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Once again, KP Oli seems to have done the impossible. Once again, he seems to be turning the tide in his favor when it was thought to be insurmountable. Once again, he has lifted mountains through his sheer grit, and his wit.

In a pair of confident and wide-ranging interviews delivered in English and Hindi to Indian Journalists this week, Oli, as the sitting prime minister, has come out as a leader who can speak truth to the powerful. He didn't dodge any question; neither did he make an effort to find a diplomatic escape when asked difficult questions. Both the journalists were bent on cornering Oli by blaming him of cozying up to China and staging forward an antagonizing stand against India, especially blaming the timing of Nepal publishing a new map that included a disputed territory. Oli gave it back straight to them.

There is no doubt that this is a clever political move to gain support back here in Nepal at a time he is being attacked from all sides. But despite the political maneuvering that these interviews are part of, they will remain in the archives as an example of a bold statement of Nepal’s official line vis-à-vis its two giant neighbors.

Oli's decision to dissolve the parliament has left the intelligentsia in Nepal divided, and the politicians befuddled. The moderates among his close supporters are finding it difficult to justify the action, and have invented metaphors for doing the same. Pradeep Gyawali, the foreign minister, and a sober voice among the supporters, said that the decision to dissolve the parliament could be accepted as democratically correct in a 'Nepali flavored democracy'.

How did it come to this? How did a seemingly black and white decision fall into the grey area? And why is Oli able to slowly generate public support despite his obvious disregard for the constitution? The answer to this lies in the long history of moral degradation Nepali politics has entertained.

For a long time, Nepali politics, and the intelligentsia, have allowed themselves to be manipulated. During the early days of the peace process after the signing in India of the 12-point agreement, the media, the international community and the intelligentsia closed their eyes and allowed themselves to be fooled by the trickery of the Maoists. It was an open secret that the Maoists had a force of no more than 5,000 in their roster when they entered the peace process and they had gone on a rampant drive to recruit new soldiers to inflate the numbers.

The UNMIN got manipulated and more than 15,000 were registered as verified PLA members. The media misreported, and the intelligentsia kept mum. This collective moral failure of Nepali society has manifested itself many times thereafter in politics, in multiple forms. And people deeply resent the fact that Nepal's politicians and intellectuals have been fooled time and again by the trickery of one clever Man.

Pushpa Kamal Dahal 'Prachanda', who became the co-chairman of Nepal's largest party after merging his Maoist party with the Nepal Communist Party (UML), hasn't allowed the transitional justice process to be completed. The whole political juxtaposition, and the complex power sharing mechanism, has ensured that the hazy ground of immorality and injustice gains acceptability and politics remains dirty.

In his new avatar as a player in the parliamentary system, Prachanda has proved that the tactical tendency of a guerilla mastermind hasn’t been shed. In the build up to present crisis, while the constitution didn't allow a no-confidence motion for the first two years of government, Prachanda was Oli's best friend. But the moment the door to destabilize the government technically opened, he launched attacks on all fronts. With two powerful media houses under his direct influence, the tides turned.

KP Oli in an interview has claimed that all engagements Prachanda had with Oli as the head of the government were always focused on bargaining for power for his near and dear ones. Hard evidence substantiates this. He has a network of family members and close relatives who have been placed in powerful positions, including his daughter Renu Dahal as the mayor of Bharatpur. She was elected in a controversial re-election after a party member tore ballot papers during the vote-counting process.

After doing this while in an election coalition with the Congress, he broke the tie immediately and merged his party with UML. With such clever but immoral maneuverings still etched fresh in public mind, it's difficult for them to believe Prachanda's claims about a new struggle to save democracy.

So, what we clearly see is a great political manipulator completely flabbergasted by the unexpected step Oli took. While the intelligentsia feels obliged to speak against Oli’s steps due to technical reasons, the general public will not come to streets in Prachanda’s support. Luckily, they have no such pretentious dilemmas about technicalities.

As I interact with the people on the streets, I find a common sentiment of support for Oli for having the courage to tackle an unjust manipulation; and with some courage I feel forced to say that in a democracy, we should let people decide what's right or wrong.

Indian experts on Nepal, everyone from Shyam Saran to Ranjit Rae, have been advising their government to exercise restraint. That, they aver, will best protect Indian interests in Nepal. The naked Chinese intervention to save the sinking Nepal Communist Party ship, they argue, has discredited China in the eyes of common Nepalis. By contrast, India’s ‘quiet diplomacy’ has been a welcome change, and gone down well among common folks. Has it?

Arguing India should not intervene (and it shouldn’t) and that its interests are best protected by subtle diplomacy (perhaps) is one thing. Whether it really has been ‘hands off’ in Nepal now or if it will be so in the future, is another. No thinker this writer talked to before penning these lines thought India had no role in Nepal’s recent political ructions. Nor did they reckon it would desist from intervening in the future. 

In fact, they suspected India’s direct hand in House dissolution. Why? Because India has never explicitly accepted the new constitution and the governments formed under it. Now by helping KP Oli to unconstitutionally dissolve the House, it has put the constitution in jeopardy. The other common thread among these thinkers was their suspicion that India’s utility of Oli had perhaps ended now, and it would look to install someone more amenable in Singhadurbar. 

When Indian intellectuals argue India shouldn’t intervene in Nepal, it is worth asking back: which India are they advising? The one represented by the Hindu nationalist BJP and Narendra Modi? The South Block that has never liked taking orders from the PMO on smaller countries in the neighborhood? Or the RAW, the Indian external intelligence agency, notorious in Nepal for its part in the unceremonious dissolution of the Maoist-dominated first Constituent Assembly? Or for the current disastrous course set in motion by Kathmandu visit of its new chief Samant Goel?

Which of these three actors believes in non-interference and stability in Nepal? The BJP has for long been lobbying for a Hindu state, a goal that would be hard to realize in a stable polity. The South Block likes to maintain total control over events in the neighborhood, which, again, is not possible without creating a semblance of instability. For the RAW, well, instability is its natural playground. 

In evaluating India’s role, we must also ask a fundamental question: what is New Delhi’s chief interest in Nepal right now? To ensure democracy, peace and stability, or to push back against the assertive dragon that seems intent on gobbling up India’s traditional strategic space? Considering recent events on Indo-China border, the Indian establishment’s preference is easy to guess. Yes, there are still those who believe India’s continued support for democratic process and non-intervention are India’s best offense against the Chinese; given its natural advantages in Nepal, goes this argument, the Chinese will eventually tire themselves out.

Yet, surely, the Indians won’t agree to so easily loosen their hold in a country traditionally under their strategic grip. If anything, Indian intervention, of every kind, will grow in Nepal as China too throws off its shackles. The Chinese have lately been brazen in the pursuit of their interests. And so will the Indians. Perhaps this is why no serious thinker in Nepal is ready to buy the trope of ‘aloof India’ that only ‘takes note’ of events here. We all know what happened in 2015 when it took such a note.

The recent government decision to allow foreign direct investment in agriculture is a bold step. It will boost competition in otherwise moribund sector. Although the decision has been criticized in some quarters, as the inflow of foreign investment and technology will supposedly marginalize domestic investors, it was nonetheless essential in order to break the cycle of low investment and cultivation of sub-standard products in agriculture.

The business community has objected on the ground that the Foreign Investment and Technology Transfer Act (FITTA) 2019 bars foreign investment in agriculture. The council of ministers made the decision by going against the act. You could argue that this represents a massive breach of standard procedure in policy-adoption in a sector that touches the lives and livelihoods of nearly 70 percent of the national population. This may be true. But with the parliament under heavy influence of lobbyists and industrialists, there really seemed no other way out.

Foreign investment in agriculture will not negatively impact farmers. They will rather get better prices for their products in competitive markets. The hardship will rather be felt by the industrialists who have been exploiting both farmers and consumers without being accountable for their sub-standard products that are costly too. On one hand, farmers are not getting fair prices for their products with domestic industrialists forming cartels to buy farmers’ products. On the other, domestic industries do not produce quality products at competitive prices for consumers.

Nepal’s agriculture has always been stunted in the absence of outside disruption. The Agriculture Development Strategy (2015-2035) is being implemented after the completion of the implementation of the previous Agriculture Perspective Plan or APP (1995-2015). But there have been no meaningful changes in farmers’ lives or the way they do agriculture in all this time. The reason again is lack of innovation. The sector’s condition is not much different to what it was in 1995 when the government started implementing the APP. Farmers have not seen any meaningful changes in their lives in the past 25 years.  

Allowing foreign investment in agriculture was discussed during the formulation of the new FITTA in 2019. But a parliamentary committee directive ended that discussion. The directive was the direct result of the political economy of bill drafting and interest-groups’ access and influence in the process. The same group of traders and businessmen that blocked the FITTA is against welcoming foreign investment in agriculture.

The government decision applies only to export-oriented items. It will enhance the ability of our agri-based industry and support those willing to explore global markets and bring more investment. Consumers at home can enjoy export-quality products and farmers get better prices. The only group that will be hurt is a coterie of businesspersons who are holding the entire sector hostage by imposing a monopoly on prices and quality of agricultural products.

Again, the cabinet may not have gone by the book. But this decision made in public interest was both bold and right. We have to differentiate between real farmers and domestic industrialists while making policy decisions. The Federation of Nepalese Chambers of Commerce and Industries (FNCCI) and other associations have objected. But the FNCCI and likeminded associations do not necessarily speak in favor of common folks. Let’s not forget these are the same people who forced sugarcane farmers to beg for the payment of their dues.  

A federal structure with central, provincial, and local governments was to be the core basis of a new Nepal. But although it was meant to devolve decision-making to the local level, federalism has been one of the most disappointing and unrealized aspect of Nepal’s political transition. Instead of genuine devolution, federalism is emerging as a top-down conduit for managing disbursements to the local level.

Authority remains vested in the center. The constitution does devolve authority and responsibility to provinces and local entities. In practice, however, they are being structured to manage government disbursements and expenditures. Without meaningful emphasis on building revenue sources for local governments, federalism in Nepal will remain an empty promise.

Several promising new acts, such as the Local Government Operations Act 2074, delegate spheres of authority but do little to fiscally empower provinces and local entities to deliver on their responsibilities. Local governments remain entirely dependent on the center’s generosity.

Federalism in Nepal was a direct result of the Maoist movement. During constitution-making, the Maoist leadership strategically protected the space for federalism. Recognizing that federalism would be a contested issue, they drew the debate towards provinces—how many should there be, their names and geography.

While that debate on provinces raged, Nepal’s constitution quietly established 753 highly empowered local entities. These local entities, more than provincial authorities, represent the genuine basis for federalism in Nepal. The constitution combined federalism with decentralization, returning Nepal to its original state with many diverse and different entities before a king had unified them under one central authority.

Why is that Nepal’s vision of federalism and decentralization confined to paper, lacking the thrust to translate its principles into practice? Because the Maoist uprising only provided the political movement to establish a federal decentralized structure. An economic revolution is needed to realize it.  

The fight for genuine federalism represents the next phase in Nepal’s political transition—an economic revolution that will dismantle the concentration of wealth at the center, paving the way for genuine fiscal federalism and decentralization. Whether the Maoists will reinvent themselves to lead this charge, or a new alignment of forces will emerge, is hard to say.

Kathmandu, where the wealth and authority are most concentrated, is the battle ground. Much like the capture of Kathmandu was the final piece in the unification of Nepal centuries ago, the dismantling of Kathmandu’s economic stranglehold is now the final piece in the genuine decentralization of Nepal.

For evidence, start by looking at land prices in Kathmandu. Fuelled by access to cash, debt financing, lack of alternative investments, and short-term speculative transactions, Kathmandu’s economy sits on a giant asset bubble. Return on housing or commercial assets are a miniscule fraction of the underlying land value.

To visualize Kathmandu’s asset bubble, contrast the hustle and bustle of everyday life in the city with the quietness that prevails during Dashain and Tihar. Kathmandu is deserted then not because everyone is quietly celebrating at home. It is because most have left Kathmandu to celebrate the holidays with their families in other cities, towns, and villages around Nepal.

What would Kathmandu’s land and real estate asset prices be if the situation during Dashain and Tihar were normal everyday life? This is what genuine federalism would do to Kathmandu—suck out the pressure on land and burst its asset bubble.

The federal capital’s economy thrives by sucking in remittances, export earnings and foreign aid, before turning them around to fuel consumption across Nepal. As a trading, financial and administrative hub, it has very little productive capacity of its own—unlike other towns and cities in Nepal that draw in resources from surrounding areas and add some value.

Unlike other towns and cities, Kathmandu’s value comes entirely from its administrative positioning as the central hub through which everything must pass. That value is now under threat. Genuine federalism will erode Kathmandu’s unchallenged administrative position as the hub through which all earnings and consumption must pass.

Why does genuine federalism in Nepal require an economic revolution? Because genuine federalism will burst Kathmandu’s asset bubble. The impact will be felt largely by Kathmandu’s wealthy asset owners, though the economic fallout may be broader. At the same time, wealthy asset owners have too much at stake to let the asset bubble burst.

The parties to the conflict have now taken their positions. Nepal’s economic revolution is brewing.

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