COVER STORY (Spotlight Weekly)

Quest For Unfettered Understanding

Even a decade after the restoration of democratic system in Nepal, transparency is still lacking in the formulation of Nepal-India relations. Despite the drastic changes in the global, regional and domestic environment in the period, the continuation of the practice of traditional dark room diplomacy in Nepal-India relation has resulted in brewing suspicions in the minds of Nepalese citizens. Can Prime Minister Girija Prasad Koirala shift this trend remains to be seen?

By KESHAB POUDEL

In his fourth tenure as prime minister, Koirala is going to India for the second time next week on a five day official visit. Since he first visited India eight years ago, there have been many ups and downs in the relations between the two South Asian neighbors but nothing has changed in the mentality of decision makers on both sides.

The tendency on the part of the government, however, shows that nothing has prompted the leadership to take the people into confidence and bolster its stance in dealing with India.

Prime Minister Koirala has spelt out five-point agenda for his visit: Kalapani border dispute, review of Nepal-India Peace and Friendship Treaty of 1950, border management, Bhutanese refugee and water resources. Like other political parties, he does not include trade issues with India in his agenda.

Only a few people seem to be aware about the problems existing between the two countries. In the water resources front, Nepal's land in more than 20 places have been inundated due to the construction of dam and barrage in Indian territory contiguous to the international border including in Laxmanpur.

Of serious economic consequence to Nepal is the recent imposition of special additional duty by India on Nepalese exports to India. Besides, there are border disputes in more than half a dozen of places including Kalapani. Though it is becoming less relevant, every one is talking about the treaty of 1950 as demanding top priority.

From the ruling party to the opposition, all are raising the expectations of people as if this visit will sort out all problems. Too much talking on sensitive issues by different political parties, political leaders and intellectuals have added more confusion and complications to the problems. It seems that there is a sinister design to confuse people regarding Nepal's agenda.

"One visit won't be enough to sort out all the problems. Prime Minister Koirala is going with a view to create goodwill and ensure certain understanding that will pave way for negotiations and normal relations," said Shailendra Kumar Upadhyaya, former foreign minister. (See interview in Spotlight July 21-27).

After the visit of former Indian Prime Minister I. K. Gujral to Nepal in 1997, this is the first time Nepalese and Indian leaders are meeting face to face. While Indian side seems well-prepared to push their agenda, how Koirala's team will fare in putting across their points of view is uncertain.

Nepal has democratically elected and accountable government but there seems to be no room for transparency in dealing with the bilateral issues with India. Although Prime Minister Koirala has forwarded a five-point checklist, details of these issues are still unknown. The secrecy on the part of Nepalese officials has given room for misgivings among the public.

Like Indian counterparts who use media to inform their public about the state of relations and agenda, Nepalese leaders, too, should tell people what they are going to do through their own media.

Openness and transparency are basic elements of modern democracy. But still, people have to rely on speculation about what Nepal and India will agree to do. Such suspicion creates confusion in the minds of people.

"The time has come to review Nepal-India relations in changing context and reshape relations with new line of thinking," said Dr. Lok Raj Baral, former Royal Nepalese ambassador to India.

For example, on Tankapur issue, people were kept in dark till last minute whether it was an agreement or accord. Indian government, however, always disseminates information to its citizens before formulating any kind of policy.

For instance, Indian media have already started publishing different articles and stories to show that Nepal is vulnerable to India's security. The Nepal Game-plan was just one of the strategies to press Nepal to accept India's security perception and also make it known to Indian people.

"We are always in favor of open-ness in Nepal-India relations. During my tenure as foreign minister, I informed the people about the contents of our talks with Indian leaders," said Madhav Kumar Nepal, leader of main opposition UML and former Deputy Prime Minister. "The government must spell out its agenda before the public."

Nepalese and Indian leaders do not tire acclaiming the positive aspects of Nepal-India relations harping on historical, cultural and religious links but in practice the relations are not becoming any warmer. "The Nepal-India relations are very complicated in the sense that they have some peculiar realities. We have disputes because we are very close," said Uddhav Dev Bhatta, former foreign secretary.

The relations seem to be bound by informal factors but in practice it is more formal. Prime Ministers of Nepal and India do not visit respective countries without formal invitations. At a time when informal diplomacy is dominating the world, the two closest countries are tied up in formality.

Nepal and India have many common charactersistics and share the longest open border where millions of people cross without visas or any kind of permit. The leaders of both the countries, however, find it more difficult to visit each others' country. The gap in the close contact between the leaders of the two countries may be responsible in creating hurdles of mistrust.

"There must be frequent visits by the leaders of two countries. If possible, there should be visits to India at least twice a year," said former foreign minister Kamal Thapa. "I had registered the Nepalese proposal to review the 1950's Peace and Friendship Treaty with India four years back, but the delay in the visit at political level stalled the process."

Furthermore, the impromptu statements by various Nepalese leaders and intellectuals complicate the situation. Successive governments had claimed that they have achieved considerable progress in Nepal-India relations but the reality is different.

"Debates on foreign policy issues in Nepal are rare: and when they take place, they remain limited to perfunctory academic exercise which alter very little the decision makers' perspective in the way policies are actually executed. During the Panchayat period, when issues relating to Nepal's foreign policy were considered to be most exclusively within the purview of the palace, debates on sensitive matters were rare," writes professor Shridhar K. Khatri in his article "Nepal in the International System: The Limits of Power of a Small State".

The debate on India-Nepal relations is still rare. The tradition to hide the reality has been maintained even after the restoration of multiparty democracy in the country in 1990. "Despite drastic changes in the global and domestic environment, no substantial discussion on Nepal's foreign policy has taken place, except for a number of seminars on Nepal India relations," Khatri states.

The hush-hush diplomacy in foreign relations is out-dated and is not compatible to the present political system.

At a time when leaders of two hostile states like Israel and Palestine can sit regularly across the table to talk and negotiate on the whole range of issues, what has prompted Nepalese and Indian leaders to hide the entire issue of bilateral relations is hard to understand argue foreign policy experts.

"We must have to be open minded what we are going to do with India. Nepalese leaders always do secretive pacts with India which is a very bad practice," said Hiranya Lal Shrestha, leader of CPN-ML.

In a democratic set up, public opinion plays a crucial role as it gives the leverage to the leaders to put across their views confidently. As both the governments are under the vigilance of public opinion inside and outside the country, it is better for both of them to take public into confidence.

A democratic government at present context is answerable to its public as well as to foreign government and the press.

"The government must tell people what its agenda is. It is the right of the people to know about the relations," said MP and former foreign minister Dr. Prakash Chandra Lohani. I don't think Indian government succumb to the Indian lobbies who are trying to restrict the import of Nepalese products. The important thing is when our export to India and import from India also increase in line with the trade treaty, the expansion of trade is not only beneficial to Nepal but also to India. This is the point Nepalese Prime minister should take into consideration before talking to Indian leader."

For example, there is UN, aiding agencies, friendly countries of Nepal which are concerned about its relations with its big neighbors particularly India.

"Similarly, India is judged by its attitude towards other countries particularly towards its small neighbor. US President Bill Clinton last time had reminded of its obligation to maintain democratic relations with its small neighbors. But this has not been conveyed properly to the people," said expert.

How would people judge the government if it does not tell them what it is going to do? Lots of rumors and controversies are brewing. But the tendency is to push the dirts under the rug. The disputes witnessed in the bilateral relations including that of trade, transit or border needs to be informed to the public.

In the absence of open diplomacy, rumors go ground. For instance, in the past, several Nepalese leaders were accused of selling away the country because they were not transparent.

In his first term, Prime Minister Koirala was inexperienced and ill-informed. He is now a veteran of four terms and informed politician of the country having ridden to power four times during the last nine years. He can thus be expected to strongly represent the nation. As an added advantage, he has a foreign minister in Chakra Prasad Bastola who enjoys a personal rapport with many contemporary Indian leaders. He also served as an ambassador to India after the restoration of democracy.

Current ambassador of Nepal Dr. Bhekh Bahadur Thapa also has a distinct personality with heaps of experiences in governance and diplomacy. In fact, the present team of Koirala is well equipped. Koirala, as country's prime minister must cut across party line and include men of vision and experience in his team who can negotiate firmly in the country's interest.

Given the composition of the team, it can be hoped that they will carry out a a proper dialogue with their counterparts. "We hope that they will not betray the trust of the people by making impractical negotiations with their friends," said one foreign policy analyst.

Diplomatic distrust, mutual tensions and territorial disputes have dominated the bilateral relations between Nepal and India over the last five decades. Even when political leaders came to occasional agreement, bureaucrats always express hostile attitude towards friendly relationship, say foreign relations experts.

"Nepal has to put its stand clearly before Indian leaders during the visit of Prime Minister Koirala regarding different issues like trade, water resources and others," said MP and former foreign minister Dr. Ram Sharan Mahat."In addition the inundation problem in various border towns and villages due to embankments built by India on the other side, many parts of terai region are being denied the opportunity of being irrigated with international support because of Indian objection. This has happened in respect of places such as Kankai, Sikta and Babai which had to be aborted after initial investment. The objection is basically raised on the theory of consumptive use down stream as India has been developing irrigation net work in their parts of the territory. This is unfair. Therefore, countries should reach on agreement to the effect that Nepal's consumptive needs should be given first priority for the use of water flowing from our territory."

"After all our requirement is very modest. It is necessary that India takes into account Nepal's consumptive need of water while developing irrigation facilities down stream."

India needs to be open and transparent as well as large-hearted according to its size. Nepalese are expecting no less. It is also time to take a fresh look as to how much of the benefits that this country was supposed to have received from Kosi and Gandaki projects have materialized.

Nepal's geographical location is also responsible for periodic fluctuations in relations with India. The unseen cold war between India and China remains major factor to curtail the democratic spirit in restoring the cordial relationship between the two countries.

"The tension in China's relations with Nepal and Bhutan are by products of Indian relations with both these countries. Both China and India are apprehensive about other becoming excessively influential in these two Himalayan kingdoms," said J.N. Dixit, former Indian foreign secretary in Himal, June 1998 issue. "While Nepal has shown a tendency to play each of its large neighbors against the other, Bhutan, being more dependent and hence closer to India, does not have a strong relationship with China."

As long as the cold war between India and China continues, one has to see many ups and downs in Nepal-India relations. " The other countries of South Asia can contribute to this process by encouraging India and China to sustain the efforts to develop 'normal' bilateral relations," said Dixit.

It has been a common criticism that Nepalese side always lacks appropriate homework before entering into important negotiations with India. Moreover, the indiscriminate bureaucratic shake up that Girija Koirala affected in 1992 has had great adverse effect on the working of Nepalese bureaucracy. It is believed that Prime Minister Koirala himself is regretting it now. But the foreign ministry spokesman Gyan Chand Acharya thinks otherwise. He shows enough confidence when he says "We are making thorough preparations on the agenda we would take up with India."

Being close neighbors there would always be some points where both countries fail to see eye to eye. India, by virtue of its size, might and global influence can protect her interests, like they did when they convinced the international donors not to support Nepalese irrigation projects in the terai. Nepal can neither assert her right nor influence the outside world. India knows here priorities and takes appropriate steps to further them. Their concern on water resources and security needs no emphasis although the stress on the latter in often overblwon.

Nepal's priorities are over all development. While Nepal should take up issues that would accelerate Nepal's economic development. Nepalese politicians prefer to indulge in emotive matters to raise public passions in consonance with their political ideologies.

Moreover, Nepalese leaders raise issues on piece meal basis. After the Laxamanpur barrage incident all parties have forgotten the issue of Bairgania of Gaur. The Susta Narsahi dispute was hot cake in Panchayat days but today nobody knows its status even.

How many irrigation projects were halted following the protest of Indian government and what happened to Kankai, Babai, Saptagandaki, Kosi, Sunkosi diversion and other projects.

We must deal all water resource issues on a package basis instead of dealing them individually. All this is possible if there are more frequent visits among political leadership by taking people in confidence.

"Our recent experience has shown that the development of parallel democratic institutions and the sharing of common values will ensure a better understanding between the two people and governments," writes Nepal's first Permanent Representative to UN Rishikesh Shah in his book New Direction in Nepal-India Relations. "India could help Nepal transform the bilateral relationship from dependence to interdependence with a dozen of multipurpose projects for power, industries, irrigation and water transport. It is high time mutual suspicions and fruit-less debates give place to positive cooperation in the economic sphere."

There is a constant need to revitalize them in view of the changing patterns of international geo-politics and economic cooperation brought about by the worldwide technological revolution.

The history of Nepal and India touch each other at many points. Great intellectual and social, religious and philosophical movements have criss-crossed the frontier.

Since the government in Nepal do not bother to take the people in confidence they seldom command their support. As a matter of fact, such important internationas visit should be bolstered in unison by the whole nation. Unfortunately. This does not happen in Nepal. Koirala is visiting India in a charged atmosphere when the Indian media are baring their teeth. If he can manage to comeback unscathed that in itself would be a big achievement.

NEPAL -INDIA Economy, First

Though India may withdraw additional duty on Nepali exports during PM's visit, a number of issues remain that might make or break the bilateral economic ties

By BHAGIRATH YOGI

Besides political baggage, Prime Minister Girija Prasad Koirala will have no less a baggage related to economic issues between the two countries when he leaves for New Delhi on Monday (July 31). From immediate problems like 4 percent special additional duty (SAD) imposed on Nepali exports to India for the last four months, business community want him to talk issues like removing procedural hassles at the Calcutta port and recognize Nepali standard mark in India.

"The provision of SAD has badly affected Nepal's export business to India and hence, should be given top priority," said Pradip Kumar Shrestha, President of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI).

Indian Finance Minister Yeshwant Sinha, presenting his budget on February 29 this year, proposed 4 percent SAD on all the imports to India. At a time when Nepali exports to India were picking up thanks to the bilateral trade treaty concluded in December 1996, the decision came as a major shock to Nepali business community.

"The provision is against the provision of the bilateral trade treaty. So, it should be scrapped immediately," said Dr. Ram Sharan Mahat, former Finance Minister and a Nepali Congress lawmaker. The treaty provides duty free access to goods manufactured in Nepal except those in the negative list such as liquor, tobacco and cosmetics.

Not only exports of items like vegetable ghee boomed in the aftermath of the treaty, companies like Dabur Nepal (Pvt.) Limited and Nepal Lever Limited (NLL) that made Nepal a base to sell their products in northern India found their margin of profit eroded with the new provision.

According to knowledgeable sources, companies like Dabur and NLL sell their products to their parent company in India at the `manufacturing rate' with a profit margin of 5 to 6 percent. Other Nepali exports also transact at almost similar profit margin. "Besides paying countervailing duty and sales tax, the imposition of SAD has almost wiped out profit margins of Nepali products into Indian market," said Mahesh K. Agrawal, former President of Nepal Chambers of Commerce.

Nepali officials raised the issue during the recent visit of Principal Secretary to the Indian Prime Minister to Nepal. Sources claimed that Indian officialdom has realized the issue and may even withdraw the provision if the Prime Minister could put the issue in right perspective.

For quite sometime now, Indian officials have made it mandatory for Nepali food products to be tested in far-away labs within their territory before selling in the Indian market. This has not only added to the costs, sometimes even resulted into waste of products. "The Prime Minister should take initiative to get Nepali standard mark recognized in Indian market so that we don't have to undergo unnecessary hassles," said Shrestha. "Talks should be held to end hassles at Calcutta port in India."

The issue of duty free access to Kodak products of India may also surface in the talks, sources said. Kodak has already closed down its operations in Nepal after India refused to provide duty free access to it saying that it was not a manufacturing product. US President Bill Clinton had also raised the issue during his visit to India, reports said.

Growing trade deficit with India is another matter of worry for Nepal. Nepal's exports to India stood at around 1.55 billion Rupees in 1990/91, which has risen to more than 33 billion rupees in the first 10 months of the fiscal year 1999/00. Similarly, imports from India have risen from 7.32 billion in 1990/91 to nearly Rs 18 billion last year.

Nepal's major exports to India include vegetable ghee, tooth powder, goods made up of jute, soaps and polyester yarn. Similarly, imports from India include vehicle and parts, medicine, cotton thread, machineries and rice. Interestingly, Nepal used to export rice to India till mid-eighties.

From the investment point of view, India is the single largest investor in Nepal. Even the multinational companies like Unilever have entered Nepal through India. While companies like Dabur and Hindustan Lever have been expanding their plants and businesses in India almost every year, their subsidiaries in Nepal have failed to do so. "This means that there must be some problems in Nepal's treatment toward these companies," said an analyst. "More than a single concern like security, investors look into a total picture. But Nepal has failed to present herself as an attractive investment destination basically due to bureaucratic hassles."

Recent Maoist attacks on multi-national companies in Nepal may have also added threat to the foreign investors. Though the government has assured the business community that it will give top priority to the security of industry and businesses, it can't be taken at face value. Recent attacks on Surya Tobacco godown and Colgate-Palmolive factory are enough to scare prospective investors, analysts say.

"Since our market is small, foreign investment won't come here unless they can be sure about their access to a larger market (read: India)," said Agrawal. "Nepal should also look into promoting bilateral relations in the areas like hydropower, tourism and information technology."

With the hijacking of Indian Airlines plane that left Kathmandu for New Delhi in December last year and subsequent suspension of IA flights to Nepal, the number of Indian tourists visiting Nepal has dropped by almost one-third, said officials. With IA resuming its flights and Nepal Tourism Board (NTB) launching an ambitious Rs 20-million promotion campaign in India, the trend seems to be reversing. "India is a very important market for us from tourism point of view and we have been targeting big Indian cities like Mumbai and Bangalore in our promotional campaigns," said Tek Bahadur Dangi, marketing director at the NTB.

On the water resources front, passing of the Power Trade Agreement (PTA)—that was initialed by junior Ministers of Nepal and India in 1997-- by the Nepali Parliament could go a long way in attracting private foreign investment into the sector. Unfortunately, ruling and opposition parties here have locked their horns over the issue whether the treaty should be passed with simple majority or two-thirds majority.

Another potential area of cooperation between Nepal and India is information technology. By choosing Bangalore, the cyber capital of India, as his only destination out of Delhi, Prime Minister Koirala has indicated that he is serious to develop the sector back home. Nepal is the only country in the region where VSAT can be set up freely in the country. But lack of infrastructure and necessary policies and laws have hampered the growth of the sector.

In short, there are ranges of areas where Nepal and India can work together and reap mutual benefits. But what is needed is shedding off cold-war mentality and moving ahead to meet new challenges. If Koirala's visit could contribute even a bit in that direction, the Nepali business community may cherish it for long.