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Nepal-US relations have hit a bumpy patch of late. First, the parliamentary ratification of a $500m US grant under Millennium Challenge Corporation (MCC) compact ran into a nasty controversy after it was linked to ‘anti-China’ Indo-Pacific Strategy (IPS). The parliament endorsed the compact with an interpretative declaration, which clearly stated that Nepal can never be a part of any military strategy. But within a few months of MCC’s passage, there is now debate over the US State Partnership Program (SPP). Nepal has refused to join the program saying the SPP was mentioned in the 2019 IPS report. ApEx this week organized a roundtable with former ambassadors and security and foreign policy experts to solicit their views on the recent evolution of the US-Nepal ties—with a focus on the IPS and Nepal’s place in it. Excerpts. 

Strategic blunder on army chief’s part to write to the US

Binoj Basnyat, Strategic affairs analyst 

Our government is weak in international relations. The contents of the much-talked Indo-Pacific Strategy (IPS) are country-specific, so Nepal should be clear that it is not an American ‘ally’ but just a ‘partner’ under it. There is a fundamental difference between the two. In our context, there is also a very narrow understanding of the word ‘strategy’ in the Indo-Pacific Strategy. It is an American way of dealing with the countries in the entire Indo-Pacific region, and they usually conduct cooperation and collaboration through such bilateral mechanisms. So the IPS should not be seen as a threat. It does not undercut our long-standing policy of non-alignment. 

As for the State Partnership Program (SPP), it is a way for the Americans to deal and cooperate with the Nepal Army. But it was indeed a strategic blunder on the part of the Army chief to write a letter to the Americans in 2015 requesting to be a part of the SPP. The government of the day should have done this. Also, the Parliamentary Committee on International Relations should have summoned the army chief of the time for inquiry, not the current chief. 

The Americans have many things to offer through various strategies and policies. The question is how we can best use them. To deal with these complex issues, there should be cooperation and coordination among major political parties and key state bodies. 

We must prepare a broad framework of our national interests. On issues of international relations, there is a deep gap among political leaders, government officials and experts. We also lack strategic vision and planning.  

It is vital that Nepal clearly defines its non-alignment policy. It is also important to keep party politics out of sensitive foreign policy issues, and to strengthen our security agencies. 

Relations with big powers should not be project-driven

Geja Sharma Wagle, Foreign policy expert  

Any foreign policy issue is increasingly seen through the narrow prism of nationalism in Nepal. To avoid the recurring confusions and controversies, we must develop separate national security and foreign policy documents based on broad consensus. Those documents of consensus should dictate our security and foreign policies, irrespective of which political party is in power. 

Currently, our dealings with big powers are driven by some specific projects, be it America’s Millennium Challenge Corporation (MCC) or China’s Belt and Road Initiative (BRI). But Nepal’s relations with the US, China or India should not be confined to such specific projects. But this project-driven approach still prevails, overshadowing our long-standing and multi-dimensional ties with these countries. 

We talk of balanced foreign relations, but the time has come to define what kind of balance we seek: a static or a dynamic balance? We must also define our non-alignment and neutrality policy in the changing context. We should maintain dynamic and strategic balance while dealing with big powers, as king Mahendra first proposed in 1960.

Look at Bangladesh and Mongolia, which have successfully maintained a dynamic balance in relations with all major powers for their development. Nepal is focusing more on developing cooperation, but what the big powers want is defense collaboration.  

When Chinese President Xi Jinping visited Nepal in 2019, there was an agreement to elevate ties to ‘strategic partnership’. But there has been no discussion in Nepal whatsoever of what such a partnership entails. We are hastily signing documents as and when they come along, without going into the details, without understanding their nuances.  

Nepal’s US policy influenced by outside actors

Vijay Kant Karna, Professor emeritus of political science 

The government is taking decisions on issues related to the US without much thought or preparation. There has been no focused discussions in Nepal on the Indo-Pacific Strategy, either among political parties or in the parliament. There should have been a broad public discourse. It is not just about America, global powers often come up with new policies and without any deliberation, we in Nepal either accept or reject it. The Ministry of Foreign Affairs is responsible for deeply studying such policies. 

The reality is that we do not have any institutional capacity to handle such issues. Not just with the US, Nepal also has defense cooperation with other countries, including with India and China. Defense collaboration is vital to enhancing our own capacity. 

I doubt if we are making independent decisions on such matters. Perhaps our conduct of foreign policy, including with the US, is being influenced by external actors. 

I do not think our politicians have thoroughly studied the SPP or IPS documents. It is important that they look at these strategies and policies with national interest at the center. But political parties are using foreign and security policies as a tool to fulfill their own interests.  

Foreign powers are guiding our internal political order. For instance, a senior leader of the Chinese Communist Party was in town to facilitate unity among our communist parties. Where else in the world does this kind of open meddling happen?

US-Nepal ties always underpinned by military cooperation 

Suresh Chalise, former ambassador to the US 

To understand the current trajectory of Nepal-US relations, we have to understand their 75-year-long bilateral history. America recognized Nepal much before the British left India. There had been some vital developments between 1945 and 1950, which must be closely studied. Our relationship with America was underpinned by military cooperation from the very beginning. The core of the current problem is that a large section of Nepali population leans towards communist parties. 

They see India as an expansionist and America as an imperialist power. This thinking naturally invites problems. Nepali and the American armies have for long been conducting military exercises. America has also been providing military support to Nepal. There is a strong social and economic bond between the two countries. Whether it is the SPP or any other American project, some people will always see them with a biased eye. 

The cooperation under the SPP is mainly in the areas of disaster management and environmental protection, which are in our national interest. Our security apparatus alone cannot handle those issues. The SPP could have been an opportunity for us had we negotiated with the Americans better. 

Obviously, there is growing competition among the major powers, but we should see this as an opportunity. Until and unless the state mechanisms are strong, there will always be policy inconsistencies. In the conduct of our foreign policy, we should practice strategic autonomy by taking our closest neighbors India and China into confidence. 

It is also important that our politicians mend their ways. For instance, a few months back, when Chinese Foreign Minister Wang Yi was in Nepal, Prime Minister Sher Bahadur Deuba categorically told him that Nepal would not take loans for BRI projects. The prime minister should have avoided such polarizing statements. The same message could have been conveyed at the bureaucratic level. 

Non-state actors setting the terms of debate 

Apekshya Shah, Assistant professor, Department of International Relations and Diplomacy, Tribhuvan University

The Indo-Pacific Strategy has come under fire due to the negative narratives around it and its military component. Controversies surrounding the MCC and the SPP also demonstrate how non-state actors such as media and social media are complicating the space of foreign policy and diplomacy, traditionally dominated by state actors. Misinformation and disinformation have become a cause for concern, which the government must address. 

Lack of a national consensus on foreign policy is the second point to consider. This is critical for any country, we have witnessed the consequences of lack of consensus and politicization of foreign policy. While a policy document is vital, diplomacy is even more important for its implementation. 

In order to balance the interests of all parties involved, we will need even more diplomatic agility. Even in the recent SPP debacle, there was a clear diplomatic mismanagement. 

It is important for Nepal to distinguish between military diplomacy and defense diplomacy. Military diplomacy is peace-time use of armed forces to achieve national and international goals. A country’s defense policy includes more than just the military, from the defense ministry, National Security Council, to Parliament. Military diplomacy has thus become a component of larger defense diplomacy initiatives. Previously, the military was under the supervision of the king who solely handled military diplomacy, but the context has changed since 2007. In these circumstances, it is vital for all parties involved to clarify how military-related diplomatic activities should be carried out and what role the Nepal Army plays. 

The SPP was a diplomatic opportunity for Nepal to negotiate and achieve its defense interests, but neither the government nor the people were able to discuss and understand it.

Nepal Teen Leaders has organized a panel discussion on career counseling for the +2 passed students. It was held on June 20 at Presidential College. Panelists Dr Estroy Pokhrel, head of business of Gyapu Market Place Abhimanyu Sharma, Chemical Engineer Nischal Baniya, Chairman of Presidential College Kshitiz Puri, and CA Nischal Maharjan shared their professional journey to the participated students and held a Q&A session.

This program was supported by the Vibrant Institute of Medical Education and AOC, Academy of Commerce.

The Public Service Commission has defeated Tharu Commission in a tie-breaker of the inter-constitutional body quiz contest organized by the Public Service Commission on the occasion of its 72nd anniversary. It held a two-day quiz contest on June 13 and 14. A total of eight constitutional bodies had contested the competition.

Officers Tilak Sapkota, Madan Kumar Bajgain, and Ishwari Adhikari were on the winning side while Nanda Paudel, Phanindra Shanker Ghimire, and Shiva Sharma represented the Tharu Commission.

The eight teams were divided into two groups for the qualifier round held on June 13 where the Public Service Commission, Tharu Commission, Commission for Investigation of Abuse of Authority, and Human Rights Commission made it to the finale.

In the final held on June 14, Public Service Commission and Tharu Commission got equal (80 points) pushing the competition to a tie-breaker where the home team grabbed 10 additional points.

The CIAA came third with 55 points, and the Human Rights Commission satisfied themselves with a consolation prize.

Chairman of the Public Service Commission Madhav Regmi distributed shields, medals, and certificates to the winners.

ApEx is beginning a 10-part InDepth series titled ‘Nepal’s Energy Myopia’ starting with a roundtable on the issue this week. The larger goal of the series is to take a deep dive into Nepal’s energy sector and unearth the opportunities and challenges and to question assumptions. For the roundtable, we welcomed five guests with expertise in different aspects of energy production and consumption to share their views on the series title.

Deepak Gyawali, Ex-Minister of Water Resources 

During the Panchayat regime, there used to be proper planning and sound vision for the energy sector. There was a sound projection of how our demand increases with time. Such planning and projection works are rather haphazard these days. There is no study involved. 

The role of the private firms and foreign investors in Nepal’s energy sector increased significantly after the 1990s. Energy development licenses were issued to them willy-nilly, without carefully studying their projects and conditions. 

Our per capita energy-consumption of around 300 units is the lowest in South Asia. This means we will need a lot of energy in the coming days. We have to switch to clean energy sources for cooking and transport, which means more hydropower. This cannot be achieved without the right vision. The fact is that the vision we had during the Panchayat period was scrapped after the restoration of democracy. 

When it comes to investing in hydropower, we should concentrate on Nepali investors. Foreign investors seek more guarantees, want to put more risks on the government, and take home more profit. We must ask ourselves whether Nepal is really benefiting from their investment in hydropower. Existing policies make electricity more expensive, not cheaper.  

The private sector should also introspect: does it seek to make profit by selling electricity after project completion or during the construction phase itself? 

We have some targets in the energy sector but they are fundamentally wrong, with the focus on the sale of electric vehicles and other things. We are not focusing on what amount of fossil fuel we want to displace through such measures. In the past 14 years, we have failed to introduce the amended Electricity Act or to create a basic framework on how federal, provincial, and local governments should work in the energy sector. The entire sector is a mess. There are many areas where we can use clean energy including the ropeway, which consumes less energy than other means of transport. But we have not taken any initiative towards this end.  

Bhushan Tuladhar, Clean energy campaigner

Certain clean energy targets have been fixed in Nepal, which is a positive thing. For example, Bagmati province has vowed to completely switch to electric vehicles by 2028 in its five-year plan.  Likewise, the Ministry of Energy has set some targets in its white paper on the much-needed transition from traditional to clean energy.  The Nationally Determined Contribution prepared by the government has pledged a net-zero energy system by 2045. There have been some serious studies while fixing these targets. But to achieve these goals, Nepal needs a clear path, which is missing. 

For example, we have pledged that 25 percent of the vehicle sales in 2025 will be electric. But we lack a blueprint for this. In the absence of a clear roadmap, inconsistent policies and provisions appear in the annual budget, creating confusion. 

Vague policies also discourage the private sector from investing. There is no clarity in our long-term plan on hitting targets in transport, cooking, and other sectors. What we need is a continuous campaign on the switch to clean energy. All state mechanisms, particularly local governments, must be mobilized in this, backed by a national commitment and of course a clear roadmap. 

Our constitution mentions a clean environment as a fundamental right of citizens. But international studies show that every year approximately 42,000 Nepalis die from air pollution. There is a need for a revolution in our cooking system.  Instead of exporting electricity to India, we must utilize it in cooking. About 67 percent of Nepalis still use the smoky biomass to cook. We need to launch a special campaign to switch to clean energy in our kitchens. 

Madhusudhan Adhikari, Executive Director, Alternative Energy Promotion Center  

There is a misconception in Nepal that energy means electricity. The contribution of electricity in our energy mix is less than 10 percent. In other words, when we discuss energy in Nepal, we are debating on that 10 percent. We are not sufficiently utilizing modern and clean energy. We have the Energy Ministry, which functions more like a hydroelectricity ministry.  This means there is no clarity of vision.  We are investing our time, energy, and mind only in hydropower. We have to look at other sources of energy as well. Recent technologies are focused on other energy sources besides hydropower. So, in the future, hydropower could become the most expensive kind of energy. 

There are also questions over whether our rivers are fit for hydroelectricity, given our problems with floods, landslides and other natural disasters. Even in hydropower, we are focusing on the run-of-the-river projects, with no attention being paid in building storage projects. Similarly, Nepal Electricity Authority is just focusing on power import and export. There are also many flawed provisions in our energy policy and our understanding of energy consumption is all wrong. 

Our main target at this point is to lower fossil fuel imports. But we lack dedicated institutions and targeted effort to switch from conventional to clean energy.  To check chronic pollution, electric cars should be made mandatory in Kathmandu after certain years. 

High cost of production is a big barrier to the growth of Nepal’s energy sector. We should have a policy to decrease the cost of energy production.   

Prakash Chandra Dulal, Executive Committee Member, Independent Power Producers’ Association, Nepal 

The new laws formulated after the restoration of democracy in 1990 guaranteed the private sector’s role in the energy sector. Nepal has some plans to develop the sector. For instance, the hydropower strategy promulgated in 2002 talks about the production of cheap electricity and encourages exports. Similarly, the document talks about the private sector’s role in hydropower development. We are not completely private entities but operating under the BOOT (build, own, operate, and transfer) model. The law talks about providing various facilities to hydropower projects. But then we have failed to build projects at low cost and to export electricity. Policy inconsistencies caused by frequent government changes is part of the problem. 

The 15th plan prepared by the National Planning Commission talks about rapid production of hydroelectricity to boost the country’s energy sector and decrease the import of fossil fuels. Our policies are good; the problem is in implementation. Frequent government changes and with them a change of direction are a big impediment. Clearly, there is a need for the upgradation of the electricity supply system to encourage electricity-use in cooking. The federal, provincial, and local governments should come up with a clear plan on this. 

For instance, municipalities and rural municipalities could declare themselves free from LPG gas and fully switch to electricity. To do so, all three levels of government should provide subsidies.  With proper planning, local governments can implement this scheme within five years.

Sushil Pokhrel, Managing Director, Hydro Village Pvt Ltd 

One-fifth of the world’s energy comes from hydropower. It has played a big role in the growth of countries like Bhutan, Norway, Canada, and the US. They are role models for us.  Many countries have undergone economic revolutions through hydropower, so it is not wrong to advocate for it here in Nepal as well. The private sector has a high potential in hydropower. We have invested trillions of rupees. Scores of small and big hydropower projects are currently underway. With an integrated legislative framework or a one-door policy, there is no doubt we could have attracted more investment in hydropower.

But investing in Nepal’s hydropower projects is not enough. Foreign investment is low because of some flawed policies, for instance our failure to offer foreign investors an exit strategy. Established global companies are not investing in Nepal’s energy sector due to the country’s murky policies and regulations. If we fail to ensure minimum requirements, it will be difficult to attract investors. The hydropower sector has contributed a lot to Nepal’s social and economic transformation. 

Power production is expensive due to lack of basic infrastructure, which is the government’s responsibility to build. We have to invest energy and resources to build infrastructure. Likewise, our notorious red-tapism scares away prospective investors. Investment process should be made clear and free of any ambiguity. 

Another important issue is an investment-friendly climate. Nepal is not the only lucrative country for hydro-investment. We have to fix our issues to encourage more investment. After all, it is not just big businesspersons and investors who have stakes in hydropower projects. Even those of more limited means have a direct sake in it.