Submit your Article

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

President Ram Chandra Paudel on Friday authenticated the bill aimed at taking action against loan sharks.

The President’s Office said that President Paudel certified the bill ‘to amend some other Nepal Acts including Civil Code 2080.

President Paudel authenticated the bill endorsed by both the Houses as per Article 113 (2) of the Constitution.

It will get the legal status after it is published in the Nepal gazette.

The Upper House on Thursday unanimously endorsed the bill aimed at taking action against loan sharks. With the National Assembly endorsing a bill ‘to amend some other Nepal Acts including Civil Code 2080’, the passage has been cleared for its authentication from the President.

Tabling the bill, Minister for Law, Justice and Parliamentary Affairs, Dhanraj Gurung said that since the period of the ordinance related to usurious lending has expired, the bill had to be brought as an amendment to some other Nepal Acts to provide the justice of the loan shark victims. 

Following a series of protests from the loan shark victims, the government on May 3 had issued an ordinance to criminalize usurious lending and provide justice to the victimized borrowers. The government also formed an inquiry commission led by Gauri Bahadur Karki to collect complaints from the victims and study them based on the ordinance. The government and the victims on April 1, had reached an agreement to expedite the process to amend the laws to criminalize unscrupulous lending.

Since the ordinance has to be endorsed by the parliament within 60 days, the government tabled the replacement bill at the National Assembly on June 20 and the national assembly passed the bill on June 30.  The replacement bill to the ordinance was supposed to be endorsed from the House of Representatives on July 5. However, as the opposition parties including main opposition CPN(UML) obstructed the parliament against a controversial statement made by Prime Minister Pushpa Kamal Dahal, the bill couldn’t be endorsed.

With the expiry of the ordinance and failure to endorse from the parliament created a legal vacuum in the investigations, the government again tabled the bill at the House of Representatives which endorsed it on July 17. However, National Assembly Chairman Ganesh Prasad Timilsina initially refused to include the bill in the proceedings of the upper house and sought opinion from the Attorney General’s Office.

The bill has taken a significant step by criminalizing the practice of lending money at exorbitant interest rates through unfair transactions. It establishes provisions for imprisonment of up to seven years and imposes fines of up to Rs 70,000 on individuals engaged in such predatory lending practices. This move aims to protect vulnerable borrowers from falling into debt traps and to deter loan sharks from exploiting people in dire financial situations.

In addition to criminalizing predatory lending practices, the bill has defined the forcible transfer of a debtor’s immovable property through threats, violence, or exploitation for debt recovery as an unfair transaction. Furthermore, the bill addresses the issue of exorbitant interest rates by stating that charging interest to the extent that it exceeds the principal amount is punishable. 

The commission has opened its office in Janakpur, the capital of Madhes Province, as it will be easier for the victims to share their problems. Most of the loan shark victims are from districts of the Terai region.  Of the 24,000 complaints received by the Karki commission, majority are from eight districts of Madhesh and Nawalparasi (Susta West). The commission has settled around 1,800 complaints so far and returned 8 bigha of land to victims from lenders.

Koshi Province Acting Chief Minister Hikmat Karki said that the CPN-UML is ready to form a new government together with the Nepali Congress.

Karki, who was reinstated after the Supreme Court removed Congress province Parliamentary Party leader Uddhav Thapa from the post of chief minister, took charge as the acting chief minister today.

Speaking to journalists at the Biratnagar Airport this afternoon, he said that the UML will not be the stumbling block for the prosperity of the province.

Karki said that the country’s largest parties—Nepali Congress and CPN-UML—could go together.

“We can go ahead by forming a new government if the Nepali Congress is ready to work with the UML for democracy and good governance. We are open,” he said.

Karki said that discussions are going on for the same.

“We are ready to give the post of chief minister. The party should be ready to give the post of chief minister if it has no majority. But I do not agree with the proposal to change the leadership on the rotation basis,” he said.

Karki said that the UML could also go to the office of the province chief for the formation of a new government by garnering a majority.