Submit your Article

The Donald Trump administration’s decision to freeze all foreign aid has begun to show its effects in Nepal. US Secretary of State Marco Rubio issued an internal memo to all relevant agencies and diplomatic missions, announcing the suspension of foreign aid with exceptions only for emergency food assistance and military funding for Israel and Egypt.

In Nepal, USAID and its implementing partners have temporarily halted numerous ongoing projects. Pre-scheduled visits from US officials to Nepal have also been canceled. Organizations working with USAID now face an uncertain future, with no clarity on the fate of previously signed projects. Officials indicate that all activities will remain suspended for the next three months, adding to the ambiguity surrounding existing programs.

USAID has been Nepal’s largest donor in sectors such as health, education, agriculture and food security, water and sanitation, energy, environment and humanitarian assistance. Organizations collaborating with USAID were reluctant to comment on the impact of the freeze but acknowledged they were rushing to communicate with stakeholders about the decision.

The memo seen by Agence France-Presse (AFP) explicitly states, “No new funds shall be obligated for new awards or the extension of existing awards until each proposed new award or extension has been reviewed and approved.” This directive effectively pauses US funding for critical initiatives like PEPFAR, an anti-HIV/AIDS program launched under President George W Bush in 2003. PEPFAR, which has saved an estimated 26m lives, primarily in developing countries, is now facing uncertainty. The memo permits exceptions on a case-by-case basis and allows temporary funding for salaries and administrative expenses during this period.

The freeze comes with an 85-day timeline for an internal review of all foreign assistance. Rubio justified the decision by stating that it was necessary for the new administration to ensure foreign aid commitments were not duplicated, were effective and aligned with President Trump’s foreign policy priorities. Rubio, once a proponent of development assistance, noted the need for greater oversight.

The US has long been the largest donor in dollar terms, providing more than $64bn in overseas development assistance in 2023, according to the Organization for Economic Cooperation and Development. However, the Trump administration’s approach marks a significant departure from bipartisan support for foreign aid in Washington.

On his first day in office, Trump signed an executive order suspending foreign assistance for 90 days. Anti-poverty organization Oxfam criticized this move, calling it a drastic shift from a longstanding US consensus on foreign aid. “Humanitarian and development assistance accounts for only around one percent of the federal budget; it saves lives, fights diseases, educates millions of children and reduces poverty,” said Oxfam America President Abby Maxman. She warned that cutting these programs could have severe “life or death consequences.”

Trump’s decision to withdraw from the Paris Climate Accord and the World Health Organization further compounds potential challenges for countries like Nepal, where foreign aid plays a vital role in addressing critical issues.

In May 2022, the Nepal government and USAID signed a five-year assistance agreement worth $658m. The grant aimed to strengthen democratic governance, promote enterprise-driven economic growth, and build resilience in communities most vulnerable to natural disasters and climate change. This partnership highlighted the long-standing collaboration between the US and Nepal in addressing developmental and environmental challenges.

However, the recent freeze has cast doubt on the continuation of such initiatives. USAID operations in neighboring countries like Bangladesh have also come to a halt, citing the executive order. The suspension of foreign assistance underscores the Trump administration’s shifting priorities and its potential repercussions for vulnerable nations like Nepal.

As the freeze unfolds, the implications for Nepal’s development, public health and disaster resilience remain uncertain. The situation demands close monitoring, as delays in funding and project implementation could disrupt critical progress across multiple sectors.

Prime Minister KP Sharma Oli’s recent 47-page political document offers a detailed justification for his decision to form a ruling coalition with the largest party, Nepali Congress (NC). A close reading of this document reveals that the CPN-UML is unlikely to sever its alliance with NC before the 2027 elections, as Oli describes this coalition as a ‘new political course’. This marks the first Central Committee meeting Oli has chaired since becoming prime minister for the third time in July last year.

According to the document, the idea of a coalition with NC had been under consideration even before the 2022 elections. Oli notes that the UML had proposed to NC that it contest the elections independently, without forming an alliance with the CPN (Maoist Center). This proposal, however, was not accepted by NC, leading to the formation of alliances out of necessity rather than preference.

Historical context of collaboration

Oli’s document traces the historical precedents of collaboration between the UML and NC, emphasizing their shared roles in pivotal moments of Nepal’s political history. He highlights their partnership during the 1990 democratic movement, their joint efforts in the 2006 second people’s movement, and their collaboration in promulgating the 2015 constitution. After the second Constituent Assembly elections, NC and UML formed a government that played a crucial role in drafting the constitution. Oli argues that this historical context underscores the natural alignment of the two largest parties in times of national need.

Following the 2022 elections, the UML had initially proposed to NC that they form a government together to ensure political stability. However, NC declined the proposal, leading UML to form a coalition with other parties, including the Maoist Center. This alliance proved fragile and eventually collapsed when the Maoist Center supported NC’s candidate, Ram Chandra Poudel, in the presidential elections. Subsequently, UML returned to its long-standing proposition of a coalition with NC, which Oli asserts was driven by a commitment to political stability rather than opportunism.

Justifying the coalition

Oli’s document provides a critical analysis of the 2022 election results, arguing that the fragmented mandate failed to deliver the political stability the country desperately needed. He describes the results as fostering instability and weakening the ability of any single political force to lead decisively. Oli criticizes Maoist Center leader Pushpa Kamal Dahal for engaging in opportunistic behavior and secret consultations with other parties, actions that he claims undermined trust and governance.

The coalition with NC, according to Oli, was therefore a calculated response to the prevailing political instability. He portrays the alliance as a means to foster hope and trust among the populace, mitigate societal pessimism, and bolster the democratic process. Oli also contends that the partnership is vital for addressing growing geopolitical challenges and ensuring Nepal’s national interests are safeguarded in an increasingly polarized global environment.

Mechanisms for collaboration

To ensure effective governance, UML and NC have established several bilateral mechanisms aimed at addressing key national issues. These include working groups focused on constitutional amendments, federalism implementation, pending legislation, governance reform, economic restructuring, and public expenditure management. These mechanisms are intended to bridge differences between the parties and provide actionable inputs to the coalition government.

Oli claims that these collaborative efforts have already yielded significant results, citing the passage of the transitional justice bill with all-party consensus as a major achievement. However, he acknowledges delays in appointing members to the transitional justice mechanism, a gap that needs urgent attention.

Economic and foreign policy perspectives

On the economic front, Oli’s document expresses cautious optimism, stating that the country’s economic situation is gradually improving despite unfavorable indicators. He argues that the strong coalition government has boosted private sector confidence, which is crucial for sustained economic recovery. Oli’s administration has also prioritized governance reforms and efforts to streamline public expenditure, which he believes will yield long-term benefits.

In terms of foreign policy, Oli highlights achievements such as his meeting with Indian Prime Minister Narendra Modi on the sidelines of the 79th General Assembly. He emphasizes the importance of the Framework Agreement on the Belt and Road Initiative (BRI), viewing it as a critical step toward improving Nepal’s connectivity infrastructure, diversifying transit facilities, and enhancing trade opportunities. Oli acknowledges the need for vigilance regarding the escalating China-US rivalry and its potential implications for Nepal, advocating for a balanced and pragmatic approach to international relations.

Future prospects of the coalition

Oli’s document suggests that the UML-NC coalition is not merely a temporary arrangement but a long-term strategic partnership. He underscores that the UML remains committed to the alliance as long as NC upholds its end of the agreement. Oli’s vision for the coalition extends beyond the immediate term, framing it as a cornerstone for ensuring political stability, fostering democratic values, and addressing Nepal’s pressing socio-economic challenges.

Six months into the coalition government, Oli asserts that it has already delivered a message of stability and progress, countering widespread skepticism about its longevity. He envisions the alliance as a platform for addressing deep-rooted issues such as governance inefficiencies, economic stagnation, and geopolitical vulnerabilities.

Conclusion

Prime Minister Oli’s political document serves as a comprehensive defense of the UML’s decision to partner with NC, highlighting its historical, political, and strategic rationale. By framing the alliance as a necessity born out of a commitment to national stability and progress, Oli seeks to position the coalition as a transformative force in Nepal’s political landscape. While challenges remain, including differences within the coalition and delays in key appointments, the document reflects a strong resolve to navigate these hurdles in pursuit of a more stable and prosperous future for Nepal.

Dec 12, 

Shantinagar, Kathmandu

When I entered the teashop, five young boys in their early twenties were seated at a corner table. Two of them were busy filling out forms, seemingly immersed in their task. After observing for a while, I realized they were preparing documents to apply for a loan from the microfinance next door, as they were planning to fly abroad for employment.

Their intentions became clearer when a staff member from the microfinance joined them, assisting with the paperwork. A young woman from the same office reassured the boys that their loan would be approved within a day if they submitted all required documents immediately. Over cups of tea and light snacks, the boys began discussing their future plans once they started earning abroad.

“I need to support my two brothers with their education,” one said. “So, I might not save money for the next five years.” Another shared his priorities: repairing his house and preparing for marriage. These boys, hailing from Madhes province, had arrived in Kathmandu two weeks earlier, chasing the dream of better opportunities abroad. Their candid conversation painted a picture of aspirations entwined with familial responsibilities.

As I listened to their discussion, two men walked into the teashop. They were familiar with the owner, who greeted them warmly. Their conversation veered into an unusual topic: the divorce case of a mutual friend. The man in question, aged 72, had remarried three months ago but had divorced only days earlier. The tea shop owner shared that the man had since stopped visiting the establishment, and the conversation quickly turned to rising divorce rates.

“At a time when divorces among young couples are increasing, it’s hardly surprising to see it happening among older couples too,” remarked one man. They discussed possible reasons behind these trends but focused disproportionately on blaming women. I refrained from delving deeper into their views, noting the deeply entrenched gender bias that lingered in their comments—an issue pervasive from tea shops to workplaces.

The four boys had left by this point, heading to the microfinance, and the two men exited shortly after, leaving just me and the shop owner. The owner struck up a conversation, commenting on the bitter cold and how it doubled the time needed to prepare tea. Then, out of the blue, he asked, “Sir, what’s going to happen to Rabi Lamichhane? Will the court free him or convict him?”

I replied cautiously, “There are multiple allegations; it’s hard to predict the outcome.” He nodded, adding, “Today, Kantipur reported allegations about misappropriated funds meant for charity. Do you think the news is true?” His curiosity was palpable, but I had no definitive answer for him. The case had clearly piqued public interest.

As I sipped my tea, two men entered and began discussing the stagnant real estate sector. From their conversation, it was clear they were investors struggling to sell land and meet their interest payments. The market slowdown had left them in distress, their voices heavy with worry.

Soon, five morning walkers entered the teashop, their familiarity with the owner evident. They didn’t bother specifying their tea preferences; the owner already knew their choices. One of them brought up former President Bidya Devi Bhandari and Vice-President Nanda Kishor Pun rumored plans to re-enter active politics.

“It’s absurd,” one of them exclaimed. “After holding such high offices, why would they join party politics?”

This sparked a lively debate. Some cited examples from India, the US, and other countries, pointing out how rare it is for former presidents or vice presidents to return to party politics. “If they join,” one argued, “it’ll cast doubt on their neutrality while in office and weaken the presidency’s integrity in the future.”

Another participant added, “They should follow the example of former President Ram Baran Yadav, who hasn’t rejoined party politics. Instead, they could focus on philanthropic work, like American presidents do after retirement.”

The conversation shifted to CPN (Maoist Center) Chair Pushpa Kamal Dahal. One of the men speculated that after signing the Belt and Road Initiative (BRI) agreement with China, the government was under pressure. “Dahal is supporting Rabi Lamichhane to form a new government,” he claimed.

Another participant countered, suggesting there wouldn’t be a new government but rather a cabinet reshuffle. “Youth leader Gagan Thapa might become deputy prime minister and finance minister,” he predicted. The room fell silent, except for one man who expressed concern over the potential impact on the stock market.

Their discussion reminded me of a conversation I’d had earlier in the week with a senior Rastriya Prajatantra Party leader. He had hinted at murmurs within political circles about a potential government change and the need for his party to be ready to take a role if invited.

Returning to the teashop chatter, the focus shifted to the government’s decision to take a concessional loan from the Asian Development Bank (ADB). Someone pointed out the irony: “The Nepali Congress had said it wouldn’t take loans under the current circumstances. Now, they’ve changed their stance.”

This triggered laughter among the group. One man quipped, “Our politicians care more about commissions than loans or grants.” His comment drew nods and chuckles before everyone began leaving to start their day.

By then, it was already 9 am. I finished my tea, paid Rs 20, and stepped out. The mix of conversations I witnessed at the teashop was a microcosm of Nepal’s society. From aspirations of young men seeking opportunities abroad to discussions about real estate woes and political dynamics, it reflected the concerns, challenges, and debates shaping the nation today. Even the lighthearted moments and humor, like the comment about politicians’ commissions, underscored a deeper truth about public perception of leadership and governance.

China’s Belt and Road Initiative (BRI) has once again unsettled Nepal’s coalition government, formed in July. Prime Minister KP Sharma Oli is preparing for an official visit to China, but two key coalition partners—the CPN-UML and the Nepali Congress (NC)—remain divided on advancing BRI projects. While Oli, who leads the UML, advocates for BRI projects, the NC opposes taking loans under BRI, fearing it could lead Nepal into debt.

Since 2022, the NC has consistently communicated its opposition to financing BRI projects through loans, a stance championed by NC President Sher Bahadur Deuba during his tenure as prime minister. Conversely, the UML and other leftist factions argue that Nepal should make headway on BRI to balance its acceptance of the US-backed Millennium Challenge Corporation (MCC) and to maintain geopolitical equilibrium.

To reconcile these differences, Prime Minister Oli is negotiating with the NC. Currently, there are three major issues regarding BRI. First is the signing of the BRI implementation plan, which was drafted during former Prime Minister Pushpa Kamal Dahal’s visit to China in September last year.. Second, although Nepal has proposed four projects under BRI, the coalition partners have yet to agree on an investment model. Third, Nepal has requested China to waive the loan for constructing the Pokhara International Airport, where alleged corruption in the airport's construction has also become a point of contention.

To date, Nepal has only signed a BRI framework agreement in 2017, outlining general directions for the initiative. However, debates have since persisted, particularly around China’s claim that certain infrastructure projects, like the Pokhara airport, are part of BRI, a claim rejected by Dahal’s administration. Additionally, Nepal wants Chinese grants for BRI projects, but China’s official position states that BRI funding only involves loans, not grants, facilitated by the Chinese government. Nepal has proposed that, if loans are necessary, the interest rates should align with those of the World Bank and other international lenders.

The 2017 BRI agreement outlines cooperation in policy exchange, connectivity, trade, financial integration and people-to-people interactions. Although the agreement allows for flexibility in cooperation areas, the debate in Nepal has focused largely on infrastructure and financial arrangements.

A recent 2023 Chinese white paper describes BRI as a joint venture rather than a form of foreign aid, emphasizing collaborative development. “The principle of extensive consultation signifies that the BRI is not a solo endeavor by China, but a collaborative effort involving all stakeholders. The principle of joint contribution highlights that the BRI is not one of China’s international aid programs or a geopolitical tool, but a collaborative effort for shared development.” 

According to the  MoU  signed in 2017, , the BRI does not include grants and primarily involves loans, with a possible contribution from Nepal. Nevertheless, the framework agreement does leave room for mutual agreements on funding sources.

The document states: “Adaptation of appropriate modes of cooperation for mutual benefit to support development and implementation of major programs in the BRI and provisions of investment, financing and technological support for these programs through mutually agreed sources of funds, and strengthening of exchange and cooperation to ensure program’s sustainability and safety.” 

There is also contention regarding China’s integration of numerous activities under the BRI umbrella. However, the 2017 framework does explicitly include areas like cultural exchange, media, health, tourism, agriculture, parliamentary visits and cross-border exchanges—reflecting the current scope of China’s involvement in Nepal. Thus, while BRI has become a significant component of bilateral cooperation, other forms of collaboration can still occur outside BRI’s framework.

Comparing China’s current engagement with the BRI document, there is a common ground between the two countries. In that sense, it seems that Nepal is already a part of BRI and scores of programs are in progress under the BRI. But it does not mean that bilateral cooperation can happen only under the BRI. The document has clearly mentioned that even if the MoU signed in 2017 is terminated, it will not affect any ongoing projects between two countries.

As for the BRI implementation plan and project selection, officials indicate that these steps primarily signify another principle agreement, not one that includes financing details or loan agreements. A senior UML leader said, “It’s similar to the 2017 MoU, without raising the loan concerns voiced by the Nepali Congress.” Although a final investment structure may not be concluded during Oli’s visit, there could be a consensus to include specific projects under BRI, though the NC may resist finalizing these agreements.

The China factor is a sensitive issue that risks widening the rift between NC and UML leaders. Oli is actively engaging with NC and Foreign Minister Arzu Rana Deuba to manage these differences. Tensions between the NC and China have escalated recently, driven by the NC’s stance on alleged border encroachments in Humla and its critical position on BRI. Additionally, external pressures may be influencing the NC to limit Nepal’s engagement with China, complicating the situation further. NC leaders have openly stated that BRI should also  follow the model of MCC, which involves primarily US grants with minimal Nepali investment.

Prime Minister KP Sharma Oli’s upcoming visit to China in the first week of December marks a notable departure from the Nepali tradition of newly appointed prime ministers prioritizing India for their first international visit. In his previous terms, Oli adhered to this unspoken convention, but this time, India has not extended an invitation despite his four months in office, signaling what some interpret as a shift in India’s approach to Nepal.

Oli’s visit is generating significant attention both domestically and internationally, largely due to his track record of signing strategic agreements with China during his past tenure. This will be his third official visit to China as Nepal’s prime minister; he previously visited in 2016 and 2018. Notably, during his premiership, Chinese President Xi Jinping also made a landmark visit to Nepal in 2019, the first by a Chinese leader in over two decades.

In 2016, as Nepal was recovering from months-long economic blockade imposed by India, Oli signed a Transit and Transport Agreement with China, granting Nepal access to Chinese ports for essential imports and reducing Nepal’s reliance on India. The agreement also marked a major shift in the age-old Nepal-India relations. This agreement was formalized in 2019, further strengthening bilateral ties between Nepal and China. 

Although high-level exchanges between Nepal and China are not new, Oli’s upcoming visit is under heightened scrutiny.

One of the major focuses of this visit is China’s Belt and Road Initiative (BRI), with which China has long urged Nepal to make concrete progress. Discussions are ongoing about a BRI implementation plan—a topic broached but left unresolved during former Prime Minister Pushpa Kamal Dahal’s visit to Beijing. Nepal is also expected to request debt relief on a Chinese loan for Pokhara International Airport, potentially in exchange for BRI commitments. India and Western countries have expressed implicit concerns, warning Nepal of potential debt risks and corruption associated with the BRI. While Nepal signed the BRI framework in 2017, specific project implementation has stalled due to Nepal’s reservations and external pressures.

Oli’s visit also highlights Nepal’s complex diplomatic balancing act amid growing international interest in its relations with China. India and Western nations are increasingly wary of Chinese influence in South Asia, including in Nepal, and are closely monitoring this visit. Within Nepal’s ruling coalition, there is a disagreement over engagement with China; the Nepali Congress is cautious about progressing with the BRI, whereas Oli’s party, the CPN-UML, advocates for advancement. Oli has sought to maintain coalition harmony by consulting coalition leaders, including Congress President Sher Bahadur Deuba, as they work to finalize the agenda.

A few days earlier, UML and NC held a meeting to discuss Oli’s planned China visit. The two parties agreed that Foreign Minister Arzu Rana Deuba would work on the agenda of the visit after consultations with NC leaders. The meeting between UML and NC indicates that Prime Minister Oli wants to deal with China without upsetting his coalition partner.

Over the past few years, mainly after Xi Jinping’s Nepal visit in 2019, bilateral cooperation between two countries is ever expanding. Along with continuous development partnership, two countries are cooperating in the new areas. Another vivid change in China’s engagement in Nepal is through its Communist Party of China. Over the past few years, CPC has been engaging with Nepal’s major parties, particularly focusing on communist parties. Senior leaders of CPC continuously visit Nepal and China is also inviting Nepal’s political parties from center to local levels. Similarly, China also organizes sessions with leaders of Nepal’s major parties to inform about the decisions taken by CPC and Chinese government.

In the third week of Oct 2024, Chen Gang, Secretary of China’s Qinghai Province, led a delegation visiting Nepal with two major objectives, first organizing an interaction program with Nepal’s political parties and another to meet Nepal’s political parties. The delegation shared the decisions made by the Third Plenary Session of the 20th CPC Central Committee which has taken some important decisions in the areas of opening up after 1978. This is just an example CPC often organizes such programs in Kathmandu and Beijing. In January this year, Sun Haiyan, Vice minister of the international Liaison Department of CPC, conducted a high-level discussion with the leaders of parties represented in Nepal’s Parliament. In the program, she made a remark that some forces are trying to spoil Nepal-China relations so Nepal’s political parties should be cautious of it.

Since President Xi’s visit in 2019, China’s presence in Nepal has expanded beyond government-to-government partnerships, notably through the Chinese Communist Party (CPC) directly engaging with Nepal’s political landscape. Dozens of delegations mainly from three communist parties—CPN-UML, CPN (Maoist Center) and CPN (Unified Center)—have visited China to participate in various programs. Leaders from NC, Rastriya Swatantra Party and other fringe parties have also visited China over the years, but not quite as often as the communist parties.

Senior CPC leaders have also frequently visited Nepal, fostering ties primarily with Nepal’s communist parties and facilitating interactions that include briefings on CPC policies. In October 2024, Chen Gang, the CPC Secretary of China’s Qinghai Province, led a delegation to discuss recent CPC decisions and further bilateral cooperation, underscoring this growing political engagement.

CPC is mainly engaging with Nepal’s communist parties, often advising them to unite and form one powerful communist force. In August this year, when Nepal faced unprecedented floods and landslides, it was the CPC and not the Chinese government that rushed to provide relief to the disaster survivors. The CPC channelized the aid through Nepal’s major political parties. 

There is no doubt that China’s influence in Nepal is increasing at different levels. The rising presence of Chinese NGOs, which were virtually absent a decade ago, is one example. Organizations such as the China Foundation for Rural Development (CFRD) now actively participate in health, education, agriculture, and disaster relief in Nepal, often collaborating with UN agencies on initiatives like the Global Development Initiative (GDI). 

China’s influence in Nepal has grown significantly over the past decade, and Oli’s visit is expected to further deepen this relationship. Should Oli secure agreements with China that align with coalition interests, particularly with Nepali Congress’s consent, Nepal’s relations with India and the broader international community may experience further shifts.

This week, Prime Minister KP Oli was occupied in New York, attending various multilateral forums, delivering lectures and participating in bilateral meetings. Two significant engagements stood out: one with Indian Prime Minister Narendra Modi and another with senior US officials.

In a notable 30-minute meeting, the first between Oli and Modi since Nepal's new government was formed in July, the two leaders discussed bilateral relations. The meeting is expected to bolster Oli's political standing in Nepal, as there is a perception in Kathmandu that India has not fully supported his government. While Oli has yet to receive an official invitation to visit India, preparations are reportedly underway for a possible visit by Modi to Nepal.

During his appearances in New York, Prime Minister Oli addressed topics such as Nepal's transitional justice process, climate change impacts and sustainable development goals. He also met with Alize Albright, CEO of the Millennium Challenge Corporation (MCC), where both parties emphasized the importance of completing the MCC project to improve Nepal’s transmission lines and highways. Additionally, Oli held talks with USAID Administrator Samantha Power, focusing on Nepal's development efforts and the ongoing support from USAID.

In another significant development this week, Nepal and China resumed the joint military drill after a five-year hiatus. According to Chinese media, the exercises between the Nepali Army and China’s People’s Liberation Army are focused on skills such as rappelling, IED detection and disposal, checkpoint blockades, infiltration and armed rescue.

Also this week, Nepal Police moved forward with the report submitted by a parliamentary probe into the cases of cooperative deposit scams. A case has already been filed in the Chitwan District Court regarding the misappropriation of funds from various cooperatives. Chhabi Lal Joshi, former DIG of Nepal Police and one of the founders of Gorkha Media Network, was arrested and transferred to Pokhara for investigation. Reports suggest that Rastriya Swatantra Party (RSP) Chairman Rabi Lamichhane, who was also associated involved with Gorkha Media, may also face arrest for his alleged involvement in the misuse of cooperative funds. Lamichhane has called for public pressure to resist the potential arrest. 

On a more positive note, the International Monetary Fund (IMF) this week reported that Nepal's economy is gradually recovering. According to the IMF, “Credit growth is recovering while remaining appropriately below nominal GDP growth. Inflation continued to decelerate to around 3.6 percent mid-July, partially reflecting favorable commodity prices and weak demand. International reserves continued to rise, underpinned by robust remittances, recovering tourism, and still subdued imports.”

In political news, former president Bidya Devi Bhandari has made it clear she intends to re-enter politics, announcing that she hopes the CPN-UML will become a decisive force in the 2027 elections. Speaking at an event organized by the Madan Bhandari Foundation, Bhandari expressed her desire for UML to produce the next president and hinted at her own ambitions to return to power. UML insiders suggest that Oli may retire after the next election, paving the way for Bhandari to take a leadership role within the party.

This week, businessperson Durga Prasai was arrested following complaints accusing him of cybercrime. Prasai, known for his vocal criticism of current political leaders and for spreading unfounded claims on social media, has faced backlash despite his past close ties with Prime Minister Oli and CPN (Maoist Center) leader Pushpa Kamal Dahal. His supporters have protested his arrest, while police are preparing to file cybercrime charges. Prasai, now advocating for the restoration of the monarchy, appears to be raising his political profile.

In another story this week, CPN (Maoist Center) Chair Dahal expressed concerns over the proposed constitutional amendment, warning that while he is not opposed to the idea, it must be approached with caution to avoid triggering instability. “Amending the constitution could be like opening Pandora’s box,” Dahal said at a program, emphasizing the need for careful deliberation.

Lastly, while there was widespread celebration after Parliament passed the bill on the Truth and Reconciliation Commission, there has been little progress in making appointments to the transitional justice mechanisms. The process is expected to gain momentum once Prime Minister Oli returns from the UN summit.

That’s all for this week. Have a great weekend! 

Two weeks have elapsed since Prime Minister KP Sharma Oli assumed office, backed decisively by the largest party in the House of Representatives, the Nepali Congress (NC). While it is customary to reserve judgment on a new government’s performance for at least 100 days, vigilant oversight remains essential from the outset.

During this period, Prime Minister Oli has focused on assembling his team, securing a vote of confidence from the Parliament, and receiving briefings from various government agencies. He has appointed key aides, including former Finance Minister Yubaraj Khatiwada as his economic advisor, though appointment of press and foreign affairs advisors remain pending. A close examination of Oli’s first fortnight in office reveals a promising trajectory.

Breaking from tradition, Prime Minister Oli has opted not to prepare a Common Minimum Program (CMP) or announce populist agendas to capture public attention. This contrasts with his previous tenures, as he now seems intent on allowing his administration's results to speak for themselves. Notably, the Nepal Rastra Bank has introduced a new monetary policy, eliciting mixed reactions but holding potential as a remedy for the nation’s economic challenges. Despite a significant downturn in the stock market following the new government’s formation, there is optimism for progress in the real estate sector. The private sector, a crucial driver of growth, is adopting a cautious “wait and see” stance regarding the policy’s efficacy.

Progress is also evident in addressing the contentious issues surrounding the Truth and Reconciliation Commission. A tripartite task force comprising the NC, UML, and the CPN (Maoist Center) is nearing a resolution of longstanding issues. If they reach a consensus, it will be a great achievement, given its two-decade history fraught with delays and disagreements. The Maoists, despite their recent ejection from power, are cooperating on TRC matters.

Unlike previous administrations, the Oli-led government has refrained from transferring government secretaries, as well as issuance of extensive, often unimplemented directives. The frequent transfer of secretaries has historically impeded service delivery. Additionally, the government is expediting ambassadorial appointments in key countries following the recall of ambassadors by the previous administration.

However, public scrutiny has emerged in response to some decisions by the UML and NC. The government's transfer of senior police officials has been poorly received, attracting criticism from opposition parties. The NC and UML are amicably resolving disputes over provincial government formations, marking a significant positive development. However, the selection of ministers at the provincial level has faced backlash. 

The administration has also contended with significant tragedies, including the Saurya plane crash and a fatal bus accident in Chitwan, which demanded urgent governmental response. Furthermore, the government had to rescue Nepali students in Bangladesh amid prolonged protests against the quota system in government jobs.

Despite these challenges, the government’s initial performance indicates a positive direction. It has not pursued ambitious yet unfeasible agendas, focusing instead on substantive progress. Criticism from ruling and opposition party leaders has been minimal. Favorable developments in the stock market, monetary policy, real estate sector, and declining inflation have created a conducive environment for the government.

While early indications are promising, numerous challenges remain. The government and political parties must abandon ineffective practices of the past. Prime ministers and ministers, in particular, should prioritize official duties over ceremonial engagements and project inaugurations to ensure continued progress.

Soon after stepping down from power, CPN (Maoist Center) Chair Pushpa Kamal Dahal has initiated efforts to engage with fringe communist parties, particularly former Maoist leaders, to strengthen his position in national politics.

It has been observed that Dahal tends to reach out to his former Maoist colleagues, who have formed splinter groups, especially after the major split in the Maoist party in 2012 when senior leader Mohan Baidya established a separate party due to serious ideological differences with Dahal. A few months ago, while still in power, Dahal formed the Samajbadi Manch (Socialist Front), a loose coalition of fringe parties within the government. However, this front remained inactive as Dahal did not perceive any immediate threat to his government after aligning with the CPN-UML four months ago. 

On Tuesday, Dahal convened a meeting that included CPN (Maoist Center), CPN (Unified Socialist), Nepal Communist Party, and Samajbadi Forum. Of these, only the Maoist party led by Dahal and the CPN (Unified Socialist) led by Madhav Kumar Nepal have a presence in the national parliament. The Nepal-led party had supported Dahal during his vote of confidence in Parliament on Friday. The meeting of the Socialist Front has labeled the NC-UML coalition as opaque and unnatural. The four parties view the NC and UML’s plans to amend the constitution with suspicion, fearing that these two parties might regress from the progressive provisions of the 2015 constitution. Consequently, the four parties have formed a task force to thoroughly study the policies and activities of the newly-formed coalition.

For the first time in 10 years, the Maoist party finds itself in the opposition bench, a position it last occupied in 2014 when the NC and UML formed an alliance to deliver the constitution. Since then, the Maoist party managed to remain in power despite multiple major and minor splits. After the promulgation of the new constitution in 2015, Dahal’s long-time comrade Baburam Bhattarai left the party to form a separate faction. Bhattarai has been a vocal critic of Dahal, unlike other Maoist splinter groups, which still regard Dahal as their leader.

Despite maintaining moderate strength through electoral alliances with the NC and UML, the Maoist party’s influence is waning. Party leaders fear that contesting elections without alliances could further weaken their position in the national parliament.

Numerous Maoist party leaders and cadres, who were excluded from benefits during Dahal’s tenure, believe it is crucial for Dahal to reflect on his past decade in power and work toward strengthening the party organization. The Maoist party is steadily losing public support and organizational strength. Officially, Dahal will not become the main opposition leader as he lacks the requisite 65 seats. However, as the third-largest party in Parliament, the Maoists remain a significant opposition force, supported by the fourth-largest party, Rastriya Swatantra Party, which holds 21 seats in Parliament, alongside other fringe parties.

Dahal, according to close associates, will strive to consolidate his power by uniting various Maoist factions, although a formal unification is unlikely. The potential unification could be influenced by shared concerns over war-era human rights violations if the NC and UML join forces. Whether the new government will prioritize transitional justice issues remains uncertain, but these issues could serve to unite the Maoist factions. 

Additionally, Dahal may reach out to political outfits advocating identity politics. As the NC and UML aim to amend the constitution to alter the current electoral system, Dahal and other identity-based groups are likely to vehemently oppose any such change. Consequently, Dahal is expected to lead a front that staunchly resists any attempt to amend the constitution.