Nationalism without democracy is a logical fallacy

Murari Prasad Upadhyaya, Executive Secty. General, ADDCN, Nepal

TGQ1: You Mr. Upadhyay, recently presented the salient features of ESCAP region survey. What is the trend of the economies of the countries in the ESCAP region?

What factors did contribute the economies of some countries to grow in the recent years and likewise what could have been the drawbacks for the same to decline in certain countries? Your comments please.

Mr. Upadhyaya:  The economic growth of the developing countries in the ESCAP region was at 6 percent per annum in 2003, which was higher than in the previous year.

Against the bleak prospect forecast for ESCAP countries in the aftermath of the Asian crisis that erupted in 1997, the region showed remarkable resilience. Within two years most crisis stricken countries regained pre crisis growth rate. One of the principle reasons was the significant growth of intra-regional trade fuelled by huge Chinese demand for intermediate and primary goods from within the region. Chinese economy that was growing at around 12 percent is still maintaining the lead in the region. As the inflation rate was also kept in check at low levels in most part of the region, investment demand continues to keep on rising. Other things being equal, the collective growth rate in this region is expected to continue growing at the same pace in 2004.

Despite steady depreciation of US dollar, the fixed exchange rate maintained by China vis-à-vis US dollar has protected its currency from appreciating thereby maintaining its comparative export advantage. Remarkable growth rate of Indian economy (8 percent) in 2003 is mainly attributed to agriculture due to good weather conditions, which cannot be predicted for 2004. The fixed exchange rate has overheated the Chinese economy. Sooner or later it has to slow the rate of growth of economy. Moreover, the robust economic growth forecast for 2004 is based on the assumption that the unraveling of global imbalances will not disrupt financial markets and therefore macroeconomic fundamentals will remain intact. But, global imbalance due to fluctuations in exchange rate parity is likely to encourage protectionist tendencies amidst the failure of WTO negotiations in Mexico in 2003. Similarly, stimulation of domestic demand due to higher fiscal spending at low interest rate for three years has greatly contributed to both public as well as private debt. In this scenario, region's economy will have no option but to pursue tighter monetary policy and fiscal consolidation, which will have direct and downward implication on current state of growth if prudent policies are not brought forward.

TGQ2: Nepal is a lost case, economically speaking, say senior economists of the country. However, you have depicted the Nepalese case in a positive manner in the survey. Is it what you have portrayed or just the otherwise given the fact that the country has had to experience several explosions, bundhs, strikes over the periods which apparently made no difference to our economy. How it could be that? Your remarks please.

Mr. Upadhyaya: The positive picture of the Nepalese economy that the survey portrays is time relative. In 2002 it actually contracted but marginally (-0.6 percent), It was the year of widespread escalation of Maoist insurgency in the country. The survey shows a recovery in 2003 when the economy grew by 2.4 percent. It is attributed to the brief ceasefire and some degree of normalcy benefiting agriculture, industry, transport and services sector. The projection of further higher growth in 2004 and 2005 is based on assumption of continuation of normalcy following ceasefire. Had the 2003's ceasefire continued till present, I do not see why economy could not have grown further? Here the survey is not talking about a big leap. It is relating to pre insurgency baseline situation. Against 2.25 percent population growth rate, the rate of 2.4 percent GDP growth is hardly likely to change the economic absolute of the country.

Also, the survey has portrayed negative side of the trade sector with significant rise in current account deficit. Serge in remittances exceeding foreign aid attempts to show increasing conflict in Nepal and unemployment.

TGQ3: A section of Nepali economists do claim that Nepal can exist even in the absence of foreign aid and donations. How you take their claims? Is it possible to move without donations? If yes, what should the country do in order to exist as a nation-state? If not, what could be those factors that would compel us to go in for donations for some more time to come? Your remarks please.

Mr. Upadhyaya:  It has been a proven fact that meaningful economic growth in present open and competitive environment is not possible without attracting foreign capital. The success of Chinese economy is largely attributed to its success in attracting foreign capital. For a country like Nepal there is still a long way to go and get private foreign investment attracted with sizable volume. International lending institutions are supporting Nepal's need for such injection of capital under concessional terms. Bilateral grants are anyway minimal in relation to loans. Therefore, we do need foreign capital. The focus should be on productivity of such capital, which the government of the country is responsible for. Therefore, the subject of the blame is the quality and competency of governance than the foreign capital itself.

TGQ4: Nepali politics continues to be in a limbo. A sort of constitutional crisis is prevailing at the moment with no sight of its coming to an amicable solution in between the King and the agitating political parties. Where lies the problem and what are the real issues those need to be urgently addressed to?

Mr. Upadhyaya: Let us understand this way. There is no such thing as "absolute" sovereignty of nation. All wise nations attend to protect and safeguard national interest and nationality. Why proud Japanese nation agreed to sign security treaty and allowed US to establish its naval base in its land? And, nationality is not a physical thing. It is the feeling of individual citizen living in a given geographical area, who believes that his life, liberty and property are best protected where he lives and therefore, he would like to fight till death to protect that country against alien encroachment or outright attack. Therefore, the need of the governance system is to ensure citizens of their inalienable rights and freedom not in rhetoric but in practice through establishing and deepening genuine democracy. In Nepal's case this can happen only when the King and political parties come to terms. But it is increasingly getting difficult as foreign powers see this internal conflict as an opportunity to serve their own global/regional interests. Yes, there lies the problem.

TGQ5: Slogans from the political parties for a republican order in the country is in the air. The Maoists have reasons to rejoice for it is their prime demand. Does this mean that the two diametrically opposing forces have forged a sort of working alliance against the monarch?

Should the country go in for such a demand? Or is it simply a ploy of the parliamentary parties to terrify the King in order that he yields to their demands?

What suggestions you would offer the government and the Maoists so that peace in the country is restored?

Mr. Upadhyaya: Everything is dispensable for democracy, the social system, which only can ensure sovereignty of individual in a social and moral context. Nationalism without democracy is a logical fallacy. In the absence of nationalism even the life of "relative" sovereignty becomes a matter of time. But, still Nepali people will continue to live in their homeland waiting forever to get back their nation as Zeus waited thousands of years. Others wouldn't be around though.

Whether left or right, arms trotting campaign is incompatible with democracy. Democracy tolerates differing ideas. It allows peaceful persuasion only, not physical action. What a replay of the demise of ancient Yadu Bansa.

Curriculum Vitae

Date/Place of Birth: January 5, 1951, Janakapurdham, Nepal.

Education: M.A. (Economics) 1982; School of Economics, University of the Philippines, Diliman, Q.C.

Post Graduate Degree (Economics) 1977, Tribhuvan University, Kirtipur, Kathmandu.

Major Fields of Work/

Experience: Advocacy and Study of Local Government and Decentralization

Economic Analysis and Evaluation Study of Development Activities and Related Public Policies.

Journalism and General Editorial Work at Nepali Print Media.

Current Profession : Executive Secretary General, Association of District Development Committees of Nepal (ADDCN),Kopundole, Lalitpur.September 2000.

Positions Held :Chief Editor, HIMALAYA TIMES, a Nepali language broadsheet National Daily published from Kathmandu, Nepal, July 1995 - August 1998 and August 1999- February 2000.

Economy/Business Editor, SURUCHI Weekly, a Nepali language Weekly published from Kathmandu Nepal, August 1991 - July 1995.

Senior Resident Consultant / Economist, Integrated Development Systems (IDS), 1986-1987.

Director, Economist & Associates, Kathmandu, Nepal, February 1985-July 1986.

Executive Chairman, Nepal Institute of Development Studies, Kathmandu, Nepal: July 1983 - February 1985.

Lecturer, Department of Economics, Central Campus, Tribhuwan University, Kirtipur, Kathmandu, Nepal, July - October 1979.

Economist, Agricultural Projects Services Center, Kathmandu, Nepal January 1978-April 1980.

Contact/ Mailing Address:

Office: Association of District Development Committees of Nepal (ADDCN), Kumaristhan, Kopundole, Lalitpur:

Tel/Fax: 5524901/ 718

Email: murari@addcn.org.np

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