, and no one seems prepared. 

Of late, the Chinese side has been insisting on the implementation of BRI in Nepal. Recently, Home Minister Narayan Kaji Shrestha and Chairman of the National Assembly Ganesh Timilsina visited China. 

In meetings with Timilsina and Shrestha, high-level Chinese officials underlined the need for the implementation of the BRI in Nepal. 

The BRI issue is likely to figure out when Prime Minister Pushpa Kamal Dahal visits China later this year.

In Nepal, BRI is primarily perceived as an infrastructure project, though it has five distinct priority areas: policy coordination, infrastructure connectivity, unimpeded trade, financial integration, and connecting people.

Not only on BRI, but China’s claim over other initiatives such as Global GSI, GDI and GSI has also put the Nepal government in a quandary. During the Dragon Festival organized in Pokhara recently, Chinese Ambassador Chen raised eyebrows by saying that the festival was the implementation of GCI.

China was partly emboldened to make such a claim also partly because former President Bidya Devi Bhandari attended a virtual program of the GSI in September 2022. Bhandari had taken part in the program despite the Ministry of Foreign Affairs advising her not to. 

When National Assembly Chairman Timilsina visited China in the second week of June, Zhao Leiji, chairman of the People’s Congress

In the second week of June, he held discussions on the BRI and other initiatives with Zhao Leiji, chairman of the People’s Congress, and other Chinese officials. 

In one of the meetings, the Chinese side also thanked Nepal for supporting GDI and welcomed the support and participation in the GSI and GCI for jointly promoting peace, stability, and prosperity in the region and the world. 

China’s claims on the BRI and its other latest programs like the GSI run counter to Nepal government’s position, which states that there have not been any official decisions yet and that all the initiatives put forth by China are being studied.  

Nepali leaders are adopting a very cautious approach regarding China’s unilateral claims. On the BRI, Nepal is not in a hurry to take a loan to construct infrastructure because there are already questions about financial viability and sustainability of some projects, such as Pokhara International Airport, Gautam Buddha International Airport, Kathmandu-Terai Fast-track. 

Over the past 10 years, there have been a lot of changes in the original BRI document. China has emerged as a lender of last resort for developing countries that are having difficulty repaying their BRI debts. 

According to the AidData report, by the end of 2021, China had undertaken 128 rescue loan operations across 22 debtor countries worth $240bn. These operations include many so-called rollovers in which the same short-term loan is extended again and again to refinance maturing debts. 

Learning lessons from many countries, China is now cautious to provide loans under the BRI, while Nepali leaders are also equally careful to avoid a potential debt issues.

On paper, the Nepali Congress is in the pink. The party is a key piece in the coalition government in Kathmandu, leading vital ministerial portfolios, such as finance, defense, health and industry. It is also heading three of the seven provincial governments and 295 out of 753 local governments. 

But there is a sense of unease among many leaders and cadres concerning the party’s future. They say the Congress is confronting multiple challenges which if left unremedied could risk the very existence of the party. This sense of anxiety is also widespread among the district-level leadership of the party, which they made clear when they met at the NC headquarters in Sanepa, Lalitpur, last week. 

A word of assurance from NC President Sher Bahadur Deuba would calm the nerves of the party rank and file at this moment, but that has not happened—and is unlikely to happen. The alarm bell ringers in the party represent the rival factions, and Deuba has so far managed to shrug off their grievances. 

Right after the general elections held in November last year, party leaders have been calling for a Central Working Committee (CWC) meeting to discuss the intra-party and national issues, but Deuba has been postponing it. 

The meeting of the party’s executive committee has finally been set up for Wednesday, which is likely to witness a verbal war between the rival factions. For a long time, Deuba had been avoiding the CWC meeting in an apparent bid to avoid criticism and confrontation. The rival factions are prepared for a showdown with the establishment faction. 

There are multiple issues related to the party and the government that the CWC will have to delve into. The first is holding the party's policy convention which should have taken place immediately after the party's general convention held in 2021. The objective of the policy convention is to review and rework the party's ideological standing in the changing context. 

The second issue is about managing the party's sister organizations torn asunder by the intra-party infighting.  

Madhu Acharya, a CWC member, says they are presenting a detailed report on party reformation prepared on the basis of consultations held in all seven provinces and diaspora community. 

“Our first priority is to fix the date and venue of the policy convention and Mahasamiti meeting. If party leadership does not heed to our request, we will launch a signature campaign to hold the party's special general convention to change the leadership,” Acharya says.

It is no secret that the rival factions do not see Deuba’s leadership in a favorable light. Part of the resentment comes from the fact that Deuba holds a significant sway in all party committees, including the CWC and the Parliamentary Party, and almost no decision can be made without his say-so.  

For example, several appointments are pending in the party's sister organizations due to Deuba’s reluctance. Factional feud inside the NC has spread to the local level, and is eating away at the party and its organizations. There are at least four clear factions in the party: the establishment camp led by Deuba, and others spearheaded by Gagan Kumar Thapa, Shekhar Koirala, and Gururaj Ghimire.

Last week’s meeting of district-level presidents of the party was convened by the Thapa camp. Likewise, the Ghimire-led group also recently sent its representatives to all seven provinces for the “NC resurgence campaign”. The Deuba fold is not pleased with the latest activities of the rival groups.   

“It is inappropriate to call a meeting of district presidents when the whole party mechanisms are unaware about it,” says Nain Singh Mahar, a CWC member and a leader close to Deuba, of the district-level leadership meeting organized by the Thapa camp in Sanepa.

Observers say the growing factional rift in the NC will not help the party’s future. While the party may have the largest share of seats in parliament, they say the strength of the Congress party is waning away. Today’s NC cannot fight elections on its own. In the last year’s general elections, the party had to forge an electoral alliance with the CPN (Maoist Center) and other fringe left parties.  

Despite emerging as the largest party, the NC is currently playing second fiddle to the third-place Maoist party as part of a pre-election power-sharing deal. There is a general dissatisfaction inside the Congress over the performance of the current government. Some leaders are of the view that the party will fail to secure its political base if this government fails to deliver. 

Revelation of corruption scandals involving senior party leaders are also not helping the NC. While the government led by Prime Minister Pushpa Kamal Dahal has won acclaim for prosecuting “high profile” individuals, there is a fear that the Maoists could weaponize these corruption cases to ultimately disrepute and weaken the Congress party.   

Many NC leaders are not in favor of joining forces with ideologically opposite communist parties just for the sake of securing parliamentary seats. 

The meteoric rise of the newly formed Rastriya Swatantra Party has also rattled the Congress, along with other traditional mainstream political forces of Nepal. 

The NC youth leaders and members in particular seem tired of Deuba’s leadership.  

A few days ago, NC rival leader and general secretary, Thapa, made his intention known about his plan to unseat Deuba as the parliamentary party leader. 

“I am pretty clear that the same leader should not become prime minister again. So I am trying my best to change the parliamentary party leader,” he said at a public program.

Thapa had contested and lost against Deuba in the PP election held after last year’s general elections. He was defeated by a huge margin despite getting the support from Koirala, another rival leader in the NC.  

Thapa and Koirala are no longer together, as both of them are vying for the post of Congress president. Koirala has been working hard to improve his ties with Deuba.  

In Wednesday’s CWC meeting, Koriala is expected to restrain himself from criticizing Deuba’s leadership. But the same cannot be said for rival leaders Thapa and Ghimire, who could launch an all-out attack on Deuba.

Prime Minister Pushpa Kamal Dahal’s India visit last month has rekindled hope that the Pancheshwar Multipurpose Project will finally move ahead. Although there are some contentious issues that remain unsettled despite several rounds of talks between Nepal and India in the past years, the two sides have agreed to expedite the bilateral discussions to finalize the detailed project report (DPR) of the project within three months. They have also agreed to conclude the modalities of the project implementation within one year after the DPR approval. In line with the agreement reached at the top level, a meeting of the Pancheshwar Development Authority (PDA) was held in Pokhara this past week. The meeting produced some positive results. As per the agreement, the two sides agreed to renew the term of the expert panel by six months and to convene the meeting of the panel within 10 days to discuss the technical aspects of the DPR. The meeting of the expert panel has not taken place since 2018. During 2016-2018, there were a series of meetings in an attempt to finalize the DPR, but both sides failed to resolve the differences on certain contentious issues. The panel stopped meeting and the tasks related to the proposed 6,480 MW project on the Mahakali river were halted as a result of the Covid-19 pandemic and the map row between Nepal and India. In 2016, PDA had prepared a draft DPR and submitted it to both countries for feedback. To date a mutually acceptable DPR has not been finalized, which remains one of the major roadblocks hindering the project development. While Nepal and India have shown eagerness to finalize the DPR, there are other contentious issues that remain unsettled. Nepal wants a share of the irrigation benefit that India stands to get from the multipurpose project. But the India side has been insisting that since Nepal has a smaller cultivable area than India, it is natural for India to get greater benefit. It has also pointed out the greater risk of flood and inundation that India will be exposed to due to the project. “We have offered to meet the full cost of the irrigation component. The details are yet to be worked out,” says an Indian official. There are also issues concerning the division of cost between irrigation and power. As Nepal wants to put a lot of cost in the irrigation component, there are differences on how to divide the overall cost. Ranjit Rae, former Indian ambassador to Nepal, says both countries should show flexibility in resolving the outstanding issues, namely sharing of water as well as irrigation benefits and cost, so that the DPR can be finalized within three months as prescribed by two prime ministers. “This will be a huge step towards the implementation of the mega multipurpose project that will not only transform the economies of far-western Nepal and the Kumaon region of Uttarakhand,” Rae says. “It will be a significant pillar of our bilateral cooperation and a global symbol of how two neighboring countries can work together in the sensitive area of water resources and energy.” Pancheshwar Multipurpose Project is a bi-national hydropower project to be developed in Mahakali River bordering Nepal and India. Development of the project is an important centerpiece of the Mahakali Treaty between Nepal and India, which states that equal sizes of underground power houses of 3,240MW will be constructed on each side of the Mahakali river in India and Nepal. The project also offers the benefit of regulated water for irrigation to a vast area of agricultural land in both countries as well as the benefit of flood control downstream. According to officials, there has been gradual progress on these projects. Previously there were more than 500 disputes which now have been narrowed down to 127, according to Madhu Prasad Bhetuaal, joint secretary at the Ministry of Energy and Resources. Over the past few years, there has been good progress in the construction of India-invested hydropower projects as well. A senior Nepali official says that this time India has shown eagerness to finalize the DPR of Pancheshwar project. “We are hopeful that India will adopt flexibility to sort out the key contentious issues,” the official adds. In 2017, too, there had been some serious efforts to finalize the DPR, but they could not yield any progress, mainly due to the internal political situation of Nepal. The Mahakali Treaty is already a contentious issue in Nepal, so there is a need for an all-party consensus while finalizing the content of the DPR. Former Nepali ambassador to India Deep Kumar Upadhyay, who  had played a significant role in sorting out the differences concerning the project during the Sher Bahadur Deuba administration, says Indian Prime Minister Narendra Modi is interested in taking the Pancheshwar project ahead. “Former water resources minister of India Nitin Gadkari had told me that Prime Minister Modi was interested and that a high-level team from both sides must steer the project,” says Upadhyay. “Gadkari had also warned me that the project would not move ahead if the two sides continued to engage in a blame game.” He views the resumption of talks at the bureaucracy level as a positive step, but insists that only the top political leadership can settle the disputed issues. “There should be a strong political will to direct the bureaucracy to sort out the key contentious issues,” adds Upadhyay. Deepak Prakash Bhatt, a CPN-UML leader from the far-western region, says the domestic political situation is favorable to move ahead, as major political parties are not opposing the project despite some reservations. “If the technical teams of both countries work seriously, I believe all contentious issues can be sorted out,” he says.

If nothing else, the Pushpa Kamal Dahal government has won acclaim for its anti-corruption stance. It started with the fake Bhutanese refugee scandal, in which several high-profile politicians, their relatives and government officials have been arrested. Balkrishna Khand of Nepali Congress and Top Bahadur Rayamajhi of CPN-UML are among the well-known figures who have been jailed for their alleged involvement in the case.  Senior politicians, government ministers and top bureaucrats getting arrested, let alone investigated for any wrongdoing was unheard of in Nepal. Next came the reopening of the Lalita Niwas land grab case, in which a large government-owned land, just next to the Prime Minister’s official residence, was transferred and transacted as private plots with the involvement of former government ministers, bureaucrats and businesspersons. The Central Investigation Bureau (CIB) of Nepal Police has already arrested several individuals including Min Bahadur Gurung, the owner of Bhatbhateni supermarket chain, for land misappropriation. The CIB action move follows the green signal from Prime Minister Dahal, who has hinted that his government would indiscriminately crack down on corruption cases, no matter who is involved. There are many corruption cases, mainly after 1990, on which there has not been any investigation. The probe into Bhutanese refugee scandal and the arrest of senior politicians and top bureaucrats give the impression that Dahal really means business. But some observers say while the Dahal government has taken a praiseworthy step to probe and prosecute corruption cases, one cannot help but suspect his intention. In the fake refugee scandal and the Lalita Niwas land grab incident, most of the accused who have been arrested or are under investigation are not directly linked to his party. Is Prime Minister Dahal serious about stamping out corruption, or just employing vindictive politics for his political gain? Observers say while Dahal might be the prime minister, the fact remains that his party is the third largest party in Parliament, and he needs a bargain chip in order to secure his post. In the Lalita Niwas land grab incident, names of two former prime ministers Madhav Kumar Nepal and Baburam Bhattarai have been linked. Nepal’s party, CPN (Unified Socialist), is a partner in the current ruling coalition, while Bhattarai is a former Maoist party leader. As the CIB pursues its investigation, there is a chance that several other big leaders could be arrested. Senior journalist Hari Bahadur Thapa says while it is a good beginning that the government is finally serious about taming corruption and investigating old cases that were mothballed with consensus among major political parties, it is yet to be seen how these cases will conclude. True, the anti-corruption campaign of the Dahal government has been lauded by the media and general public, but the move has also rattled the major political parties like the NC and UML. It could easily upset the current political power sharing deal. The Rastriya Swatantra Party, which is poised to become a major political force in the future, and the Rastriya Prajatantra Party, which is undergoing something of a revival, are the only parties that have clearly supported the government’s position on corruption. One could argue that Prime Minister Dahal and his party is trying to appeal to the RSP and RPP supporters in view of the next general elections. Thapa says rather than offering immature praise to Prime Minister Dahal and his government, it will do well to look at the current development with a critical lens. He says the general public must be cautious, as Dahal could weaponize the high-profile corruption scandals for his own political advantage. It is crucial that the media and civil society continue to exert pressure on the government to conclude its investigations into all corruption cases, without fear or favor. Thapa says it is worthwhile to remember that there are corruption cases related to the Maoist party as well, including the one related to the People’s Liberation Army cantonment. So far, there has been no investigation into those cases. Khem Raj Nepal, former government secretary, says the support and appreciation that the Dahal government has won with the investigation of fake refugee scam may have prompted the government to look into more cases related to corruption. He is of the view that even if Prime Minister Dahal intends to take a political benefit by investigating corruption cases involving high-profile individuals not associated with his party, it will no doubt help the country by discouraging corruption. At this moment, everything hinges upon Prime Minister Dahal. He must prove that he is a man of his word.