View Point (Spotlight Weekly)

Economic Dimension of Conflicts in South Asia A Case of Nepal III

By Ram S. Mahat

Question of Sustainability

Human Development Report in South Asia 2002 estimates that Nepal's armed forces increased by 46 percent during 1985-99, and the per capita defense expenditure rose from US $1.3 to $2.1. Statistics published by Government sources based on budgetary figures show that the combined police and military expenditure as percentage of GDP increased from 1.8 percent in 1990-91 to 2.3 in 2001-2. However, the actual expenditure is far greater than that shown in the budget. Allocation for various items including arms, ammunitions and communication equipment, flying equipment such as choppers with night vision facilities and new recruitment are made through extra-budgetary decisions, which in recent years represent about 20 percent. The per capita defense expenditure including non-budgetary allocation at present represents approximately US $ 4 at present. This figure apparently not high by regional standard, should be viewed against the traditionally low military spending of Nepal and increasingly displaced social investment in a country whose per capita income is already the lowest in the region. Furthermore, assistance extended by various countries like India, UK and, USA under bi-lateral arrangements are not reflected in these figures. The expanding size of the armed forces and police has meant not only additional allocations, but will add huge recurrent liabilities in the long run with implication for future sustainability.

Given the limitation of the existing security system to deal with the guerilla warfare which was exposed at the height of Maoist insurgency, the need for a strengthened security force capable of strong counter insurgency actions can hardly be exaggerated. This will require proper weaponry, and logistics suited to the kingdom's terrain. A core concept program to expand the army is under implementation. A para-military force in the form of armed-police has already been set up. The question, however, is one of sustainability of the rising military spending, and competing claims from priority social sectors for the limited resources in a country where poverty and impoverishment has already provided enabling habitat for conflicts. The recent decision of the Royal Nepal Army inviting tenders to supply military hardware including tanks and armored gunship helicopter/aircraft has already provoked controversy and debate. A leading journalist writes:

The country seems to be caught in headlong rush towards an unsupervised, unrestricted military build-up that it can ill afford. One wonders if there is proper discussion even within the military command about the need for and implications of adding tanks, helicopter gunships or bombers to the arsenal. What seems to be deliberate plan to acquire such weaponry must be questioned primarily because of the lethal internal consequences, both in military terms and the larger inter-institutional equilibrium of the state.

The implication of large army and unsupervised weaponry is not confined to questions of its immediate rationale and long-term sustainability. The increased firepower and their nationwide deployment of the army are giving them the status in the national affairs which they never enjoyed before. It is no accident that in recent months they made several controversial statements on political matters, which have seriously raised question about their political neutrality, confirming the widely-held suspicion that increased military strength enhances the aggressive behavior of some regimes. Furthermore, one of the principal demands by the Maoists for settlement is the integration of their own ' people's army' into the RNA to transform the present army into a true national army under civilian control. The proposition is debatable on political, practical and economic grounds, and may not find acceptance across political lines. But these are not happy portends.. Therefore, some scholars have already started making de-militarization proposal. They think - the best option will be a significant reduction in the defense forces, and demobilization of insurgents, either unilaterally or through negotiation between warring parties. The demobilization can be negotiated in exchange for appropriate compensation arrangement. A third option, although unrealistic, of total demilitarization, demobilization and democratization (a la Costa Rica) has also been proposed as the foundation for Nepal's peaceful future.

Peace Dividend is Possible

Resources are fungible, easily liable to be transferable to other uses. Under poverty-ridden conditions of South Asia, defense spending has alternative uses involving significant opportunity costs. Every rupee spent on defense implies foregone economic and social opportunities. Naturally, decline in military expenditure will release resources for other priority programs. Mahbub Ul Haque estimated that India and Pakistan increased military budget at the rate of 6 percent per annum over the five decades since independence. A freeze or a cut-down in the military expenditure by 5 percent, through mutual agreement, would release a peace dividend of US $ 80 to 125 billion over a period 1997-2010. If a Mirage 2000-5 is not purchased, it would be possible to extend primary education for 3 million children with that money. A similar estimate for Nepal says - the cost of an M-16 gun will be enough to supply medicines of a village dispensary for one year, or to immunize 900 children against deadly disease.

South Asia is the home of 44 percent of the world's extreme poor that live on less than US$ 1 a day. Recognizing poverty as the most prominent problem of the modern time, the UN General Assembly has committed itself to the objective of halving the global poverty by the year 2015. The main components of this goal are: reducing by half the proportion of people under extreme poverty, universal primary education, elimination of gender disparity in primary and secondary education, reduction of infant and child mortality by two-thirds and maternal mortality by three-quarters, universal access to reproductive health, and reversal of the loss of environmental resources.

To achieve the above millennium goals, we require actions to accelerate growth, reduce income inequality and a massive investment in priority human development programs. Securitization and militarization in the midst of deep and wide poverty is not only ironic but also anachronistic. Security today has a much wider meaning than the traditional military security. Security of human beings against poverty, hunger, malnutrition, illiteracy and natural disaster are no less important than security against lethal enemy attacks. A state while protecting its citizens against conflicts has also the responsibility to address the causes of such conflicts. Poverty is not just an economic issue; it is also a result of social, political and cultural processes whose interactions could worsen or ease the deprivation of the poor. Therefore, anti-poverty program would call for actions to enhance opportunities, empowerment and security in the overall political, socio-economic and cultural contexts.

Investment in armed forces will have to be balanced with provision for priority human development needs. Imbalance between defense expenditure and human development program will only deepen poverty, the root cause of instability. Conventional military security is necessary, but within affordable limits without sacrificing social concerns. Inefficiency, wastage and wasteful practices will have to be reduced and eventually eliminated. Estimates show that a potential peace dividend in the order of US $ 5-8 billion would be possible in South Asia, through mutual restraining of military build-up, if political determination is forthcoming. The potential peace dividend is not limited to the diversion of resources from security investment to social and economic development. The benefits which would occur from increased inter-state and regional trade, investment, tourism and other areas of economic cooperation would be many times higher. It is reported that the unofficial trade between India and Pakistan is around 2 billion US dollars, compared to just 200 million US dollars in official figures. This would indicate the potential opportunity from cooperation. In Nepal, proper restructuring of security budget could release a peace dividend of Rs. 2-3 billion, if the security strength could be reverted to the pre-insurgency level, if the violence could stop. The return to peace would spur economic activities throughout the country and revive economic growth, which will bring direct benefits to the people. However, this will require a commitment from all sides to settle for a genuine sustainable peace within a framework of truly representative and participatory democracy, capable of addressing the aspirations of all forces and communities. For this, all principal political forces including the monarchy will have to sacrifice something to achieve a greater goal of peace and prosperity of present and future generations. On the part of Maoists, they will have to give up the romantic aspiration of total state control by eliminating all institutions of "old state power" through violence and terror. There is no alternative to peaceful, competitive and democratic politics within the framework of multi-party system with constitutional monarchy in Nepal, with genuine reforms and affirmative actions to empower and provide enhanced opportunities to broad swathes of population

(The concluding part of an article written by Dr. Mahat. This article was presented as a paper in New Delhi at Delhi Policy Group) (Note: footnotes have not been shown here)