Drifting from governance in Nepal

By Maung Mya Thar
03 October 2020
Drifting from governance in Nepal
Mount Everest in Nepal. Photo: Narendra Shrestha/EPA

When in 2018, K.P. Sharma Oli formed a government with a two-thirds majority in Nepal, the people heaved a sigh of relief and expected an era of stability in Nepal.

Since then, however, these hopes have been belied and much of the initial euphoria with the Oli government has vaporised as governance has taken a back seat and political bickering has come to the fore again. Constant rifts in the ruling Nepal Communist Party (NCP) due to lack of coordination between the party organisation and government have complicated matters to a point where the people have learnt to survive the ill effects of the COVID-19 pandemic on their own, without recourse to any government assistance.

In the last two-and-a-half years, no step was taken to cement political stability and address the demands of the people. There was a hope that a stable government with a five-year mandate would help in kick-starting Nepal’s economic growth and bring stability. The tragedy is that the Oli-led government has failed to bring about the requisite policy and governance changes. This has been compounded by widespread corruption in government and the frequent transfer of officials and bureaucrats on the basis of their political loyalty has wrecked the administrative system. The NCP’s major election plank had been economic prosperity and stability. This slogan helped the party draw the support of a large number of people. The government however, failed to leverage its political strength to bring about the necessary reforms to usher in economic prosperity. Notably, Nepal’s Central Bureau of Statistics’ has projected (August 2020) that Nepal’s economy would grow at 2.27 percent this fiscal year, ending mid-July, a massive deceleration from the government’s projected 8.5 percent target. Clearly, Nepal’s economy has been hit and consequently, unemployment has increased. The coronavirus crisis is to be partially blamed for it, as in the world generally, but the government’s performance has been dismal too. The World Bank’s country report for Nepal (12 April 2020) predicts that economic growth is expected to fall in Nepal to a range between 1.5 and 2.8 percent in FY2020 reflecting lower remittances, trade and tourism, and broader disruptions caused by the COVID-19 outbreak. A prolonged outbreak of COVID-19 is likely to affect growth significantly with a further deceleration or contraction in services and industrial production.

On 21 March 2020, the Government of Nepal announced a nationwide lockdown, which affected industrial and agricultural production, leading, for instance, to more than a 25 percentage point decline in capacity utilization of industry by early June 2020 and a 64.7 percent (y/y) drop in credit provision to the private sector during the two-month lockdown period. A domestic outbreak of COVID-19 in May 2020, prolonged the lockdown and imposed substantial human and further economic costs. Growth in the service sector is now estimated at 1 percent, the lowest since FY2002, while growth in the industrial sector is estimated at 3.2 percent, a four-year low, due to the deceleration in overall growth.

The global crisis induced by the pandemic initially impacted Nepal’s tourism sector, with arrivals from China dropping by around 70 percent in February 2020 and a full stop to the issuance of visitor visas taking effect in early March 2020, which has effectively dropped tourist arrivals to zero. The impacts of the pandemic did not remain limited to tourism. Demand for consumption and production products, such as diesel and petrol, slowed, with many Nepalese experiencing job losses or the inability to out-migrate due to widespread travel restrictions. The government should have by now ended the political uncertainty and focused on combating COVID-19. But party leaders have invested more time and energy to settle internal rifts than tackle the pandemic.

What China has done is to take advantage of the inadequacy of government delivery systems for essentials and medicines and tapped the commodity shortage crisis by opening two of its land border crossings with Nepal to transport medical equipment and other essentials to Nepal. Instead of acting to prevent the spread of the pandemic, Oli has chosen to blame Indians coming into Nepal for its spread. Recall, PM Oli had initially diverted attention from the pandemic and crisis within the party by stirring anti-India sentiments on the subject of Kalapani. Once this strategy petered out and faced with increasing anti-government discontentment among the people of Nepal, Oli tried the tactic of trying to divide the opposition by reaching out to senior leaders individually and offered them a share in the power set-up. This has further exasperated the prevailing situation in Nepal.

History of Political instability

At the heart of Nepal’s current crisis lies a power tussle within the NCP. A few months after the formation of the Oli government, details of the power-sharing agreement between PM K.P.Oli and the party chairman Pushpa Kamal Dahal ‘Prachanda’ was leaked to the media. The thrust of the pact was that both leaders would lead the party and government for an equal length of time. Prachanda clearly briefed the Indian media about this understanding during his visit to India in 2018. Recall that the Oli government was formed after the unification of two Communist forces — CPN-UML and CPN-Maoist Centre, and this united front had also secured outside support of Madhes-based Federal Socialist Forum Nepal (FSPN) and Rastriya Janata Party (RJP) in the federal lower House. These Madhes-based parties supported Oli in the hope that that Nepal’s constitution would be amended to address their demands. But that did not happen, and it forced the FSPN to withdraw support in December 2019. With that, PM Oli lost his two-thirds strength in Parliament — something his party was the first to enjoy since 1959.

But the fight for power is not only between Oli and Prachanda. Another senior leader, former prime minister Madhav Kumar Nepal, of the CPN-UML faction, is in confrontational mode with K.P. Oli since the merger. Madhav Kumar is vying for the presidency in the next general convention of the party. There are high chances of a three-way competition inside the party in the next convention. Due to the conflict among the top leaders of the NCP, the government has been living on the edge, nearly collapsing on quite a few occasions. Similarly, there is a perception that if Oli’s opponents try to destabilise the government, he may choose to split the party and join hands with the Nepali Congress (NC).

That the NC poses no challenge to the incumbent government is clear from the fact that the party has taken a clear position that the five-year tenure of NCP government is the mandate of the people and it does not have any intention of toppling the government. The problem therefore is internal to the NCP, which is on the verge of implosion. Top leaders Prachanda and Madhav Kumar Nepal are urging PM Oli to resign either as party chairman or prime minister. Oli, however, is arguing that he has the mandate to rule for five years and will not step down and that only a general convention can replace the party chairperson.

This is not the first time in Nepal’s political history that a government has been in trouble because of inner party conflict. All governments, after the restoration of democracy in 1990, have collapsed due to rifts in the party. Organisational splits, frequent government changes, horse-trading, and corruption have been key features of Nepali politics from 1993 to 2017. In the post-1990 phase, the number of political parties increased and, in some cases, fringe parties with only a handful of seats in parliament were able to act as kingmakers. The earlier constitution gave the prime minister full authority to dissolve the House and call for fresh elections. The challenge for Nepal today, therefore, is two-fold; mis-governance and instability. Both are recipes for disaster. It is hoped that Nepal will see the light at the end of the tunnel sooner rather than later.

Maung Mya Thar is the pseudonym of a writer who covers South and Southeast Asia