NEPAL'S Dummy Text About Book: Conflict is an intrinsic aspect of politics and motivating element in policy NEPAL'S innovation. It is an imperative to discover ways of making conflict compatible with the rules of NATIONAL democratic practice by building bridges of peace. NATIONAL This requires the government to strike a proper balance between conflict and consensus and to NEPAL'S INTERESTS coordinate decision-making through the collective FOREIGN POLICY, INTRENAL SECURITY, FEDERALISM, ENERGY-ECONOMY action of the system's principal actors. It will be difficult indeed to prevent and reduce conflict at the INTERESTS regional and local levels, unless the state achieves constitutional and political stability at the center NATIONAL through an inclusive social contract. Both recovery and conflict prevention require the sustained implementation of the Peace Accord in a coordinated, transparent and, inclusive way. FEDERALISM, ENERGY-ECONOMY FOREIGN POLICY, INTRENAL SECURITY, FOREIGN POLICY, INTERESTS FOREIGN POLICY, INTRENAL SECURITY, FEDERALISM, ENERGY-ECONOMY EDITORS Tomislav Delinic Nishchal N. Pandey Nishchal N. Pandey Nishchal N. Tomislav Delinic Tomislav EDITORS ISBN: 978-9937-2-3254-8 9 789937 232548 + Nepal's National Interest: Foreign Policy, Internal Security, Federalism, Energy-Economy Editors Tomislav Delinic Nishchal N. Pandey 1 + Published by Centre for South Asian Studies (CSAS) Kathmandu 5, Nepal Konrad Adenauer Stiftung e.V. (Regional Program SAARC), New Delhi, India Copyright 2011, Centre for South Asian Studies and Konrad Adenauer Stiftung e.V. All right reserved ISBN : 978-9937-2-3654-6 Printed at: Modern Printing Press Kathmandu, Nepal. Tel: 4253195, 4246452 Email: [email protected] + + Contents kl/jlt{t ;Gbe{ / /fli6«o lxtsf] ;jfn 1 jfdb]j uf}td Nepal’s National Interest and Foreign Policy 11 Dr. Shambhu Ram Simkhada Economic Stability and Trade 26 Purushottam Ojha Defining National Interest in an Emerging Nation-State 42 Mohan Lohani Challenges to National Security and Safeguarding National Interests 52 Brig. Gen. (retd.) Ranadhoj Limbu-Angbuhang Federalism and the Restructuring of the State 74 Manohar Prasad Bhattarai Managing Centre-State Relations in Fiscal and Security Matters: 80 India’s Experience Prof.(Dr.) N.R. Madhava Menon Federal Democratic Republic of Nepal and Her Security Concerns 86 Lt Gen (Retd.) Balananda Sharma Fiscal Federalism:Reviewing the Prospects and Challenges of New Nepal 98 Bishwambher Pyakuryal, Ph.D. Potential Conflicts and Possible Response Provisions in 113 Nepal’s Federal System Dr. Bishnu Raj Upreti How Many States in a Federal Nepal? 129 Prakash A.Raj + + Health: Pre and Post Federal Nepal 142 Dr. Rita Thapa Economics in the National Interest 156 Madhukar SJB Rana Hype and Hydro in Nepal: 172 What Went Wrong and What Corrective Measures Are Needed? Dipak Gyawali Enhancing Nepal’s Competitiveness: India’s Role 185 Nisha Taneja Reviving the Nepali Economy: A Private Sector Perspective 198 Suman Neupane Petroleum Products and Gas 208 Prof. Dr. Rhiddi Bir Singh Nepal-India Relations 221 Upendra Yadav China and Japan and Nepal’s Core Interests 228 Ramesh Nath Pandey Nepal in the United Nations 234 Shailendra Kumar Upadhaya Role of Intelligence: Crucial to Maintaining Security 239 Lt. Gen. (retd.) Sadip Shah Law Enforcement in Post Federal Nepal 253 AIG (retd.) Rabi Raj Thapa Crime Prevention, Ensuring Public Safety and Nepal Police 266 SSP (retd.) Dr. Chuda Bahadur Shrestha Internal Security Problems: A Journalistic Perspective 281 Jan Sharma + + Preface The critical question of what constitutes a country's national interest- continues to marvel policy makers and political leaders. Considerable disagreement exists in almost every country on what is best in its 'nationalinterest'. Writers concede that it is subjectively interpreted by the governmentof the day. It is natural in this context, that many countries, especially those in South Asia have not elaborated their 'national interests'. Nepal cannot be an exception in this regard. Leaders and scholars in the historical context have attempted to define it in political, economic, military or cultural realms ranging from 'safeguarding Nepal's territorial integrity' to 'ensuring the economic well being of Nepalese'. There were also undertakings to elaborate sources of threats - external, internal, economic and ecological in order to outline the country's national purpose and goals. Centre for South Asian Studies (CSAS) in cooperation with the Konrad Adenauer Stiftung (KAS) decided to launch a national interests project in series to discuss and debate this critical area not with a sense to ever defining the concept but to sensitize the Nepali political leaders, policy makers, academics and strategic analysts on inherent, multi-faceted and multi-dimensional contours of Nepal's interests especially after the historic change of 2006. This was at best the most radical political transformation in Nepal's history. The most significant was the ending of the Maoist conflict that had taken its huge toll in both human and material terms. A forward-looking federal, secular, democratic Constitution is being drafted by the first-ever Constituent Assembly which everyone hopes will restructure the state by resolving prevailing problems related to class, religion, region, language and gender. This is truly a momentous time in Nepal but also a critical period to institutionalize its infant democracy, establish a healthy political culture, integrate and rehabilitate the former Maoist combatants and ensure fundamental rights of the people. Equally imperative is to strategize the country's short, medium and long-term goals in both national security and economic arenas. + + Prof. Huntington once said, "Efforts to define national interest presuppose agreement on the nature of the country whose interests are to be defined. National interest derives from national identity. We have to know who we are before we can know what our interests are." Impulses towards building a strong nation is being challenged by assertion of identity, socio- cultural distinctiveness and growing surge of linguistic, religious, ethnic and cultural traits that will need special focus in the months and years ahead. With tension simmering in the terai and multifarious groups coming up with newer demands that the state can hardly fulfill, it will not be easy to maintain internal security, tougher still will be to forge a thorough consensus on the nation's foreign policy among all major political parties. Adopting a federal model to provide opportunities to people across the nooks, corners and remotest parts of the country could be a better alternate than to have Kathmandu decide over all the development works without an iota of the requirements of the local areas. But it will not be a panacea to all the problems that plague the mal-governed country. Further, the energy woes of the nation from load shedding to petroleum crisis and from food insecurity to scarcity of drinking water cannot be divorced from the national interest debate. It is with these critical issues in view that the CSAS-KAS project was initiated. The authors include a former Deputy Prime Minister to 7 former ministers, known academics and senior army and police officials to a prominent banker of Nepal. We are thankful to each one of them for their valuable contribution. In total, the book comprises papers of five conferences:- the introductory conference held in Oct. 2009, NNIP-I on federalism held in Feb. 2010, on energy and economy held in July 2010, NNIP-III on foreign policy held in Nov. 2010 and internal security held in Jan. 2011. We are most grateful to the then Rt. Hon'ble Prime Minister Madhav Kumar Nepal for having inaugurated the conference on Oct. 21, 2009 which essentially set the tone of the subsequent NNIP series. While inaugurating the conference, Mr. Nepal had said "domain of National Interests has intimate connections with both domestic and foreign policies and that it comprises of a country's goals that may range from the protection and promotion of its + + national sovereignty to the achievement of its political, social, economic, trade, security and cultural objectives.' Fundamental to this project was to get the active participation of members of the first-ever Constituent Assembly and both the CSAS-KAS are grateful not only to the M.Ps but also to the Secretary General of Constituent Assembly and Legislature Parliament Mr. Manohar Prasad Bhattarai. We are also obliged to Prof. Dr. N.R Madhava Menon, Member, Commission on Centre-State Relations of India, Mr. Kush Kumar Joshi, President of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), Her Excellency Verena Gräfin von Roedern, Ambassador of Federal Republic of Germany to Nepal and to Mr. Henning Hansen, Deputy Head of Mission of the Embassy of the Federal Republic of Germany for their keynote addresses delivered during different NNIP conferences. We are indebted to Dr. Beatrice Gorawantchy for all her help and guidance that made the conferences productive. Mr. Pankaj Madan, Mr. Martin Maurice Boehme, Ms. Mareen Haring, Ms. Megha Jain, Ms. Ritika Rana of the KAS-Delhi office need special mention without whom organizing these conferences would not have been possible. We are also thankful to Punjita Pradhan and Renisha Khadka of the CSAS for their assistance. We hope our modest effort will be appreciated by the readers. 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