• INDIA TRADE TALKS • UML MEET: FUTILE DEBATE • LDCs JN WTO

Page

Letters 3

News Notes 4

Briefs 6

Quote Unquote 7

COVER STORY: TOURISM: Flight To Destruction Off The Record 8 By stepping into the ring the Public AccountsCommittee and the Commission for Investigation of Aubse of Authority have com· NEPAL· UNITED STATES: Super Power Support 9 pleted [he process of destroying the national !lag carrier. Page 16

ROYAL NEPALESE ARMY: Loyalty And Trust 10

CPN·UML MEET: Futile Debate 12

PM DEUBA : Operation Restore Peace I3

IME AND PUNISHMENT: Lawful Killing 21

LDCs : Demanding A Fair Deal 24

NEPAL·INDIA TRADE TALKS : INCONCLUSrVEROUND BOOK REVIEW 26 The bilateral talks fail to resolve key iss ues raised by both the sides. THE BOTTOM LINE 27 Pagcl4

VIEW POINT: Niranjan K. Tibrewala 28

PASTIME 29

LEISURE 30 management system in banking sector. FORUM: S.B. Pun 32 Page 22

SPOTLIGHT/AUGUST 10.2001 SPOTLIGHT EDITOR'S NOTE THE NATIONAL NEWSMAGAZINE he just concluded four day Nepal-India inter-governmental official level trade IVol. 21, No.7, August 10, 2001 (Sawa" 26, 2058) I talks have, once again, exposed India's masked mien. It is quite gratifying to see Chief Editor And Publisher that Nepalese officials have been able to offer some kind of resistance to the Madhav Kumar Rimal overweening demands of the Indian delegation. It is reliably learnt that the Indians have threatened· to terminate the treaty when it expires on 5 December Editor Sarita Rimal 2001. As a matter of fact, such attitude on the pan of the Indians is nothing new eras far Nepal and other smaller nations of are concerned. Nepal, in particular, because Managing Editor of her geography, has been experiencing unbearable hardships for more than five decades ever Keshab Poudei si nce India gained her independence from the British. In 1950 the most unequal treaty was Associate Editor clamped on her. The last Rana prime minister was cornered to sign the treaty on a false promise Bhagirath Yogi of quid pro quo, In the late sixties the trade agreement had to be deferred for two years due to the unrelenting stance of the Indians. And about twelve years back a vinual economic blockade, Senior Reporter unthinkable between friendly nations. was imposed on Nepal for more than a year, Since the rulers Sanjaya Dhakal of independent lndia have treated Nepal as a captive market, they always find various eXCUSf Reporter retard her economic growth, by restraining her commercial expansion and industrial devet~ Akshay Sharma menL This becomes a big irony when Indian statesmen never tire extolling age old friendship and their unparalleled economic aid to Nepal. Nothing could be more hypocritical. The Indian Design and ~yout contention that certain Nepaleseexports have started hurting Indian industries and thus the Indian Jyoti Singh economy, is nothing but ludicrous. Even an insane man would think. twice to believe such a Photographer figment of imagination. According to available statistics Nepaleseexp0rls of those items to India Nishchal Chapagain are almost negligible in comparison to India's imports from other countries- hardly coming to a meager one percent Nepal has been suffering hundreds of millions of dollars adverse trade Art M.S. Khokna balance in her trade with India. And when she Slaned to narrow the gap even to an insignificant degree, the Indians are making a big hue and cry. The Indians are definite to press the issue and Legal Advisor force the Nepalese to come to their terms in the next meeting whenever that happens. People here Advocate Lok 8hakta Rana are quite apprehensive that the government might willingly capitulate. h could be a big testing issue for Prime Minister Sher Bahadur Deuba. It might provide him a good Marketing/Advertisement Sarit Aimal (USA) opponunity to prove that he is not anti national as hi s senior colleagues and predecessors. He must acquire enough gUls to thwart the unreasonable pressures from hi s bigger neighbor in the South. Marketing Ifhebehaves like aNepali patriot, he can rest assure the whole nation will back him. The Nepalese Madan Basnet are ready to tighten their belts. once again, and face another economic blockade if they have to. Navin Kumar Maharjan Madan Aaj Poudel But, we do believe such a situation will not come to pass. Time cannot be reverted twelve years back and the world has moved forward. Let us hope wisdom will prevail and the talks will have Editorial Office a happy ending, safeguarding Nepal's right to economic development. GPO Box 7256, Baluwatar, Kalhmandu, Tel: (9n-l) 423127, Fax : (977-1) 417845 * * * Chief Edijo(s : 435594 Sher Bahadur Deuba led Nepali Congress government seems to be losing the grip over E-mail: [email protected] negotiated settlement with the Maoists. Since the issue demands urgent attention, Deuba has to Internet Add: http://www.nepalnews.coml accord utmost priority in forming a national consensus for the talks without delay. We had spotlight emphasized earlier that the members of the lower house only do not constitute the whole nation's public opinion. As a matter of fact they should have done that. But their insensitive behavior Cover Design Wordscape towards the poor of the country and their blatant selfishness in nursing their personal interests Kamal Pokhart, Ph : 410772. Fax: 432872 have deprived them of that inherent responsibility. Moreover, an overwhelming public opinion has not been represented in the parliament. IfDeubafails to embrace the whole nation to resolve Distribution this national issue he will be digging his own grave, He can never overlook the fact that he also Bazaar International 228 Sanchaya Kosh Bldg. Kalhmandu is personally respon"sible for creating this problem and thus shares the onus of bringing it to a G.p.a Box 2480. Ph: 222983 Fax: 229437 peaceful conclusion. The Maoists, he must understand, might not be alone. They too must have a-mail: [email protected] the support of elements inimical to Nepal's interests. Consequently, it will be a tough job for Deuba to wean them away from such alien influence. And he will need the support of all sections Printers: Ktshor offset Pnsss (P.) Ltd. of Nepalese populace for a fruitful dialogue. If he adopts an imransigent attitude of belonging to p .a. Box 4665. Galkopakha. Tharnel. Kalhmandu.Tel: 351044 (011).351172 (Aes.). the biggest ruling party, he will be only inviting sad days for himself. He must also realize that Fax: 9n-I-351172. as the Prime Minister, it is hisjob to maintain law and order and bring peace to the troubled nation. E-mail [email protected] . com . np He must learn to be his own master and work sincerely in the interest of the country. •

C.D.O. Read. ill. 1511039-40 P.. ta1 Regd_ N. rf\ ~__" - ____A J<.. 421057/58 U.S. Library ofCongteSs Catulogue No. 91-905060 v M\dhav Kumar Rimal Chief Editor& Publisher

2 SPOlLIGHT/AUGUST 10. 2001 LETTERS ______

blaming donors for the tariff in­ crease. Withdraw Tariff Shekhar GlIpta Hike lawalakhel, Ekantakuna Nepal Electricity AUlhor­ Deuba's Second ily (NEA) has again raised the electricity tariff, taking it out Innings of the reach of the common At a time when the main op­ people ("Consumers Paying position party is dictating the terms For Inefficiency", SPOT­ and condition the majority party LIGHT, AugusI 3). How long should work under, I don't think anyone can predict the longevity will the poor consumers have of the Nepal Congress govern­ to pay the price of the ineffi­ ment led by second-generation ciency and mismanagement of leader Shcr Bahadur Deuba the NEA and the misuse of ("Deuba's Second Coming". resources by polilicians', The SPOTLIGHT. July 27). Had people arc losing faith in the Deuba backed Girija Prasad NEA and the government. If Koirala when he was under attack the government is serious from all opposition panics. the about public welfare, it must minOrity would not have pre­ immediately withdraw the vailed. Whcther Deuba likes it or not. hi s tenure will last as long as price increase. As you men­ he enjoys thc !iUpport of the main tion in your story. the NEA opposition party. can raise resources in so many Pradeep Be/base other ways. Why does it al­ Butwal ways have to squeeze the con­ sumers? Neighborhood Bully Nirmala SlrarmQ As a ncighbor. lndia has Kalankislhan never done any favor to Nepal ("Marchabar Controvers y." SPOTLIGHT. July 27).10 the I." power-seclordevelopment ("Con­ Biased View Eventually, the NEA will again 50 years. India basonly promoted sumers Paying For Inefficiency", politics of confromation in the I agree that the NEA had no increase the tariff, citing.sameold SPOTLIGHT, August 3). If the kingdom. Instead of helping to .. Itemati ve to raising the power lar· reasons. Thcorganization may get monoooly of the NEA continues. $SOmillion in loan from the Asian bring economic prosperity to ,"OonsumersPaldn!! Forlneffi- Nepalese consumers will have 10 ,SPOTLIGHT, August 3). Development Bank after this price Nepal. India is forcing Nepalis in brace for further scarcity of power. Ilow long can 85 percent of the hike, but how long it can it avoid border areas to Ileetheir homes by Who knows when the NEA will population share the burden of the checking the misuse of funds. triggering floods. Every year, In­ raise the tariff again? AI a time dia creates havoc among Nepalis 15 percent of Nepalis who enjoy Ra/IlQ A wale when the prices of most commodi­ decuicity facilities? There is no Mangalbazar living in the border areas. Whether ties are going down. is there any it is in Gaur. Laxmanpur, Siraha leason to give subsidies in a com­ rationale in increasing the elec­ ornow in .lndiaseems to modity like which is ele~tricity. tricity tariff? Don'tBlameDonors lIsed by the well-to-do class of the be making calculated effons to Sllrelldra Nepal I agree with the argument harm the Nepalese people. population. I don't understand why If In­ Bauddha that it is not donors' pressure but a party like CPN-UML. which dia really wishes the Nepalese mismanagement within the gov­ claims to be the messiah of the people well. it must not repeat Control Leakage ernment that is responsible far the poor. opposed a move to tax the such actions. The Nepalese gov­ Had the NEA fannulated a power tariff increase ("Consum­ lichclass. The NEA needs to focus ernment is also responsible for plan to reduce electricity leakage, ers Paying For Inerticiency", attention on properly using the this .situation. Instead of going it would not have had to go on SPOTLIGHT, August 3). Lead­ additional revenue. Your story has through diplomatic channels, increasing the tariff ("Consumers ers of all major political parties Nepalese officials are using the not done justice to the NEA ' 5 deci­ Paying For Ineffitiency", SPOT· have been misusing the property :o.ion . media. I don' t think sucl1 activi­ LIGHT. August 3). TheNEA must of the NEA. The recent report of DJrarnramall Shaky"'Q ties will help Nepal find an ami­ go in vigorously to reduce leak­ State Affairs Committee of the Ason cable solUlion. Our officials must age. As long 'as ministers, their HouseofRep:-esentatives pointed tell their Indian counterparts about relatives and supporters continue to how politicians have been tak­ the situation faced by the Ncpalese No Justification to misuse the resources of the ingaway dozens ofvehicJes from people. The NEA is pushing the NEA, the financial situation of the NEA. Nepalese politicians Gagafl Slrakya coumry towards stagnation in the organization wi11 not improve. must look at their own face before

SPOTLIGHT/AUGUST 10,2001 3 NEWSNOTES

Ne Gives lfree India in its territory only 500 meters decline in arrivals oflndian touri sts, who away from the Indo-Nepal border, re­ make up nearly one third of total tourist Hand To Deuba ports said. Minister for Water Resources arrivals in Nepal by air. Compiled from The central working committee of Bijaya Gachhadar eonfimled that offi­ reporls Aug. 3. the ruling Nepali Congress has given a cials from both the sides will make an on "free hand" 10 Prime Minister Sher Baha­ the site visit and discuss the issue within Nepal-Bhutan Talks dur Deuba to hold talks with the under­ the next few days. He said that Nepal has Later This Month !!round Maoist rebels. The meeting held already requested the Indian government in Friday morning "granted to make arrangements so that there would The 11 th minislerial level meeting pCI1l1ission La Premier Deuba to move be no blockage in the natu- , __------,.." .. "head with the process for peace talks by ral now of the river. A ~upporting hi s initiative and attempt for a Nepalese technical team has peaceful re so lution to the Maoist prob­ already been dispatched to lem:' Upon assuming office last month, visit the site and repon to Dcuba called upon the rebels to stop all the Ministry. Reports say th eir vio len t activit ies to whi ch the lalter up to 18 Village Develop­ responded posIlively. Sincethell, both the ment Committees On the ~overnment and rebels have been freeing Nepalese side face inunda­ people under their custody. Reports said tion , affecting more than I he Congress high command even dropped 100,000 people, once the the condition of talks to be held within the construction of the barrage .-.phcre of the constitution "in order to is completed. Compiled lTealc a conduci veenvironment for talks .,­ from reports Aug. 2. Bhutanese refugees The Maoist party had launched it s violent ====~~------'peoplc's war' in early 1996 with a view Campaign To Attract between Nepal and Bhutan is to take 10 overthrowing the country's constitu­ place in Thimpu between August 20 and ti onal monarchy and multiparty democ­ Indian Tourists Extended 22. a newspaper report sa id Saturday, lacy and turning Nepal into a 'people's Amid a downturn in Indian tourists quoting ofricial sources. According to republic'. Compiled from reporls. visiting Nepal, the Nepal Samacharpatra daily, the meeting (NTB) has announced an extension of will discuss the is sue of expedition of Left Students Burn Effigy the Nepal Festival of Life. a promotional verification process of the Bhutanese campaign targeted at Indian tourists, for refugees residing in eastern Nepal for Student a<.:tivists affiliated to the main another two months. Pradip Raj , morc than a decade. A joint team is opposition CPN-UML carried out a pro­ Chief Executive Officer of the board conducting verification of the refugees lest rally in thecapital Friday and burnt an hoped that the program would send the - to detcrmine Iheir nationality - • cfligy of Indian Prime Minister Atal Behari message to Indian visit ors that Nepal the last few months. Refugee leaders say Vajpayee in protest against the construc­ always welcomes Ihem. The hijacking of il will take several years to determine the ItOn of Rasiyawal-Khurda-Lautan buml Indian Airlines plane on Christmas eve natiooality of nearly 100.000 refugees in tHl Indian lerritory close 10 the border with in 1999, the Hirithik Roshan episode last the camps if the verificali on is carried out Nepal in (he western teraL The act ivists year and Ihe royal palace tragedy on June at the current pace. As Premier Deuba ~aid the construction of the barrage, if holds the foreign ponfolio at presem, I are said 10 have contributed to the completed , cou ld result in inundation of a :;:::::______--.Finance Minister Dr. Ram number of villages in the Nepalese side, Sharan Mahat - who has Including Lumbioi. the birthplace of Lord already headed Shital Niwas Buddha. The protest rally concluded briefly - will lead the peacefully. Nepal Samacharpalra Aug. Nepalese delegat ion 10 .I. Thimpu later this month. the repon said. Meanwhile. hu­ man rights activists, govern­ Joint Team To Inspect ment offi cials. and refugee Rasiyawal Bund representatives have called Experts from Nepal and India will _ for speedy veri ficalion of th e Joint ly carry ou t inspection of the con­ h:~:.. __:-~::"' __..:.. ______J Bhutanese refugees. They ~lruc ti oll orthe controvers ial Rasiyawal­ ": have call ed for a speedy. Indian tourists Khurdlautan bund be in g constructed by transparent and time-bound

-I SPOTLIGHT/AUGUST 10, 2001 NEWSNOTES

\ cri fic..:ation to sol vc the decade-long refu­ COnstructed at a cost of nearly Rs 30 grant and design. Kalllipllr July 29. l!cc stalemate. Thl: participants were million under grant assistance from ~rcaking at a se minar on the theme .. DFlD. the overseas assistance arm of the Nepal Self-Reliant Bhutunese refug.ee problems and verifi­ British government. the 103 m x 10 m cation process" organized by GRINSO­ long bridge was completed within the In Poultry Nepal. a Nepalese human rights group. stipulated period of 20 months. But the Nepal has become self-reliant in the Compiled from reports. slabs on the upper part of the bridge have production of chicken and eggs. experts crumbled. Chairman of Kawasoti VDC. said. The annual production of chicken in Prof. Subedi Nepali Narayan Timilsina, has demanded that Nepal is nearly 35.000 metric tons. Ac­ the quality of the bridge be checked and cording to Nepal Poultry Farmers Asso­ Candidate For UNLC the <.:onlractor. Sharma and Company, be ciation, marc than Rs 25 billion has been The Ncpalc:::.c government has nomi­ taken to task. Chief of Western-4 No. invested in poultry business in 42 out of nated Or. Surya Subcdi. professor o f in­ Division Road Office at Butwal. Guru 75 distric~s in the country. Aboot 55,000 h:rnationallaw at the Middlesex Univer­ Prasad Dhakal. however, said hi s office families depend on poultry fanning as s it y o f the United Kingdom for the post of could not comment on the is sue as the their main source of income, studies said. of the United Nations Law Com­ bridge was constructed under roreign RSS lIews agency reports July 29. • .. ion. The 56th United Nations Gen­ lTal Assembly will elect thc mcmbers to the prcsligiouscommission later this year. FNCCI Expressing hi s gratitude toward Nepal and Nepalese people for hi s nomination. The New Team The apex chamber now has an impressive new team

Along with the change in political landscape, the business leadership in the country has also undergone a sea change. Look at the present leadership of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI). Under the presidentship of Ravi Bhakta Shrestha. who was elected unanimously by the 35th AGM of th e FNCCI last month. the new executive committee has chosen four vice presidents through elections. First Vice President, Binod Bahadur Shrestha, held the position o f third vice president in the earlier executive commitlee led by Pradip K. Shrcstha. He runs hi s businesses from hi s office at New Road and is also known for hi s efforts for the development o f backward Karnali lone. Second VP, Rajendra Khetan. was the fourth VP and chairman of the employers' council in the earlier executive committee. The media savvy young industrialist is also the Vice President of the Khetan Group. Former President of the Garment Association of Nepal. Chandi Raj Dhakal has been elected third VP of ~------~--:------~~--~th e FNCCI. He brings with him the Mr. Subedi expertise of success­ fully running lhapa­ Pro!". Subcdi said hi s viclOry would be a based Momento Ap­ VIctOry for Ncpal. The43-year-o ld lawyer parels, the top gar­ ~aid if elected, he would work toward ment exporting com­ \.'nsuring international support in protect­ ------"::::1 pany. Vice chairman ing the interests or landlocked countries (From Left) Binod, Rajeodra, Chandi and Suraj: Young of the Vaidya's and energetic like Nepal in international law. Kalltipllr, ______Organization, Suraj ilugllst 2. Vaidya has been elected fourth vice president and chairman of the employers' council of the Bridge Starts Cr;umbling FNCCI. The soft spoken Vaidya earlier led the Agriculture Enterprises Center at the FNCCI. A bridge over Kawasoti River along The apex private sector chamber now has an excellent team to lead the FNCCI for Ihc East-West highway in Nawalparasi the next two years. Its success will depend on how much it can mobilize support from district has started to crumble less than within the organization and beyond. I wo months after it was opened to traffic.

SPOTLIGHT/AUGUST to, 2001 5 BRIEFS

if the flight s to Europe were cancelled at the beginning of the louri,st season.

A TOTAL OF 5,622 HECTARES OF GOVERNMENT· OWNED fore~ l s l y in g in sub-watershed areas in six di stri cts incl uding Kathmandu have been handed over to 85 community forest user groups at the initiative of the Bagmati Integrated Watershed Management Project during the last fi scal year. RSS news agency reponed quoti ng offi cials. According to (he project. about 7.000 households have benefited from the transfer of government forests 10 the local communi ties. The community fdrestry user groups have sizeable number o f women members represented in (heir executi ve cO ll1ll1inccs.

A TOTAL OF l27,175 NEPALESE PEOPLE AQ.E WORKING in 44di fferent countri es indiv idually or through manpower agencies, RSS news agency reported . Minis ter for Labor and Transport Ma n­ agement Pahen G urung informed the House of Represen(ali Thursday that over the las t one decade. Saud i Arabia had the hi ghest at Narayanhiti Royal Palace. number of Nepalese workers (60,9 15) foll owed by UAE (33,998), 5280 in Malaysia, 2988 in South Korea and 240 1 in Bahrain. amo ng I'RIME MINISTER SHER BAHADUR DEUBA, WHO ALSO others. Industry sources. however, said thcactual numbero f Nepalese holds the Land Refonns and Management port fo li o. presented the working abroad could be much higher than that. hill ror the prohibit ion o f kamaiya (bonded laborcrs) practice in I,ariiamcnl Tuesday. T he bill. tabl ed in the HouseofRepresentatives THE UNDERGROUND CPN (MAOIST) PARTY CADRES in the last session. could not comc up for disclIssion because o f have freed Krishna Prasad Upadhyaya, engineer at the Distri ct disruptio n in parliamcmary proceedings. The bill will now go (Q a Irri gati on Office, in the mid-western district of Dailckh whom they parli ament ary commiuee for discussion. The government had abol­ had kidnapped on Jul y 23. RSS news agency reported Saturday. ished the kamaiya system through a cabinet decision in mid-Jul y. last Upon reaching the district headquarters, Upadhyaya said the Maoists year but remained to formulate a law. did nOllllcte out any physical or mental torture on him. Meanw hile, the distri ct admini strati on in Kapil vastu has released two members o f SEVEN PEOPLE TRA VELING IN A TRUCK EN ROUTE TO the underground NCP (Maoist) party. impri soned under the Public J )i payal in far-western cpaJ died when the truck fell nearl y 500 Security Act. Those released include Dinesh C hapagain. 20. Kamal meters off the road at Bhas u al ong the Dhangadhi-Dadeldhura Kumar S hahi, 19. hi ghway on Monday ni ghl. Hundreds o f peopl e die in road accidents in Nepal every year because of human error, bad roads and lack o f THE 'REVOLUTIONARY' COMMUNIST PARTIES AROUND monitoring. the world have advised the Nepalese Maoists not to join for peae'" talks wilh the government "at a time when they are making 0 I.ANDSLIDE AND FLOOD DURING THIS MONSOON HA YE military victory after olher," Kantipur dail y reported last Saturday. already claimed the li vesof 174 people, injured 39 others and caused Revolutionary Communist Panies fro m the US. italy. Columbia, a loss o f over Rs. 11 6 million, a senior cabinet member said. Home Dominican Republic. Tunisia and Iran haveselll secret e-mai ls lo the Mi nister Khum Bahadur Kh adka informed the National Assembly Mao ist leadership and have drawn its attention to the long-drawn Wednesday that 1,396 families have been affected by the natural talks between the Philippines government and Philippines commu­ disasters so far. Mean while. nine more people were feared dead aft er ni st party tha( have fail ed to yield results. These all outfits are Ihey were swept away by the nood in Kamala Ri ver in Sindhuli members of RIM (Revolutionary Internatio nal Movement) incl ud­ distri c t. Minister Khadka said the government had ordered reli ef ing the Nepalese Maoists. The Maoislleader.; hip. in it s response, has l1lca~ ures with urgency in the affected areas. repli ed that talks too are parl oflhe battle. ·'In C hina. Mao had moved forward by holding talks wilh Chiang Kai·shek in 1945. So. its THE STATE· OWNED ROYAL CORPO· appropriate here too." the repl y sai d. ,alio n has terminaled its aircraft lease agreement with China South West Airlines wi th mutual understanding with e ffect fro m Tuesday, THE INSURANCE BOARD-A REGULA TING BODY-HAS Kantipur daily reported Wednesday. The agreement was valid until granted permission to Ame ri can Life and Insurance Company S l.! ptelllber 27. 200 I. Director of publicit y at the RNAC. Mohan P. (ALlCO) to run life in surance business in the country. ALlCO has Khanal, has said some of the international sectors operated by the thus become the first foreign company to run the lucrati ve life ,,,,,ional n ag carri er woui'd be affected due 10 Ihe terminat io n o f the insuran ce busin ess. Two other companies. the slate-owned Rastriya {·onlracl. He said the routes that would be affected would be finalized Beema Sanslhan and Nepal General and Li fe In sunlnceCompany are in a week. Meanwhile. Hotel Association Nepal (HAN) has de­ the onl y two companies operat in g li fe in surance business in the lIounced the RNAC's decision 10 termin

() SPOTLIGHT/AUGUST 10.2001 QUOTE UNQUOTE

~'W e have lost our paddy crops, as our fields have been under five feet of water ever since the Indian built a dam near the border." Ram LAkhall Chaudhari. describing theflaading ill his village. in Kantipur. * * *

"E mployees fear bemgsummoned. by the Pu blic Account Committee, State Affairs Commi ttee or the Commi ss ion ofln vestiga­ dOl/er"'''''''''/-_ ti on for Abuse of Authority every time the l'1aois~ talKs yeah .' -the cioDt administrative machinery gears up ," Sambhusharall Kayaslha, explaining is Ope'rt the state of the cOll/Uly's administra­ tioll to th e State Affairs Committee of parliament, ill Kantipur. • • • "I did nol resign under pressure from the opposition. I resigned of my own will to pave the way for smoolh democratic u-ansi­ tion in the country ," Former prime minister . explaining the reason behind •• his resignation, in Space Time. • * * Qlln iversary of human right activist general secretary, ill same program ill Prakash Kajle. ill Himalaya Times. Nepal Samac h arp~llra. "Don "ttake Cl confrontational line. If the • • * UML drafts a program forthe development * * * and prosperity of Nepal. I wi ll just give it a ''Prime Minister Sher Bahadur Deuba "II .IS true that so many CPN-UML tille." should be prepared to resign for the sake of fo ll owers and workers have jo in ed Prime Minister Slrer Balladur Deuba, the country." Nepal Commu nist Pany Maoist In some m/dressing a program lO IIUlrk rhedeath Modhav Kumar Nepal, CPN-UML places. the CPN-UML seems to be weak­ ening." ]agaflUlh Khalill'ada. MP of CPN­ UML, ill Jan Astha we~kly. * • * "There is a poss ibi lity of direct negotia­ ti ons between Prime Mini stcrSher Bahadur Deuba and Maoist leader Comrade Prachanda." Leftist leaderPadma Ra/no Tuladhar, exp/ainin f{ hall· negotiations 1I"01l/d be held. ill Bimarsha. * * * "T he communi sll..::ade rs are divided on grounds of peny inlercs!. Wc don't have much ideological difrerences." CPN-ML leader c.P. Mail/ali, talkillg about rite possibility of left I1l1ity. f1/ Prakash. * * •

SPOTLIGHT/AUGUST 10.2001 7 _OFF THE RECORD

Trouble In viled to an informal meeting Silent Speaker had to wai t half an hour to be The Party served their first drink. In hi s House of Representati ves Speaker Taranath Ranabhat When newspapers carri ed first tenure as head of govern­ seems la ha ve taken [he resig ­ ~ I o ri es on the resignation of ment, Deuba was so generous nati on ofGirija Prasad Koirala CPN-UML leader Pradeep that he gave almostevery,hing as a personal loss. Since Nepal fr om the .post of party everyone wanted. from minis­ Koirala stepped d own, ~pokesman. leaders in the ri val terial be rths to all-expense­ Ranabhat has shown little in­ CPN-ML group began distrib­ paid trips to Bangkok. What clination to speak. Even dur­ uting sweets. ML leader C.P. prompted him to become aus­ in g House proceedings, Mainali seemed to be partic u- tere this time around? Perhaps the morc important questi on is: in thewhirlwind ofNepalc se poli,ics, how long wi ll the prime minister be able to main­ help. , who had endorsed ta in hi s frugal ways? a party decision to take action again st Rana, finally hailed hi s Nepal's Demand role in the party. This is how CPN-UML leader Madh,v Thapa has thrived in politics. Kumar Nepal seems to have Daily Gaijatra developed a liking for counting the number of prime ministers When Royal Nepal Acad­ he can rui n. The leader of the emy announced that it would opposition waited six mOlllhs not organize the Gaijatra Parba before launching his crusade this year because of the Royal Ranabhat : No more Ryat tya t - which included everythin g Palace killings. it did not disap­ between disrupting the entire point many people. With poli­ Ranabhat spares little time. winter session of pari iament and ticians, intellectuals and other lelli ng his uepu,y C hitra Lekha tearing off of street railings­ luminaries of socielY putting Mainali (left) and Gautam : Yadav take <.:harge. When the to oust G irija Prasad Koirala. on a daily show of Gaijatara. Divided we stand speaker turn s silent, what does In Prime Minister Sher Baha­ the academy's program will not that bode fo r our politics? • larly happy, as he considers dur Deuba s case, Nepal did be sorely missed. Nepal as one of the key people not even wait for six days to ask in the UML who forced him to for hi s resignation. Nepal has quit the party. UML workers, already made it c1earthatDeuba Annual SUBSCRIPTION Rate

Il1canwhi le, were stunned and must be prepared (Q sacrifice U>:D IV IDl ,AL lN STITUTION Ch mJlKor.:a us ~ 1'10,00 liS S zoo,1X! in:t.:1 ~ R S Rs 14(1),00 NRS Ih 2500.00 "1 £l 1 ,,,,~1 USS 1'I(j {(j US S 200.00 Nepal himself was reported to hi s position in the interest of the OIhcr SAAItC IC R, I.!OOOU IC It!" ,1100.00 Bhul.UI LS S 1 ~11.(j(l US S2oo.00 he in state of near shock. Nepal country. How many prime min­ COU nm", Hong K"ng/Tal,," un US') I 'IU (Ill US S 200.00 J ~ PJIl ~~ ~ : ~.: ~~! ~~: ~::~ ' '''New {.eal"rod U5~l:~~:~; US S[ ~:_: had not expected the story to isters does Nepal hope to de­ A,""" eOUllln", US S 12000 US S 200.00 USA l'S S I '\{JIH) L'S S 100,00 push him toward greater isola­ stroy during the term of this ~U~~~R~~~~Crrpuon for... cOl"'" 1 ,agaended when UML general ! C a-'JJoD!C t ~que-No.... ,,, .... __ J'crrR...... tJUS5, .. _h.. '" .... Dalc...... : ,ecretary Madhav Kumar Nepal Thapa In Defense INu,nc 1 claimed that he had not recei ved 1 1 Rastriya Prajatantra Party 1 1 any such letter from Pradeep I M,h-l:~'..... ·.... •·• .... 1I (RPP) leader Surya Bahadur Nepal. Friends of the Nepal duo , ~ ~ 1 Thapa seems to have learned I 1 have a better theory: the story , 1 to accommodate rivals in the , 1 was a conspiracy hatched by pariy. Although it was orga­ LI Signature Telephone t u " anti-UML forces. ------~ nized under his request, a meet­ DO NOT Send CASH in MAIL Deuba'sAusterity ing of the RPP's district chair­ Please- send your remillance by Drafl/Cheque to Prime Minister Sher Sa­ men surprisingly opposed hi s SPOTLIGHT recent policies. The shrewd hadur Deuba seems to be on an THE NATIONAL NEWSMAGAZINE politician he is, Thapa imme­ ~ ,u sterily drive. This may be G.P. O. Bo.\: : 7256, Haluwutar, PH : 977.1-423127, "3S5 9~. F:u: ; 'J77- 1-~1784S the reason why j ournalists in- diately turned to his rival E-mail: [email protected]. Web site: www.nepalncws.('om/spollight Pashupati Sumsher Rana for

SPOTLIGHT/AUGUST 10,2001 NATIONAL

South Asian Affairs, Rocca' s remarks on NEPAL - UNITED STATES Nepal's democracy and the insurgency may therefore deserve special attention. HA thriving, secure democracy and open SuperPowerSupport markets under The rul es of law are essen­ tial. As a good friend, the United States The world's most powerful democracy reiterates support to strengthen looks forward to continuing its efforts to help Nepal reach those goals." the struggling democracy and the endangered America's public commitment "to help Nepal" has come at a time when the ~ KESHAB POUDEL creased, ifthechoiceofthenew American tiny land-locked nation is under one ofthe envoy is any indi cati on. For the first time most serious pressures in recent limes to , 'We have no intention of look- after the multi-party democracy was rc- safeguard not on ly lhedemocracy but also illg at Nepal through the stored in Nepal Twelve years ago, a career the independence and soverei gnty as well , prism of allY O,her /latiol/. .. diplomat wi th hi gh credential has been due 10 the on-going armed insurgency by Thus spoke the first seni or official of appoint ed American ambassador. the Maoist communists, who, accordi ng wor ld 'sonly superpower to visit So uth Mike Malin owski 's appointment is toarepon prepared by acommlnee headed Asia after the Republican adm ini strati on important for several reasons. One. he Isan by none other th an the Prime Minister replaced the Democratic dispensation in old Nepal hand? He served as the deputy SherBahadurDeuba. "have been trai ning the White House. The remark s fo und head of the mission at Pani Pokhari in the in Indi a and using the Indi an territory as a place in the very beginning of a one-page earlyyearsofmuhi party democracy. More safe haven for trafficking the arms." statement the Assistant Secretary of State Important. he is now comjng from a co un- Roccaalso call ed for a peace ful reso- for South Asian Affairs, Christina Rocca, try whi ch has for years been a lOp US lution of the Maoist insurgency. As fears gave at the end of her Recent continue to rise abou t possible Nepal .isits. allempts to derail the ConstilU- At a timc when many polili- lional and democratic process, ca l pundits were speC Ul atin g an the se ni or American official Indi a- tilt Underthe new ad mini s- urged the Nepalese to peace- (ration in its relations with Sou th fully solve their problems Asian Countries, Ms. Rocca "within a constitut ional and scotched such speculation s. She democratic process." Any po- sa id. "the Bush Administration litical change, she sa id , must sees each of the nations of South take place "within the constilU- Asia as important to US Inter- tional framework, thus guaran- s. teeing it is lhewill of the people." Her visit was itself indica- Nepal is currentlg going li ve of the Ameri can policy lO- through one of the serious cri- ward s the Region. That a small ses. The cold war may have land -locked Nepal was put in her ended globall y. It has not, re- iirst itinerary, Which included r ~~~~~~~-"'~~~~~~~~~~~"'J:~~~~gionally. Regional rivalry has India and Pakistan, spoke vol um e - turn ed South Asia, to quote nfhow the Himalayan Kingdom is seen as priority in Asia. Incidentally, the Philip- former President Bill Clinton, into one of "imp0rlantto US interests."' Incidentally. pines, where Mr. Malinowski is currently the dangerous spots in the world. it was Only four months ago that another number two man in the American em- Sa!1dwiched between the two none- US official in charge of the South Asian bassy, has recently witnessedsevereslrains too-fri endly, if not totally hostile, nuclear affairs, Alan Eastham, who was officiat- on its adolescent democracy, like Nepal powers wi th a billion-plus people each, ing pending the fom1al Appointment of IOday. The Pacific island nation has also the South Asian nation of Nepal faces Rocea also visited Nepal. been reeling, under a long-running insur- enormous challenges in its journ ey ahead This reOects that despite the much gency like the Himalayan kingdom. as an independent and democratic mem- publicized US-Indi an ax_is versus theSino- Despite strai ns, the Philippines has ber of the intern ationa l commu nity. Hav- Pakistani alli ance after th e., recent per- been able to avoid major setbacks to its ing seen this without "the prism of any ceived shift in the American Poli cy on democracy. And despi te massive out side oLh ernati on," Assistant Secretary of State So uth As ia, there has not been maj or shift help, the insurgency has not been able to Chri slina Rocca left Kathmandu "con- in policy toward s Smaller countries like make a major dent. vinced that Nepal's challenges are great , Nepal. Instead, it appears to have in - The Assistant Secretary of State for but so are its prospects." •

SPOTLIGHT/AUGUST 10.2001 9 NATIONAL

However. the external variables that ROYAL NEPALESE ARMY came into play left Ihe anny at the forefront of national affairs. In their book "Nepal: Profile of a Himalayan Loyalty And Trust Kingdom" . Leo E. Rose and John T. Scholz point to a major variable in the Amajor participant of the campaign of national unification and consolidation, transformation of thi s pillar of state: the army has always been on the frontlines of Nepal's political debate "The wholesale adoption of the Indian ve rsion of non-alignment as a basic principle without even a serious discus­ BY AKSHAY SHARMA tem and is not synchronized easi Iy with sions wi th its relevance to Nepa\." the pOlitical system. this could result in They add: "Kathmandu accepted a a coup." client-state role in India regional secu­ The polilical di scourse ovenhe past Polilical analysts agree that the army rity, economic and political systems. .I. year would suggest that the Royal is currently facing one of its biggest The establishment of an Indian milit ,­ Nepalese Army has emerged at the fore­ challenges. "But the reassuring factor is mission in Nepal in 1953 and of Indl front of the national agenda because of that the Nepalese anny has always been posts on Nepal's northerner border in questions surrounding the conduct and a patriotic and nationalist force. They 1954 associated Nepal even more di­ performance of Ihe civilian leadership. wi ll never be slOoges for alien powers." rectly in India's security systems. And The fael, however. is that the army has one analyst says. an infonnal system of periodic consul­ been inextricably linked with Nepalese Since Nepal has always been an tations between top officials of both nationhood ever since it established il­ independent nation and the hallmark of governments assured a continual ex­ ~e l r as a major instrument of the na­ the army has been obedience to the change of views. thus fac ilitating New lional unification and consolidation authority of the state, a built-in patriotic Delhi's guidance of Kathmandu on for­ ( campaign Ihat began under ](jng Prithvi tradition has always existed in the force, eign policy." Narayan Shah the Great. says one securilY experl. Matlers en­ Some security analysts say the cur­ "Is the democralic system in Nepal tered anew phase arterthe revolution of rent "cold war" between Indiaand China compalible with th e preponderance of 1951 when King Tribhuvan, Ihe Ranas would cast a dark shadow on Nepalese the Nepalese army?" BP Koirala asked and the Nepali Congress agreed on form­ politics. "The recent problems in the in hi s poslhumously published "Jail ing a coalition government paving the country cannot beatlributed lO the army. Journal". During his eight years in prison way for Nepal's transition from isola­ However, one can certainly point a fin­ "fter hi s IS-month tenure as Nepal 's tion to democracy. gena the political leadership," one ana- firsl elected prime minister came 10 an abrupt end in December 1960, BP spent a 101 of lime wondering whal sequence of events led King Mahendra to take the drastic step of dismissing the Nepali Congress government. Eleven years arter the restoration of the multiparty democracy that was abolished with the removal of BP Koirala's government. the army sti II dominates political discussions. For Ihe betler pan of a year, the country debated every legal nuance concerning who has the authority lO deploy the army against the six-year-old Maoist insurgency. "An army coup is not very far off," wrote political scientist Dr. Pancha Narayan Maharjan in a recent article in Himal Khabarpalika. "Ifthe army is not modernized along with the political sys- Ready for combat: Dedicated and strong ------

10 SPOTLIGHT/AUGUST to, 2001 NATIONAL

Iyst says. "We have a flexible constitu­ tion . but the unruly and anarchist alli­ tude or the political leadership is the root cause of the problem because the dc-facto leader cannot afford 10 be un ­ ruly or populist. Governance is the art or mastering and exercising their au­ thority in a balanced manner." Military mallers have inevitably crept into Indo-Nepal relations. India's sec urity concerns on its nonhern fron­ tiers is a legacy from British colonial rule. "The massive ra nge of the in the north, in spite of a few . . which remains snowbound for major part of the year, is an effective way into the Kashmir Valley. This was proved by the Chinese unilateral decla­ ration of the cease-fire in the winter of 1962 and the withdrawal of the Chinese forces behind the passage before snow RNA at the street: Safeguading the nation fall," remember Lt. Colonel Sharma and K.S. Nagar, then head of the depart­ attach its military mission in dismantling of the party less system and ment of defense studies at the Univer­ Kathmandu. Although it operated out the restoration of multiparty democ­ sity ofGorakhpur, in their book "India's of Nepal's headquarters, its racy. Northern Security". rei ations with the headquarters starf "As all institutions of the state "But the unity of Nepal and Bhutan were andstill are reported to be very have weakened against alien forces, the as 'windows' for India on China and close." army has managed to survive. Maybe Tibet and for China on the sensitive King Mahendra had full control over the generals were aware of the pitfalls Indian regions in the Gangetic planes the army and after the Sino-Indian bor­ of supporting the party in power." says and the north-east can never be elimi­ der war in 1962. Rose and Scholz write: a security analyst, referring to thearmy's nated. This will continue to make the "In New Delhi, top priority was given to hesitation to move against the Maoist 'malayankingdoms a center of atten- strengthening India's security systems rebels in Nuwagaon recelllly. "Under to the outside world," writes Lt on its northern frontier. The Nepalese the current political set-up, today's op­ Colonel Sharma. "India's security is opposition forces were pressurized to position parties could come into power tied with Nepal's, whereas China's is cease their terrorist activities from bases tomorrow. Maybe the generals made not." he adds. in India and use peaceful political tac­ the correct move by not appearing to In the 1970s when Bangladesh tics." side with one 'section of the majority gained independence from Pakistan, "The balance of military power on party." India emerged as the dominant power the Himalayan border shifted gradually The fact that the army in Nepal is in the region, observes an experr. to India's favor, leading to a probable still a force 10 be rcckoned with was This resulted in pressures from India Indian superiority at key points on the evident in the circumstances surround­ and China in Nepal. The Indian, US and frontier," wrote Rose and Scholz, ac­ ing Girija Prasad Koirala's decision to Nepalese armies trained Khampas in cepting the fact that Nepal ended up step down as prime minister last month. hit-and-run tactics against Tibet. When vulnerable 10 Indian pressure in the A iron-willed politician who weathered the Chinese exerted pressure on Nepal, 1970s as it had before the 1962 Sino­ sustained pressure from the combined Indian army posts on the northern bor­ Indian war. opposition in parliament and on the der were shifted 10 Army Headquarters Mallers came to such a pass that streets, from the Maoist rebels in the in Kathmandu, says an exp<;rt. As Rose when Nepal decided to buy anti-aircraft rural hinterland and from a string of and Scholz recount, "A new treaty was guns from China in the late \980s, India corruption allegations, Koirala found signed in 1971, but with somewhat less responded by applying economic himself at a virtual dead end when he dangerous terms than the 1960 treaty. pressure against the kingdom. The se­ realised he couldn't deploy the army in Coincidentally, India was allowed 10 quence of events culminated in the the way he wanted 10. •

SPOTLIGHT/AUGUST to, 200t It NATIONAL

who is himself uncertain whctherhis party CPN-UML MEET can remain united umil the next conven­ tion, raise questions about who should be­ come monarch?" Futile Debate "The CPN-UML has a history ofrais­ ing non-issues to drag the country into Setting aside vital national issues, the central committee meeting of fresh rounds of political uncertainty and the UML wastes time discussing the issue of succession to the throne tumlOil," says senior advocate Mukund Regmi. ·'Whether it is in Tanakpur case, accident, Lauda Air or the is- By KESHAB POUDEL three years ago over differences rooted in sue of free and fair elections, the ePN- leadership succession, was particularly UML has pushed the country into anarchy hat is the major national issue strange. It seems the CPN-UML wants to and tunnoil," he said . W today? Uyou ask theCPN-UML, ensure its survival and relevance by raising "In the Tanakpurcase, the CPN-UML it is succession to the throne. The recent non-issues. obstructed the house for a month and fi- central commiuec meeting of the main Every monarchical country hasitsown nally paved the way for the ratificatio opposition party discussed various aspects system of succession that is detennined by the Integrated Mahakal i Treaty. n of succession to the throne. At a time when its traditions and political developments. Dasdhunga movement, theCPN·VML ac- rolitical parti es are unable to resolve their In Japan, the parliament has the right to tions led to the deaths of 19 people. While own institutional problems and to ensure decide on succession bUllhc monarchy is raising the Lauda Air issue the party ob· transparency in their functioning, .------_------_____.., structed the winter session of their tendency to raise questions parliament for64daysandcalled on an issue that is neitherin contro- athree·day Nepal bandh. Finally, versy nor a source of complication RNAC is virtually on the brink delies logic. of collapse:· Regmi said. As a traditional institution. Whatever ideological un· monarchy is governed by its own derpinnings that guidc CPN- ( system and procedures that have UML leaders, thcy secm to be evolved over the centuries. Even morecom:emcdonasinglc-point after the by agenda: to create anarchy and I King the disrupt the democratic process Great, the country has kept succes- by raising issues that do not need sion to throne out of controversy. to be debated. There has not been a single in· TIle country is today fac ~ stance where the succession has several problems, including ~ faced complications. Nepal's two employment, illiteracy. trade traditional institutions, the monarchy and so influential that the Japanese people see imbalance with India, health worries. wa· the Royal Nepalese Army. have traversed the monarch as symbol of unity and parlia· ter inundation and . most importantly, various phases of history together, over- ment defers to the traditions of the inslitu· growthofpoliti cal institutions and the trans· coming all odds. tion. In the United Kingdom, lOO, the man· parent functioning of parties. However, the Un like political parties such as the archy has its own system of succession and CPN·UML found succession to the throne comm unists who have made a habit out of parliament has nothing do with the matter. as the maj or age nda in its 128-mem ber frequent splits in the name of leadership, In South Asia's cont ext, the national central comnuttee meetin g. Although some the monarchy remains intac t and united assembly of Bhutan can replace the lGng influential members of the Nepali Con· hecause of the procedural sturdiness of by a two-thirds majority. The CPN-UML gress like former spokesman Narahari succession. In the last 50 years, the com- and other communists had made efforts in AcharyaandsomeCPN-UML leaders have rnunist parties have split into more than 1990 to introduce the Bhutanese model but raised the succession issue in parliament, two dozen groups. The Nepali Congress, were forced to abandon them. the CPN-UML's latest decision is anoUler too. has seen many splits, including the last "By rocking the country's two most bid to drag the monarchy and the Royal one led by its supreme leader Ganesh Man stable traditional instituti ons, the monar- Nepalese Anny into needless controversy. Singh. chy and the Royal Nepalese Army, the It remains to be seen whethertheCPN- The Succession to the Throne Act of CPN-UML and other political leaders are UML's latest adventure would strengthen or Nepal has proved successful in ensuring trying to prolong instability in the coun· weaken the monarchy. However, the his· the stability of the institution of monarchy. try," says a political analyst. "How can· tory of the CPN-UML shows that its steps Thedemand by theCPN-UML, which split CPN-UML leader Madhav Kumar Nepal, have often brought the opposite results . •

12 SPOTLIGHT/AUGUST 10.2001 NATIONAL

PM DEUBA ORDINANCES Operation Restore Peace Building Prime Minister Sher Bahadur Deuba gets much-needed support from all political parties in his effort to restore law and order Consensus

By A CORRESPONDENT It took nearly five months to regu- [n the last two weeks, except for larize two ordinance tabled in parlia- sporadic in cidents of extorting donations ment. The Armed Police Ordinance and and forcing elected local representatives Local Administration Amendment Or- he achievements by newly ap­ to resign, the Maoist in surgents have dinance have finally entered in the offi- pointed Prime Minister Sher Ba­ honored the truce announced by its lead- cial process of parliament. ur Deuba in bringing various politi­ ers by not attacking police posts. The According to the constitution, an cal forces together to reslOre law and government has released several Maoist ordinance I11U51 be ratified by parlia- order in the Maoist affected areas have prisoners from jail to pave [he way for ment within 60 days of its introduction. been remarkable. Even before taking the peaceful dialogue. The Maoists, too, have Although the go,ernment does nothave oath of office, Prime Minister Deuba released people under their captivity. a majority in the upper house, the ma- l.:alled a truce with the Maoist insurgents. Although two weeks have passed jority of the Nepali Congress in the drawing a reciprocal announcement from since the truce was announced. it seems lower house is adequate to ratify iL Ihe rebels . that it will still take at least a week to start Although all opposition parties have ....______., formal negotiations wi th Maoist rcgisleredamotiunagainstit.,.they secm leadership. Many hope that Prime to have decided to pave the way for Minister Deuba will bring lasting ratification byorgani7ing a tactical boy- peace to a country that has been cott of the house. gripped by nearly six years of es~ "We arc nor opposin g the estab- calating violence. lishment of the Armed Police Force. Although many express doubts Our opposition is to the way the govern- over Deuba's ability to make the menl tried to bypass parliament in an- peace talks successful. the prime nounclng the ordinance," says a senior minister has already gained some UML le~ldcr on condition of anonym- mileage by drawing suppOrt from ity . "We will not Vale in favor of the leaders of major political parties, ordinances." including his own. for the talks. The House of Representatives Deuba has held talks with endorsed the ordinance after Home leader of main opposition party Minister Khum Bahadur Khadka tab Madhav Kumar Nepal, Rastriya led it. • Prajatatra Party leader Surya Ba- ~~ ____ hadurThapa, CPN-ML leader Bam Dev Gautam, Nepal Sadbhavana parties aner cOlllpleti ng his consu Italions Party president Gajendra Narayan with various political leaders:' says a Singh and other leaders. including close aide to Deuba, 011 condition of former speaker Damannath anonymity. ·'Th~ prime minister has re­ Dhungana. ceived a very positive response from all After receiving the backing of political parties." his own Nepali Congress party, As pressure is mounting on the gov~ Dcuba is now on a mission to con­ ernment and the Maoists to find a peace~ vince other national and small po­ ful solution. negotiations seems to be litical parties to develop a consen­ inevitable. "I think all the parties will sus on selling the agenda for the support PrimeMinislcr Dcuba in his quest talks. to restore law and order in the country:' 'The prime minister will hold PM Deuba : Rush to consensus says Sudip Pathak. president of the Hu­ a conference of national political man Rights Organi zation Nepal. •

SPOTLIGHT/AUGUST 10.2001 13 ECONOMY

physical facilities and infrastructure at NEPAL-INDIA TRADE TALKS major border points between Nepal and India. Both sides also agreed to make greater Inconclusive Round efforts to finalize the railway agreement for operationalizing the Inland Nepal withstands Indian pressure on 'export surge'. Will it be able Container Depot and the agreement on regulation of vehicular traffic. Similarly. to hold its ground as the treaty comes up forrenewal in a few months? understanding has been reached for en- hancing the process of agreeme nt between By BHAGIRATH YOGI India Trade Treaty- are. hence, consid- Bureauoflndian Standard (B IS )and Nepal ered crucial. Bureau of Standards and Metrology Theenv ironment may not have been According to the Ministry oflndustry, (NBSM), the ministry said. The Indian .1. perfect for crucial trade talks be- Commerce and Supplies (MO l CS), the side agreed to look into the request to tween the two close neighbors. As there two sides agreed to further strengthen the waive excise duty imposed on fuel su - was nobody to look after the Industry and implementation of provisions of the 1996 plied to Nepalese aircraft in India. Commerce portfolio independently (Prime Treaty by resolving some operational is- On the crucial issue of 'export surge' Minister Sher Bahadur Deuba sti ll holds sues. specifically waiving the premium in on some crucial items from Ncpallo In- the portfolio) and Nepalese press remain- the leased properties at Kolkata port, set- dia, both sidcs agreed 10 further continue ing 'hostile' on the issue of inundation of ting up lab testing facilities at Raxaul and bilateral consultation. For sometime now. Nepalese territory by the under- lndia has had re servations toward construction Rasiyawal-Khurda the surge in export of five items. Laulan bund by India close to namely polyester yarn, vegetable the border, il needed diplomalic r--:;;;;:;;;;;;;:;;;;::;:=;--:=::-;=--;-=~:---=:-=-----' ghee, copper wirc, zinc oxide and skills and patience to slcer the GI pipes from Nepal to India. talks to a positive conclusion. Reports said India wanted up to For the Nepalese side, the 30 percent local value addition in acceptance by Nepalese busi- these item!>. before they were ex- ness community. in principle. ported to India. Nepali officials, during a recent meeting with however. maintained that the said theirlndiancounterpartsinNew provision would be against the Delhi on the inlroduction of spirit of the 1996 Treaty of Trade value addition on some ilems between Nepal and India that al- exported from Nepaldid not help lows duty free access 10 Nepalefj,. mallerS. However, Ihe Nepalese manufaclured goods into the learn, which had done adequate Nepalese and Indian officials: Searching for common ground dian market. I. homework, did not relent, lead- "Both sides have agreed to ing the crucial issue to be postponed until I Gorakhpur for exports of food items from I meet some time Ialer 10 discuss Ihe con- the next meeting. Nepal, concern of Indian joint-venture lentious issuc of ~ expon surge," said The five-day talks (in cluding prepara- industries in Nepal, and improvement of PUfUshotlam Ojha, joint secretary at the lory meeling led by MoICS. India has been claiming that tive joint scc~e t aries) be- of the most expoflcd Nepalese items to Iween Nepal and India India fall underthe surge net. Nepal main- concludedhereSunday tains that its exports is meager (on ly 2 to postponing crucial de- 2.5 percent of the Iota I imports of the said cis ions on some con- items by India) in the huge Indian market. • tentious issues until the The new provision would further curtail next meeting. The date Nepalese exports thereby further widen- and venue of the next ing the already imbalanced Nepal-India official-level meeting trade. are yet to be fixed. The In the year 1999/00. Nepal exported next round of talks- goods worth Rs 22.62 billion to India. Ihal will bc held on the lmports from India stood at Rs 40.92 eve of the expiry of the billion with the trade deficit of more than five-year-old Nepal- Rs 18 billion ... Its not appropriate tocheek

14 SPOTLIGHT/AUGUST 10.2001 ECONOMY the growth of Nepalese exports to India in across the open border is a two-way busi­ eign investment in Nepal thus helping the name of export surge. In the wake of ness and has equally hurt both the Indian industrialization in Nepal. But the rigid the huge trade deficit, we need to increase and Nepalese economy. attitude on part of India, as manifested in our exports to India further," said Ravi Experts say the treaty can be imple­ the case of Kodak, has raised suspicion Bhakta Shrestha, newly elected President mented only in an environment of mutual about the implementation of the treaty. of the Federation of Nepalese Chambers trust and confidence. Said Or. Puskar "Due to lack of clarity in the 1996 Treaty of Conmmerce and Industry (FNCCI). Bajracharya, professor of management at (such as the provision of eexport surgei). TItanks to the 1996 Treaty, Nepal's Tribhuvan University, "TIle Indian pro­ problems have been cropp ing up in set­ exports to India rose by up to 80.5 percent posal to introduce value add iti on in the ting up industries in Nepal," said T. K. in the year 1999/00. The growth in import name of 'export surge' is not rationale. Gupta, general manager of Dabur Nepal from India, however, was relatively mod­ But Nepal, toO, should take steps to avoid Pvt. Ltd. "It is very interesting to note that erate. It increased at an annual ralcof 13 .2 deflection of third country imports to In­ the behavioral pattern of the Nepalese percent in the five-year period between dia and should immediately put in place investors has not yet changed even though 1994/95 to 1998/99. As a result, trade a mechanism to correct such deflections. the treaty has given an opportunity for eficit with India has continued LOdecline The Indian side, too, should not treat more industrialization. The preference an annual rate of more than 5 percent Nepal, that now enjoys preferential treat­ toward trading is still greater than toward after 1995/96 except a brief in crease in the menl, at par or worse than the countries manufacturing." year 1998/99. India accounted for 43.8 (with which it has) the MFN (Most Fa­ According to Gupta. Nepal has not percent of Nepal's exports in 1999/00 VOff'd Nations) arrangement." used the benefits of the trade treaty to the compared to 12.5 percent in 1993/94. Sources said leader of the Indian del­ fullest extent. "If the benefit of the treaty Nepal's trade with India was fairly egation, Commerce Secretary Prabir Sen is not materialized soon. there would be open even before the onset of the liberal­ Gupta. was quite flexible during the talks hardly any time left before the imposition ization process. Even at present, morc compared to the relatively hard stance of of WTO accord, which may become su i­ than 44 percent of Nepal's total export is the South Block mandarins. Officials from cidal for the economic development of consumed by India whereas little more the Indian Foreign Ministry insi sted that this region," he said. than 35 percent oftotal Nepalese imports controversial issues needed to be sorted It is time both Nepal and India moved comes from India. Three joint venture out at the politicalleve!. forward to translate the treaty into a win­ companies, Dabur Nepal (Pvt.) Ltd., Nepal I'The talks were held in a very cordial win situation. respecting each otheris sen­ Lever Limited and Colgate-Palmolive manner," said Secretary at the MolCS sitivities . • Nepal Pvt. Ltd. togetherrepresent up to 40 Bhanu P. Acharya, who led the Nepalese percent of Nepal's total exports to India. delegation. Direct foreign investment from lndiastood Former Industry Secretary Or. Bhola _ Nepal-India Trade at Rs 0.21 billion in 1996/97 which de­ Nath Chalise, in his article published in " ined to Rs 0.08 billion in 1997/98. Himal Khabarpatrika. recalls that the Treaty, 1996 Nepal continues to honor the spirit of 1996 Trade Treaty was made possible due the 1996 Treaty by offering 20 percent to the effective leadership of the private Article V-Government oflndia will concession on the prevailing tariff to the sector in both the countries whcn 1. K. extend parity in the level of additional products of India, the only country to Gujral was the prime minister of India. duty on such Nepalese goods equal to enjoy such a privilege. Butthings have not The "Gujral doctrine" pleads for non­ the treatment imposed in the Icvel of been the same on the partofIndia. Nepalese reciprocal treatment by India toward her effective duty on slmilar Indian prod­ exporters faced difficulties due to the smaller neighbors. "While dealing with ucts under the Indian customs and Cen­ Indian provision of Duty Refundable Pro­ Nepal, Indian bureaucracy is too conser­ tral Excise Tari fL cess (DRP) and later due to CENV AT vative," said Or. Chalise. "Ifthere are any ii) In the event of .... a surge in the (Central ,value Added Tax). Last year, shortcomings in the implementation of Imports generally or in the import of India imposed 4 percent Special Addi­ the 1996 Treaty they should be corrected any particular articlc, the two govern­ tional Duty (SAD) on all imports from as per the spirit of the Treaty. But there mcnts shall enler into consultation with Nepal, which was withdrawn in October should be no attempt to return to the 1991 a view to laking appropriate measures. last year after tremendous pressure from Treaty for th e comfort and benefit of one Article XU- The Treaty shall re­ the Nepalese government and the busi­ of the parties." The 1991 treaty made it main in force up to December 5.2001 ness community. The imposition of quar­ mandatory that Nepal should value add at and shall be automatically extended for antine fees on the imports'of agricultural least 50 percent in its export items to further periods of five years at a time, products from Nepal and allegations that enjoy duty free access in the Indian mar­ unless either of the parties gives to the Nepal is flooding Indian market with the ket. other a written nmice. three months in goods smuggled from China are some The 1996 treaty is also considered a advance, of hs intention 10 temlinate more examples. Analysts say smuggling milestone [or attracting Indian and for- the Treaty.

SPOTLIGHT/AUGUST to, 2001 t5 COVER STORY TOURISM Flight () To Destruction Nepal's tourism industry suffers a major setback as Royal Nepal Airlines Corporation (RNAC) decides to suspend flights on its European and other sectors. After it cancelled an agreement with China South-West Airlines, RNAC is in no position to continut serving its regular routes with its two ageing Boeing 757 aircraft. Over the past decade, RNAC has been the victim of continual attacks by politicians. By stepping into the ring, the Public Ac- counts Committee and the Commission of Abuse of Authority ) have completed the process of destroying the national flag carrier. )

By KESHAB POUDEL pended its regular schedules on the Euro­ hits in October 2000, the hotel workers' pean sector. Having survived even the strike in November2000andJanuary200 I, epal's tourism industry has sur­ fiercest assaults over the last two years, the widespread negative publicity gener­ vived on hope tor a long time. RNAC's decision has come as the pro ver­ ated by anti-Indian activities tri ggered by Even hope has become a luxury bial last straw on the back of the touri sm anti-Nepal remarks atiributed to Indian film these days. The tourism sector industry. star Hrithik Roshan - which he consis­ Nis on the verge of collapse after the Royal The hijacki ng of an Indian Airlines tentl y denied making - successive Nepal Nepal Airlines Corporation (RNAC) sus- flight in December 1999, a series of bird- bandhs, the royal palace killings and bomb

16 SPOTLIGHT/AUGUST 10, 2001 COVER STORY

recovery for the time being. RNAC officials are not alone respon­ . sible for the presenl plight. After the pun- ishment meted out to senior officials in­ volved in the leasing of the Lauda aircraft, no official orminister is willing to take any major decision. The Commission for In­ vestigation of Abuse of Authority's (CIAA) deL:ision to warn the prime minister in the

l H U • h H ...... " ..., ... ,,, ... ,,. case has multiplied the risk factor involved in files reaching the cabinet room. "Who will take risks at a time when officials are indil:1Cd for causing losses during the course of operating flights? If I continue flights to Europe incurring losses, who can guaranlee !ha! !he CIAA will nol fileacasedemanding that I compensate for the loss," said a senior executive official of the RNAC, requesling anonymity. "If we continue operations with our own two air­ RA's airctaft : Clipping of the wings craft. we might not make money. But. at leasl, we won'l have to face any kind of ~carcs all contributed to driving tourist of irregularilies made by !he Public Ac­ risk," arrivals 10 unprecedented lows. counts Conunitlee in the leasing ora China The CIAA 's indictments in the Lauda Although many other international South- West Airlines aircraft, nobody was Air case are based on losses incurred by airlines have proposed to increase the fre­ in a position to retain the leasedjcls for 100 leasing the aircraft rather than on any acts quency of their fl ights from Europian des­ long. or corruptionor irregularities. ll1is anomaly linations wilhdrawn by Ihe RNAC, it is not Although other international airlines is responsible for the prcsent situation. easy to recover the vacum created by the will undoubledly step in 10 fill Ihe gap, "We will operate !he aircrafl we have. Why ,uspension of the Ilights by nalional nag Nepal's tourism industry can hardly expecl should we have 10 go 10 the Public Ac­ carrier. QualaT, Trans3via, Lauda and to recover by depending on carriers be­ counts Committee and Commission of In­ Aerollol remain four airlines which fly 10 longing lOothercounlJ'ies. Along with Qalar vestigalion of Abuse of Authority for lak­ Europe from Kathmandu. Airways, Lauda and another airlines from ing decisions lhalmight benelillhe coun­ Wc have already received request Nctherlands are operating direct flights try?" another ofIicial said. In some international airlines which want from Kathmandu to London and other Private airlines, too. are feeling the 10 increase Ihe frequency following the European destinations. Emirates and Paki­ heat. "Fewer nights mean fewer tourists. ff wilhdrwal of flight by the RNAC,: 10ld a stan International Airlines also have direct the number or visitors goes down drasti­ ,eniorofficial ofMinislJ'y ofCuliure. Tour­ links to European cities. cally, many private airlines will suffer," ism and Civilaviation to Spotlight. But who knows when foreign airlines said Birendra Basnel.managing director of The cutback in flights by Indian Air­ will start seeing thinning profit margins 'Buddha Air. "Some airlines may just have lines from July hampered the recovery and evemually decide 10 pull OUI'! Indian to close down." efforts made by Nepal Tourism Board. Airl ines' dec ision to cut the number of its When the government-Maoist truce RNAC's latest move will further reduce nighls shows how vulnerable it is 10 de­ was announced. tourism entrepreneurs Ihe number oflourists visiting Nepal. Brit­ pend on foreign carriers. breathed a sigh of relief and had started "in, Gennany, France. the Netherlands and "Olher airlines may fill !he gap cre­ plotting a tourism promotion strategy. The lialy occupy 7.31 percent, 5.39 percen!. aled by Ihe cancellation of flighls by Ihe royal palace massacre and subsequent 5.06percenl, 2.85 percenl and 2.60 percenl RNAC, bu! Ihese arc not as dependable as events sent negative signals in the interna­ of total tourist arrivals respectively. The the nalional carrier:' said Tek Bahadur tional market. As a resuh, tourist arrivals number of tourists is bound to plummet Dangi, marketing director of Nepal Tour­ plunged in June and !he Iirsl week of July. after nights to the major markets are sus­ ism Board. '·We need to have our own Encouraged by the upswing in the pended. strong airlines to provide reliable service." second week of July, tourism entrepre­ RNAC's move was expected even It doesn'l look like the much-hailed neurs were becoming cautiously optimis­ he fore the [onnal announcement was made. truce between the government and Maoist tic of a recovery. RNAC's decision en­ Af!er the cases tiled against board mem­ insurgenls will help the lourism industry. sured thallhe optimism was short-lived. hers in Lhe Lauda Air deal and accusations The seClOr can juS! forgel aboul making a "RNAC's move todiscontinue nights

SPOTLIGHT/AUGUST 10,2001 17 COVER STORY on the European will have a major setback in the tourism industry. We will be forced throughhas sent the shock industry waves. The r--I~l:;=~~::::~~~;;~f~il to close down business if the government RNAC management has does not take necessary steps to restore other compulsions to can­ those nights," says president ofTreakking cel the night, as it has Association of Nepal. "As tourist arrivals tenninated the lease with over the last two months have gone down China South-West effec­ drastically - the arri val of Indian tourists ti ve August 5, 200 I. alone has plunged by 72 percent - it is "How long we can impossible for us to do business." operate nights on the Interventions outside European sector losing By fi ri ng shots in unproven allegations such huge amounts of of corruption in the leasing of aircraft, the money·} RNAC has lost ClAA has ruined the country's two major more than Rs.750 mil­ tourism components, RNAC and hotels. lion in the European sec­ "Look at the irony. All Lhjs damage was done torin thclasllOyears,"a by an anti-graft watchdog headed by some­ senior RNAC executive one accused of abuse of authority during his told SPOTLIGHT on tenureas secretary to lheMinistryof Agricul­ condition of anonymity. ture," says a political analyst. Double stan­ In its announce­ dards on questions of morality have exacted ment, the national flag a heavy pIjce from the tourism industry. carrier has made it clear The decline in the number of Indian that it is in no position 10 'i:::rFt::I:::;q tourists is understandable, because Indian operate nights on the Eu- 11 Airlines has cut its nights to Kathmandu ropean and other sectors n::~~~ from New Delhi. Calculla and Benaras by with its two Boeing 757 half. Maintaining the share in western mar­ aircraft after the cancel-I\'::;~:t:J. kets should ordinarily have been high on lation o f the agreement ~w::.tl; RNAC's priority li st. with China South West. But these are not ordinary limes. At a It has already suspended \\n.:~Wi'eT':R'eiimiUriCertam-----.::..i time when available seats are low, one nights to Frankfun, Lon- ______cannot expect high growth in tourism. don and Paris in Euro­ RNAC's night cutback comes just a few pean sector and Dubai and Singapore in the Although a group oftourism entrepre­ months before the tourist season, which Asian sector. neurs has met Prime Minister Sher Baha­ dur Deuba to demand the restoration of , European Ilights. he is yctto take any kin of decision right now. Aware of the plight of his predecessor, Gi,ija Prasad Koirala's. in the Lauda Air deal. Deuba may simply avoid getting involved in a highly COntro­ versial matter. Some RNAC executives say there is a ~ lil11 chance of improving things. but want the government to make honest commit­ ments. "If wc receive strong assurances from the government and written direc­ tives, then we may be in aposition to rear­ range the flight schedule. However. we don't want to put our career on the line. If we take initiative.... to normalize the flight schedule, the PAC and CIAA won·t lose time in launching a probe," said a senior RNAC official. requesting anonymity. At a recent meeling. the dircclOr of Door closed: Please, go out Nepal Administrative Staff College dis-

18 SPOTLIGHT/AUGUST 10.2001 COVER STORY closed that no secretaries and senior offic- iSler," said another RNAC ofticial. the airline's officials are allowed to work ers in government ministries and depart­ According to RNAC's press release, independently, they can manage the air­ ments are in a mood to take decisions the carrier will continue its night to Osaka, lines efficiently and start hringing in profits hecause of overreaching approach of the Shanghai. Hong Kong. Bangkok, New soon," says an offic ial. "I think RNAC can PAC, State Affairs Committee and ClAA. Delhi, Mumbai and Bangal ore . However, still recover from thi s trauma." "There is a growing mentality in favor of with just two ageing Boeing 7575 on its However, that kind of optimism is not working. Whenever a ministry or de­ international fleet, touri sm entrepreneurs very hard to come across. After 10 years of partment takes a decision. offi cials fear are questioning whether nights on these endless cases of comm ission. omission and they might be summoned by the PAC, sectors will be regular. If one aircraft hits a political intervention. RNAC has compl eted State Affairs Committee and the ClAA at techni cal snag. the whole schedule will be the circle to destruction - dragging down any lime," said Sambhu Saran Kay astha. at hampered. the touri sm industry as well. a meeting organized by the State Affairs "I dOh'tthink tourism will be a viable No Flight, No Exposure COOlmiuee, industry at a time when the national carrier After the withdrawal of RNAC from CIAA's Role itself is in the doldrums," said a touri sm the European sector, pilots and oth er se­ In RNAC's case. this psychosis is at entrepreneur. Although other intefllmi onal nior officials have lost opportunitics to • play. In the last decade. whenever airlines may add nights, noonecan predict gain ex posure. Human resources devel­ RNAC has taken an initiati ve LO lease air­ when they will suspend it." opment in RNAC i, set to suffer. Con­ craft. the PAC and ClAA ha ve summoned The fortunes of RNAC began heading demning the practice of leasing aircraft, senior officials. "We will not take any new downhill soon after Girija Prasad Koirala. RNAC pilots and other ol'licials appearto decision until something concrete finally during his ftrst tenure as prime minister, have hurt themselvc~. comes from the mini ster or the prime min- approved the sale ofthecanier' s two Boeing In the airline~ business, loss alone 727s at th rowaway cann ot be a valid reason to withdraw prices, paving the way nights. Until the regu lar service to Eu­ .------:..--:.,....,~r:-_,. forleasingairera/t.All rope, RNAC pilot got opportunities lO successive govern­ take off and land at ~uch leading interna­ ments used RNAC as tional ai rport s as Frankfurt, Paris and a miJching cow that Lond on. Marketing and other administra­ brought hefty com­ tive staff statjoned at these cities also got missions along with the opportunjty to learn international prac­ every new lease deaL tices and trends. Un fortunatel y, Suspension of fli ghts means missed the CIAA thi s time opportunities for juni or pil ots and stalT. It liledcases against the wi ll take many dc<.:adcs to develop profes­ tourism minister and sional and technical capability to ny on the half a dozen RNAC European route. Some RNAC pilots seemed offici als, including a to be happy that the airline finall y pulled r=::::.i former executi ve out of the European route, arguing that J chaimlan and board management and politicians cannot spend member. o n the time leasin g aircraft. After RNAC ground of incurring management's decision to lease wide-body losses, not for com­ aircraft, Nepalese pilots were barred from mittinganyoffenscof go ing to Europe. "The decisi on to pull out corrupti on and irregu­ of the European sector is a good onc, since larities, The case has RNAC incurred huge losses annually." says had a knock-out ef­ a senior pilot on condition of anonymity. fect on the wider ad­ Other see the decision as major set­ ministration, virtually back for RNAC and the country. "Not ruining the decision­ only the RNAC, Nepal has lost something making process of it achieved after in ves ti ng a lot of money." countless institutions says an aviation expert. "If loss is th e onl y like RNAC. criterion to judge the perfollnance of an "111ere are still organi zation, then every corporation 111 many ways of im­ Nepal should be closed down." ...... proving the perfor- Bridge To The West Tourist at Thamel : Where have other folk1gene? mance of RNAC. If Over the years. RNAC has played a

SPOTLIGHT/AUGUST 10. 200 1 19 COVER STORY major role in bringing tourists from West­ ducti on of daily nights by Qatar Air, RNAC 19,865 tourists from Western European ern Europe to the kingdom. carried the largest number of tourists in nations. According to the Nepal Tourism Sta­ 1999. According to the report, Qatar Air The government still has time to res­ ti stics 1999, RNAC shared 43.3 percent of carried 9,541 tourists from UK compared cue RNAC from total ruin. If the govern­ tourist arrivals in 1988,39.5 in 1989,42.4 to 6,676 by RNAC. RNAC brought in ment is sincere about preserve RNAC, it in 1990,41.2 in 1991,42. 1 in 1992,40.3 in 4,087 French, 4,087 German, 3,093 Ital­ must intervene in the management and 1993, 42.5 in 1994. 43.3 in 1995, 39.8 in ian, 1.888 Swiss, 1,537 Spanish, I, 998 make necessary arrangements to add new 1996.39.8 in 1997,36.0 in 1998 and 29.3 Dutch tourists and 336 from other coun­ aircraft. Otherwise, Nepal's national nag in 1999. tries in 1999. RNAC carried 28.530 Euro­ carrier might find its wings limited to In­ On the European sector, despite intro- pean nationals in 1999. Qatar Air carried dian cities. • 'If Other Airlines Bring In Tourists, We Won't Have To Worry' -NARENDRA BAJRACHARYA

Presidelll of Hotel Association Nepal The RNAC management has assured alternative ar- "'------.., (HAN) NARENDRA BAJRACHARYA us that they will make alternative arrange­ rangements? sees the RNA C's decisiol1!OSwi/iendj7igl1fs ments to transfer the bookings made with They have to Oil the Europeal/ sector as a bold step. RNAC.lf other airlines bring tourists, we make alternati ve Bajracharya jllst wallt a system put ill don1t have to worry. We want more tour­ arrangements place !tllder u"hich tourists hooked all ists, We don't care which airlines bring within 10 days RNAC s"ol/Id be able 10 cOllie to Nepal. them. rescheduling their Bajracharya led a team to Prime Minister Why are you so sympathetic to flights. RNAC She,. Ba/Wc/Ill' Deflba alld other go\'em~ RNAC? management meJll officials to demand appropriate When the executive chairman briefed should move /IIeasures to cOllfrolthe damage from the us about the situation, we came to realize positively toward light slIspension: Excerptsfrom an infer­ the huge loss incurred by RNAC 0 11 the I an alternati ve system. I'jell' I·l'illl the HAN chief European sector. 11" RNAC cannot ~ake When you met the prime minister, money, how can we ask them to contltlue ­ minister and other officials, what was f As a tourism entrepreneur,how do their Ilights? their response? you see RNAC's decision to withdraw How do you see the role of RN A C in 1 saw a very positive response. from the European sector? the European sector? new budget has tenned hotels as a sick Despite its negative impact on the Over the last few months, the number industry. This policy shift will play very a tourism inuustry, the RNACmanagcment' s of passengers coming to Nepal via RNAC positive role, as the tourism industry will decision to withdraw from the European has drastically declined. RNAC's execu­ take another two or ~hree years to make a !-.cctor is a bold onc. According to the tive chainnan informed us that the carrier recovery. RNAC managcment, they will save mil­ would have to transfer 5,000 passengers What will be the impact of truce lions of rupees after pulling out from the 10 mhcr airlines. According to the RNAC between government and Maoist insur~ European rOllte. There is no reason to con­ management. their aircraft carried 570 gents? tinue nights incurring loss. As a hotel en­ tourists a week from the European sector. We view the truce very positively. trepreneur. what I want is more flights frOI"!l If you see RNAC's decision as bold, After the cease-lire. we have extended the Europe. Thc duty of the RNAC manage­ then why are you calling on the govern~ Festival of Life program to aUract more ment is to make alternative arrangements ment to make other arrangements? tourists from Indin. The tourist arrivals to transfer its booking la other airlines. If We are concerned about introducing will increase. RNAC can accommodate the passengers alternative arrangements and met offi­ How do you see the future of tour­ in other airlines, Nepal's tourism would cials for this purpose. RNAC can suppor! ism in Nepal? not have to ~uffcr much . .; in arranging other carriers. by giving its If peace continues to exist, tourism Don't you think RNAC's with­ night to other airlines. If alternative ar­ will rccovc:- soon. The arrival of tourists drawal from such a vital route would rangements can be made, hoteliers won't will star! 10 increase. I think the talks have an adverse impact on Nepalese have to wofT)'. between the government and Maoists will tourism? Do you believe RNAC will make result in an amicable solution. •

20 SPOTLIGHT/AUGUST 10.2001 NATIONAL

cord aimed at cutting greenhouse gas emis­ CRIME AND PUNISHMENT sions threatens the global e nvironment. On the other hand. Lh e blasting of the hills at Godavari forces the local people to live in unsafe condi­ Lawful Killing tions. Can we punish the US presidem or those who ordered Lhe blasts at Godavari?" Questions of morality, justice, compassion and fairness straddle the Agrees Ajit Pun. "As Lhe environment plays a cruciaJ role in the lives of human debateon death penal ty beings, tampering with nature is certainly tan­ tamount to playing with the Iivesofthe people." By AKSHAY SHARMA One important area is en vi ronmental deg­ That leads us to the unfairness of the radation. A clean and safe environmem plays system of justice. A fonner president. like a vital role in safeguarding human life. In Slobodan Milosevic of Yugoslavia, can be The death penalty has long been a sou rce many cases, however. policy makers are di­ taken to the International War C rimes Tribu­ ..1.. of intense debate in many societie s. rectly responsible for approving programs and nal in TIle Hague to face charges of genocide. .. day, th\! United States' decision (Qconlinue projects that are environmentall y hazardous. BUl who is responsible for the thousands upon 1 capi tal punishment has left it at odds with "Refrigerators and ain.::onditioners the West •~ thousands or deaths that UN sanctions against its key European allies. Within the United banned long ago as unsafe are being dumped Iraq have caused over tJ1 C last decade? Stmes. the death penalty is deeply divisive in developing countri es," says Madhukar Psychologist Kri~hna KC believes there political issue. Gurung of Chabhil. ''This rcpresents an indi­ is always an clement of unfairness in the Questions of morality. justice. compas­ rect fornl of killing sanctioned by the state." criminal justice system. 'The laws are never !'>ion and fainlcss straddle the debate, which Gunja Lala Hirachand says he believes up to perfection. There is noequality in the rcaJ ~erve 10 bOlh dari fy and cloud lhe COfe issue: there arc two ways a person can be killed under world. Sometimes innocent people are con­ whether it is right for the state to take the life the law. ''The first is directly, through admin­ victed and sent LO Lh e exct.:ution chamber." Ilf an individual on any grounds. istration of the death penalty. The second is Thesc innocent people t.:an be victims of Some opponellls of capi tal punishment through the use of weapons of mass destruc­ miscarriage of justice or random targets of

SPOTLlGHT/AUGUST 10.2001 21 INTERVIEW 'Credibility And Commitment Are Our Strength' -SHOVAN DEV PANT

SHOVAN DEV PANT, chief execwive officer at in distributing loans. Mostly what they do is to Nabil (Nepal Arab Bank Limited), has been associ­ invest in government bonds. There is another sec­ ated \\'ilh rlie banking sector/or the last 17 years. li on involved in un scrupul ous lending. A bank is a Having joined Nabil in 1984, Pant is the first custodian of public money. If we don't maintain Nepalese chief executive officer of the ballk. Pant, cert ain norms and values, banks will coll apse. 42, who did his MBA from Tribhllvall U/liversity. Nepal Bank and Rastriya Banijya Bank are facing spoke to KESHAB POUDEL at his office 0 11 Fri· a difficult situati on. We don't want to get into tl ~ day 011 various issues relating (0 Nepal's banking situation. Nabil is always concerned with the safe sector. Excerpts: of depositors. I am proud to say that the overall health of the bank is quitegood. Wcare formulat ing As the first Nepalese chief executive officer a strategy keeping in the mind of overall health o f of the bank, how can you prove that you are the bank and shareholders. Wc expect Nabil will different than your foreign predecessors? remain the leading force in the country's economic After my appointment as eEO, we have de­ activities. cided to introd uce a scicJ1Iific management system. What is tbe ratio of deposits? One of the aims o rthe system is to demonstrate that We now have deposits of Rs.17 bill ion and Nepalese can run the bank effi cientl y under sc ien­ lending of Rs. 9 billion. We do not sec lending and tific management. We are planning to reoricnt th e deposits as u1e focus of growth. We are focusin g on management system as a whole. I am promoting the quality of banking systcm as a whole. Gener­ teamwork in the bank to activate all internal insti­ all y, this is a time when the investment is very low tuti ons. It is going to be very rewarding for the and getting a good avenue for lendin g is hard. Even in stitution. We have constituted a hi gh-level man­ mullinational companies like Kodak have pu ll ed agemem leam where we discuss and decide what out of the country. The tourism sector, where all the reforms are required in the bank. Teamwork is banks have a stake, is in a bad positi on. Now we important in making a bank an efficient and cred­ need to play a bigger role in supponing tourism. I ible in stitution. There is no expert and everybody's don' t think a conventional banking process w ideas are used to get results. safeguard our industries. We require a change in Do you believe changing management prac­ outlook. At a time when the economy is not func­ tices alone would bring better results? tioning properly, a bank cannot invest in ri sky This new method wi ll produce beller resuils. areas. This is the reason we are trying to introduce Earlier, one man look all the decisions, but now it a pragmatic and practical outl ook. If wedo not take is a team that is functi oni ng. We have four senior ri sks, it will not help the country. [f the banking members who are committed and experienced and sector does not invest, the country will face a very who can conLribute a lot to bring prosperity to the difficult situation. As bankers. we also have the bank. In the process, we also have redefined busi­ responsibility and obligation to in vest the people's ness values. We are also trying to define the mi s­ money in the right places. We cannot lend money Teamwork is sion of the organization. All our effort s are dedi­ without observing and evaluating perfonnance. cated to developing Nabil as a sustainable in stitu­ For Nabil, our motto is ·'a fri end in need and a important in lion to serve the country with the objective of partner in progress". Wc are making efforts to making a giving the best relurn to the in vestors. It is neces­ overcome a difficult time by harness~ng the oppor­ sary to have a committed and efficient management tuniti es avai lable. We arecoIl cerned abQl1t support­ bank an effi­ .,. to achieve thi s objective. The other objective is to in g industries and protecting deposits. Napil is not cient and place thi s in stituti on as a catalytic institution. just a profit-making in st itution. it also wants to credible insti­ What are your other goals'! . fulfil social and economic obli gati ons. We have many banks that are concerned with At a time when so many private banks are tution. profits for investors, but they do not take major ri sk coming up, how competitive is the market?

22 SPOTLIGHT/AUGUST to. 2001 INTERVIEW

Business is very competitive. It is more impor­ tant to see how they arc working rather than how they are. When there is a level playing lield be­ tween competilOrs, then things will be alright Bul lmcan here. the banking sector does not seem to be performing within established nonns. Nabi l has maintained its credibility and we have been trying to improve our perfonnance. Today OUT strength is our credibility and a committed work force. We are going to make them more productive and morc efficient. In the present age of competition, only profess ionall y run organizations can be sustain­ institutions. How do you see this situation? able. The banking sector will face problems ex pe­ I agree with you, but there is nothing wrong to ri cm:ed by non-professional cooperatives sector invest in the sector as an investor. Everyone has not unless wechange lhcslralcgic position. Nabi l wants necessarily come with bad intentions. One has to "6 13\C a balance sheet where the values of deposi· understand that banking is totally different than ~s should be protected. Nabil aims to survive in other businesses. Banking is an area where the noy situation with a strong and efficient manage· parties have to deal with publi c money. A person ment team. deposits his or her money onl y in a credible bank. How do you see the future of the banking The person handle public money has to enjoy sector in Nepal? credibility. Public trust is necessary to run a bank. As J said earlier. sustaining all these in stilu· A bank or finan cial in stiltlli on run by incxperi· tion, is a very difficult task. Again. only those enced people is always vulnerable to bankruptcy.lf inslIl utions that provide good return to depositors the regulatory authority is weak, the possibility is t:3n survive. It is not bad to have Illany banks. butdo much higher. The cases of cooperatives have al­ all of them protect the intcrest of depositors? I am ready shown how vulnerable deposits in the hands very doubtful. As far as running the institution over of inexperienced promoters are. Lapses in monitor· the long run is concerned, wc may race very diffi· ing arc also creating an alarming si tu ati on. If there cult times. is a lack ofmechanis111 and credibility in the bank· How do you evaluate the monitoring system ing sector, it will hamper the process. It is not just of Nepal Rostra Bank? distribution of loans and making returns. there are After the crisis in the two largest public-sector many other issues in volved. hanks. Rastriya Banijya Bank (RBB) and Nepal As a pioneer joint-venture iYank, what plan Ban~ (NBL). Nepal Rastra Bank has introduced a do you have to show that Nepalese management )re effecti ve monitorin g system. NRB has now is capable of maintaining Nabil's reputation? realized the need for monilOring. They are trying to The Nabil team has the capability to prove plug loopholes. They are now more concerned with their credibili ty. What we are going to prove is th at enforcement. Nepalese have the capabil ity la run things profes­ What major contribution has Nabil made in sionally. This is the need of the country. Wc have the market? to develop skill s to lead the nation. After all. it is the In terms of manpower, Nabil is again a leading responsibility of Nepalese to develop their own han!.... We (ame in 1984 as a firstjoint·venture bank country. bank and other institutions. Nepalese can in Nepal. Since then. we have produced so many manage Ihings very efficiently and Nabil has the competent workers. You can find many fonner manpower to handle all challenges. I am very proud The experi­ ,talfers o f Nabil in the new banks. Nabil is very to say we have very competent and honest t ~am. ences afRBB proud to have produced such effi cient and qualified You have been with the banking sector for manpower. We have produced a huge number of such a long time. What are the prospects for and NBLhave people in vari ous l eve l s~Nabi l has played a very banks in Nepal? shown how important role as far as development of human There are a lot of challenges ahead in the resources is concerned. The bank will continue to banking sector. The experiences of RBB and NBL vulnerable the play this role. We will contipue to in vest in human· have shown how vul nerable the banking sector can ballking sec­ resources development sin ce thi s will benefit the be if it is not managed properl y. They have still tor can be if it entire banking sector. You cann ot run a bank with­ Illore than 60 percent of deposits. The new private out erticie,n t and competiti ve manpower. banks have to see the experiences of th ese two is not man­ It is said that people unfamiliar with the banks. Onc has toscc the ri sk factors. [fbanks don' t aged properly. banking sector are promoting many financial lend money, the entire industrial seclorwill suffer..

SPOTLIGHT/AUGUST 10.2001 23 had targeted an annual GDP growth of7.2 percent for thc LDCs. After 20 years, the actual average rate of annual GDP growth is just 2.2 percenl. The total number of LDCs at that time was 32 and which has now increased to 49. Despite holding two more UN sponsored conferences on LDCs, their problems have remained the same, if not worsened, Efforts by thc dcveloped countries to improve the conditions of the LDCs over the past two decades ha ve not yielded much. Reduction of their share of global expons from 0.7 percent in 1981 to under 0.4 percent in 200 I and the surge in d bt Carpet products: Will they compete '? from US$ 65 billion in 1985 to$120bil in 1997 speak for themselves about the LDCs conditions of the LDCs today. Lack offinancial resources and exper­ tise has hindered LDCs' allempts to pre­ Demanding A Fair Deal pare them to face today's integrated global trading environment This has also hin­ Least Developed Countries call for greater action to dered their allempts at the negotiating table to yield the best outcome for themselves. become part of the multilateral trading system Against this backdrop, a two-day South-South seminar di!>cussed issues re­ B A CORRESPONDENT liberal izatiol1 and globalization. Therefore, lated to LDCs' attempts at integrating into they remained marginalized. This multilateral trading ~ystem. Its objective marginalization has now taken a deeper was to come up with suggestions for the "Dpresentatives of civil society orga­ root. The establishment of the WTO in participants orthe Zanzibar meeting to be '&izations from SAARC and 1995 and its agreements further exacer­ held later in the year on the possible stands COMES A regions demanded a better deal bated the problems of the LDCs. that LDCs should take in the upcoming from the multilateral trading system, espe­ The process of integrating LDCs into Doha ministerial meeting. cially for the most marginaiized and vul­ the multilateral lrading system has so far Participated in by over 30 represe n nerable countries of the world. This was been limited to rhetoric. On the one hand, tives from Bangladesh, India, Sri Lan • the view of the participants allending the the WTO seemingly shows concern over Nepal, Pakistan, United Kingdom. Uganda South-South Seminar "From Brussels to the integration of LDCs into the multilat­ and Zambia. the seminar came up with Doha: Integrating Least Developed Coun­ eral trading system, while on the other its recommendalions in the areas of market tries into the Multilateral Trading System" agreements stand in the way. No wonder access. implementation issues. participa­ in Kmhmandu last month. then that LDCs feel not only left out but tion in the WTO processes, supply-side The two-day seminar(July 14-15) was '1lso disenchanted with the whole process. constraints. efforts at the regional and do­ organized by Kathmandu-based South Asia Thereisagrowing feelingamong the LDCs mestic levels and deliverables for LDCs at Watch on Trade, Economjcs and Environ­ that the developed coumries were not hon­ the Doha Ministerial Meeting. The recom­ ment (SA WTEE), a Kathmandu-ba~ed est about impiementi ng whatever i ittle com­ mendations of the seminar will also be fed advocacy group, in cooperation with Con­ mitment they had made to start with. This into the meeting of the LDC trade ministers >umer Unity and Trust Society (CUTS), is substantiated by the fact that so far none lO be held in Zanzibar, Tanzania, Jaipur. India. 1lle meeting was organized of the commitments made during the in­ Dr. Shankar Sharma, member of the in preparation for the third Ministerial ception of the WTO has been set in motion. National Planni ng Commission, said LDCs Meeting of the World Trade Organization The Marrakesh Declaration, which provi­ have not been given fair treatment by the (WTO) to be held in Doha in November. sioned for special and preferential treat­ developed countries in the WTO system. If Although most of the Least Devel­ ment for the LDCs and Integrated Frame­ this lrend continues, he said. they would be oped Countries (LDCs) initiated the pro­ work for Trade Related Technical Assis­ fUl1hermarginal ized, ll1crefore. implemen­ L:ess of economic reforms by the end of tance are examples of empty promises that tation issues should be discussed as a prior­ I 980s, they were not fully prepared at that have so far been confined to words. ity during the Doha Ministerial Meeting, time to reap the benefits of grobal race for In 1981, the first UNLDC Conference he said.

~4 SPOTLIGHT/AUGUST 10,2001 ECONOMY

Secretary-General of SAARC, Nihal other sectors have not produced results. out that maj or faclOrs responsible for this Rodrigo, said complexity of issues related Despite the fact that major policy changes are market structures in the LDCs and to WTO inhibit the equitable participation have been made and appropriate legal and political will of their leaders. o f the LDCs in multilateral trade negotia- institutional mechanisms have been put in Doha Minislerial Conference ofthe tions and their full integration eventually in place, Nepal has not been able to reap the WTO the global tradin g system. benefits of trade liberalization so far. According to UNCT AD, Least De- Pradeep S. Mehta, secretary-general -EffonstowardsintegrationofNepal veloped Countries (LDCs), a group of 49 of CUTS. said the developing countries into the multilateral trading system are coun tri es, have a combined share of less and LDCs should maintain the cohesive- underway. Two such examples include: a) than 0.5 percent in global trade, and esti- nCS$ they exhibited duri ng the Scattle min- initiation orlhe process for Nepal's Acces- mates show that this share is declining. iSlerial conference ofthe WTO during the sion to the WTO; and b) preparation of the Efforts 10 integrate LDCs into the multilat- Doha ministerial meeting as well . Added Trade-Related Needs Assessment. eral trading system have largely failed so Ratnakar Adhikari. general secretary of Nepal's main positions during the far. SA WTEE. "WTOmembershi p is a prercq- Doha Ministerial Conference are likely to The Marrakesh Decision on Mea- I for LDCs to belter in tegrate them- be centered on three key issues: sures in FavourofLeast-DevelopedCoun- in lO the multilateral trading system. -Speedy and trouble free accession tri es and Measures Concerning the Pos- However. the way developed countries have to be provided to the WTO. sible Negative Effects of the Refonn fo rced LDCs 10 accept WTO- ....______----,.,.."""' .... Programme on Least-Developed plus commitlllents proves that and Net Food-Importing Devel- they are not genuinely interested aping Countries have been of no 10 make this happen." use because of developed CO UI1- Intemationaltrade,undcrthe tries' indifferent attitude towards au~piccs ofWTO. is supposed to them. Integrated Framework for expand the participation of the '.' Trade Related Technical Coop- LDCs in the international market eration (IF) have failed to pro- and thereby expand their econo- duce any noticeable impact be- mies. However. empirical evi- causeconfusionregardingtheob- dence points to the other end: the of the initiative. The re- last decade orso has seen a shrink- ce nt initiative of European Union. ing oftheeconomiesoftheLDCs namely. Everything But Arms and their participation in the vol- (EBA) is not likely to produce ume of world trade . much impact unless Olher mem- global trade should be inclusive, bers follow suit. LDCs ,Aexclusive, ofLDCs. To that end. it was -Quota-free and tariff- free access of are also being subjected to WTO-plus .,ed that multilateral agencies, indud- all the LDCs' products lO all the developed commitment durin g the lime of their ac- ing WTO. should do more to integrate countries' market. cession. However, they are to be blamed LDCs into the multilateral trade system by --Continuation o f some fonn ofpref- in part for not being assertive enough. To assisting them rat her than ignoring them. erenti al arrangements on textile and cloth- sum up, LDCs are not able lO claim their The major issues confronting integra- ing to the LDCs even af~er the phasing out due share from the multilateral trading tion of Nepalese economy into the multi- of the quota system. system, and at the same time, the devel- lateral tradin g system are as follows: Participants were of the opi nion that oped countries ha ve been conspicuously - Depe ndence on one country for creating a trade-enabling envi ronment at ignoring them . major international trade acti vities. Trade the regional and domestic levels can have WTO has at last acknowledged the with India was fairly open even before the major impact on LDCs' ability to integrate marginalization of LDCs from the global onsel of the liberali zat ion process, Even at into the multilateral trading system. trading system . TIli s view was also re- present 44.4 percent of Nepal's expons The experiences of LDCs in their Oectedduringtherecenlly concludedThird IInd markets in India and 35.6 percent of attempt to integrate their economics at UN Conference on LDCs (UNLDC ill, Nepalese impon come from India. regional level are not encouraging. LDCs May 14-20, 2001, Brussels). However, -After India. Nepal is dependent on remain least integrated economies both at unless and until a follow up is made to two commodities [Carpet (37.4 percent) regional the multilateral level. This is not ensure that the message from Brussels are and garments (39.5 percent)],md two mar- to say attempts at doing so have not been carried forward to the Founh Ministerial kets (Gennany and the United States). Nepal made by the LDCs. Indeed, many re- Conference of the WTO to be held in Doha, does not have comparati ve advantage in gional cooperation agfeemenls are evi- whatever precious little has been achieved any of these products. dence of their attempt at integrating them- during the UNLDC ill will lose its momen- - Efforts made so far to diversify into selves to such arrangements. It was pointed turn. •

SPOTLIGHT/AUGUST 10, 'lOOt 25 REVIEW

sodated with Nation al Planning Commis­ JOURNAL sion, evaluates Nepal ' soverall export trends, Bhattarai also di scusses policies fommlated by Nepal following the implementation of Ideals And Institutions liberalized market-oriented economic poli­ cies, He also dwells on the challenges posed Experts come out with in-depth analyses on adminis­ to Nepa!"s ex port by the lack of port facil i­ ti es, tration, management and development Umesh Prasad Mainali stresses the im­ portance of responsibility and transparency _By A CORRESPONDENT effect they have, Pokharel 's article gives in public administration, explaining the major insights into how frequent changes in poli­ lapses in the present administrative struc­ cies have hampered the growth of institu­ ture, Underlining the need la refonn and lthough Nepal has travelled fi ve de­ tions, At a time when everyone is lalking consolidate an e ffi cient administrative cul­ A cades down the road to modemiza­ about the need to amend the constitution, ture, Krishna Gyawali explains how Nepal 's I ion, including two stints under a democratic Hari har Dahal, a former administration remains influenced by ~e lllp , it has been struggling in the process of Bar Association, has helped to initiate a tion, Ji v Raj Koirala and Dr. Hiram' " huilding institutions that sustain develop­ serious debate on substan ce of areas of Ghimire highlight various aspects of the ment The bureaucratic setup. whi ch is at the amendment. Dahal argues that discussions Nepalese administralive system, rore of state in stitutions, remains weak. on amending the II-year-old basic law The volume provides a wealth of in­ However, a positi ve aspect of today's ad­ should proceed within the framework of the formation and anal yses on the challenges Ininistralors and management experts is that basic principles lai d down in the constiLU­ of building insti tutions th at support democ­ Ihey have been making efforts to su-engthcn tion, racy and development. which should prove these in stitutions. Published by the Ccntcr Deepak Dhital, who is associated with equall y useful to experts and general read­ 1'01' Ad ministrati on Managementand Devel­ the Ministry of Foreign Affairs, discusses ers, 11 t lp menl , this joumal is the rlf st orits kind Ihal the challenges ofpov- r------. includes arti cles by various administrators erty. In his article titled and experts in the process of implementa­ "Poverty in the Picturesque and Peaceful tion or govemment policies, Global izat ion" , Dhital The articles highlight nOI only the theo- stresses that the mag- a Pilgrimage with Pleasure

Camad A journal of Administration, Management and Development Price : Rs.JOO (general readers); Rs.300(institutions) Published by Center for Administration, Management and Development, Pages: 131 rCli cal perspecti ves of particular issues but nitude of poverty in al so the experiences administrators and ex­ the world is still alann­ perts faced in the process of executing Lhe ing despite Lhe rapid decisions, policies and other related matters, pace of globalization As the objecti ve of the organization is to and its potential for prov ide a forum for critical and creative economic boom, In ru s :-\111 Cl' Cl'l lI llnl'~, .\ 1:II1,\k;\man;l l)l'\'1 ha~ lH':l'Il discussion of problems, perspectives among extensive article, \\'H.kh Ill' lll'l co u, fulfd Ihe lI'i~hL'~ 01 hn ;1 cadcmi cians and practitioners in the fi eld Dhilal di scusses vari­ Ul'\'tHen "\:l'r'I~" fir~1 (.lbk- CM ~C:f\ lel', Cllmbllll'd of administration, managemenll and devcl­ ous factors contribut­ II'llh d'd~ \\HJ('~prc'lJ respeCI :I1lJ Slqlt'fU u,Hulal (lpmem, this issue includes articles on a wide in g to the rise in the ~llfrtHI!ldII1K" It;t~ Ifall,forllll:U Ih~' 1I!:l1lak,lIll:tll:J ran ge of contemporary topics. number of people li v­ tl'glOll 1'1 a pUpUl.lf pdgrlnl:tgl' anJ hd1td.I~' destination, in"LlI1cd by Ihl' \\'orlJ rl.:nll\\' nl'd From lhe dcbale on amending the con­ ing below the poverty I)oppkmalr "f \U~ln : I, our cthlc Clr, :lfe;l( p;lr ~ tituti o n to the issue of poverty and from line, The journal also \\'lIh the hl'sl :n lhl \\'urlJ a~ arl.: uur SCn'lCI.:S Nepal 's export trends to the need For admin­ includes papers on re- istrative reform, rhe journal uies to bring 10 cent trends in Nepal 's ~. 4"

:'6 SPOTLI GHT/AUGUST ID. 2001 THE BOTTOM LINE

By M.S.KHOKNA

LOOK.I Nepalese

IS hurting our erfl'l'?Il ...,,,1 tJe -must stop d.

TRANSITION ciation Shakya and Dr. Ananta Raj forts to create a conducive en­ Poudyal as the president and vironment for peace talks. RETIRED: Chief Electiov ·La.man Upreti as a president vice·president of Fulbright Commissioner, Bishnu of Nepal Founn for Environ­ Alumni Association of Nepal A WARDED: Senior politi­ Pratap Shaha, upon reach­ mental Journalists by its gen­ (FAAN). Dr. Prakash S. Ma­ cian Balchandra Memorial ing his age limit. Shaha wi ll eral convention hat as the general secretary, Award by Balchandra Memo­ be remembered as a strong Madan Mohan Das, secretary rial Trust votary of reforms in the elec­ NOMINATED: Dr. Surya and Ram Bhakta Amatya as toral process in Nepal. Prasad Subedi as a candidate the treasurer by the FAAN. Journalist Suman Adhikary for the membership of United with the Best Journalist Award ELECTED: Nir Vikram Nations Law Commission. RELEASED: Ten more 200 I by the Federation of Shaha as a president of Di­ Maoists from detention as a Nepalese Journalists, Butwal rectors and Producers Asso- SELECTED: Dr. DilIi ~evi part of the government's ef- Unit. •

SPOTLIGHT/AUGUST 10.2001 27 VIEWPOINT An Assessment Of The Proposed Divestment Of The Nepallndosuez Bank By NIRANJAN K. TffiREW ALA

The Nepal Indosuez Bank (NlB). a public limited joint venture same. The implementat ion of the hank wi th 8anque Indosuez (now Credit Agricolc Indos uez), was decision was, however, delayed due estab li shed in 1985. The agreement was signed between Ministry to frequent changes in the govern­ Io f Finance, His Majesty 's and the Banque ment and the ministry. The present Indosuez. . Finance Minister, Dr. Ram Sharan Subsequently. the NIB was set up with three promoters: Mahat, took the concern and com­ Banque lndosuez, Paris. Rastriya Banijya Bank and Rastriya mitment seriously. He took the ini­ Becma Sansthan. NIB was set up wi th the equ ity investme nt of tiative to have the Cabinet endorse about US$ 7 15.000 representing 50 percent by the Indosuez, US$ the provi sion for the Indosuez to 215.000 representing 15 percent by theRastriya Banijya Bank and hold 67 percent of the share. This US$ 2 15.000 representing 15 percent by the Rastriya Beema poli cy was also articulated in his budget speech for fiscal year Sans th an.1l1c Ind osuez was 10 manage the bank and it was o.g rccd 200 1-2002. that the NIB would pay to In dosuez a management fee of US$ Despite a ll these errorts made by the Government, In dosuez 150.000 per year rorthe firs t 10 years and US$ 200.000 therearter. reconlinned its decision to wi thdraw its holding. Indosuez man­ NIB has been in operation sin ce 1986. The annual loan aged to obtain a ICHer from the Nepal Raslra Bank that its two Olher ponfolio has been around US$ 20 to 30 mi lli on. The an nual net promoters were not entitl ed to increase their present holding or 15 pro lit (after tax) has ranged between US$ I million to 1.5 million. percent each. With this letter, lndosuez has in errect indicated that By compari son, the Olher simi lar types of join{ ve nture banks in it wi ll sell its holding to a third party. This is a procedural mistake, Nepal areoperating at a profit of around US$ 6-7 million annuall y. which is not expected from a highly reputed bank. It should not be Thus. compared la the perfonnance of similar Olhe rj oint venture the concern of lndosuez whet her other promoters are eligible or hanks in Nepal. the profit ofNlB is low by about six to seven raid s. nol. Indosuez si mply requires to iss ue a letter mentioning clearl y I Despi te this. the value of the Indosuez invest ment has increased by the number of shares it wants to sell and the price of the share. In

li ve fo lds. case other promoters refuse la buy I lndosuez should ask first 10 its There are two main reasons of the re lati ve ly poor perfor- board members 10 buy the shares and it has to follow the proce­ mam:e of N1B. First. Indosucz is a global wholesale bank whose dures set by the board. In this way, lndosuez could have got a Iex pertise lies in project financing. aircraft lease rinancing, asset graceful exit. It is we ll known that Nepal is going through a verv_ management. private banking, corporate banking. and foreign difficult period. It is tryin g to get ou l of a long political instabi exc hange management. Since such ac ti vities have negl igible and put the economy on a solid path or progress. A highly repute scope in Nepal, NIB was not able to take rull advantage or its bank of the world came in Nepal as apos itive gesture orthe French expert ise and operate at hi gh profitability. Second, the country's government only wi th an investment orUS$ 715.000.111e current de teriora tin g econom ic situation may also be the reason. book value of its holdin g is about US$ 3.3 mill ion. A bank of high Nevertheless, since its operation lndosuez has received about repute shou ld not leave the country at a ti me when it is passi ng I US$ 2.5 million as its management fee and about US$ 3 mi lli on in through a difficult phase. the form of dividends. Rumors began !laming in June 1999 mal When lndosuez came to Nepal, it should have been rull y 1ndos ucl was se lling its hold in gs to one of the leading banks in in fonned that there was no scope for wholesale bank. The scenari o Nepal. At that time. the Nepalese members of the bank's Board or has not changed. Further, the portfol io of tht: loan has been kept Directors were critical of the procedures followed by the Indosuez. within the range or US$ 20 million to US$ 30 million. This limit The other promoters were entitled to exercise their ri ght to pur­ is most probably set by the l ndosuez on the basis or its own country ichase the shares of the Indosuez. Furthennore. Ind osuez was ri sk analysis. This may be the reason why Indosuezd id not ex pand requested to continue with its inveslment ou t of fear that divest­ aggressively in Nepal. At the same time, the lndosuez has pointed ment cou ld have a negat ive impact in the economy, particularl y in out the country's poor eco nomic situation as onc of the reasons for tryin g to seek foreign investment. its dec ision to di ves t. What Indosuez is proposing to do does no Indosuez agreed to eontinue provided its holding was in­ good to Nepal at present and there is a lot to be desired in the way creased to 67 percent (rrom the ex isting 50 percent). Conse­ the matter is being handled by the lndosuez. quently, all the concerned panies and the board members made effort s. TIle Nepal Raslra Bank also made its decision along th is (NK Tibrewala, MBA ,filulIlcial expen alld illvestor, sell'ed as director ill 'Iine and reque sted the Finance Ministry in January 2000 for the the board of the Nepa/ hu/os/I" Ballkfrom /99210 2000)

28 SPOTLIGHT/AUGUST 10.2001 PASTIME

The Regional Paradox: Eassys in Nepali and South Asian Affairs Now In Town BOOK Lok Raj Baral/2000 Rs. 880.00

I )ynamics and Development of Highland Ecosystems Ritual, Power and Gender: Explorations in tht: Ek Raj Ojhall999 Rs.99S.00 Ethnography of Vanuatu, Nepal and Ireland Michael Allenl2000 Rs. 960.00 Hundred and One Poems for New Millennium L.D. Rajbhandaril2000 Rs. 100.00 Selected Nepali Lyrical Poems Rovin Sharmal200 1 Rs. 300.00 Institute of Foreign Affairs: Policy Study Series Ifal2000 Rs. 300.00 Small and Medi.um Enterprise Development in Nepal: Emerging lssues-:.ind Opportunities Nepal's Foreign Policy: Issues and Options Bishwa Keshar Maskay/2001 Rs.400.00 1FAil 999 Rs. 300.00 Who is the Daughter of Nepal? A collection of Eassys Nepal Missing Elements in the Development Thinking Sangita Rayamajhi/200 I Rs. 3 IS .00 (Junanidhi Sharrna/2000 Rs .472.00 WTO Globalization and Nepal . As You Like It & Palp;') Revisited Ananda P. Shresthal2001 Rs. 160.00 Kasajoo/200 I Rs. 2S0.00 WTO Regional Cooperation and Nepal I

Video (English)

Score Scary Movie 11 Al .Iurassic Park III Melt Down Fast And Furious

'earn 4 Tomb Raiders Cats and Dogs Sword Fish I"MI Yadein Turn Bin "The end of Gadar Lagaan knowledge is love Aks Love Ke Liya Kuch Bhi Karega The end of education Pagalpan Bas Itnasa Khawaab Hai is character." Pyar Tune Kya Kiya Albela - SATHYA SAl BABA (Source: Super SUlr Video, New Road)

SPOTLIGHT/AUGUST la. 2001 29 LEISURE

MARYWORTH

GASOLINE ALL!!;}' I'mnnl"·'ned to the Of counse.call"ing the se)(.uslly. bOGG a"dumb ctuckrt an' now Im had noth'lng to do ~t?--___-r-,wH;h H; !

ERNIE

.I() SPOTLIGHT/AUGUST 10.2001 LEISURE

CROSSWORD BRIDGE NORTH ... • U • Q J 10 9 tAJ'" .. K 7 2 WEST EASt' • J 7 4 • Q 1053 Z • & 4 3 Z t It Q 105 .-t 9 B 7 Z ... • J 1093 SOIfl'll .AKB75• K96 • AQ"•

w... No'" Eu' ,...... 3 • .... ' .... H' -.. ' "'" ••U' "'" .. ' "'" 7. ADp'" .. "'" 'Cootrol-shmring"'" bids ACROSS DOWN

I. High-flyeronce hindered by literary dean 2. It may be served with Roquefort, ini­ "To be brave in misfortune is to be (8) tially, and wine (4) worthy of manhood; to be wise in 6. Politician takes time off to admit blunder 3. Comic paper engages wartime hero with about working model (6) evidence of debts (9) misfortune is to conquer fate," 9. Fabric originally worn in church but ul­ 4. Non-professional male song-writer? (6) AGNES REPPLlER timately at home (10) 5. Play with sacred book at first? The man, 10. Philosopher set up for the daily grind? I swear, isn't all there! (5,10) When adversity strikes, it may not be enough (4) 6. Moved clobber (8) 10 seek a quick Band-Aid solution" Often, 11 . White horses may accompany us during 7. Game doctor observed before a dance (5) more thought is required to find the surest way such a journey (12) 8. Dressing down, being highspirited (10) 10 success. 13. Vcnetian merchant supplying game (4) 12. Soldiers in company race to state cer­ Visualizing an easy road to 13 tricks, 14. Frantically seck a man, one of the same emony (10) South wins dummy'sdiamond ace and leads a denomination (8) 15 " Theatre music, an outstanding example trump" East's discard straightens South's back, 17. Frenchman in bailie field thaI' 5 adjOining (9) and South must reconsider his prospects. How ancient city (8) 16. Smooth colonel finally entering main can he overcome the unexpected develop­ Old writer's material, one hailing from eating-lace (8) ment? Tamworth? (4) 19. Pod from higher area in island group 96) The quick solution is cash the top spades 20. Fellow reprotcdly navigates vessel with­ 21. Wear away surface of Eastem high.way, and ruff a spade with one ofdummy's trumps" out agent's involvement (12) say (5) After drawing all of West's pesky trumps, all 23. Gain love, being frequently besotted (4) 22. The colour of piecrust? (4) South needs is a 3-3 split in clubs to make his 24. English woman, about 90. recognised slam" Unfortunately, clubs are not friendly. engineer's surpassing merit (10) and the slam goes one down. While it's usu­ 25. Infuriates obli ging people changing sides ally correct to ruff losers in the short trump near the end (6) hand, sometimes it' s better to ruff in the other 26. Rancorous son shwoing compassion, hand. I f Sou"th accurately counts sure wi nneTS, having change of heart (8) he should find the best plan. After East's discard on du~my 's trump queen, South succeeds if he ruffs three of dummy's diamonds (dummy reversal). He ruffs a diamond at trick three and cros~es to ru~3 "lZ ;)poJ3 ·IZ !1l!4:J "61 sS;)lwe;)s "91 ;)~;)!dM04S ·~I UO!leUOJ0:J ·ZI dummy's club king to ruff another diamond 5u!'P!IIOH"S eqwnH"L ;)wo~Ja"'O"9 sn~!uoJPue sm!l."~ uewAel " vSnO!l;)~e.::l"£ 1~A-\. "Z: UMOQ high. Next, he leads his trump eight to dummy to ruff dummy'"s last diamond with his last Inpl!ds ·9Z

SPOTLIGHT/AUGUST 10,2001 3 1 FORUM r Our Electricity Tariff- Still Raat-Tatting I By SB Pun

With the recent 11 % electricity tariff hike, our average tariff who misuse electricity. If proven has reached Rs. 6.96 per Kwhor about US CenlS 9.4 perunil. There guilty, then these consumers will b no denying the fact that this tariff as a ratio of the per capi ta have to undergo jail imprisonment income is onc of the highest in this region. BUL sad ly in typical like any other proven thieves. Very Nepalese fashion. our tendency has been more 10 howl and wail harsh and lhough this may look ex­ "bOlll it and do precio us litllcon it. It is about time that we sit down cellent in theory. in practice very without any i~hibitions and discuss what the thrce key players impractical in the present social en· I Nepal Electricity AUlhoritylNEA. the governmem/HMGN, mul­ vironment. India does have such a tilateral financial institutions/Donors) could and should do to "draconian" law. But look at Delhi ~tabilize our tariff in the coming years. BiddhYUlNigamthalSupplies power ....._ _ ...... ___..... Nepal Electricity Authorily : to India's prestigious capilol and The immediate major task confronting NEA is its looming the officially professed losses there is an unimaginable 48%! It is Encrgy Surplus once the 842 Gwh Kali Gandaki A comes on to tackle this chronic menace that NEA needs to go a ll out to Lease ~trcaIl1 this winter. There are three opti ons which if tackled its distribution system to the communit y/private operators. Some judiciously could have very beneficial impact not only on NEA experience has been gained by leasing out some of the rural areas ;.I one but to the counu) ' as well. One is to make NEA 's tarifr more to the local villages and the districts. NEA should be totally attractive to the existing consumers so Ihat they change their committed to this restructuring process. ThIS process has the I present psyche of consume less to consume more. NEA already has inherent beauty that the onus of controlling the losses is on the in place the Time of the Day Metering for large hi gh voltage vill agers/consumers' themselves. I l'unsumers. The inccmive to these industrial and commercial If we are to prevent our tariff from raHJlling further then there l'onsumers may need further reviewing and NEA should not are numerous other in+house areas of good governance that NEA hesitate to provide them. "RIedomesti c consumers which represent can and must implement. The concept of Profit CClllrcs has been . "bout 38% of NEA's total revenue have at present a tariff that 0 11 the kettle ror quite some time. This is an excellent concept bllt discourages consumption over 250 units. With the energy glut apparently there are noone around to stoke the fire below the kettle. there is a need to reverse this kind of tariff. NEA is understandably The heavy arrears to the tllneof about Rs. 100/· Crores particularly apprehensive that such incentives to the consumers may result in from the government itself and the municipalities arc of great the fall o f the ir re venues. But the transacti on in large volumes may concern. Of greater concern is the "ea!)ing out" of the NEAlMD offset this revenue fall. The second option is to export this surplus when he "sinned" by disconnecting the electricity supply of the ('ncrgy to the two Electricity Boards of Uuar Pradesh and Bihar. Ministers' Quarters where the Minister of Water Resources curn 'I'hough both these Boards arc financially bankrupt. Uttar Pradesh Chairman of NEA Board resided fur non·pilyment of e1ectri ha::. initiated reforms in its power sector whereas Bihar has still dues. Procurement needs to be streamlined and tightened as the !ootuck to its status quo guns. Unfortunately. we have two 132 Kv slares inventory is bulging out. It may not be out of place to statc interconnections with Bihar while the one and only 132 Kv here that the many incoming Minister of Wilier Resources will interconnection with UP is used merely to impo rt the free 70 want his office REFURNISHED. The Minister's personal secre­ million units from the Tanakpur. The other irony is that Bihar is in tary , in keeping with the new trend, will want to lot a lap-top the Eastern Regional Grid that has surplus power whereas UP's computer. Of course, these are all met through the NEA cash box Northern Regional Grid has power shortage. The third option to for they devote a good amount of th ei r time in the development of dcal with thi s energy glut is the creation of power intensive NEA! There is no doubt that the 9,000 plus employees to rlln a tiny industries like the urea fertilizer plants in Nepal. Also we import 400 Mw system is a bloated figure. We must ask ourselves how we about 70%- of our cement requirement despite having large, rich arrived at this figure and where does the final iluthority to hire new deposit s of limestone. Tiny Bhutan has three cemelll factories that employees reside. In an employment scarce country. the concept of' churn out export materials. "golden hand shake" prevalent indevelopcd countries was not only The othcr major problem confronting NEA is its 24% LOSSES tried but this concept was infinitely refined. hy demonstrating who which in stead of going down is unfortunately creeping upward. the employer and the employees were, by giving the senior NEA There is no magic wand lO solve this problem whieh has its social executives the "iron shake" in stead to rest at their homes. There are dimensions. NEA simply needs to keep on working hard at it. a lot of areas for improvement in the administrative and O&M CONTINUOUSLY. day i~ and day out without any respite. There areas. The classic well known example is the use of NEA vehicles i~ a wrong perception floating around that once our Parliament by the "power that bl.!". When NEA's project managers and t: ndorses the proposed Theft of Electricity Bill then our loss will consultants loll around in Pajeros. what harm is thcre whcn the ,tarl to zoom down. Basically, this Bill will empower NEA and "real employer" also util ize this service. IIMGN la produce before the court those defaulting consumers • To be COll1ifllled I

32 SPOTLIGHT/AUGUST 10,2001 Cash out all day and everyday, 365 days a year, 24 hours a day, no more holiday created tentions including Saturdays and Sundays nor anyother

holidays ...

Nabil has introduced ATM Service permitting fast cash withdrawal and balance enquiry for your conven­ ience from our Kanitpath, New Road and Lalitpur Branch.

Your Bank at Your Service.

;;tm:r ~ I

Nabil House, p.a. Box: 3729 Kamaladi, Kathmandu, Nepal Cable: NABIL, KATHMANDU Tel: 429546-47, Fax: 429548, Tlx: 2385 NABIL NP, 2430 NABILD NP E-mail: [email protected] Web: www.travel-nepal.com/nabilbank Casino Nepal Casino Anna Casino Royale Soaltee Compound Hotel de L' Annapuma Hotel Yak & Yeti Tahachal , Kathmandu New Baneshwof Durbar Marg, Kathmanclu Durbar Marg Te l: 270244, 27101J Tel 488100 Tel: 223479 Tel: 228481 Fax: 977-1-271244 Fax 977-1-490284 Fax: 977-1-225228 Fax: 977-1-223933 E-mail: [email protected] E-ma il [email protected] E-ma il: [email protected] .np E-ma il: [email protected]