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Foreign policy is a set of goals, policies and strategies aimed at promoting national interest through effective conduct of external relations. Most importantly, it has permanent and changeable features. According to Frederick H Hartmann, it is a ‘Systematic statement of deliberately selected national policies’. George Modelski defines foreign policy as the system of activities evolved by communities for changing the behavior of other states and for adjusting their own activities to the international environment. Hence, it is generally designed to protect and promote a country’s national interest, security, economic prosperity and independent international image.

Nepal aims to protect its core national interest and secure these interests through its foreign policy (Foreign Policy 2077). The policy, an attempt at clarifying Nepal’s policy to the internal and external audiences, highlights the country’s constitutional provisions, including directive principles, and tries to incorporate its fundamental objectives. Apart from guiding internal affairs of Nepal, the policy also helps development partners, neighboring countries, academicians, foreign policy experts, researchers and others get a clear picture of its objectives and goals.

Nepal’s foreign policy is characterized by continuity and change because it is guided not only by constitutional provisions but also by ages-old principles of peaceful co-existence (Panchasheel), non-alignment, world peace and international law.

For the promotion and protection of national interest, a foreign policy has to adjust to the changing political and economic contexts as well as the unexpected exigencies relating to new emergencies issues of health, ecology and technology, among others, by keeping the above-mentioned characteristics at the core. Foreign policy 2077 emphasizes soft power, multidimensional connections with other countries, revision of bilateral treaties, Nepali diaspora, resolution of border disputes, labor diplomacy, public diplomacy, track II diplomacy and climate change issues, making it a bit different from previous foreign policies.

Given contemporary international politics and our geostrategic location, the policy demands widespread and multidimensional cooperation involving government-to-government, people-to-people and business-to-business engagements with the international community. 

Our foreign policy also emphasizes multidimensional connectivity networks in this globalized world, including transnational roadways, railways, waterways, airways, optical fibers and electricity transmission lines. Such international networks can play a crucial role in the transformation of least developed countries (LDCs) to developing ones.

Although foreign policy 2077 is much more detailed than previous foreign policies, challenges remain when it comes to getting desired results through this instrument. Nepal needs to identify new areas of collaboration driven by shared interests to get benefits from technology transfers and strengthen diplomatic missions further.

Our unique geostrategic location between two Asian giants India and China means we need to maintain cordial, balanced, friendly and cooperative relations with both the neighbors to achieve the desired and set goals of foreign policy. 

We also need to know that conduct of foreign policy is not the exclusive domain of Foreign Ministry as the private sector, civil society, non-government organizations, professionals and state as well as non-state actors all have important roles to play. 

Most of the time, our foreign policy is punctuated by hyper-populism and often not dictated by principles due to political influence. This calls for an effective mechanism for the execution of foreign policy. Our political parties often pick individuals lacking even minimum standards and knowledge of diplomacy as ‘diplomats’, so the focus should be on improving professional skills and efficiencies of diplomats and officials working in Nepali missions abroad.

Nepal has struggled with many ups and downs and undergone various political translations. Time has come for the country to use economic diplomacy as a major aspect of foreign policy to achieve national prosperity and make every Nepali happy.

Formulation of a national consensus-based foreign policy and its full implementation is a must to realize this goal. 

Foreign policy is the principle that guides how a country uses different strategies to steer its relationship with other countries and international organizations. It is also known as an instrument that a state employs for promoting national interest and policy while dealing with the international community. It basically aims at contributing to global peace, harmony and security.  In a globalized world, every country seeks to protect national interest through its foreign policy.

The fundamental objectives of Nepal’s foreign policy are to enhance the dignity of the nation by safeguarding sovereignty, territorial integrity, independence and promoting economic well-being and prosperity of the country. Nepal has been adopting a policy of non-interference, non-violence, peaceful coexistence, mutual cooperation and respect for other countries’ sovereignty. Our foreign policy consists of strategic plans to interact with other countries, which is fundamentally used to achieve national interest. National interest should have three basic components—security, prosperity and social well-being. Some basic principles of Nepal’s foreign policy are mutual respect for each other’s territorial integrity and sovereignty, non-interference in each other’s internal affairs, respect for mutual equality, non-aggression and peaceful settlement of disputes, cooperation for mutual benefits, faith in the chapter of the United Nation and world peace.

Nepal attempted to adjust its foreign policy after the restoration of multiparty democracy in the 1990s. Only after the advent of democracy in 1951 did Nepal’s foreign relations become robust and expanded. Before the political changes of 1951, the Ministry of Foreign Affairs (MoFA) was absent and Nepal’s foreign relations were very limited. 

Foreign policy is a means of statecraft that has become the most important mechanism to defend national interests in this globalized world. Nepal’s foreign policy has remained unchanged despite changes in regimes, constitutions and governments.

In the latter decades, Nepal has gone through several changes and transitions, the traditional practices have given way to new alternatives and the actions in foreign policy decision-making have substantially surged. The issue of a growing number of actors in foreign policy decision-making also calls for a serious overview. Other line ministries and government agencies have become a part of international engagement and a prominent stakeholder in foreign policy and diplomacy. In this context, the most prominent challenges are the lack of coordination among the actors involved along with the need for structures and intuitional changes.

These structural changes pose several challenges to Nepal’s foreign policy behavior. Geopolitical and geo-economic interests of Nepal have increased with the rise of India and China. These challenges and circumstances urge policymakers to induce policy coordination and structural changes to meet the new challenges. Modern foreign policy and diplomacy are experiencing fundamental changes at an unprecedented rate worldwide, affecting the traditional way of diplomacy and decision-making process. 

Nepal’s foreign engagement needs to be made more robust with policy coordination and structural changes to address the changing geopolitics and geo-economic scenario of the country. At this point in time, global power is shifting toward Asia, especially in reference to the rise of China and India. Our ties are heavily southward-oriented, especially toward India and China. So we must promote a sound relationship of trust with both of our immediate neighbors keeping the national interest at the core.

Nepal has been following the principle of non-alignment and panchasheel for a long time. But nowadays, debates among foreign policy experts are centering more and more on redefining our foreign policy. According to these experts, there is an urgent need for Nepal to review and redefine its foreign policy vis-a-vis a changing world order, balance of power and the rise of Asian powers. 

Some contemporary issues like economic diplomacy, development diplomacy, trade diplomacy, cultural diplomacy, public diplomacy and technology diplomacy deserve due priority. Proper coordination is necessary between line ministries and MoFA toward this end.

A vital form of diplomacy, economic diplomacy is the full spectrum of economic tools of any country to safeguard its national interest. Broadly, it executes ‘rules for economic relations between states’ at the international level by employing economic resources, either as rewards or sanctions, in pursuit of a particular foreign policy objective. 

Different agencies of government play a vital role in international economic diplomacy apart from non-state actors such as non-government organizations (NGOs), businesses and investors. 

The phrase economic diplomacy is a combination of economic and diplomacy, therefore, the foundation of economic diplomacy is taken as economic theories and diplopic political theories (Pokharel 2014). Of late, economic diplomacy has become a prominent activity in the diplomacy of nation states and international organizations. Take India, for our neighbor India, which has been using economic diplomacy as a core component of its foreign policy.

Economic diplomacy has become the primary means of penetrating the world market, where economic aspirations like foreign assistance, foreign employment, foreign investment (direct or porthole) and foreign trade and tourism are pursued through diplomatic skills. 

Economic diplomacy is also an indispensable instrument for securing Nepal’s foreign policy objectives and economic development. At present, the government engages in economic diplomacy/development at three levels—bilateral, regional and multilateral. Nepal needs to focus on facilitating trade and business investment by promoting domestic tourist destinations through high-tech means like the use of new science and technology tools.

A least developed, sovereign and independent country, Nepal is lagging behind in the race for development. If used skillfully, foreign policy (with main thrust on economic diplomacy) can speed up the national development process as conventional diplomacy has failed to deliver, by and large. At present, we are facing a volatile economy and unstable political situation, which demands using diplomacy as eyes and ears in the national interest. 

Our current economic indicators have laid bare several flaws in capital endowment, slacking foreign trade, diminishing exports and increasing imports and mostly ineffective implementation of policies.

According to World Bank (2019), Nepal’s export of goods and services was 8.93 percent of GDP while import of goods and services was 42.38 percent in 2019. In such a situation, the government needs to promote exports by exploring potential actors and factors. This can be achieved by mobilizing Nepali diaspora, encouraging private sector investors and prioritizing different trade and export promotion agencies. 

Notably, we have failed to welcome FDI due to an unstable political situation, illiberal policies and investor insecurity. These issues need to be addressed as soon as possible. As we know, components of economic diplomacy have a greater impact and crucial role in strengthening the national economy. 

For achieving desired economic growth, Nepal should conduct its diplomacy by expanding its missions to attract investments. In addition, Nepal needs to introduce investment-friendly Acts and other legal provisions for the creation of a favorable environment for foreign investors and donors.  

In this globalized, liberalized and competitive global market, Nepal needs to be very skillful to pursue effective diplomacy with other nations. It is obvious that none of the states in this globalized world can escape from economic interdependence, so economic diplomacy has become the unavoidable reality of the 21st century in international relations. Nepal should explore opportunities and challenges, and prioritize the issues on execution procedure.

But a number of experts point out that Nepal has not accorded due priority to economic diplomacy.  

Bishwambher Pyakuryal, former ambassador and economist, says economic diplomacy is highly affected by a country’s foreign policy. According to him, the government of Nepal has not taken this form of diplomacy as seriously as it should. As for the way out, he says structural changes are necessary in our diplomacy. 

Purushottam Ojha, a former commerce secretary, says, “Economic diplomacy is vital for promoting national economic interests like trade, commerce, investment, tourism, migration, aid and investment.” But our economic diplomacy and diplomats have failed to protect economic interests.

FDI promotion should focus on enhancing economic development. In line with this, diplomatic missions need to focus on attracting more assistance in Nepal’s priority areas like infrastructure development, employment generation, capacity building and so on. Economic diplomacy should be able to create an environment that is welcoming and friendly for businesses. 

Nepal can learn and adopt different forms of economic diplomacy from different nations. For instance, Switzerland’s strong and effective economic diplomacy has enabled its agency based in Geneva to conduct nearly two-thirds of the United Nations’ business activities. Japan’s foreign policy is aimed at strengthening economic diplomacy as a means of driving economic growth, which is very supportive of overseas business expansion and developing collaboration with diplomatic missions. 

On the contrary, we still struggle in trade diplomacy with neighboring countries, leading to a yawning trade deficit each year. Diplomats must be mobilized and foreign missions expanded to address such issues. 

Coordinated diplomacy between several ministries, including the foreign ministry, as well as private and civil societies is crucial, with the main focus on economic diplomacy. 

Policymakers need to find ways to attract foreign investment and increase export strategy and other forms of economically beneficial exchanges where Nepal enjoys a comparative advantage. Our diplomats and overseas missions must acquire a new global strategy and new skills to make diplomacy effective. Improving managerial capacity, acquiring new knowledge and negotiation skills are a prerequisite for economic diplomacy. 

Economic diplomacy involves using diplomatic skills with economic tools for advancing and achieving the country’s economic and strategic goals. A serious lack of policy coordination among stakeholders for pursuing economic diplomacy has affected the conduct of diplomacy.

Against this backdrop, every concerned agency, including the Foreign Ministry and other government entities like the Ministry of Finance, National Planning Commission, Ministry of Commerce and Supplies, Ministry of Tourism, and Trade Promotion Center should be equally involved in promoting economic diplomacy on a broad level.