Shifting focus on retail banking

By L D MAHAT

Deregulation in the banking sector has forced the banks to focus on cost reduction; improving the speed and quality of service to face stiff competition and enormous challenges. Entry of more number of banks in the market has created intense competition in the banking industry. This has led the banks to operate under thin interest spreads, declining margins and rising costs. This was not the case until two years ago. Banks were getting a lot of business because of expansion in the economy. Consumer finance was not a favored subject for them. They were keen to finance industrial and trading activities.

However, with slowdown in the economic activities in the recent past, banks became selective in their lending operations as lending to industrial and trading activities as working capital and term loan requirements. Because of uncertainty in the economic environment, banks diverted their resources to a new area called retail lending. Retail banking refers to the mobilization of deposits by the banks mainly from individuals and lending to small business and in retail loan markets. Retail banking consists of large volume of low value transactions. Retail banking liabilities are mostly related to various types of deposits accounts and the loan portfolio is dominated by the consumer loans.

Banks are now trying to reduce their risks by diversifying their portfolio and having a thrust on short-term retail earnings rather than blocking funds in riskier medium and long-term loans. Some banks developed consumer finance and housing finance product to attract rich middle class people and the people having fixed source of income and increase lending business. Consumer finance by the banks can also help in minimising the disintermediation taking place in the form of consumer finance offered by the consumer durable companies. Consumer and housing finance not only helps in effective deployment of surplus funds but also diversifies the risk in the portfolio due to large scale of operations. In the present competitive banking environment, differentiated products are an effective method of gaining competitive advantage.

Retail banking requires a moderate level of customer relation. While most of the banks offer the same range of service with similar technology, the level of customer service matters the most in bringing in more business. Dedicated, highly professional junior and middle management supported by senior management could contribute to the success of retail banks. In retail banking, each product to be offered to the customers needs to be well defined, easily serviceable and potentially profitable.

Retail banking is undergoing a transformation. In the past, conservative savers who were content with moderate-yield, low-cost savings deposits, dominated retail banking. However, attitudes and needs of the people are changing now. The new generation of savers prefer to invest to build wealth rather than save to protect wealth, demand exceptionally high levels of convenience, expect better work technology, require information and advise that can be acted on, and prefer a wide range of alternative products. They are highly individualistic and require individualized solutions to what they perceive to be individual needs.

Customer service is one of the most important dimensions of retail banking. Public sector banks compare very poorly with the private sector banks when if comes to the efficiency in services. In order to improve the speed of service the bank should improve the rapport between the controlling offices and the branches to ensure that decisions are communicated fast; and make sure that the officials as well as the staff ore fully amore of the rules so that processing is faster.

While information technology has contributed to major upheaval in wholesale banking, its impact on retail banking has been relatively limited. Corporate clients are more familiar with automated environments, which will facilitate more automation and creation of paperless office. Technology-based delivery channels such as automated teller machines (ATMs) did not fundamentally change competitive position among banks, based on the density of traditional branch networks. So far, Internet banking has not modified this relationship. While the number of banks with Internet sites and offering Internet-based services is growing rapidly, it represents a limited portion of banking transactions.

Retail banking was viewed primarily as a cost centre and source of low cost deposit. But, these days, retail banking represents a major source of competitive strength for the banking industry, as it is a point of direct customers contact. Retail services are uniquely positioned to help banks develop strong long-term relationship with targeted customers and thus differentiate themselves from competitors. Banks look up to retail lending as a possible avenue to augment business in the current context. Consumer financing appears to be a viable alternative to cope with poor credit off takes.

Consumer financing encompasses extension of loans for consumer durable goods, education loans, finance for travel, medical expenses etc. Demand for loans for acquisition of TV, fridge, washing machine, air-conditioners, etc., is on the rise. Banks also offer loans through tie-ups with manufacturer or distributors of such products. Some of the factors that contribute to the growth of auto finance are lower interest rates, poor public transport system, increasing income levels of the people, and availability of finance for even second-hand cars. In fact on account of liberal financing by banks, import of passenger cars, motorcycles and scooters, has registered good growth.

Housing finance is another area which seems to be most promising in the near future due to fall in interest rates, increase in the salary level, changes in lifestyle, offer of various incentives in the form of lower processing and administrative charges. There is stiff competition in the matter of interest rates and rate cuts are announced at frequent intervals.

In retail banking, one of the major problems faced by the banks is the queue problem. The size of queuing will differ from hour to hour and day to day. To overcome this obstacle, banks must ensure that adequate staff is available to man all the branches. With the aid of technology banks can provide ensure faster and efficient customer service. Proper management information system can also be implemented to aid in superior decision-making.

Swami, Sherpas and Catharsis

By ARUN POUDEL

Being cyber-savvy is synonymous with being modern or fashionable these days. People go on and on with Internet surfing, mostly without a definite purpose. I am a maniac surfer, too. However, my surfing is a different type. Instead of the mouse, I surf with the remote-controller. Instead of the computer monitor, I see the results on the screen of the idiot box.

During my all-exclusive sessions of surfing TV channels, I very rarely stay at one site (channel) for more than two minutes. But yesterday morning saw me doing the unusual thing: Watching a humdrum Nepali channel for about fifteen minutes. It was a speech by Swami Anand Arun, the head of the Nepali commune of followers of a controversial spiritual revolutionist Osho.

The speech was on spirituality, mental health, psychoanalysis etc. The engineer-turned-yogi said that about 80 percent people in today’s urban-centred society are insane in some ways. The insanity arises with suppression of emotions – be it sex, anger, envy or anything. "You do not express it, you develop a complex deep inside your subconscious," he said.

As I often take ephemeral delight in applying anything ‘spiritual’ to my life, I immediately decided to go by it. I, therefore, decided to release, through the means of catharsis that the Swami preached, a complex brewing afresh inside me. And what a means of expression than writing for a scribe!

My complex is related to Sherpas. I am jealous of them. They can climb the world’s highest peak Everest for thirteen times, but me – not even once. They can live without oxygen for 22 hours atop the mountain, but I cannot do so for even one minute down here. They can make it in 10 hours, I cannot in 1000 hours. They can do innumerable things that I cannot.

They are world-renowned for mountaineering. They are the first, youngest, fastest, record breaking climbers, and more. I am none. Good Lord! Why was I unable to defeat the big rocky mountains? How wasn’t I born a Sherpa? Why wasn’t I one of the Snow Leopards?

Then, I got a paradigm shift. The term Snow Leopards comforted my jealous heart. I started to see it differently. That Sherpas could make or break umpteen Everest-records has nothing to do with their speciality. Neither is it a measure of their strength or mountaineering skill. A fish can live in water for several years. It does not need an oxygen cylinder. In the thick of the darkest night, an owl can fly and land wherever it wants. It does not need a ray of light. However, nobody would appreciate the speciality and gift of fishes and owls.

As for human beings, a man in Madras can endure a burning 420 Celsius for years. A Siberian does not get frozen at minus 200 Celsius. Does this mean that they are highly skilled at surviving extreme heat or extreme cold? Do they deserve any outlandish appraisal for their otherwise unattainable accomplishments? No way.

I started resembling the Sherpas’ accomplishments with those of the fish, owl, Madrasi and Siberian. I could see the triviality of so and so achievements.

With this, I have now been catharsised. Pretty relieved, I no more eat my heart with envy. Now that my mountaineering complex has been substantially diluted, I bear no more grudge against the Snow Leopards.

Now I have started to respect Sherpas as much as I respect myself. They occupy a highly dignified place in my heart. Their role in introducing Nepal abroad is really appreciable. Nepal banks heavily on tourism and mountaineering for foreign currency earnings. The Sherpas are indispensable part of Nepali mountaineering. They have set more Guinness Book records than any other Nepalis. They deserve true respect, not disparagement in the name of catharsis.

Confucius vs Chanakya

By M R JOSSE

Ostensibly, Indian Prime Minister Atal Bihari Vajpayee’s recent sixday official visit to the People’s Republic of China was primarily about injecting a measure of trust to their roller-coaster 50-year plus relationship.

As most know, it plummeted from the dizzy heights of Hindi-Chini bhai-bhai of the 1950s to the depths of the sanguinary armed conflict in 1962.

TRADE, CBMS

It then stagnated in the rut of an unresolved border dispute for decades while they trod diametrically opposite paths during the heyday of the Cold War when India’s and the Soviet Union’s worldviews and strategic goals meshed, even as the triangular Sino-Pakistan-US relationship deepened and widened. That was then.

Now, one may conclude that the Sino-Indian minuet put on for display in Beijing had chiefly economic and CBM (confidence-building measure) dimensions, which should not be underestimated.

Specifically, the Vajpayee mission to China resulted in agreement that China would set up a $ 500 million corpus for investment in India and that both would target $ 10 billion trade volume by 2005 (or, double the present volume).

While increased trade and economic interaction are, per se, very important CBMs, so, too, is that Beijing and New Delhi have named two high-level special representatives to explore from the political perspective a settlement of the protracted border dispute within an overall bilateral framework. Its time frame, though, has not been spelt out.

Politically, however, the most significant outcome is the Declaration on Principles for Relations and Comprehensive Cooperation signed by Vajpayee and Chinese Premier Wen Jiabao.

Indeed, the Declaration beginning with a reaffirmation of the principles of panch sheel, and including an explicit affirmation that India and China do not consider each a threat to the other, is a vital capstone to the architecture of the new relationship that is being attempted, brick by brick.

TIBET AND SIKKIM

Despite that, what has generated the most interest or excitement are the "concessions" reportedly made by India and China, the former on Tibet and the latter on Sikkim.

While political commentators on both sides of the Himalayas seem to have gone gaga claiming that their side has gotten the better of the other, it may be in order to take a closer look, particularly in a country that borders both Tibet and Sikkim.

First, let’s take the Indian claim that Beijing has "tacitly" accepted India’s annexation of Sikkim, formalised in 1975. The basis for such a claim is that the Memorandum of Understanding (MOU) signed by the two foreign ministers states, inter alia: "The Indian side agrees to designate Changu of Sikkim state as the venue for border trade market; the Chinese side agrees to designate Renqinggang of the Tibetan Autonomous Region as the venue of the border trade market" while Nathu La will be the trade route.

As one Indian analyst explained: "the use of the nomenclature ‘Sikkim state’ and the phrase ‘desirous of opening another pass on the India-China border’ in the MOU amounted to Beijing’s tacit recognition of Sikkim as a part of India."

Not so, said Chinese Foreign Ministry spokesman Kong Quan (obviously a latter-day disciple of Confucius, or Kung Fu-tzu) who denied that China had recognised India’s sovereignty over Sikkim. As he put it, "this question cannot be solved overnight, but we hope this question can be resolved gradually."

Regarding Tibet, the official Chinese press enthused that the Declaration signed by the two premiers "for the very first time recognised explicitly the Tibet Autonomous Region as part of Chinese territory." Notably, however, Indian Foreign Minister Yashwant Sinha told reporters at a briefing that India’s stated position did not amount to a change in policy.

Since both parties cannot be right, what is the reality? Sikkim was considered a vassal state by Tibetan authorities till 1890 when China accepted, through the Anglo-Chinese Convention signed in Calcutta, that in future, it would be a British protectorate. Even following the establishment of the PRC in 1949, or indeed, after the Dalai Lama’s flight to India a decade later, trade continued between the two countries through Sikkim, an Indian protectorate, post-1947.

Such trade ended, understandably, after the 1962 conflict, that is, more than a decade before Sikkim’s annexation by India. Trade stopped because of hostile relations between India and China, not over a change in Sikkim’s condition. In agreeing to resume trade with India through Sikkim Beijing is therefore not making as much of a concession as Indian officials are making out. She has certainly not endorsed the manner of Sikkim’s change in status, a direct result of the toppling of its monarchy.

It is entirely possible that, in time, Indian enthusiasm over the resumption of India-Tibet trade through Sikkim will be replaced by anxiety, both on economic as well as security grounds, specially after the Golmud-Lhasa railroad in completed.

In fact, by repeatedly harping on the argument that China’s has "tacitly" accepted Indian sovereignty over Sikkim, India is exposing her own guilty conscience over the manner in which the "merger" was bulldozed. Apart from "the role played by the Government of India in manoeuvering the political parties of Sikkim and sustaining an anti-ruler movement" (Vide Sikkim: A Himalayan Tragedy by Nari Rustomji), it is worth recalling that the merger took place "under the shield of a heavy Indian presence" which "gave an impression, within and outside Sikkim, that India’s was the hidden hand." (Ibid).

Regarding Tibet, let me point out that the formal title of the Sino-Indian pact on Tibet, signed by Pandit Nehru and Zhou Enlai in Beijing on April 29, 1954 is: "Agreement between the Republic of India and the People’s Republic of China on Trade and Intercourse between the Tibet Region of China and India."

Since India accepted the "Tibet Region of China" formulation as far back as 1954 how is the explicit acknowledgement that Tibet is a part of China materially any different? Is a "region" of a country not its "part"?

On the surface, Sinha is perfectly right is claiming that no material change has be made. Yet, what this modern devotee of Chanakya conceals is why India’s reiteration of position vis-à-vis Tibet should be coupled with a solemn commitment in the Declaration not to permit anti-Chinese activities on her soil – along a reaffirmation of the validity of the pancha sheel doctrine.

Since one key pancha sheel principle relates to non-interference by one state in the domestic affairs of another, the raft of assurances that New Delhi has had to provide on Tibet as a quid pro quo to get the feeble or implied recognition of India’s annexation of Sikkim, there cannot be any doubt that the progeny of Confucius have scored over those of Chanakya.

If anyone still entertains any doubts on that score, I would direct his/her attention to what I regard as the most crucial single outcome of the Vajpayee visit: the acknowledgement in the Declaration that neither country regards the other as a threat.

Although ostensibly even-handed, since it is India which has repeatedly been claiming that China is a threat to her, and not the other way about, this backtracking must also be factored into any objective assessment of Vajpayee’s diplomatic foray to China.

Give leg up to club football

By Suman Malla

Ganesh Thapa, the president of ANFA, about one-and-half years back — at the height of the tension between his own faction and Geeta Rana — once said: "Sometimes I feel like running a club rather than fretting over this squabble."

Well, the squabble may have been resolved. And hopes for better football future have emerged among genuine enthusiasts of the game in its wake with the resumption of football tournaments and initiation of an organised youth development programme.

The recent recruitment of graduates from ANFA Academy by Friends’ Club indeed heralds a new dawn on the country’s football as the academy is being developed into a football nursery.

But what ANFA faces now is the challenge to upgrade the standard of club football. Judging the Martyr’s Memorial League in this context, only six out of the total twelve teams in the fray look eligible for first division status. With the way the league has been run, it is simply too difficult to expect the chasm between them narrowing down any time soon.

There are lots of basic, essential ingredients missing from Nepali football.

Not a single club in the country has got the basic infrastructure to be called a professional club. Forget basic infrastructures, many clubs playing in the National Football League do not have a practice ground for proper training.

While ANFA holds an outlook to qualify a U-17 team to the World Cup, the question arises here is: about the progress thereafter? ANFA should be paying more attention to the club football to ensure that the tempo it created at lower rungs is not washed away in the long run.

Well, providing land to each of the clubs is beyond the scope of ANFA. But it can certainly help the clubs take the issue to the concerned authorities. Even if two clubs have to share a ground between them that would be a big relief to them.

Clubs are equally responsible for the current state of affairs in Nepali football. Though many in Nepal have the "professional" tag their activities and functions are very much amateurish. Clubs only turn professional during the transfer season.

Clubs enter into contract with players for one season and most of their contracts are made without proper paperwork and at the end of the season most the players run from pillar to post for their contract money. Clubs rarely fulfill the contractual obligations to players as per the contract terms and ANFA’s inability to bring forth a proper transfer regulation only provides them with a cover.

Few clubs playing in the league enjoy corporate sponsorship but they fail miserably in fulfilling the mileage aspect of the concerned sponsors. As at ANFA, they too lack the services of professionally competent people and thus marketing and managment is the real problem at the Nepali clubs. The revenue which the clubs generate mostly constitutes donations, membership fees and very little from sponsors.

And all that lead to the national team’s performance at the international level. ANFA should come up with prudent management if it is to stave off shameful results.

The dismal showing of Nepal at the eight-team competitions in Dhaka has more to blame on incoherent policy of the national association. While many other participating teams including the host Bangladesh, Maldives had been undergoing long preparation in the lead up to the tournament.

When Nepal played against Bangladesh, it was the first international match that the national team was playing after almost two years. Because of a self-imposed claustrophobia, Nepal, after returning from the World Cup qualifiers 2001, was forced to stay away from all friendlies and international tournaments.

Little wonder then, the team, apart from a few flashes of brilliance, otherwise struggled to catch their rhythm. On top of very little practice session, what added more woes to Nepali team’s cause was the ANFA’s decision to bring in foreign coach at the eleventh hour.

There is plenty of football ahead for the Nepal team this year, starting with Asia Cup qualifiers. Expecting Nepal to qualify through to the finals from the tough group involving South Korea, Oman and Vietnam would simply be too much of an ask. Only if ANFA wakes up by the bitter experience of the third SAFF Championship, can the team avoid being a laughing stock in South Korea this October.

Who’s afraid of polls?

By Beena Kharek

Autocracy is no alternative to democracy. And Nepali democracy is being put to a full definitive test as never before. What holds the key? Conflicting views are colliding to make matters grayer. Is it the revival of parliament dissolved by a democratically elected Prime Minister of the majority parliamentary party? Or an all-party government as per Article 128 of the 1990 Constitution? Or the elections—one that upholds the achievements of the 1990 Popular Movement or another that includes more?

Some are even proposing to mobilise members of the Upper House, and the Speaker and Deputy Speaker of the Lower House to form a more democratic government than the one led by Surya Bahadur Thapa. That’s just the latest flash in a hot pan of proffers, and apparently holds not much significance.

Finding coherence in confusion is not everyone’s cup of tea. Nor are our five ‘agitating’ political parties giving it a sincere try. Even though they remain away from formal talks with the Thapa government, unofficial channels are being used. Since his appointment on June 4, Thapa has been making a house-to-house visit to garner support of mainstream political parties for the Maoist talks and other issues of national concern.

CPN-UML General Secretary Madhav Kumar Nepal and Nepali Congress President Girija Prasad Koirala are still questioning the legitimacy of the Thapa government. With each force
refusing to budge an inch forward or an inch backward, the going is getting tougher for one and all.

Maoist talks

Even though democracy continues to retain its appeal, the stalled Maoist talks lurk as brain-teaser. Because of the Maoist insurgency, the last three years have been very painful when measured in terms of deaths, destruction and diversion of scarce national resources. The cease-fire declared five months ago generated hope, and so did the two rounds of talks, albeit held after long intervals. But a third one is taking an agonisingly long time to come by.

A paralysis of sorts is gripping the nation. The panacea lies in bringing the Maoist talks to a logical conclusion, and incorporating the rebels into a ‘broader’ democratic framework. This is precisely what the five parties of the ‘joint movement’ are doing, some may say. But it needs no forethought to conclude that the movement launched on May 4 is fast turning into a gathering of the stranded few whose destination is blurred. Differences amongst the main leaders of the parties are widening day by day.

Strong voices against the movement are dominating the bazaar of views and cues. CPN-UML’s Khadga Prasad Oli and Radha Krishna Mainali do not see any ground for the restoration of House and the significance of the ongoing movement, but they do not seem to be against holding elections. NC leaders like Shailaja Acharya and Speaker of the House of Representatives Tara Nath Ranabhat, to some extent, appear to share similar views.

Last autumn the then PM Sher Bahadur Deuba’s inability to hold elections on time was taken as a compulsion to activate a somewhat gray area of the Constitution. Then began the invoking of Article 127, under which the King appointed Lokendra Bahadur Chand as Prime Minister, replacing him by S B Thapa afterwards.

Article 127 is being interpreted in many ways. Technically, the King is not at fault. But it is against the spirit of the constitution, say some of his critics. Practically speaking, Thapa does not have a strong base, as did Chand, when compared with the combined strength of the five agitating parties.

Elections

Even after weeks, the movement has not been able to achieve anything, besides stoking confusion, uncertainty and undemocratic practices. Forgotten in the mayhem are elections, the lifeline of democracy.

An ideal situation for polls will be when the Maoists join the electoral fray. But they are unlikely to field their candidates officially in the absence of any major breakthrough in the ongoing talks. That may, however, take any length of time, or the talks may break down.

Elections and Maoist talks should not be correlated at the cost of the former. This would make democracy increasingly less democratic. They should, therefore, be treated as two separate but integral parts of the country’s multi-party democracy.

Whatever the voters’ turnout, no democratic political party should fear elections and the results. After all, the Constitution also allows elections at any time. Lack of will power and courage amongst the political leaders, not the Maoist rebels as before the January truce, is creating barriers.

Prime Ministers in the past had shown no qualms about dissolving parliament and declaring snap polls, even though such a move meant undue state expenses and extravaganza that tested the thinning public patience.

All for the wrong reasons, G P Koirala dissolved parliament in 1994, Man Mohan Adhikari attempted it in 1995 within six months since he came to office and Koirala again announced fresh polls in 1999 before parliament completed its full tenure. Sher Bahadur Deuba repeated his erstwhile mentor’s folly early last year. This time announcing snap polls will be for the right reasons.

Then why should political leaders who jumped on the bandwagon of the fifth phase of movement against ‘regression’ be afraid of elections?

They recall the combined strength of the five parties in parliament that was constitutionally dissolved, little realising that they are wasting their time. PM Thapa, too, preferred to follow rigours of elections and limited parliamentary practices (eg vote of no-confidence) permitted by the ‘reformed’ partyless Panchayat system in the post- referendum period. He stood up until he was voted out in the eighties.

Again, why do the leaders prefer to imprison themselves in the glory earned five years ago and fear to face fresh popular verdict?

Biotech food, Frankenfood is here to stay

Dan Glickman & Vin Weber

The trans-Atlantic battle over agricultural biotechnology is the biggest food fight since the one staged by John Belushi in the movie "Animal House." While it may be almost as entertaining, it is not likely to be any more productive. Nothing good can come from a situation in which Europeans talk of "Frankenfoods" and the US calls Europeans "Luddites." Coming to an agreement about genetically modified (GM) foods will take clever diplomacy on both sides, not name-calling.

The ministerial conference on agricultural science and technology that took place in Sacramento this week, and the recent G-8 summit in France, hardly eased the entrenched positions on agricultural biotechnology. The United States suggested that the Europeans abetted African famine by discouraging African farmers from growing pest-resistant GM corn, or even accepting US food aid shipments containing GM corn, for fear that Europe would bar future African exports. European leaders have little to show for their efforts to end Europe’s de-facto moratorium on the approval of new GM food. Even if new GM foods are approved, required labels would likely mean few sales among the wary European public.

The United States has repeatedly pointed out that there is no evidence that GM foods currently on the market are harmful to human health or the environment. The Europeans counter that without extensive, long-term monitoring and research there is little proof that it is will not cause harm.

Even though the recent filing of the WTO complaint against the EU by the US and like-minded countries has upped the ante in this dispute, there are some hopeful signs. The international food safety office, the Codex Alimentarius Commission, is making progress in establishing an international foundation for assessing and ensuring the safety of biotech foods. Even the EU is making progress towards ending their moratorium on biotech foods and establishing their own regulatory systems.

In the United States, Several high-profile regulatory missteps have showcased both the strengths and weaknesses of the US regulatory approach. In 2000, food companies pulled foods from the grocery store shelves when it was discovered that they contained low levels of a type of GM corn that had been approved only for use in animal feed. More recently, an experimental corn modified to produce pharmaceuticals was accidentally mixed with some food crops. It was caught before it went into the U.S. food supply.

While no one was harmed in either case, these events suggest that steps can be taken to improve and modernize our own regulatory system. This notion was further advanced this week when the International Council for Science, an umbrella organization for more than 100 national academies of science, released a comprehensive study confirming the safety of biotech products and calling for the modernization of regulations for GM organisms and foods.

So, can the endless finger wagging now finally end? We believe so.

We recently had the opportunity to play a role in such an effort on the domestic front. The Pew Initiative on Food and Biotechnology brought together a diverse array of views to examine whether the current U.S. regulatory system needed to be modernized to address the next generation of agricultural biotech products. Despite long-held disagreements, the participants sifted through the facts and found themselves in substantial agreement on many issues. Such efforts could help pave the way toward recognizing both the value of agricultural biotechnology and the need for a trustworthy, credible and effective regulatory system. Consumer trust in the regulatory system is an essential condition for the acceptance of genetically modified food. This is as true in the U.S. as it is in Europe.

Agricultural biotechnology has been around for many years and is unlikely to go away. Rather than fight about whether the biotech genie is good or bad, all parties need to sit down and collectively figure out how to manage it. Without efforts to find agreement, we risk wrecking the current round of trade negotiations, increasing the schism between the EU and the US, and impeding the use of a technology that has such great promise for the future.

(The authors are advisors to the Pew Initiative on Food and Biotechnology.)

International Herald Tribune

Vajpayee’s China visit, A Nepalese perspective

By Bhagirath Yogi

Indian Prime Minister Atal Behari Vajpayee has completed his six-day official visit to China in late June. The first high-level visit by an Indian leader in the last ten years, Vajpayee’s visit has succeeded in addressing a number of issues, which have remained ‘bones of contention’ between the two Asian giants for years.

Important among them are Chinese side agreeing to conduct trade with India through Nathu-La pass (bordering Sikkim and Tibet) and India’s declaration that Tibet autonomous region is part of China. While both the sides have insisted that there haven’t been any shift in their traditional policy on these two issues, those watching Sino-Indian relations since the 1962 war and even prior to that concede that in fact both the sides have made a huge leap forward in improving their bilateral relations. So, what may have led to such developments at this point in time?

Since the end of the cold war in the late nineties and the emergence of the United States as the sole super power in the world, propositions like non-aligned movement and south-south cooperation have almost lost their relevance. The US continues its "global war against terror" in the aftermath of the September 11, 2001 attacks.

The forced removal of Taliban regime in Afghanistan, the Iraq War and growing US pressure against countries like Iran and North Korea have given countries around the world no choice but to adjust to new realities. Even institutions like the United Nations have been forced to adjust to the new realities or face increasing alienation as being advocated by countries like Australia—a trusted US ally.

From Russia to the European Union and from India to China, all major international and regional powers have been re-defining their domestic and external relations of late. Closer home, India and Pakistan entered the exclusive "nuclear club" in 1998 and China joined the World Trade Organisation (WTO) a year later.

For the two neighbours that house one-fifth of the world population (nearly 2.3 billion), to remain hostage of mutual suspicion even in the new millennium was no more going to be a prudent policy. Reports say the existing US dollar five billion a year trade between India and China could double or even treble in every few years. Leading Indian software companies already have their presence in major Chinese cities and tactful Chinese businessmen know how to tap the one-billion strong next door neighbouring market for their mutual benefit.

But more than making perfect economic sense, thaw in Sino-Indian relations has clear political and strategic overtones. While India has blamed China of supplying military hardware as well as missile and nuclear technology to Pakistan—its arch rival, China has keenly watched growing military and economic ties between the US and India over the last few years.

As a section of the foreign policy hawks in the Washington D. C. are trying hard to sell their "Contain China" policy, countries like India have watched and assessed spectacular economic performance of and reasonable political stability in China with great care. Many, hence, see the recent breakthrough in the Sino-Indian relations dictated as much by their growing ambition to play a more powerful and decisive role in the regional and global affairs as to fulfil their national interests.

While it will be naïve to think that proximity between India and China will pose any kind of threat to the predominance of the US in global affairs, it will equally be unrealistic to conclude that they will halt or slow down their military/strategic ambitions in view of their new-found cordiality. In fact, India has been reported to be preparing to test-fire a longer-range, nuclear capable Agni ballistic missile later this year. Experts say, its range of over 3,000 kilometres would place portions of China within (India’s) striking range. On the other hand, "giving to the Pakistan armed forces a feeling of psychological parity with India and keeping India preoccupied with Pakistan are still important objective of Chinese policymaking in the South Asian region," wrote B. Raman, a retired senior Indian bureaucrat, in a recent article.

For Nepal, thawing of relations between India and China presents both opportunities as well as challenges. Nepal enjoys cordial and friendly relations with both of its neighbours and also has private sector business links in place to further its economic relations with both the neighbours. King Gyanendra paid his first-ever state visit to India in June last year and promptly visited Beijing within two weeks.

It has been Nepal’s official position not to allow any activities inimical to its neighbours from its soil. But, protecting and furthering one’s national interests so as not to hurt fundamental interests of two resurgent neighbours is a much more difficult task as has been experienced by Nepal in the recent times. While India has alleged that Nepal is being used as a base by "third-country" elements to launch terrorist attacks against her, China wants Nepal to contain pro-Tibet activities and even repatriate the Tibetan refugees.

Three Himalayan kingdoms— Nepal, Bhutan and Sikkim— served as buffer states between British India and China until 1947. Newly independent India entered into a treaty with Bhutan in 1949 that allows it to oversee foreign and military affairs of the tiny Himalayan kingdom. Late Indira Gandhi annexed Sikkim into India in 1975. Though Nepal has peace and friendship treaties both with India and China, the latest developments, particularly China agreeing to conduct trade with India via Sikkim and India’s on-the-board acceptance of Tibetan autonomous region (established in September 1965) as part of China could have serious implications to Nepal’s future standing. It could even be interpreted as Chinese willingness to accept Indian ‘dominance’ in South Asian region including in the areas right in its backyard.

Only a politically stable and economically strong country can pursue its foreign policy in a much balanced and confident way in the rapidly changing interenational and regional scenario. But, in our case, the Maoist insurgency, royal palace massacre and continuing political wrangling within the country have given Nepal an image as a nation that is too fragile to handle its domestic affairs. Both India and China have their security interests predominant while dealing with Nepal. They would also not like to see the US predominance in their neighbourhood. Unfortunately, as three major political forces in the country are still preoccupied to settle their own scores, Nepal may be losing its sovereign and independent standing too fast. Keeping one’s house in order would be the best policy for Nepal before preparing to adjust to the changed regional and global scenario.

(The author is a producer with BBC Nepali Service)