Flexibility needed

Peace talks between the government and the CPN (Maoists) seem to have run aground. The sticking point is the Maoist demand for a new constitution and a republic. Soon after the talks ended inconclusively, both the negotiating teams headed for the capital to put before the press and public their respective versions of what happened. That the Maoists came to Kathmandu to do this instead of heading straight for the rebel hinterland may indicate that they too now attach importance to what the public think, for whatever that’s worth. This in turn yields the impression that the uncompromising Maoist position may indeed be just public posturing. Many now believe that the Maoists are looking for a soft landing, and the softer the better. The government side is still stronger than the Maoists and the latter realize that only too well. If it should come to outright confrontation between them and the security forces including the army, it is not hard to guess which side will be mauled. And it is hard to imagine the present establishment giving in to the rebels without a showdown. The Maoist leadership is possibly facing the task of selling the soft landing to their rank and file, which has borne the brunt of police action.

Meanwhile, the Maoists now also have to reckon with some new elements which have a bearing on the situation. Potentially the most serious of these is the backlash that has developed in the terai and the way this has taken on a communal colouring. The situation could well get out of hand and nobody is going to thank the Maoists for it. The second factor is the growing perception that the Maoists have blessings from south of the border. Following the meetings that their supremo had in Siliguri with other Nepalese left leaders, the question doing the rounds is, would New Delhi have looked the other way without some sort of understanding with the Maoists? If such an understanding is indeed the case the Maoists will have a hard time explaining themselves to their battle hardened cadres. Thirdly, there is growing suspicion that the Maoists leadership is not fully in control of their lower echelons. That could have consequences for the future of their movement. Fourthly, the devastation wrecked on the World Trade Centre in New York by terrorists presumed to be linked with Osman Bin Laden could have repercussions in this part of the world also. The world’s only superpower is on the war path and while their likely target is Afghanistan they intend to cast a wide net. That’s going to change security alignments in the whole region.

Under the circumstances, the Maoists would do well to quit while they are ahead and cash in on the gains they have already made. Perhaps that is exactly what they are doing. But if they are stalling the talks to drive as hard a bargain as possible or in view of the mass gathering in the capital scheduled for September 21, they should facilitate matters by looking for ways to climb down on their demands and become more flexible. Or one could suppose the worst and say the Maoists are indeed hell bent on ringing in their bloody revolution. That would be a sterile path that bodes no good for the government, the people or even for the Maoists themselves. If the Maoists are going to bring havoc to this land they had better be prepared for a long, long march whose ultimate destination is uncertain at best.

Need for international intervention

By Dr D N S Dhakal

As of September 2001, the joint verification team of the Government of Bhutan and His Majesty’s Government of Nepal have verified about 1,000 refugee families, clearing 6,000 individuals for placement into the agreed four categories: Bhutanese forcefully evicted, Bhutanese emigrated, Bhutanese with criminal records, and non Bhutanese. The Joint Ministerial Committee of the two governments had agreed to place the refugees into four categories in 1993 without agreeing what position each government would take with regard to repatriation to Bhutan.

The governments of Bhutan and Nepal have also agreed at the 11th Joint Ministerial Committee meeting held in Thimphu from August 21-23 that the refugees who are verified would be repatriated to Bhutan after harmonizing the position. The first batches of the refugees are expected to return to Bhutan by the beginning of 2002 if there occurs no serious problem in harmonization.

A crucial issue in the bilateral talks is justice for over 10,0000 innocent subsistence mountain farmers from South Bhutan. These farmers are of Nepali ethnicity and overwhelmingly Hindu. These once productive farmers in the hills of South Bhutan have been surviving for the last ten years on the daily dole out of the UNHCR, which is an insult to their hardworking ethos and economic independence. In Bhutan, almost every family had a plot of land to plough, some cattle to rear, and some orchards for earning some cash income. In their place in Bhutan are now people from other communities under the government sponsored resettlement programme, overshadowing their hope of repatriation to homesteads, which they had owned for generations. The refugees are awaiting the outcome of the on-going verification process with anguish at not knowing where they would go, how they would be received, and what assistance they would get, although the aid consortia meeting held in Thimphu last year had given assurance of donor assistance for rehabilitation and reintegration of the returnees into mainstream Bhutan.

However, external assistance alone does not answer all the critical questions for the refugees. The Bhutanese people have become refugees in Nepal because of their demand for the protection of ethnic and cultural rights in the Kingdom of Bhutan. Their public protest in 1990 was for the restoration of the teaching of Nepali, practice of Nepali culture and establishment of basic human rights as enshrined in the 1948 UN Declarations. This protest provoked the ultra nationalist Drukpas into creating an unprecedented refugee exodus from Bhutan. It was an unfortunate development in "Shangrila Country", where physical beauty and cultural ethos were an allure to the western imagination to
find compassion and spirituality for tackling the problems of plenty created by western technologies.

Despite some progress in the verification, the Royal Government of Bhutan and His Majesty’s Government of Nepal are yet to discuss the modalities of repatriation for those who would qualify to return. UNHCR which has let the refugees survive for the last ten years is not yet in the picture in the repatriation process, which goes against its international mandate. It must ensure that the repatriation occurs on a voluntary basis, and the overwhelming refugee population desire it that way. Unless the international community and host country Nepal take a united stand the Royal Government is unlikely to grant UNHCR a foothold in Thimphu for monitoring the reintegration programmes, even as an adjunct to UNDP.

Ever since the visit of Madam Sadako Ogata to Thimphu and the Bhutanese refugee camps in Nepal in April 2000, UNHCR has been playing a proactive role in the resolution of the refugee problem. At present it supports the host country in providing logistic support to facilitate speedy verification of over 100,000 Bhutanese refugees who are housed in seven camps in eastern Nepal. The joint verification of the refugees, the first in the history of UNHCR, started in April 2001 at the rate of 10 families a day, stretching the completion period over one half of a decade. The refugees, donor countries and the UNHCR desire that the two governments set a realistic time frame to complete the verification exercise in 12 to 18 months, and demand that the two governments increase the rate from 10 to 100 families a day. For this UNHCR has offered its assistance for logistic support, and even submitted a tentative proposal for resettlement of the refugees in Bhutan, Nepal or some other countries, depending upon the outcome of the bilateral agreement. It has also circulated the list of deaths, marriages and births among the refugees for issuing certificates, and has demanded that HMG Nepal grant refugee status for marriages where one partner is a Bhutanese refugee and other is not a refugee but a Bhutanese citizen, to maintain family unity.

The crucial role in the peaceful resolution of the Bhutanese refugee problem is that of the western countries, which have already spent over US$ 100 million for their upkeep in the camps. The central issue that has dogged the bilateral talks since 1993 is the harmonisation of positions on each of the categories. Cleverly, Bhutan is willing to accept the category of forcibly evicted leaving the other three categories for Nepal and UNHCR to handle. Over 60% of the refugees who came to Nepal have signed the so called voluntary migration form and they are at risk of becoming stateless people unless the international community and host country Nepal plea on their behalf that the subsistence mountain farmers could not have choosen voluntarily migration in their 1000s with out coercion. The refugee leadership must also organized themselves to raise a united voice on behalf of the refugees, although the recent unfortunate events in the camps, particularly the brutal assassination of R K Budhathoki, President of Bhutan People’s Party, have cast a long shadow.

A silver lining for the Bhutanese refugee is the involvement of the United States of America. The visit by US officials to Thimphu and Kathmandu in December 2000 had facilitated the setting up of the Joint Verification Team, something which had been in the bilateral agenda for the last eight years. The US is now on better terms with Bhutan’s powerful and influential neighbour India and the international community must follow the US in the event there is a need to take a united stand on the citizenship status of those who were made to sign the so called voluntary migration form. This would be the first step towards solving the long vexed problem of Bhutanese refugees.

What if missing Gods are found ?

By Razen Manandhar

Early in the morning, I got a call from an unknown well-wisher: "Dear friend, I just called to congratulate you and deliver some good news. The international community has at last reached an understanding to return all the idols they have bought from Nepal. Did you not watch the television?"

"What? I can’t believe my ears. By the way, could you give me some details on the return of the Gods?" I asked.

He said, "Of course. Because of the initiative taken by the Ministry of Culture, Tourism and Civil Aviation’s Department of Archaeology and UNESCO/Kathmandu, all the major countries, which possess such stolen images from Nepal held an emergency meeting last week. The meeting saw a series of heated debates on whether to send such "imported goods or not."

He added that international art collectors had ultimately agreed to return all the idols they have in their museums, curio shops and private collections. For this they wouldn’t even demand refund of the money they paid to acquire the ancient artifacts. They just want to publicize the names of the persons who worked days and nights to take the idols form the ‘open museum of Kathmandu Valley’ and export them to European and American markets.

That was more than enough for me. I even forgot my breakfast. I visited dozens of art lovers, archaeologists, cultural experts and conservationists and told them in detail about the good news - perhaps the best news of the new millennium.

We all then drafted a release on this good news and dispatched it to all concerned agencies. We listed the Department of Archaeology, the Ministry, the Police Department, the Customs, Tribhuwan International Airport, all the border check posts and international art dealers who traffick in cultural property as those to whom we must send a copy of the good news.

We dreamed of a shower of appreciations, news interviews, television interviews etc. etc.

But in the afternoon, I got several calls in my office that rocked my dreams. No one admired my information release. Instead some even warned that it might trigger a hurricane in Nepal. I could not understand what my mistake was. All I wanted was bring all the stolen images back to my dear country.

I went to meet an in-charge at the government body that looks after protection of all ancient monuments and also has responsibility for bring them back with the help of international law and the police force. "Why the hell are you writing to us from early morning?" she breathed fire like a dragon as soon as I entered her room.

"Madam, isn’t it a golden opportunity that they are ready to send us all the thousands of images free of cost?"

"Hell with the images. They want to publicize the names of the smugglers. Don’t you know who they area? That means naming scores of high-ranking politicians, high-profile businessmen, and other clean-faced social workers as smugglers. Some of them might be beyond your imagination. The buyers have all the records, to whom they had paid millions of dollars for such major art works. Our office cannot raise a finger against them. You better go for the country’s sake but I love my job the most," she ended her long
speech, and I returned.

I realised why Nepal did not show interest in bringing the thousands of images back and rekindling its liveliness, despite international laws to help us bring back our cultural property. I also learned why art theft did not discontinue even when government officials take part in symposiums against illicit trafficking and vow to control it from their side.

Whither Indian economy ?

By Bharat Jhunjhunwala

Indian Prime Minister Vajpayee is determined to push the reforms. He wants to encourage private investment, downsize the government, reduce the fiscal deficit, and initiate labour reforms. His resolve is welcome but, alas! one that is likely to fail. The reduction of government expenditures is a double edged sword. On the one hand it may encourage private investment by lowering the interest rates but, on the other hand, it may inhibit the same due to poor infrastructure and security. Indian reforms have not produced results because these latter negative effects seem to be greater. Vajpayee would be wiser to take a second look at his strategy of cutting government expenditures.

The standard prescription of the IMF for the developing countries is to reduce fiscal deficit, even if that entails a reduction of public investment. The idea is that such a self control on the part of the government will create economic stability, inflation will remain under control, interest rates would be lowered and private- and foreign investment will take place in a big way. The second generation reforms in labour and financial markets would further encourage these investments.

India has largely been following this strategy since the reforms were initiated in 1991. What has happened, however, is quite the opposite of what was expected. The figures speak for themselves. The growth rate in the five years before reforms, 1985-90, was a reasonable 6.0 percent. This was achieved despite a high level of fiscal deficit—8.3 percent—, which led to a high rate of inflation—6.2 percent-- and a mediocre savings rate at 20.4 percent. The government was printing notes and building roads and bridges and the economy was cruising along, albeit somewhat slowly, despite the high fiscal deficit and inflation.

Compare this with the last five years, 1997-2001. The average growth rate has remained unchanged at 6.0 percent. This is despite the fact that the fiscal deficit is down to 5.8 percent from 8.2 percent; inflation is down to 4.5 percent from 6.2 percent, foreign investment has increased to 4.5 billion dollars a year from zero; and savings rate has increased to 22.6 percent from 20.4 percent. This was precisely the IMF prescription. Lower fiscal deficit and inflation, high foreign investment flows
and high rates of domestic savings should have led to a much higher growth rates. But they have not.

The answer to the riddle perhaps lies in government investment which fell from 2.4 percent of the GDP to (-) 0.2 percent in this same period. This decline in government savings has been made up by increased savings by the household sector from 16.0 percent to 18.4 percent, and by the corporate sector from 2.0 percent to 4.0 percent. The increase in private savings and investments have not been able to compensate for the decline of the same by the government. Private investment has largely ignored infrastructure. The result has been that India’s growth rate has lagged despite an increase in the overall rate of savings.

The new mantra of the IMF is that India should push the second generation reforms in labour, banking, subsidies and public sector disinvestment. It is said that these would help increase domestic investment and also attract higher levels of foreign investment. But the question is why these same reforms have not yielded results so far. Even if they have gone half-way, there should have been some improvement in the rate of growth. And this ‘half-way’ is quite substantial too. The Supreme Court has recently held that contract labour may be employed for long periods. The banks have been allowed to fix their own interest rates. Corporations have been now allowed to fix the issue price of their Initial Public Offerings.

Food and fertilizer subsidies have been cut. Much disinvestment of the public sector has taken place. The government recently sold controlling interest in the aluminum major BALCO despite stiff resistance from the Congress—the main opposition party. The highest import tariff has been slashed from 200-plus percent to 35 percent. Why have all these reforms not led to a higher rate of growth?

The main difficulty with India’s reforms is that her own savings is not being invested productively. The main impediments are weak law and order situation—kidnapping of family members of businessmen occur at regular intervals; a slow judiciary—it may take years to settle a commercial dispute; red-tapism; and, of course, poor infrastructure—power cuts of up to many hours a day are common in most states. The reduction of fiscal deficit, and public investment along with it, does not help overcome these hurdles.

The result has been India’s growth rate remains placid. There are two entirely different approaches to handle this situation. One, India could continue with a further reduction in fiscal deficit—along with a parallel reduction in public expenditures on police, judiciary and infrastructure—and hope that private investment—domestic or foreign—would make up for the loss. The second approach is to increase government expenditures on police, judiciary and infrastructure, if necessary, by an increase in fiscal deficit and hope, again, that private investment would follow in league.

The record so far of reduction in fiscal deficit has not been favourable. The gains due to the reforms undertaken since the early nineties have been nullified by the loss due to weaker policing and public investment in infrastructure. The solution, then, is to continue with the reforms but along with an increase in government expenditures on measures that would boost private investment.

India had achieved a decent six percent growth rate in the late eighties with government investment leading the way. There is no reason why she cannot attain a nine percent growth rate with an increase in overnment investment along with the second generation reforms.