U.S.-Nepal Relations: Expectations and Realities in a Period of Transformation

By Kul Chandra Gautam

 At the America-Nepal Friendship Society, Annual Awards Dinner, New York

29 September 2007

I want to congratulate the America-Nepal Friendship Society for its sustained leadership role in nurturing the strong people to people relationship between Nepal and America over several decades. We owe an enormous debt of gratitude to our dedicated community leaders like Dibya Hada, who is with us today, our current President Tara Niraula, and the 3 distinguished personalities whom we will be honouring tonight for their role in helping cement the warm bonds of friendship between America and Nepal.    This year marks the 60thanniversary of the establishment of diplomatic relations between Nepal and the United States of America. It is also a year of great political transformation in Nepal. It is therefore very fitting that the theme of our discussion tonight is on “U.S.-Nepal Relations: Expectations and Realities in a Period of Transformation”. In a historical context, the relationship between the United States and Nepal is rather short – only 60 years – but it has grown to become a very deep and warm relationship.

The U.S. was the first bilateral aid donor to Nepal. The two countries entered into a technical cooperation agreement in 1951. Since then, in the past 56 years, US aid to Nepal has totaled over $1 biliion. And it has helped build a strong foundation for Nepal’s social and economic development.

Let us recall that although Nepal has a long and proud history as a land of ancient civilization, a rich culture, very friendly people and priceless natural beauty, in terms of modern developments, six decades ago it was just emerging out of the dark age of isolation, feudalism and backwardness.

When the US aid programme started in Nepal, people’s life expectancy averaged only 28 years, illiteracy rate was 95 percent, 99 percent of the people had no access to electricity or telephones, there were less than a dozen high school in the whole country, modern health services were non-existent in rural areas.

Some of the proud achievements of US-Nepal cooperation have been the eradication of polio, virtual eradication of malaria, and now polio,  the establishment of the College of Education, and of Agriculture; introduction of basic health care and family planning services in rural areas; expansion of education from primary to tertiary level, and introduction of vocational education; community forestry and food-for-work programmes for building rural infrastructure.

More recently, US aid has also been instrumental in supporting good governance, democracy, promotion of private sector development and civil society activism.

Although Nepal is still one of the poorest and least developed countries in the world, we have come a very long way in terms of progress in reducing mortality, fertility, illiteracy and access to modern infrastructure and utilities in the past 6 decades, thanks in part to the support of the US and our other development partners.

Perhaps the most remarkable progress has been in the people-to-people exchange between Nepal and the United States. Many thousands of Nepalis have studied in America; gone back to Nepal and provided leadership for Nepal’s development. Today, over a 100,000 Nepalis have made America their second home.

Similarly, Nepal attracts many thousands of Americans every year – as tourists, as students, as development workers, as Peace Corps Volunteers, like Congressman Jim Walsh – but alas, not yet as investors in any significant numbers.

Some analysts of US aid to Nepal would argue that besides the genuine wish for helping the poor and the needy, and promoting the values of freedom and democracy, part of the motivation for the very generous US aid during the time of the global cold war was to prevent the spread of communism.

Well, in that respect one could argue that the US policy seems to have failed. Today Nepal probably has the strongest communist movement in the whole world. After the fall of the Berlin Wall and the Soviet Union, much of the rest of the world consigned communism to the dustbin of history. But in Nepal Marxist-Leninist-Maoist ideology is still fashionable, and attracts considerable popular and even intellectual support.

We have the largest freely and democratically elected national level communist party in the world – the UML party of our Honorable Foreign Minister. And we also have the world’s most successful Maoist movement in Nepal.

It is not easy to explain the enigma of why Nepal has gone against a global trend. But it is important to look deeper to understand it better.

While still carrying the name Marxist-Leninist, the UML and other moderate communist parties of Nepal seem to have internalized the lessons of history that led to the downfall of communist regimes in much of the world.

We need to appreciate the pragmatic, democratic transformation of parties like UML into essentially a modern socialist party fighting against economic inequity and for social justice.

Now, the Maoists too, claim to have learned from history, and transformed themselves. But in their case, the jury seems is still out, as their words and actions are very far apart.

But I have a deeply abiding faith that in the end the pragmatic, common sense genius of Nepalis will prevail over any extreme ideological posturing.

Perhaps the best illustration of this would be the following: Ask any Nepali youth – including the Maoist guerillas or the children of the Maoist leaders – where in the world would they like to go to study, to work and earn money to improve their lives? If they had a free choice – capitalist America would be their first choice, and any of the world’s remaining communist countries would be among their last.

And I would be utterly shocked, if anyone volunteered to go to the communist paradise of the “Democratic People’s Republic of (North) Korea”, but would predict that many would enthusiastically line up to go to capitalist South Korea.

During the April 2006 people’s movement – our historic Jana Andolan II – it became clear that the people of Nepal will not accept or tolerate for long any authoritarian or dictatorial system of government.

And in that context, we need to thank Congressman Walsh, Senator Patrick Leahy, and other great friends of Nepal in the US for their steadfast support for peace and democracy in Nepal.

But I want to alert us all that while we Nepalis, like all other people in the world cherish peace and democracy, we also want the 4 freedoms that the great American President Franklin Roosevelt spoke about as essential attributes for humankind.

The people of Nepal need and want – freedom of speech and expression, freedom of worship, freedom from want, and freedom from fear.

Today Nepal is in a very tricky transition period, where all our political leaders, and even the international community, are preoccupied with the peace process and preparations for a historic election for the Constituent Assembly. This is completely understandable.

 However, worldwide experience of countries in post-conflict transition suggests that for peace and democracy to be sustainable, ambitious and visible reconstruction and development activities need to be planned and implemented to create jobs and to give hope to our restless unemployed youth.  We must not be so single-mindedly focused on the political agenda that we leave behind the economic and social agenda as an afterthought.  Indeed, if the current emphasis on the political and constitutional processes does not translate into improved livelihoods and fulfillment of basic social services soon enough, there is a real risk that the people of Nepal will become disenchanted and disillusioned with democracy itself.

It is in the nature of democracy that as political parties prepare for elections, they will tend to emphasize what distinguishes and divides them from each other, rather than what unites us all as Nepalis.

In this context, we need to develop a visionary but realistic reconstruction and development plan that could be the glue that unites all Nepalis and help us overcome the divisive tendencies of the current highly charged and polarized political antagonisms.

I see 6 key elements at the core of an ambitious reconstruction and development plan that we need to develop urgently:

-Immediate relief and rehabilitation of IDPs and victims of conflict,

-rebuilding and upgrading of the destroyed infrastructure,

-massive expansion of basic social services,

-targeted interventions to reduce disparities and exclusion,

-some major flagship projects of infrastructure development, and

-creating a conducive environment for private sector development and foreign investment.

 We don’t have the time tonight for a detailed discussion of these ideas. So let me just share with you a couple of highlights under each of the 6 elements: Under rehabilitation of victims of conflict, I would see the following key actions:   -unhindered return in dignity by IDPs to their ancestral homes and land, and assistance for their rehabilitation,-a quick and complete demobilization of all children and minors from cantonments and their reintegration with their families with adequate and appropriate support by national and international organizations dealing with child protection and development, such as UNICEF.-a mutually agreed, significant downsizing of both the Maoist and Nepal Army, as  part of security sector reform; resulting in reduced military expenditure to be reallocated for development purposes.-a carefully planned vocational training and alternative employment plan for demobilized armed personnel of both the Nepal Army and the Maoist PLA. This might include, for example, special professional training for the women members of the Maoist PLA and arrangements for their special assignment in UN peace-keeping missions as part of the Nepalese Army contingent.-Tighter control of small arms, light weapons and support for demining and mine-awareness. Under rebuilding and upgrading of destroyed infrastructure, I would emphasize the need and opportunity, not just to restore the old structures of VDC buildings, health centres, schools, etc. but to “build back better”.  Learning from the Tsunami and other experiences of reconstruction following man-made and natural disasters, we should aim to make all newly-built or refurbished public buildings “child-friendly”, more hygienic, more secure, and “customer or client-friendly”.  Under massive expansion of basic services, I would hope that we could give a major push for Nepal to achieve, and in some cases, exceed, the Millennium Development Goals. There are many good and specific ideas in a report prepared by the NPC with the support of UNDP entitled the “Millennium Development Goals: Needs Assessment for Nepal” 2006.

One particular home-grown scheme in Nepal that I find especially promising and worth reviving and expanding is the provision of direct bloc grants to village development committees (VDCs) which was started in the mid-1990s as the “Let Us Build Our Own Village” programme.

Because of rampant conflict and dissolution of VDCs and DDCs, the “Build Our Own Village” programme was disrupted for many years. But its principles remain sound.

As local governments are restored as part of the peace process and the new democratic political dispensation, Nepal should consider progressively increasing this direct VDC grant scheme to double, triple or even quadruple the amount originally allocated per VDC.

But these increased resources should be better targeted to encourage all VDCs to achieve the MDGs, and to upgrade their infrastructure and basic social services, using measurable indicators and reliable structures of accountability.

Using direct development grants to all VDCs to encourage them to promote goal-oriented, indicator-based development planning and implementation could be a very special way for Nepal to pursue the Millennium Development Goals.

This would also be a meaningful way in which relevant UN agencies and other donors could support Nepal’s efforts to promote community-based, results-oriented development outcomes.

Under the targeted programmes for disparity reduction, the major focus would be to develop a balanced and well-thought out affirmative action plan that seeks to reach and uplift population groups that have faced generations of socio-economic marginalization in Nepal.

A series of programmes need to be developed that are specifically targeted to promote gender, social and geographic inclusion, but which avoid segregation, ethnocentrism or a culture of undue entitlement and dependency.

Some of the activities promoted under the Poverty Alleviation Fund supported by the World Bank, seem to reach these target groups. The community forestry programme, some food-for-work and school feeding programmes can also be effective.

Besides the activities of the kind I have mentioned before, a major proposal I’d make is that in keeping with the historic nature of the transition we are living through, the time has come for Nepal to think boldly, capture the imagination of our youth and initiate some new, ambitious and exciting flagship projects.

In the past, several Nepali leaders have spoken about transforming Nepal into a Singapore or Switzerland. Others have spoken about how the proverbial “yam between two boulders” could be transformed into a resourceful entrepot harnessing the advantages of being surrounded by two of the world’s largest and fastest growing economies.

But beyond rhetorical statements, we have so far not come up with any daring proposals to translate such vision into practical plans.

I suggest that this time around, we come up with some major flagship projects

nationally, and in each development region, in the areas of major infrastructure development, harnessing new technologies for transport, communication, tourism and enterprise development, that will change the face of Nepal.

Examples of some such flagship projects might include:

 -a multi-lane highway/railway through a tunnel connecting Kathmandu with central Terai, linking it with an international airport, a revamped national transportation grid, and a new twin capital city.

-a high speed electric railway network along the East-West Highway in the Terai, connecting to regional North-South road heads. It should be possible for Nepal to build an environmentally clean and economically viable railway system that can traverse the 1000 kilometres distance from Mechi to Mhakali in 10 hours or less.

-a cable car network in selected rural/remote and mountain regions linked to tourism industry and to production and distribution needs of local goods and services.

-an environment-friendly urban transportation system in Kathmandu and other major cities of Nepal using less polluting technology to move people and goods within and between major urban centres across the country.

-some major hydro-power projects both to meet Nepal’s internal demand and for export.

-Recognizing that large hydropower projects evoke strong emotions from environmentalists, and other concerned citizens and NGOs, and are also susceptible to huge corruption, due safeguards should be built into the design of such projects to take into account of all such legitimate concerns.

-This should, of course not exclude investment in mini- and micro-hydel projects, as well as solar and biogas projects in which Nepal already has considerable positive experience.

-Investment in new regional growth poles and futuristic urban centres taking into account patterns of population growth, and the inevitable rural-urban migration.

-If planned carefully, the concept of such regional growth poles could help devise a more economically sensible federal structure of governance – a hot topic of political discourse in Nepal today.

-a large-scale investment in skilled and semi-skilled job-oriented vocational education programmes in each development region. This would include training/retooling of semi-skilled and skilled manpower in manufacturing, service, and construction trades, and a placement programme and outreach service with potential domestic and international employers.

An ambitious reconstruction and development plan of such scale and magnitude would, of course, require massive investment by the government, support by the international community, and the active participation of the private sector, including non-resident Nepalis and foreign direct investment.

If Nepal is to become a prosperous nation and develop to its full potential, it must create an environment in which the entrepreneurial talents of its citizens can flourish. It should also be capable of attracting investment from both domestic and international investors in manufacturing, consumer goods, certain infrastructure development, service industry and utilities.

Both our international development partners, and particularly potential private investors, domestic and foreigners alike, will look to Nepal to create an environment of good governance and rule of law.

Indeed, Nepal’s ability to develop a culture of good governance and rule of law might be the ultimate test of whether or not the new-found democracy will be truly people-friendly or catering only to the political classes.

Let us hope that just as the United States played a major role in Nepal’s early development, it would also engage once again in a massive post-conflict reconstruction and development in Nepal.

Frankly, in recent years, the United States has not been as big a player in Nepal’s development as one would expect – either compared to other donors, Nepal’s needs or America’s potential.

Out of some $30 billion a year in US foreign aid, Nepal currently gets less than $50 million in bilateral aid. That is far less than what the US gives to countries like Bolivia, Colombia, Liberia, Haiti and Uganda, and a small fraction of what Afghanistan receives.

We realize that Nepal may not have the same strategic importance for the US, as some of these countries do. But I hope that if we Nepalis can get our political house in order, and if other friends of Nepal join us in a massive reconstruction and development effort, the US would not shy away.

We look to leaders like Congressman Jim Walsh to show the same kind of passion for reconstruction and development as he and so many other Americans have shown in ending the violent conflict and promoting genuine democracy in Nepal.

Before concluding, let me add 2 other sources of potential American support for Nepal’s development that we must try harder to mobilize.

Americans are the most generous people in the world. Every year American citizens, private foundations, faith-based organizations and voluntary organizations chip in some $125 billion – more than 4 times the official US foreign aid – in developing countries. We need to be able to tap more of these resources for Nepal.

Remittances by foreign migrants to their home countries from the US amount to some $62 billion a year – double the official foreign aid. As the Nepali diaspora in America becomes more prosperous, we need to mobilize such remittances for Nepal’s development as well.

Back home in Nepal, our government needs to create a more conducive environment for attracting both additional donor support and increased private investment.

If we all work together, and give as much priority to Nepal’s socio-economic development as we have been giving to ending the conflict and supporting the democratic transformation of Nepal, I would be optimistic about Nepal’s bright future. And that would be a magnificent and a tangible expression of lasting Nepal-America friendship.

Thank you.