Institutions under threat

The series of threats, shutdowns and protest activities carried out by All Nepal National Free Students' Union (ANNFSU-Revolutionary)- the student wing of the underground Communist Party of Nepal (Maoist) have disrupted the smooth functioning of schools and colleges in recent days. Over the past month, numerous public and private schools and colleges in Kathmandu Valley have come under threat due to mounting pressure from ANNFSU (R). Around 4 hundred higher secondary level schools were closed the other day.

The recent protest campaign of ANNFSU(R) has obviously hampered academic activity. School and college administrations have been hit hard by the politically orchestrated close downs. A few weeks back, ANNFSU (R) activists threatened and manhandled some public school teachers. Apparently, ANNFSU (R) is pushing some demands which, if not met, could lead to very untoward incidents inside the institutions, as happened a few days back at Ratna Rajya Campus, a government college which was set on fire. Such violent activities and unreasonable pressure on education institutions have put them under threat. Worse is yet to follow. ANNFSU (R) has called for more shutdowns of public and private colleges. The one week long protest program, starting this Friday, is bound to have undesirable consequences on the education sector.

Though there were sporadic incidents of struggle between the school management and ANNFSU (R) in the past, this time around, the threat looms large with ANNFSU's intimidating tactics. In the name of wiping out ills prevailing in the education sector, Maoists are resorting to deplorable methods. Waiver of fees, the removal of Sanskrit from the curriculum and a ban on singing the national anthem are some of their demands. They also want to reduce the gap between private and public sector education. This, however, does not mean that they can threaten institutions, extort money and impose their directives on them.

In these circumstances, the government cannot sit back and let education institutions suffer under this threat. If the insurgents are allowed to succeed, there will be chaos in the education sector. Plagued as it is, with many shortcomings and anomalies, things will go from bad to worse, if the government does not take a hand in the matter and control the situation. It is to be hoped that the government recognises that it cannot allow anarchy to reign in the education sector. The Maoists are doing just this by resorting to all sorts of tactics. Therefore, the government must step in to provide protection for education institutions and at the same time move to resolve the crisis looming large.

Depreciating Nepalese currency

By Dr Hari Pokharel

In the last few days there has been a great deal of public concern about the deteriorating exchange rate of Nepalese currency vis a vis the US dollar. When we talk of maintaining foreign reserves for the purpose of meeting an imbalance in foreign trade, we mean the imbalance arising out of the normal pattern of trade.

In the early nineties, Indian Currency (IC) against US dollar was depreciating in the face of constant external crisis that India was encountering. Because of pegged exchange rate arrangements with IC, NC vis a vis the US dollar was also undergoing depreciation. Whenever IC depreciated against US dollar, Indians benefited from it because of its large export base. This is not the case with Nepal because of its narrow and fragile export base. On the other hand, Nepal’s import bill was increasing due to the inelastic nature of its imports. As a result, Nepal’s current account deficit was running as high as 8 percent of the GDP.

The Nepali rupee further dipped by 25 paisa and was traded at Rs 74.65 against one US dollar on November 29, 2000. The decline in Nepali rupee is attributed to the devaluation of Indian currency against the dollar by 16 Indian paisa and the shortage of dollars in the markets. Indian currency traded at 46.88 November 28 against its previous rate of IC Rs 46.72. The Foreign Exchange and Money Dealers association (FEDAN) has in a statement said" The decline of Nepalese rupee against the dollar is due to increased demand for dollar in the markets. "One reason is that, Nepalese currency maintains a fixed rate of exchange with Indian rupee and any fluctuations in Indian Rupees leads to a reciprocal change in Nepalese currency. The downslide of Indian currency and the dearth of dollars in the market have resulted in the continued depreciation of the Nepali rupee in the last few months. FEDAN, an association of 14 commercial banks, adopts a common market strategy to request the central bank for release of hard currency if commercial banks fail to secure dollars in the inter-bank market.

Nepali rupee has been witnessing a series of depreciation in the last few months. It has depreciated by over 29.6 percent since August 1997, when it started depreciating after over one and half years of stability, under the impact of South East Asian currency crisis. On December 1, 1997, the US dollar was worth Rs 61.85. Indian currency was worth Rs 38.29 to a dollar. It underwent a second round of depreciation in March 1998, after the Indian currency succumbed to mounting international economic sanctions as a protest against India’s Nuclear tests on March 11, 1998.

Recently, the Nepali rupee was depreciated and was traded for Rs 74.40 for US dollar. It is mainly due to rising oil prices and the volatility in the international currency market i.e. sliding Euro against the Dollar. Indian Foreign Currency experts opine that the month end corporate demand for greenback is also having some impact on the weakening rupee. It is also reported that another factor fuelling the Indian rupee slide is the Reserve Bank of Indian’s new provision that enables Indians to gift up to US $ 5,000 to relatives abroad.

This continuing devaluation process is not due to the country’s inflation rates, interest rates or increase in its GNP. Rather, it is simply because the Nepalese Rupees is pegged to the Indian currency.

Exchange depreciation means a decline in the rate of exchange: external value of one currency in terms of another. Exchange depreciation tends to cheapen, domestic goods and services for non-residents and to make imports costlier. Devaluation means the lowering of external value i.e. the exchange rate of the unit of the currency by any official edict. This may be either in relation to the currencies of all countries, or gold, or in relation to the currencies of only a few selected countries.

Currencies in South Asia have come under intense pressure and have lost their values significantly against the US dollar. In the recent past, Nepal Rastra Bank had floated over 5 million dollars to clam down a mounting demand for green back. The exchange rates with hard currency keep on changing and fluctuating with commercial banks fixing the rates. However, the exchange rate with the Indian rupee was fixed at Nepalese rupees 160 to Indian rupees 100. There has been a long slide of the Nepali rupee vis a vis the US dollar from just over Rs 64 to the US dollar to Rs 74 plus per US dollar. However, during the period, the rate with Indian rupee has been forced to remain stable. It is an irony that there is little Nepal can do in the face of unprecedented currency fluctuations.

Pressure on Nepali currency was sparked by a fluctuation of Indian currency against the US dollar. Any depreciation or appreciation of Indian currency against the dollar has to be followed by similar adjustments of Nepali currency so as to maintain a stable cross exchange rate among the Indian rupee, Nepali rupee and the US dollar.

Theoretically speaking, the immediate effects of the current depreciation of Nepalese currency are reflected in the expansion of exports and contraction of imports, thereby tending to reduce the unfavourable balance of payments situation. With a view to identifying effects of devaluation, it is necessary, economists say, to examine the elasticity of the external demand for the country’s export, which is popularly known as the elasticity approach. Some other economists opine that influences on national expenditure must be studied. In the particular milieu of Nepal, demand elasticities do not work. Against this backdrop, it can be said that: the success of devaluation will depend on domestic demand for imports. The non-domestic demand for exports must be fairly elastic, which, in Nepal’s case is not applicable to the desired extent. Devaluation has an adverse influence on some balance of payment items for instance, on the repayment of foreign loans except
when these are expressed in the national currency.

To conclude, the volume Nepalese exports will have to be increased whereas import should be reduced drastically. This is not possible due to increased import of consumer goods, development and construction materials. Thus, the poor will suffer from this devaluation.

Dear aliens, don’t ridicule us

By Sameer Khatiwada

"The one thing I liked best about Nepal is that the Nepalese play cards the whole day. At the same time, they opine on national matters not leaving even the trivial ones and do nothing substantial to earn a better life. But despite all this they dine twice a day."

These were the excerpts from the speech delivered by a Japanese volunteers working in Nepal. But other things were worse than the speech of the young Japanese lady. Even the Nepali invitees observing the program burst into laughter. (Not to mention some pressmen who were even louder.)

Another Japanese volunteer speaking of her experience said, "there are many mistakes in the curriculum of Nepali. The curriculum board has to take a note of this." Another added, "most of the Nepalese I met during my stay asked me to take them to Japan." "At first I used to feel like vomiting whenever I heard the names, Daal Bhaat," added another volunteer. To sum up, almost all Japanese volunteers ridiculed Nepal in the process of expressing their experiences in Nepal.

What had the Japanese volunteers expected in a poor country like Nepal where more than half the population are languishing in poverty? I guess they might have gone through the catalogues and books on Nepal before coming here.

Will a Nepali ridicule Somalians because they are even poorer than us? I guess no. I would have laughed at the Japanese language at the programme because it sounded funny most of the time. A Nepali in Japan for the first time will obviously feel like vomiting when eating Japanese food. Are these things unnatural in an alien land?

I was shocked to observe the Nepali response, a sign of compliance to foreigner’s comments on Nepal and its people. The Japanese volunteers were laughing at our Nepaliness. They were literally mocking us. But almost all the Nepalese at the programme nodded with laughter.

The one thing we lack is a sense of pride in being Nepalese. We join hands with foreigners and mock ourselves. Aliens come and make fun of us. And we are always prepared to grant approval to them. We are ridiculing our sovereignty ourselves, and the result, outsiders bully us every now and then.

Do Americans love America because it is a rich country? Do Brazilians support their football team because it plays well? No. Americans love America because it is their country and Brazilians support their football team because it is Brazil’s team.

We are born poor because our country is poor. Until we realize that we are ‘poor Nepalese’ our country will never rise from poverty and starvation. Once a Greek philosopher said, "if you don’t respect your being, others will never respect you."

I feel good to mention that Minister Mahesh Acharya was another Nepali at the programme who looked disgruntled on hearing the volunteers’ comments.

Dear aliens please take note that there are many Nepalese in Nepal and abroad who are proud of being Nepalese. My Nepal is my pride. How dare you laugh at my poverty and backwardness?

Globalization, WTO and Nepalese agriculture

By Bishnu Uprety

At the outset of Nepal's effort to obtain World Trade Organization (WTO) membership, potential impacts of globalization on Nepalese agriculture were presented as food for thought.

Deregulated trade, open market, structural adjustment, expansion of financial flow and privatization of capital, under liberalized macroeconomic policies are the building blocks of globalization. Agriculture is one of the increasingly globalized sectors under the framework of WTO which strictly operates various agreements and arrangements to promote uniform agricultural trade. This mainly serves interests of multinational life and science corporations by establishing their dominance and weakening the power of states at the expense of poor consumers and weak agricultural communities of developing countries.

International financial organizations like International Monetary Fund, World Bank and Asian Development Bank play instrumental role in this process. Pressure from these organizations on governments to hike the price of basic services like electricity, water, petroleum and chemical fertilizers, to abolish food depots at remote areas challenges the autonomy of the state and jeopardizes the survival of poor Nepalese people. This is just one example of how globalization operates in reality.

WTO, established in 1995, carries a distinct history of unimpeded free trade.

The Uruguay round was the longest (from 1986 to 1993) round with the most controversial set of negotiations. Among those controversial agreements, Agreement on agriculture (AoA) is the one making provision to lower international economic barriers and expand existing agreements to agricultural trade in favour of deregulated markets and greater flows of agricultural commodities and financial transactions to promote free trade that virtually increases the power of bioscience corporations. Some people argue that globalized agriculture and its free trade not only provide cheaper products and more choices, but also alleviate poverty by maximizing flow of productive financial, human, physical and technological resources to developing countries, but, in reality, it is promoting corporate control over agricultural sovereignty of developing countries. Trade Related Intellectual Property Rights (TRIPs) has great impact on agriculture, which sets enforceable rules on patents, copyrights and trademarks.

For example, monopoly rights obtained by life science companies like Monsanto and Novartis through TRIPs exclude poor farmers because they are no longer able to afford seeds and technologies of these companies. The Agreement on Sanitary and Phytosanitary Products (SPS) also negatively impacts on agriculture by setting limits on the sanitary and health standards of a nation where any attempt to ban import of potentially hazardous products will be seen as a non-tariff trade barrier and will not be allowed under this agreement. This also limits a country’s ability to label food products and will therefore, restrict right of people to know what they are consuming. The General Agreement on Trade in Services (GATS) includes all trade in services and promotes privatization of these basic services.

The AoA sets limits on domestic agriculture policies such as supply and pricing systems, procurement policy, and agricultural product marketing and farm subsidies. It will result in increased influence of a few multinational agribusiness companies and minimize autonomy of a government in economic decisions and investment. In this way, globalized agriculture under the legal and regulatory framework of WTO totally controls agricultural systems of developing countries. Based on the arguments of civil society organizations about the role of WTO in widening the gap between rich and poor and the aftermath of the Seattle battle, the academia raised basic philosophical questions about the relevance of WTO.

However, WTO supporters, diverting this fundamental question, argue that WTO is unquestionably essential but its undemocratic and non-transparent system needs to be reformed.

Current western agricultural models are more resource intensive and high tech. As a result, a country like Nepal will not be able to compete with them in the global market. In Nepal, international financial institutions are blatantly forcing government to restructure agriculture by reducing and withdrawing subsidies and other supports provided to local farmers. On the contrary, many industrialized countries provide large subsidies, technological advantages and securities to their agricultural producers.

Developed countries have advance product standardization mechanisms and sophisticated laboratory-type conditions whereby they can produce ‘just-in-time' agricultural products and deliver at high speed in order to meet the needs of affluent global markets, CODEX (FAO code of food standards for all nations) and OIE (norms related to trade of animals and animal products) requirements. In this way, globalized agriculture exerts pressure on domestic national markets and causes negative implications for agricultural employment, and food production capacity because of lack of ability of developing countries to compete with the developed world. WTO and international financial institutions, ignoring this blatant manipulation, treat deregulated agricultural systems as ‘magic bullet’ by super economic powers. A study conducted by the scientists of Reading University on the impacts of SPS and technical requirements of WTO shows that SPS requirements are exploitative, constraining ability to export agricultural products and these arrangements are incompatible with prevailing systems of food production and marketing.

Restructured agricultural sector requires fewer people to reach production targets, which creates food insecurity and job loss for small farmers. For example, Indonesia lost several thousand jobs in agriculture when shifting to export-oriented plantations.

In the Philippines, many farmers have been forced to sell their lands, as their smallholdings were no longer competitive. In Central America, small farmers and rural workers are being refused access to credit and support services. In Romania, structural adjustment policies have penalized small farmers' interests by reducing subsidies, credits and increasing bank interest. In Tanzania, changes in the labour process led to unemployment and ruin of cooperative production systems. When agricultural advancement proceeds, multinational agribusinesses control agricultural production by employing contract system whereby farmers have to be dependent on them for seed, technology inputs, credit and marketing of their products. Development of genetically modified organisms (GMO) and terminator technologies by multinational life science companies cause several unanticipated environmental and ethical problems. The Multilateral Agreement on Investment has already caused several problems in domestic management of natural resources since governments may lose the ability to manage land tenure, land use and environmental issues.

Given all these negative impacts of deregulated agriculture and considering the current Nepalese capability, there is very little hope for Nepal to benefit from globalized agriculture framed under WTO, even if Nepal gets its membership. It is absolutely essential to ensure agricultural sovereignty of developing countries, carry out radical review of WTO policies, change undemocratic and non-transparent governance decision structures and narrow down its power for getting benefit from WTO for a country like Nepal. At the same time, Nepal should be able to develop its potential to cope with those possible negative impacts.