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Ahead of seeking a vote of confidence, Prime Minister KP Sharma Oli addressed Parliament on Sunday, highlighting the government’s key domestic and foreign policy priorities. Breaking from his usual lengthy speeches, Oli focused on the pressing issues facing the nation and called for cooperation among all political parties to overcome the country’s challenges.

Prime Minister Oli began his address by paying respects to the martyrs who sacrificed their lives for the country and expressing high regard for senior leaders like Pushpalal, BP Koirala, Ganeshman Singh, and Madan Bhandari. He extended condolences to the families affected by recent natural disasters, such as floods and landslides, and assured that the government is prioritizing rescue, treatment, and relief operations.

Oli highlighted five key domestic priorities and briefly touched on foreign policy, urging cooperation among all political parties to overcome the country's challenges.

The government’s first priority is to expedite long-delayed development projects. He cited a 123-kilometer road construction project in Kalikot district, which began 16 years ago and has only seen 15 percent progress, as an example of the country’s sluggish development. Noting that national pride projects have also seen minimal progress, advancing just one percent annually, Oli emphasized the need for institutional development, improved evaluation mechanisms, policy reforms, and timely disbursement of funds to contractors to ensure the completion of ongoing projects.

The second priority of the new government, according to Prime Minister Oli, is tackling the growing trade imbalance caused by declining exports. He pledged to develop a comprehensive policy within the next three months to boost exports and manage imports. 

The government’s third priority is to create a favorable investment climate and resolve issues in the agriculture sector. He emphasized the importance of the private sector as a growth engine and outlined plans to generate jobs. Oli said the government will focus on increasing production, industry, and services through extensive investment, regulating cooperatives, and prioritizing state investment in health, education, security, social protection, and large infrastructure projects.

The fourth priority is to ensure balanced and nutritious food for all citizens. Oli announced plans to develop a comprehensive strategy to improve food habits and address poverty. The prime minister promised to set specific targets to enhance nutrition, education, health, and overall well-being, particularly for children.

Tackling corruption is the fifth priority of the new government. To achieve this, Prime Minister Oli emphasized the need for a proper intention rather than a “political stunt” to maintain good governance, stating that the government would initiate investigations into corruption and abuse of power. He highlighted the importance of distinguishing between performing and non-performing employees and holding those accountable who fail to complete their work on time and within budget.

Prime Minister Oli painted a bleak picture of the current state of the economy, noting declines in both imports and exports, reduced revenue collection, low-interest rates, increasing defaulters, stalled development projects, and six million people living below the poverty line.  

Probably for the first time since 1990, the entire country has plunged into pessimism, Oli told Parliament, calling for the need to instill hope among the people by encouraging rapid economic development. To do so, he said the government will focus on sectors such as information technology, tourism, energy, agriculture, forestry, industry, and physical infrastructure as main drivers of economic growth. He added Policies and regulations will be formulated to promote economic growth through these sectors, with support from fiscal and monetary policies.

On foreign policy, Prime Minister Oli emphasized independence, dignity, and development needs. He said that his government believes in a good neighborly relationship and shall act accordingly, while expecting the same from close neighbors. He also pledged to address the genuine concerns of neighboring nations.

Oli also justified the alliance between the two largest parties, citing historical instances of collaboration, such as ending the Rana regime in 1950, overthrowing the Panchayat era in 1990, ending violence in 2006, and promulgating the new constitution in 2014.

Amid concerns over the constitution promulgation, Prime Minister Oli assured that the constitution drafting process would be forward-looking and not undermine previous achievements. He stated that the constitution is a means to development, not an end, and any points hindering development would be amended. He called for national consensus and unity to address political instability, the main obstacle to development.

Dear readers,

This week, KP Sharma Oli, chairperson of CPN-UML, was sworn in as prime minister for the fourth time in his decades-long political career. He first became prime minister in 2015 during India’s economic blockade, led a communist government in 2018 with support from more than two-thirds of the parliament, and briefly served again in 2021.

Oli had not expected to return to power so soon. If the alliance between CPN (Maoist Center) and UML had continued, Pushpa Kamal Dahal might have handed power to Oli after two years. However, by allying with the largest party in the Parliament, the Nepali Congress, Oli returned to power this week. According to their agreement, he will hand over power to NC President Sher Bahadur Deuba after two years. Initially, the NC and UML had mooted a national unity government with the Maoist Center. The plan was to let Dahal lead for an additional year, then hand over to Oli, who would eventually pass the leadership back to Deuba. This proposal fell through as the NC and UML doubted Dahal. Including all major parties in a national unity government would have been ideal. 

Soon after his appointment Prime Minister Oli formed a 22-member cabinet without the delays seen in the past, which is a positive start. But the cabinet has faced scrutiny for its poor representation of women, Dalits and other marginalized communities. The new government's main priorities are stability, economic recovery and constitutional amendments. However, the agreement between the NC and UML has not been publicized, and the coalition has yet to present its Common Minimum Program (CMP). Oli is expected to outline the government’s policies and priorities during his address to the parliament on July 21, while seeking a vote of confidence. 

Major powers, including India, the US and China, have congratulated Oli on his appointment. Foreign ambassadors in Kathmandu are also visiting Singhadurbar to congratulate the new ministers. These powers are keenly awaiting the NC-UML coalition’s foreign policy blueprint. Observers are interested in how the two parties, with differing views on some issues, align their positions to present a unified message on bilateral and global matters. In the past, the UML has criticized the NC for failing to balance relations between India and China. 

Now, with the two parties working together, close coordination among the top leadership is essential to avoid contradictory messages. The newly-appointed Minister for Foreign Affairs, Arzu Rana Deuba, has pledged to maintain balanced and cordial relations with major powers. Incidentally, Nepal established formal diplomatic relations with the Republic of Kiribati this week. Nepal now has formal diplomatic ties with 183 countries, which is a good thing. We hope Nepal’s diplomacy will further expand and prosper under Deuba’s tenure.

On the economic front, Nepal Stock Exchange (Nepse) index hit a 26-month high and breached the psychological 2,300-point mark this week. The stock market rally coincided with UML Vice-chairperson Bishnu Prasad Poudel’s return to the finance ministry. While this stock market bump bodes well for Paudel, he still has a challenge of addressing some crucial issues, such as increasing capital expenditure, stimulating loan demand, boosting private confidence, and making the market dynamic.

How will the latest coalition government under Prime Minister Oli fare? It is too early to tell but Prime Minister Oli’s one-week in office leaves a lot to be desired. The prime minister has spent his first week attending public functions, rather than channelizing his time and energies on prime ministerial duties, especially at a time when the country is facing several challenges. As the leader of the country, Oli should inspire optimism among the people, restore faith in the government. 

In the coming weeks, people will closely watch the new government’s activities and performance. There is high hope that the government will take initiatives to improve the economy, create jobs, and inspire confidence in the populace about their future.

Meanwhile, out of power, CPN (Maoist Center) leader Dahal has started forming a strong opposition by bringing together fringe communist parties. This week, he organized a meeting with parties including CPN (Unified Socialist) led by Madhav Kumar Nepal. With the NC and UML forming a coalition, the opposition parties are in a weaker position in the parliament. Dahal aims to unite Maoist splinter groups to bolster his influence. When in power, Dahal often disregards these smaller parties, but out of power, he aligns with their agendas. 

In another story this week, a landslide swept away two buses and plunged them into a flood-swollen Trishuli River at Simaltal in Bharatpur Metropolitan City-29, Chitwan district. Of the 65 passengers, three survived, while 62 others were swept away. As of Thursday, authorities have managed to recover 18 bodies. The government has formed a committee to investigate and sought assistance from India, Bangladesh and other countries for rescue operations. 

Our thoughts and prayers go out to the families of the deceased and those still missing in the tragic accident. Let’s hope the search operation is successful, and that the new government comes up with a solution to make our highways safer for travel, particularly during the monsoon season.      

That’s all for this week. 

On March 4, Pushpa Kamal Dahal of CPN (Maoist Center) broke alliance with the Nepali Congress (NC) to form a new governing coalition with the CPN-UML. At the time, many political analysts saw this as a significant step towards left unity and eventual unification of communist parties. While UML Chairperson KP Sharma Oli was not particularly enthusiastic, senior leaders from his party the Maoist Center were optimistic about the unification.

It was assumed that both Oli and Dahal had recognized that the split of the erstwhile Nepal Communist Party (NCP) was a mistake, and that the two parties—UML and Maoist Center—should unite again. However, a lack of trust between Oli and Dahal led to the breakup in their alliance this week. The partnership between the two communist parties lasted just four months. This distrust between Oli and Dahal dates back to 2021 when the then NCP dissolved, resulting in the revival of the Maoist party and a split in the UML, with Madhav Kumar Nepal forming a separate party, CPN (Unified Socialist), which continues to collaborate with Dahal. 

On Sunday, with support from the NC, UML leader Oli became the prime minister. This development has significantly reduced, if not entirely closed, the prospects of left unity in the near future. The NC and UML justify their alliance by citing the need to ensure political stability and address the country’s economic issues. This rationale mirrors the left unity in 2018, which had promised political stability and economic development, resonating well with the people and securing nearly two-thirds of the votes for the left parties. The new coalition faces numerous challenges. Firstly, it must maintain internal cohesion to effectively address the country's current problems. Secondly, it needs to revitalize the economy. Additionally, it must tackle issues of good governance and corruption. The coalition has also pledged to amend the constitution but has not provided details on how this complex task will be achieved.

A major challenge for the coalition will come from within their respective parties. Historically, a lack of communication and coordination between the government and the parties has led to government collapses. Therefore, the leadership of both NC and UML must not overlook party dynamics if they wish to maintain the coalition. Oli and Deuba must be particularly careful in managing internal government differences. There have been many past instances of disagreements between the prime minister and ministers from the coalition parties in the past. Policy and appointment disagreements have also strained relations between coalition partners. The new coalition will face similar challenges, and the key question is how Oli and Deuba will manage these differences.

Another challenge arises from internal party dissatisfaction. Leaders like Shekhar Koirala and Gagan Kumar Thapa within the NC are unhappy with the selection of ministers, a common issue since the 1950s. Oli and Deuba must address these internal concerns seriously, as suppressing dissatisfaction will hinder government effectiveness.  The coalition must also address the country’s economic issues. Immediate measures are needed to coordinate efforts between the Ministry of Finance and Nepal Rastra Bank. International financial institutions like the IMF and World Bank are willing to assist, and the government should seize this opportunity.

To prevent the youth exodus abroad, the government must create job opportunities. On the international front, there are challenges in creating a favorable environment for Nepal’s economic development. The recent Investment Summit showed international interest in investing in Nepal, and the new government should build on this momentum. This involves winning the trust of key development partners, including India, China, and the US. However, even before Oli's oath ceremony, some Indian media portrayed him as a 'pro-Chinese' leader, highlighting the complexities in foreign policy among coalition partners.

While there are no fundamental differences between the NC and UML in dealing with major powers, there are visible differences in their priorities and approaches. For example, the NC is hesitant about moving forward with China’s BRI, while UML leaders advocate progress. Although Dahal, Oli, and Deuba all oppose high-interest loans from China, UML leaders have criticized the lack of progress. Similar differences exist in dealing with other countries like the US, the UK, and development partners such as Korea and Australia. Effective foreign policy will require coalition partners to consult with each other.

Frequent changes in the coalition have led to public skepticism about the government’s stability. The coalition must convey a message of stability; otherwise, it will be ineffective. Investors are wary due to frequent coalition changes over the past year and a half. If the UML-NC coalition fails to deliver, there will be no remaining alternatives, as all government formation options have already been tried.

Oli: A sharp-witted and shrewd politician 

KP Sharma Oli, elected as Nepal’s prime minister for the third time, was born on 23 Feb 1952, in Terhathum district of eastern Nepal, as the eldest son of Mohan Prasad and Madhumaya Oli. In 1963, his family moved to Jhapa district, where Oli began his political career. He became a full-time political activist and joined the Communist Party of Nepal (CPN) in 1970. That same year, he was arrested under the Public Offense Act for his involvement in the cause of democracy and the establishment of a republican state.

On 22 May 1970, Oli went into hiding to lead the movement as a full-time leader. In 1972, he was nominated as the chief of the Jhapa Movement Organizing Committee. In 1973, he was arrested on various false charges, including subversive acts, and was imprisoned for 14 years, including four years of solitary confinement. During his imprisonment, the Communist Party of Nepal (Marxist-Leninist) or CPN (ML) was formed on 26 Dec 1976, and Oli was regarded as a founding leader.

Released from jail in 1987, Oli was assigned responsibilities as a Central Committee member of the CPN (ML) and served as the in-charge of the Lumbini Zone until 1990. In 1990, he became the founding chair of the Democratic National Youth Federation, Nepal (DNYF), a youth wing of the party. The Communist Party of Nepal (Unified Marxist-Leninist) or CPN (UML) was founded on 6 Jan 1991, by merging two large communist groups, with Oli as a founding central leader.

In 1991, Oli was elected as a member of the House of Representatives from Jhapa-6 and was re-elected from Jhapa-2 in 1994. He served as the Minister for Home Affairs from 1994 to 1995 in the first popularly elected communist government under Prime Minister Man Mohan Adhikari. He held various party positions, including chief of the Central Department of International Affairs and chief of the Central Department of Publicity. From 1999 to 2002, he was the deputy leader of the main opposition party in Parliament.

Oli was appointed Deputy Prime Minister and Minister for Foreign Affairs in the interim government led by Nepali Congress’s Prime Minister Girija Prasad Koirala from April 2006 to March 2007. Although he lost the election for the Constituent Assembly in 2008, he continued to hold key party positions, including chief of the Central Department of Party School and chief of the Central Department of International Affairs.

In Nov 2013, Oli was elected as a member of the Constituent Assembly from Jhapa-7 and was elected leader of the parliamentary party in 2014. He became the chairman of the UML in July 2014. Oli first served as prime minister from 11 Oct 2015, to 24 July 2016, and again from 15 Feb 2018 to 13 July  2021.

Oli is known for his sharp wits and being a shrewd politician who is never the one to shy away from controversy. He is fond of reading the works of philosophy, political economy, literature, arts and culture. He has also been active in social works and loves to play various sports including table-tennis. 

Dear readers,

Nepal’s coalition politics continued to dominate the headlines this week. With the secret agreement between KP Sharma Oli of CPN-UML and Sher Bahadur Deuba of Nepali Congress pushing the Pushpa Kamal Dahal-led government into minority, Dahal is set to face a trust vote in Parliament today. Despite being likely to lose his seat, Dahal has been working hard to put up a fight, engaging fringe parties to secure their votes.

The Rastriya Swatantra Party (RSP) has pledged its support to Dahal, keeping its ministers in place to bolster his plan to face Parliament. The CPN (Unified Socialist) has also decided to support Dahal, who is working to revive the ‘socialist forum’, a network of communist parties opposing big parties like NC and UML. But, the Rastriya Prajatantra Party has decided not to vote for PM Dahal. 

Despite Dahal’s efforts, he is expected to lose the vote of confidence, bringing the focus to the new government formation process. The NC and UML have decided that the President should initiate this process according to Article 76(2) of the Constitution, which involves forming a coalition government of two or more political parties.

If President Ram Chandra Paudel calls for this, Oli could become prime minister by Monday. However, the Maoists and fringe parties argue that if the current government fails to secure a vote of confidence, Article 76 (3) should apply. This article states that the President shall appoint the parliamentary leader of the party with the highest number of lawmakers, meaning Deuba could be appointed prime minister instead of Oli. How Oli and Deuba navigate this issue remains to be seen. If the President adopts 76(3) to form a new government, he is likely to be dragged into the controversy so he is likely to take a few days to consult with legal experts. 

Political parties and legal experts are divided on the government formation process. The President may consult legal experts and is likely to call on parties to form a government based on Article 76 (2), as there are precedents. However, any decision by the President is likely to be challenged in the Supreme Court, making the coming week crucial.

As the NC and UML prepare to form a new government, there is speculation about potential ministerial appointments. Within the NC, rumors suggest that Deuba’s wife, Arzu Rana Deuba, might become the foreign minister, and Ramesh Lekhak might become the home minister. Formal discussions to select ministers are likely to be limited, with Deuba making final decisions in consultation with senior leaders Shekhar Koirala, Gagan Thapa and Krishna Prasad Sitaula.

On the UML front, although there are standards for selecting ministers, past records show these are rarely implemented. Ultimately, Oli, who maintains strong control over the party, will finalize the list of ministers. The number of fringe parties joining the NC-UML government remains uncertain, but their support might be crucial for constitutional amendments.

The issue of constitutional amendments has stirred political circles. Oli has clarified that while there is a tentative agreement on amendments, no specifics or agreements on forming a commission for this purpose have been reached. NC General Secretary has stated that amending the Constitution requires a broad consensus from all political parties.

Next week will be hectic for politicians as they work to form the government and select ministers. NC and UML leaders have already started informal preparations for the new government’s policies and priorities. Both parties face the challenge of quickly forming the cabinet to avoid public pessimism. Deuba and Oli need to work diligently to maintain party unity, as dissatisfaction with ministerial appointments could lead to government collapse. A democratic and consultative approach is essential for managing internal party differences and ensuring the government’s longevity. Coordination between the government and party is key, and Oli and Dahal must make their collaborative efforts more effective. Although the agreement between NC and UML is promising, the lack of internal consultations and discussions may hinder its success.

Another notable story this week was the expulsion of Mukul Dhakal as the RSP general secretary for alleged disciplinary violations, though he remains an ordinary member. Dhakal responded to the party’s decision by holding a press conference where he accused party chair, Rabi Lamichhane, of passport fraud and misappropriation of cooperative funds. Opinions on Dhakal’s expulsion are divided, with some viewing it as growing  political intolerance within the RSP and others seeing Dhakal’s behavior as anarchic. Dhakal’s expulsion and his allegations come as a huge blow to the emerging party that enjoys considerable public support.

In provincial politics, all provincial governments except Koshi and Madhes are set to undergo another shakeup following the NC-UML alliance. The UML has already withdrawn its support for the provincial governments in Lumbini and Bagmati provinces. Forming new provincial governments may take time as the NC and UML focus on the federal government.

Meanwhile, the monsoon season has brought heavy rains, causing floods and landslides that have blocked highways and disrupted transportation, leading to a spike in vegetable prices in Kathmandu. Kanchanpur experienced severe flooding on July 8, recording the heaviest rainfall in 78 years. A government representative has been sent to investigate the situation, highlighting the impact of climate change on rainfall patterns.

Also this week, a parliamentary committee traveled to Pokhara to investigate alleged corruption in the construction of Pokhara International Airport. The Commission for the Investigation of Abuse of Authority is already conducting its own investigation. It’s crucial that this issue is handled impartially to avoid politicization. The newly constructed airport in Bhaktapur’s Nalinchowk also drew attention this week, as pilots refused to fly there due to security concerns, indicating haphazard infrastructure development without proper study.

That’s all for this week. I’ll be back with more updates next week. 

Have a great weekend!

Embattled Prime Minister Pushpa Kamal Dahal is more than certain to lose the confidence vote on July 12. However, as he is determined not to step down easily, one thing is clear: There won’t be a smooth, amicable transition of power.

From the parliament’s lectern, Dahal is expected to criticize CPN-UML Chairperson KP Sharma Oli and Nepali Congress President Sher Bahadur Deuba for their surprise alliance, which reduced his government to a minority. The Maoist prime minister may accuse them of political backstabbing, question their political morality, and warn against their plan to amend the constitution. Yet, does Dahal have the moral high ground to criticize NC and UML?

Indeed, it would have been better if NC and UML had made the secret agreement's text public, but they did not. But a careful review of Dahal’s 10-year journey since the 2015 constitution shows he has no grounds to complain about betrayal by NC and UML.

Let’s revisit some instances where Dahal used NC and UML after one another to his advantage. After the promulgation of the constitution in 2015, Oli became the new prime minister with support from Dahal, whose party was in third place. But by July 2016, Dahal withdrew support from Oli and aligned with the NC to form a new government and become prime minister for the second time. Despite being in coalition with NC, Dahal later secretly signed a deal with UML for an electoral alliance, betraying NC.

In 2018, Dahal merged his party with CPN-UML to form the Nepal Communist Party, aiming to lead the powerful communist party. When Oli denied him the full-fledged party presidency, Dahal campaigned to remove Oli from power. This intra-party feud led to the dissolution of Parliament, for which all senior NCP leaders share responsibility. An agreement between Deuba and Dahal to lead the government in rotation resulted in more power struggles. 

After the 2022 national elections, where the Maoists secured only 32 of 275 seats, it was natural for NC to claim government leadership as the largest party. But Dahal, after tough bargaining, aligned with UML to become prime minister, only to betray UML in the presidential elections by supporting NC candidate Ram Chandra Paudel.

There may have been hidden factors forcing Dahal to support Paudel, but it was still a betrayal to UML. In March of this year, Dahal again ditched NC without warning and allied with UML. Just a few weeks ago, Dahal publicly suggested the government could last the full five-year tenure if they navigated between the first and second largest parties. His penchant for switching sides to suit his convenience is not hidden, as he has often demonstrated over the years. Several of Dahal’s former Maoist comrades, including former prime minister Baburam Bhattarai, have accused him of being a power-hungry individual with little to no regard for party ideology.      

Certainly there is no shortage of moral decay and corruption within NC and UML, but should anyone point the finger at or cry foul over their alliance, Dahal should be the last person. 

Dahal simply lacks the moral ground to accuse NC and UML of political immorality. Instead, he should be grateful for their support, which allowed him to lead the government despite waning support for the Maoists. In a coalition, even a small party can lead, but based on the people's mandate, the Maoists should have been in opposition, rebuilding their position. Doors may not be completely closed for him; he could become prime minister again if a rift emerges between NC and UML.

The best option for Dahal would have been to resign once UML withdrew its support. It is perceived that he is trying to influence President Paudel to initiate the government formation process through Article 76(3) of the constitution, making Deuba the prime minister. However, it is unlikely as the process should start from the initial articles of the constitution. Dahal has not publicly stated this, but his close associates suggest the President should appoint a new prime minister per Article 76(3). President Paudel has indicated to Oli and Deuba that he would begin the process from Article 76(2).

While an NC-UML government may not ensure stability, Dahal should wait. After a long gap, the first and second largest parties have pledged to provide political stability and address economic woes. The Maoists now have the chance to play the opposition role, and Dahal should seize this opportunity to rebuild his party. There is no reason for Dahal to be shocked by the NC-UML agreement.

Two-thirds of the House of Representatives members now support the agreement between the Nepali Congress (NC) and the CPN-UML to form a national unity government, though the specifics of the agreement remain undisclosed. Prime Minister Pushpa Kamal Dahal’s major coalition partners, the CPN-UML and other smaller parties, have withdrawn their support, leaving his government in the minority.

This situation puts pressure on Dahal to resign, which is being pushed by his own party and other political factions. However, Dahal has decided to seek a vote of confidence on July 12. According to cross-party leaders, Dahal is offering the premiership to NC President Sher Bahadur Deuba to disrupt the NC-UML agreement. He has indicated that the Maoists are willing to support Deuba for a full term until the next elections in 2027. This offer was made the day after Deuba and UML leader Oli signed their agreement, but Deuba dismissed it.

Despite Deuba’s rejection, Dahal continues to reach out to NC leaders. Two days ago, he invited senior NC leader Shekhar Koirala to his residence for discussions. Koirala attended the meeting with the consent of Deuba. Sources say Koirala told Dahal that reversing the current situation is almost impossible. Even senior leaders within Dahal’s own CPN (Maoist Center) are advising him to resign, but Dahal insists there is still room for political maneuvering. After the NC-UML agreement, the Rastriya Swatantra Party decided to leave the government, but Dahal asked them to stay until the confidence vote.

There is some dissatisfaction within NC and UML ranks regarding the opaque agreement between Oli and Deuba, but no leader has openly criticized it. Both parties have unanimously endorsed the agreement. NC leaders believe Dahal’s efforts to form an alliance with UML are unlikely to succeed, despite his attempts. Some ambiguous provisions in the agreement might be exploited to prevent Oli from becoming prime minister, but it is almost certain that Oli will ascend to the position under Article 76(2) of the Constitution, which mandates a coalition government since no single party has a majority under Article 76(1).

Dahal and his allied constitutional experts argue that if Dahal’s government, formed under Article 76(2), fails to secure a vote of confidence, the President should initiate government formation under Article 76(3). This would mean appointing the parliamentary party leader of the largest party, likely Deuba. Neutral constitutional experts, however, assert that the government formation process should start under Article 76(2) again after July 12. If the government is formed under either Article 76(2) or 76(3), it is likely to face legal challenges, much like the 2021 Supreme Court verdict on Oli's dissolution of the House before its term ended. The verdict emphasized that all provisions of Article 76 should be tested to form a government.

The unexpected agreement between NC and UML has left Dahal, who had maintained power by striking a balance between NC and UML, in shock. He was confident that the rival NC and UML would not join forces. Additionally, Maoist leaders believed external forces would prevent Oli from coming to power. Dahal had been frequently changing coalition partners and was recently preparing to align with NC leaders again in the guise of forming a national unity government.

NC and UML were growing weary of Dahal's tactics, and there had been long-standing support within both parties for a coalition. The deteriorating economic conditions, frequent government changes, growing communal tensions and problematic constitutional provisions compelled the first and second largest parties to unite to address the country's challenges. The rise of new political parties also gave impetus to this unconventional alliance.

In this context, Dahal’s attempts to reverse the situation are unlikely to succeed. NC leaders state that Deuba is not willing to accept Dahal’s offer of the premiership. After nearly a decade, NC and UML are joining forces again, reminiscent of their successful collaboration in 2014 to deliver the Constitution in 2015. Now, they aim to form a strong government to resolve the current problems facing the country.

Dear readers,

This week, the political landscape was dominated by a crucial agreement between the Nepali Congress (NC) and CPN-UML. These two parties have pledged to ensure much-needed political stability and to amend the 2015 Constitution to address certain “flawed provisions.” We covered this agreement from multiple angles, including a long-form article titled “The Story Behind the Formation of a New Coalition,” which explains how and why the two parties came together. We appreciate our readers’ enthusiastic response to this story. Additionally, we published a commentary titled “Can the NC-UML Alliance Bring Stability?” which questions the longevity of the to be formed government, given the parties’ past difficulties in working together.

The full text of the agreement signed by NC leader Sher Bahadur Deuba and CPN-UML leader KP Sharma Oli has not yet been made public. With the UML pulling out its support, the Pushpa Kamal Dahal government has been relegated to the minority, but he is refusing to step down. Dahal may use constitutional provisions that allow him to face parliament within 30 days. 

Meanwhile, there are widespread concerns about the contents of the proposed constitutional amendments by NC and UML, particularly among Madhes-based parties and other groups advocating for identity politics. There are also questions about which external forces may be influencing these political developments. Speculations abound, but no definitive answers are available. Rumors suggest that Dahal’s refusal to resign might be influenced by external advice, allowing time for preparations to continue the current coalition with Deuba as prime minister. Attempts to find clues in Indian and Chinese media were inconclusive.

The agreement between Deuba and Oli has been endorsed by both parties, but it has caused some dissatisfaction as well. NC General Secretary Gagan Kumar Thapa was initially opposed but has since accepted the agreement. Similarly, there are reservations within UML, but both Deuba and Oli have a strong grip on their parties, making significant disruptions unlikely.

In another development, the Rastriya Swatantra Party (RSP), which emerged from the 2022 national election, is facing an internal crisis. Party Chairman Rabi Lamichhane and General Secretary Mukul Dhakal are at odds, with Lamichhane expelling Dhakal for allegedly violating party discipline. Dhakal’s symbolic protest at a party meeting, where he taped his mouth to give a message that there is no freedom of expression in the party, highlights the issue of intra-party democracy, a common issue in all political parties of Nepal.

Now onto some positives. Despite these political challenges, there has been progress in concluding the transitional justice process. The NC, UML, and the Maoist Center have formed a cross-party mechanism to address remaining contentious issues of the constitution. This team consisting of Ramedh Lekhak from NC, Mahesh Bartaula from UML, and Janardhan Sharma from the Maoist party has already started its work. The transitional justice process, initiated on the basis of the Comprehensive Peace Agreement, 2006, remains incomplete, but there are plans to endorse an amendment bill in the ongoing Parliament. However, new political developments could delay this process further.

China’s Belt and Road Initiative (BRI) continued to draw attention this week. Congress leaders reiterated their position against taking loans under the BRI, which does not offer grant provisions. Additionally, Parliament has formed panels to investigate alleged corruption in the construction of Pokhara and Bhairahawa International Airports. Meanwhile, the Nepal government has published a concept note on the use of Artificial Intelligence (AI) and needs to accelerate efforts to regulate AI, a topic that still lacks widespread understanding in Nepal.

This week, the infamous fake Bhutanese refugee scandal once again made national headlines with the arrest of Bechain Jha and Pratik Thapa, the son of former home minister Ram Bahadur Thapa. This marks a significant step in the investigation involving former ministers, their relatives and senior government officials. Cooperative scandals also made headlines this week, with police arresting many cooperative owners based on public complaints. A probe panel has been set up to investigate these cases. Home Minister Lamichhane has assured to investigate all past high-profile corruption cases. But the latest political alliance between NC and UML means Lamichhane’s days as home minister are numbered.

This week, CPN (Unified Socialist) led by former prime minister Madhav Kumar Nepal held its generation convention. The convention unanimously elected Nepal as party chairman and Ghana Shyam Bhushal as general secretary. The same set of leaders have returned as party office-bearers. Bhushal’s attempt to displace Nepal has turned futile. The NC-UML agreement at the center has started to impact the provincial government. For instance, UML has withdrawn the support to the Sudurpaschim government. 

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

The Nepali Congress (NC) and CPN-UML have signed an agreement to amend the constitution adopted in 2015, aiming to address the nation's current crises. Achieving these ambitious goals requires substantial unity, maturity, and understanding between the parties. Leaders from both NC and UML assert that the parties have committed to cooperation at least until the next elections in 2027.

However, the critical question remains: Can these two parties maintain harmony in government? This concern arises from their historical track record. For example, in 2018, the UML and Maoist Center merged to form a new party and government, promising political stability and development. Yet, internal conflicts among top leaders—KP Sharma Oli and Pushpa Kamal Dahal—led to the collapse of both the government and the party, plunging the country into renewed instability.  Similarly, NC and UML failed to collaborate effectively after the 2015 constitution amendment.

The current agreement is the result of at least three months of back-channel negotiations between UML Chairperson Oli and NC President Sher Bahadur Deuba, along with key facilitators. The agreement was kept secret until Monday. Oli and Deuba initially favored an additional month for thorough preparations, but a leak of the agreement necessitated prompt decisions, hence their cautious approach to forming the government.

The primary task of the new coalition government will be the critical and complex constitution amendment. This requires consensus among the major parties that supported the 2015 constitution drafting process. Consequently, NC and UML are focusing on forming a national unity government. A leader involved in the negotiations stated: “The two parties plan to amend several provisions in phases, starting with changes to the electoral system, followed by other issues.”

The NC-UML alliance also aims to counter challenges from emerging parties like the Rastriya Swatantra Party and independent candidates such as Kathmandu's Mayor Balendra Shah. Although NC and UML are principal competitors, they view these new parties as a common threat to their voter bases. 

To address these challenges, the new NC-UML coalition must tackle corruption, ensure good governance, create jobs, and initiate plans for economic recovery. Failure to address these issues will likely provoke a backlash against the coalition government. Following the agreement, both parties have expedited the process of forming a new government, with formal endorsements from their respective parties, and are now waiting for Prime Minister Dahal’s resignation. 

In the absence of a single-party majority, the government formation process will proceed under Article 76(2) of the constitution, which allows for a coalition government. NC and UML have urged Dahal to resign to facilitate the formation of a national unity government. Although they have signed a document focusing on government formation and constitutional amendments, it has not yet been made public. On Wednesday, NC endorsed the agreements, although party leaders have not yet reviewed the document.

NC has also urged Prime Minister Dahal to resign promptly. The party argues that since more than two-thirds of Parliament members oppose him, Dahal should step down on moral and political grounds. However, Dahal cites the constitutional provision granting him 30 days to seek a vote of confidence after a coalition member withdraws support. According to the agreement between NC and UML, Oli will be appointed as prime minister under Article 76(2) of the constitution. Given the agreement to form a national unity government, NC insists it is imperative for Dahal to step aside.

To achieve their objectives, NC and UML must garner broader support from other parties. By Wednesday, the Rastriya Prajatantra Party and the Mahantha Thakur-led Loktantrik Samajbadi Party had pledged their support for the NC-UML coalition. The coalition's base is expected to expand with additional parties joining the alliance.

Key contents of the agreement between NC and UML

• Promoting national interest
• Taming corruption to maintain good governance
• Maintaining political stability
• Amendment the constitution after a thorough review
• Strengthening economy
• Rotational leadership between Oli and Deuba 

UML withdraws support to government

CPN-UML has officially withdrawn its support to the government, effectively rendering the Dahal-led government into a minority. UML leader Mahesh Bartaula said: “We gave Prime Minister Dahal the opportunity to pave the way for the formation of a national government, but he didn’t do so. Hence we have decided to withdraw the support.” With the UML, the major coalition partner in the Dahal government, pulling out its support, Prime Minister Dahal now has two options: Resign on moral grounds or to take a vote of confidence. Dahal has maintained that he will go for a floor test in Parliament.