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The Nepali Congress and CPN-UML, the first and second largest parties in Parliament, have agreed to form a national unity government. This coalition aims to amend the constitution adopted in 2015. 

According to the agreement, UML chair KP Sharma Oli will lead the government initially to push for constitutional amendments and then hand over power to NC leader Sher Bahadur Deuba to conduct the 2027 elections. Cross-party leaders acknowledge that amending key provisions of the constitution will be challenging. The NC-UML alliance anticipates strong opposition from the CPN (Maoist Center), Madhes-based parties, and other groups that support federalism, secularism, and identity-based federalism.

The new alliance needs to muster a two-thirds majority in Parliament for any constitutional amendment which seems feasible. The tentative agreement between NC and UML includes changes to the current electoral system, which many believe is one of the main causes of political instability and frequent government changes.

The two parties are of the view that the current mixed system of first-past-the-post and proportional representation makes it difficult to achieve a single-party majority. While leaders of the two major parties say that frequent coalition changes since the 2022 election highlight this issue, the electoral system is not solely to blame for instability. The new government also plans to remove the provision of secularism from the constitution, leaving the space blank. Additionally, NC and UML have agreed to revisit the current three-tier federal structure, considering it a significant burden onto the state. 

Despite their push for a national unity government, it is unlikely to materialize fully, as the Maoist party and the Rastriya Swatantra Party have decided not to join the future Oli-led government. However, the NC-UML coalition expects to achieve two-thirds support in Parliament with the help of fringe parties. NC and UML are reaching out to fringe parties in order to increase the strength of the government. 

It remains to be seen whether the fringe parties would wholly buy into the propositions put forward by NC and UML. Former prime minister Madhav Kumar Nepal’s party, CPN (Unified Socialist), criticized the latest coalition, likening it to tyranny. 

Notably, the leadership of both NC and UML have not yet held intra-party consultations about the content of the constitutional amendments. Shankar Pokharel, UML general secretary of the NC-UML coalition, emphasized their primary agenda is constitutional amendment and called on all parties to join the national unity government.

The CPN (Maoist Center) has expressed strong opposition to changing the electoral system, viewing it as a regressive step. The Rastriya Prajatantra Party, however, views the agreement between NC and UML positively, believing that the current constitution cannot address the country’s problems.

Background of NC-UML coalition 

In 2015, during the constitution-making process, NC and UML formed a coalition government that successfully delivered the constitution. Initially, NC was supposed to support UML for the coalition government, but it backtracked on its commitment, straining the relationship between the two parties. This tension peaked when UML chair Oli dissolved Parliament in 2020.

Over the past two years, NC leader Deuba was reluctant to engage with Oli, fearing it might affect NC’s relationship with the Maoist Center. When the Maoists sided with UML in March, NC leaders including Shekhar Koirala began reaching out to UML, but results were slow. There were voices within both parties advocating for a coalition to ensure government stability, though some were against it due to the competitive nature of the parties and concerns about weakening the opposition.

At the same time, Deputy Prime Minister and Minister for Home Affairs Rabi Lamichhane was digging the files of some NC leaders accused in various corruption cases. Lately, with the surfacing of various corruption scandals, it was natural for the ranks of NC-UML to be fearful. As more scandals like the Giribandhu Tea Estate began to unravel, the situation became increasingly uncertain. Lamichhane had told Parliament on Monday that preparations were underway to form a powerful commission to investigate 25 corruption scandals.

Talks between NC and UML progressed three months ago  through a facilitator when Oli was in Jhapa for a week-long visit.  But the contents of the meetings were kept highly secret. On Saturday, Deuba and Oli held a candid and open discussion at Balkot, Oli’s residence. On Monday night, two top leaders signed in a document of agreement which remains top secret. Before the Balkot meeting, two secret meetings happened in Kathmandu. 

Despite initial distrust, several rounds of talks led Oli and Deuba to agree that the country faced a crisis due to constitutional flaws and the Dahal government’s mishandling of the situation. Oli was particularly frustrated with the Dahal-led government’s monopoly on decision-making, especially regarding the budget. As a result, UML withdrew its support from the government, requiring the prime minister to take a vote of confidence within 30 days. The formation of a new Oli-led government now depends on Prime Minister Dahal’s actions. Actually, Oli was in favor of keeping the agreement in secret with a plan to complete the entire process within a month but it was leaked in the media, that is why there was slow progress on Tuesday. 

Was Dahal kept in the dark?

Increased meetings between Oli and Dahal had raised concerns in Baluwatar. The prime minister was briefed by the Home Minister about these informal meetings. 

A recent meeting in Balkot prompted Prime Minister Dahal to invite Oli for talks, where Dahal asked Oli if he was forming a government with NC. Oli dismissed the reports, focusing on left unity until the general elections. However, after NC and UML agreed to form a new government, Dahal invited Oli again, urging transparency about the agreement with NC. 

Let’s briefly talk about the coalition of politics mainly after 2022. In the 2022 national elections, Dahal’s CPN (Maoist Center) emerged as the third-largest party with 32 seats. Despite an initial proposal from UML to form a coalition government, NC claimed the leadership and did not support the Maoists, despite an electoral alliance. 

Eventually, UML supported Dahal for the premiership, but he switched alliances multiple times between NC and UML. Dahal believed he could remain in power by playing between the first and second largest parties and was confident that external forces would not allow Oli to become prime minister.

Meanwhile, the leaders of both major parties were tired of the ‘opportunism’ and ‘turncoat’ character shown by Dahal, the third power in the parliament. Lately, Prime Minister Dahal had even started publicly speaking about the ‘magic number’. He began expressing the sentiment that he could remain prime minister for the entire five years by playing between UML and Congress.

Dahal’s expressions certainly unsettled Oli, eager to climb the chair of power, and Deuba, who wanted to become prime minister once again, sooner or later. Dahal’s statements violated the ‘gentlemen’s agreement’ of rotation with Oli. Oli had not taken Dahal from the alliance with NC to let him be prime minister alone for five years.

Had he understood the situation, Dahal could have found it easier to ally with NC. Even in an alliance with NC, Dahal would have had to give up the prime minister’s position to Deuba after two and a half years. Possibly, Dahal chose the difficult and survival path post-election? However, even after collaborating with UML, the ongoing dialogue with NC did not create an environment of trust. Meanwhile, Dahal also signaled a change in strategy. He began demanding that Oli allow him to run the entire period with the condition of unifying the party until the next election and stepping down from active politics to become the president. Oli clearly did not like this proposal.

In a political environment where betrayal has become a competition, Oli took the initiative this time. He went to Baluwatar, whispered sweet assurances in Dahal’s ear, and gave form to the new relationship. Dahal’s practice of betrayal with the magical number has become a strong fear of turning into a political culture, of which today’s players of the betrayal game could also become victims someday.

Future course

It seems likely that Oli will become prime minister. Dahal might attempt to break the agreement by offering the prime ministership position to Deuba, but this is unlikely to succeed. The constitutional amendment process will be challenging, potentially unleashing tensions. It remains to be seen how NC and UML will convince all stakeholders to support the amendments.

The UML has requested Prime Minister Dahal to resign by Wednesday. A leader revealed that the UML Secretariat meeting on Tuesday decided to ask Prime Minister Dahal to step down. 

This would pave the way for the formation of a new government under Article 76 (2) of the Constitution, according to the agreement between the UML and the Congress.

The UML has also invited other parties to join in forming a national consensus government led by Oli. According to sources, some parties including CPN (Maoist Center) could suffer a split in the run-up to the constitution amendment process.

Sher Bahadur Deuba and KP Sharma Oli, leaders of the first and second largest parties in the House of Representatives (HoR), had their first private meeting in more than two years at an undisclosed location three weeks ago. The two leaders had another meeting at Balkot, Oli’s residence, on Saturday.  

While meetings among top leaders of different parties should not be a big deal, the meetings between Deuba and Oli have created a stir both domestically and internationally. Both leaders have maintained strict secrecy about the contents of their discussion.

These meetings have likely caused significant unease in Baluwatar, the prime minister’s official residence, as well. This is why Prime Minister Pushpa Kamal Dahal called Oli early Sunday morning and scheduled a meeting in the afternoon. In the meeting, Dahal and Oli discussed the critical political situation of the country.

Before March 4, when Dahal broke away from Deuba’s Nepali Congress and joined forces with the Oli-led CPN-UML, Deuba repeatedly declined Oli’s requests for a meeting, fearing it might upset Dahal. However, after the breakdown in coalition, Deuba was willing to engage with Oli to form an alliance against Dahal, who leads the CPN (Maoist Center). Since then, a faction of the NC, including President Deuba, has been working to dismantle the current coalition in favor of a partnership between the first and second largest parties. The UML, however, is divided on this issue. Nonetheless, there have been increased talks between the two sides in recent weeks. Following his meeting with Oli, Deuba has called a meeting of the party’s office bearers for Monday.

According to NC Chief Secretary Krishna Prasad Poudel, the meeting will delve into the contemporary issues. Multiple persons privy to this development told ApEx that there are many issues that NC and UML are discussing in order to resolve the problems that country is facing. There are reports that UML Chairperson Oli is unhappy with the immature approach being adopted by Prime Minister Dahal and his deputy and Minister for Home Affairs Rabi Lamichhane. 

One UML leader said Oli is of the view that instead of focusing on service delivery and addressing the economic crisis that country is facing, both Dahal and Lamichhane are engaged in political stunts. There are also concerns that some ministers in the Dahal government are reportedly using corruption allegations as a political weapon to retaliate against opponents. 

The UML leader said Oli has advised Prime Minister Dahal against following the ‘Pakistani model’ of politics, where parties in power often use corruption charges to jail political opponents.

The issues extend beyond the government. The country’s economic situation is dire, there is growing pessimism among the population, and youth emigration is alarmingly high. Geopolitical tensions have further impacted the domestic political situation, and religious tensions are rising in some parts of the country. Additionally, the current constitution, adopted a decade ago, has several flaws that need addressing to ensure political stability.

Both NC and UML leaders argue that it is time to review and amend the constitution. Their current negotiations focus not on forming a government but on addressing the political situation. There is a growing realization that national unity among major parties is indispensable to ensure political stability and to inspire hope among citizens. The UML is advocating for a national government including the NC, UML, and the Maoist party. If the Maoist party is unwilling, some leaders say, the NC and UML could form a government capable of amending the constitution.

To amend the constitution, parties may agree to form an expert panel, with Parliament initiating political changes later. NC and UML particularly want to change the current mixed First-Past-the-Post (FPTP) and Proportional Representation (PR) electoral system, which they believe is the primary cause of political instability in Nepal.

Within the NC, senior leader Shekhar Koirala has been leading talks with the UML and other leaders. They believe that as long as the current electoral system remains, a single-party majority government is almost impossible. Provincial governments have become unstable, with related cases reaching the Supreme Court. Along with the electoral system, parties might also discuss changes to the secularism provision of the constitution.

While immediate changes are unlikely, the ongoing negotiations between the NC and UML could yield substantial results in the coming weeks. Both parties believe that without addressing these issues before the next election, maintaining political stability over the next 10-15 years will be impossible, which would harm the country’s progress and stability.

There’s no progress in status quo: Oli

CPN-UML Chair KP Sharma Oli has said that the country cannot move ahead in its current state. Speaking at a program organized in Kathmandu on Sunday, he mentioned that no one should insist that there is progress in status quo.

The UML leader emphasized the need for entrepreneurship and professionalism to modernize agriculture and create job opportunities. To rise above poverty, he said the country should increase its agricultural output.

“We need to increase production through modernization and the use of technology, but government policies have not been able to address this. We need a solid policy for this to happen,” said Oli.

He also expressed concern that villages were becoming deserted as the produce from the hills could no longer sustain livelihoods. He mentioned that the biggest challenge for Nepal currently is to bring the population below the absolute poverty line to a state where they can have enough to eat.

Oli also said that he has advised Prime Minister Pushpa Kamal Dahal not to get entangled in minor appointments and to move forward considering the bleak circumstances of the country and its citizens.

Dear Readers,

This week has seen significant developments on both the domestic and international fronts that deserve your attention. 

Nepal and China hosted a foreign-secretary level meeting in Kathmandu to discuss bilateral issues. Although no major breakthroughs were achieved, Chinese Vice Foreign Minister Sun Weidong’s visit marked a significant diplomatic engagement. During his stay, he met with Nepal’s top leaders, including President Ram Chandra Paudel.

There were speculations that Nepal and China might sign a Belt and Road Initiative (BRI) implementation plan during this visit. However, this did not materialize. It is possible that progress could be made during Chinese Foreign Minister Wang Yi’s visit to Nepal, which is expected to take place very soon. China was keen on finalizing the agreement during Prime Minister Pushpa Kamal Dahal’s visit to Nepal last year. But Dahal was not interested.

Speaking in the Parliament, Prime Minister Dahal outlined Nepal’s position on BRI, which almost all major parties agree with. He said Nepal prefers grants over loans and, if loans are necessary, they should be concessional with interest rates not exceeding 1.5 percent. He also stated that Nepal seeks loans from China on terms similar to those from the World Bank and the Asian Development Bank. This sentiment mirrors the position of former Prime Minister Sher Bahadur Deuba during his discussion with Chinese Foreign Minister Wang Yi in 2022. To date, CPN-UML Chairperson and Prime Minister KP Sharma Oli has not publicly detailed his views on the BRI.

We have an in-depth analysis of Prime Minister Dahal’s parliamentary address under the heading ‘PM Faces Tough Questions in Parliament’. For more details, please visit our website.  A delegation led by CPN-UML leader Bishnu Rimal visited Beijing this week—latest in the series of Nepali leaders visiting China. China’s influence in Kathmandu has increased considerably in recent times. Our feature titled ‘China’s Growing Clout in Kathmandu’ explores how China’s engagement with Nepal extends beyond the BRI.

During his parliamentary session, Prime Minister Dahal also addressed questions about issues related to India and the Russia-Ukraine war, among other topics. Deputy Prime Minister and Foreign Affairs Minister Narayan Kaji Shrestha attended the Asia Cooperation Dialogue in Iran, where he reaffirmed Nepal’s strong commitment to regional cooperation and multilateralism, a core foreign policy priority since the Panchayat era.

Last week, Bangladeshi Prime Minister Sheikh Hasina paid an official visit to India, although she had been to New Delhi a few days ago to attend Indian Prime Minister Narendra Modi’s inauguration. Along with bilateral discussions, the two leaders addressed sub-regional and regional issues, including power trade between Nepal, India and Bangladesh. Our detailed coverage of these topics is available online under the headline ‘A Landmark in Sub-Regional Energy Cooperation’. 

After the foreign secretary-level meeting with China, Nepal is now preparing for a similar foreign-secretary-level meeting with India. These annual meetings review the full spectrum of bilateral relations.

On the domestic front, political dynamics continue to be a topic of discussion. Speculation about the stability of the current government persists, with reports indicating ongoing talks between the Nepali Congress (NC) and the UML to explore potential new government formations. Our sister publication, Annapurna Post, recently published pieces advocating for the formation of a national consensus government.

Former President Bidya Devi Bhandari returned to the political spotlight amid rumors of her renewing her UML membership. However, in a recent interview, Bhandari clarified that she has not applied for membership and that the UML has not approached her. We have analyzed this development under the heading ‘Is Bhandari Planning a Return to UML?’, concluding that while her return to active politics is possible, it is not imminent.

The government has recommended ambassadors for eight countries, with the UML selecting former bureaucrats for its quota.

Meanwhile, the Rastriya Swatantra Party (RSP) remains in the political limelight. Its General Secretary Mukul Dhakal has come up with a report describing the party as being in ‘serious illness’ and in need of a ‘major surgery’ to maintain its status as a national party. This report, which is said to be based on feedback from over 3,000 cadres across 38 districts, has given rise to significant debate within the party. Dhakal, a vocal critic of the current government and an adversary of RSP President Rabi Lamichhane, insists that RSP ministers must justify their stay in the government. There is a section in the RSP which believes the lust for power could affect its very base.

A parliamentary panel investigating the financial status of around 29 cooperatives has expedited its work. Media reports suggest that the panel is preparing to question Home Minister Rabi Lamichhane regarding his alleged involvement in the misappropriation of cooperative funds.

I will be back with more updates next week. Wishing you all a happy weekend!