MonitorsPublished on Mar 04, 2011
When the Communist Party of Nepal - United Marxist Leninist (CPN-UML) Chairman Jhala Nath Khanal was finally elected as the new Prime Minister of Nepal, the country breathed a sigh of relief.
How stable is the new Government in Nepal?
< class="heading1">Analysis

On February 3, 2011, when the Communist Party of Nepal - United Marxist Leninist (CPN-UML) Chairman Jhala Nath Khanal was finally elected as the new Prime Minister of Nepal, the country breathed a sigh of relief. There was optimism among Nepal- watchers that the Prime Minister, indirectly elected by Parliament, would soon stabilise the directionless country and eventually lift it from the current morass. But that was not to be. Of late, Nepal has become a land of contradictions. The Prime Minister is still without a cabinet, he is without support now, leaving the country without the much needed political stability.

When Prime Minister Jhala Nath Khanal signed a secret seven-point deal with the Maoists without consulting his own party, he might not have had even the remotest idea as to how things would turn out to be in the none too immediate future. The contentious points in the pact, including the creation of a separate security force comprising the Maoists cadres and a rotational system of government, have not only created differences of opinion within the ruling party but also delayed the formation of the Government.

The fixation of the Maoists with the Home and Defence ministries has already been putting obstacles in the smooth functioning of the Government. The infighting among different factions of the Maoists party, namely, the Unified Communist Party of Nepal - Maoists (UCPN-M) is also making the matters worse. While party Chairman Pushpa Kamal Dahal ’Prachanda’ has made up his mind to support the Government irrespective of whatever ministries Prime Minister Kanhal is offering to them, the group led by Vice- Chairman Baburam Bhattarai is making noises against a ’sell-out’. Moreover, Bhattarai faction wants to forward the name of party secretary C P Gajurel as the team leader in the Khanal-led Government whereas the party Chairman has already decided to send Krishna Bahadur Mahara as the Maoists’ leader in the Cabinet. The UCPN-M meeting to end the month-long deadlock also ended inconclusively. However, the Standing Committee (SC) of the UCPN-M would be meeting again to settle the issue.

The recent political tilt in Nepal towards the left is a cause of concern. The present Government comprises the two biggest communist parties of the country without any representation given to the oldest democratic political party, the Nepali Congress. Although the Nepali Congress has made it clear that they have no problem sitting in the Opposition, they don’t mind joining the Government either if Prime Minister Khanal scrapped the seven-point deal with the Maoists. This however seems to be a wishful thinking. Also, there is practically no representation of the Madhes-based political parties in the new dispensation. It is also doubtful whether in this scenario, will the current government be able to finish up the task of Constitution making in next two months.

The problem is not one of survival, but of stability, which seems to be withering with each passing day. The infighting between and among the political parties has made the functioning of the Government extremely difficult. This is the major cause behind the short-lived Governments of Nepal. What is missing is the feeling of belonging among the people towards their country. Despite their fierce nationalism, the people are still tied to their clan, ethnicities and caste-based prejudices. When people vote on these issues, the Government becomes weak and divided between different factions which would lead to their further instability. Thus, there is a need to make people of Nepal politically educated and mature enough to understand the grievances and development issues of their country and vote on certain common issues that would ensure their sustenance for a long time to come.

(Dr. Anjali Sharma is an Associate Fellow at Observer Research Foundation)

< class="heading1">Country Reports

< class="heading12boldGeorgia">A lost UNGA Presidency bid to Qatar

In a shocking turn of events, Nepal lost its bid to preside over the UN General Assembly to Qatar, quashing everyone’s hope in the Himalayan nation. A majority of countries in the 53-member Asian Group in the UN endorsed Qatar to chair the 66th session of the General Assembly. "More than 30 countries had promised to support us, but some of them betrayed in a secret ballot," a Nepali official in New York said.

The defeat was shocking as Nepal’s allegiance to the UN is two decades longer than Qatar’s, it is the sixth largest troops-contributor for the UN peace-keeping operations and had also filed its candidature earlier. Most importantly, no nation from South Asia had been elected for the job since 1986, whereas Bahrain had run the Presidency of the General Assembly (PGA) in 2006 from the West Asia sub-regional bloc of the Asia Group.

Nepal thus has not only lost the race but is also barred itself from filing its candidature for the job for another two decades. If Nepal had given up the race, it would also have changed Qatar’s perspective towards the country and towards the hundreds of thousands of Nepalis working in the Gulf country. "It’s a triple disaster: Defeat of our country and candidate and deficit in trust with Qatar," commented Prof. Jaya Raj Acharya.

To some extent, Nepal’s choice of Gautam, a former Under Secretary-General of the UN, who has no prior political exposure, as the candidate for GA presidency was among the factors that caused the defeat. Former Foreign Minister Rameshnath Panday termed the defeat a "big humiliation." According to him, "a lesson to be learnt from the loss is that Nepal should focus more on concluding political transition rather than vying for high-profile diplomatic jobs."
< class="text11verdana">Source: Himalayan Times February 26, 2011

< class="heading12boldGeorgia">China to increase economic assistance

China is continuously increasing its financial assistance to Nepal, possibly with a view to enlisting Kathmandu’s support for controlling any future upsurge by Tibetan refugees. The sharp increase of Chinese ’assistance’ to Nepal has set off alarm in the local population, which fears that Beijing’s influence could becoming too great for Kathmandu resist after some time. Tibetan refugee organisations, citing recent reports, claim that China was extending such aid to Nepal, to have Tibetan escapees handed back to them.

Agreements to increase Sino-Nepal interaction were signed by Fu Ziying, the visiting Chinese Vice-Minister of Commerce, and Rameshore Prasad Khanal, Secretary of the Ministry of Finance, pertaining to a loan of Rmb 640 million (about Rs. 7 billion) from the Export-Import Bank of China (EXIM Bank) for the ’Upper Trisuli 3-A Hydro-power Project of Nepal’.China has also decided to provide Rmb 50 million in assistance for ’mutually agreed projects’, as well as a grant for the upgrading of Kathmandu’s Ring Road.

A Chinese delegation led by Fu, was in Nepal from February 26 to March 1. During the visit the Chinese team visited various projects funded by Beijing. This included the National Ayurveda Research and Training Centre.
< class="text11verdana">Source: The Tibet Post International, March 2, 2011

< class="heading12boldGeorgia">Terrorists kill Minister

Shahbaz Bhatti, the Federal Minister for Minorities, was assassinated by militants affiliated to Punjab-based groups and al-Qaeda on March 2 (Wednesday). The tragic incident occurred when Bhatti, the only Christian Minister in the Cabinet, was leaving his house in Islamabad.

The attackers left behind leaflets signed by ’The Qaeda and the Taliban of Punjab,’ in which they justified the killing as ’punishment for this cursed man.’ Shahbaz Bhatti actively advocated protecting the rights of religious minorities and had recently suggested amendments to blasphemy laws. His vocal opposition made him the target of militant groups who began to issue threats against him following the assassination of former Punjab Governor Salman Taseer in January who was gunned down by his security guard on similar grounds.
< class="text11verdana">Source: Dawn, March 2, 2011; The News International, March 2, 2011

< class="heading12boldGeorgia">Backlash over oil price rise

The Oil and Gas Regulatory Authority (OGRA) announced a 9.9 percent rise in prices of petroleum products, attributing it to international price-hikes, caused by instability in West Asia and North Africa. This is the single largest increase in oil prices since August 2008 and is expected to generate revenue worth Rs 5-6 billion.

The decision was harshly criticised by opposition parties such as the Nawaz and Quaid factions of the Pakistan Muslim League and the Muttahida Qaumi Movement (MQM), whose members staged a walkout from the National Assembly. Later, however, the Government yielded to pressure from the Opposition and slashed the increase by half after a meeting with the MQM in Karachi.

This development demonstrates the growing political tensions between the ruling Pakistan People’s Party (PPP) and the Opposition, who have cornered the Government over populist demands such an inflation and corruption, even when they privately admit that such stern measures are quite unavoidable.
< class="text11verdana">Source: BBC, March 1, 2011; Dawn, March 1, 2011, Daily Times, March 4, 2011

< class="heading12boldGeorgia">Davis case: US threatens aid-cut

In the face of increasing demands for coercive diplomacy with Pakistan to secure the release of Raymond Davis, the American security contractor charged with the murder of two civilians, US Secretary of State Hillary Clinton has cautioned legislators against further deterioration of US-Pakistan relations and argued for sustained engagement. Speaking before the US House Foreign Affairs Committee, Clinton said, "We are working to deepen our partnership and keep it focused on addressing Pakistan’s political and economic challenges as well as our shared threats."

At the same time however, the Lahore High Court dismissed Davis’ application for diplomatic immunity. The court came to the conclusion that the accused did not enjoy diplomatic protection as documentary proof to substantiate his diplomatic status could not be submitted by the Foreign Office. Pakistan has refused to yield to American pressure in spite of threats that non-compliance may result in cuts in civilian and military aid. US’s inability to release Davis once again demonstrates Pakistan’s criticality to the campaign in Afghanistan, and also highlights limits to US’s leverage on Pakistan.
< class="text11verdana">Source: Source: Dawn, March 2, 2011, Daily Times, March 4, 2011

Sri Lanka
< class="heading12boldGeorgia">Call for new world financial order

Sri Lankan President Mahinda Rajapaksa called for a new world financial order, saying multilateral institutions should be responsible to the billions of people in the world. Addressing the South-East Asian Central Bank Governors’ Conference (SEACEN) in Colombo, the President said it was foolish to think the global financial crisis was over.

President Rajapaksa said multinational organisations, such as the IMF, should shoulder a great responsibility towards the billions of people who indirectly rely upon them to make the right decisions to improve their lives. He welcomed China’s inclusion into SEACEN, and said, "With the very recent entry of the People’s Bank of China to this group, it has further strengthened its reach and impact across the world, and I believe SEACEN’s voice would now be even stronger."
< class="text11verdana">Source: The Island, Colombo, February 26, 2011

< class="heading12boldGeorgia">Govt says "no, thanks" to GSP+

The Government has said it had no intention of re-applying for the GSP+ facility as it is a ’closed book’ for them, the visiting European Parliament delegation told the media in Colombo. "The Government indicated to us that the GSP+ was now a closed issue and that it had no interest in pursuing any further or re-applying for the concession. The government now hopes to look toward small and medium enterprise development with the EU- move on from the GSP+ issue and develop a better relationship," the delegation’s leader Jean Lambert said.

The delegation also praised the Government’s plans for development in the North and said members of the delegation were "impressed" by the development, especially in the areas of education and healthcare. Nevertheless, they called for "local participation" in the development process and showed optimism that the local elections would eventually ensure this participation. "We also welcome the Government’s open dialogue with the Tamil National Alliance, while identifying that naturally there are political issues that are yet to be resolved," she said.
< class="text11verdana">Source: Daily Mirror, Colombo, 26 February 2011

< class="heading12boldGeorgia">JVP demands withdrawal of ’army rule’ in North

The Left-nationalist JVP has called for the withdrawal of ’army rule’ in the North, with party member, Anurakumara Dissanayake telling Parliament that the local population should be freed of the consequent fear and mental tension caused by the domineering presence of the armed forces in their midst even two years after the conclusion of the ’ethnic war’.

Moving an adjournment motion, calling for the withdrawal of the state of emergency across the country, the member wanted the entire administration in the North handed over to the civilian authorities. In this context, he referred to the emergency powers that rested with the Defence Secretary, who could order the detention of any citizen for nine months without trial, whereas under the ordinary laws, the police would have to produce any detenu before a court within 24 hours.
< class="text11verdana">Source: Uthayan (Tamil), Jaffna, February 26, 2011

< class="heading12boldGeorgia">New Speaker for Lower House

Parliament’s Lower House, Wolesi Jirga, has finally succeeded in electing a Speaker, after six failed attempts in the previous month. The House elected Abdul RaoufEbrahimi, a candidate from the northern province of Kunduz, as the Speaker. He won 169 votes out of the 173 that were cast.

Ebrahimi, of Uzbek descent, fought during the Soviet occupation along with Hizb-ul-Islami Gulbuddin (HiG). He is said to be a ’pro-Karzai’ and had supported the current President when he ran for re-election in September 2010. The other leading contenders for the post were Yonus Qanooni, former head of Parliament and senior member of the one-time Northern Alliance, and Abdul Rab Rasul Sayyaf, a prominent Pashtun leader.
< class="text11verdana">Source: Tolo News, February 21, 2011,Panjwok, February 27, 2011, Reuters, February 27, 2011

< class="heading12boldGeorgia">UK Foreign Affairs Committee asks Govt to holds talks with Taliban

A recent report by UK’s bi-partisan Foreign Affairs Committee has urged the British Government to reconsider its nation-building programme in Afghanistan and cautioned it against committing resources which are not commensurate with the threat posed by the Taliban insurgency.

The report, titled ’The UK’s foreign policy approach to Afghanistan and Pakistan’, states that the current counter-insurgency strategy aimed at increasing the legitimacy of the Hamid Karzai Government and conduct holistic nation-building was failing. The report, which is the result of a seven-month long enquiry, suggested that the policy of bracketing local Taliban insurgents with foreign al-Qaeda terrorists has alienated a large number of Afghans, instead of winning their hearts and minds.

It concluded that since the original objective of the mission, preventing al-Qaeda from creating a safe haven in the country has been met, the UK should urge the US to hold talks with the Taliban and find a political end to the conflict.
< class="text11verdana">Source: The Guardian, March 2, 2011; BBC, March 2, 2011

< class="heading12boldGeorgia">Election results verification begins

A special tribunal tasked to verify last year’s election results and investigate cases of fraud began its work last week. The tribunal, backed by President Hamid Karzai, has begun meticulously verifying the contents of ballot boxes in 10 of the country’s 34 Provinces, according to Abdullah Ahmadzai, Chief Electoral Officer. He also hinted that the recount process may extend to each Province of the country.

The Provinces covered in the first sweep of the watchdog tribunal include Baghlan, Kunduz, Baghlan, Badakshan, Takhar, Laghman, Kunar, Samangan, Paktia and Khost. The implications of the latest development are unclear. For instance, since recounts are considered illegal by election observers, it remains to be seen whether Karzai will take remedial action if instances of fraud emerge.
< class="text11verdana">Source: Associated Press, February 28, 2011


< class="heading12boldGeorgia">Yunus removed from Grameen Bank

Prof. Muhammad Yunus, the Nobel laureate and pioneer of micro-finance, was relieved of his duties at the Grameen Bank through a Bangladesh Bank (BB) letter. The letter said that Yunushad failed to seek BB’s approval for his re-appointment as the managing director in 2000, violating law in the partly State-owned Grameen Bank. The Government has 25 percent stake in the Grameen Bank. This move by the Government after 11 years has surprised many.

However, Grameen Bank refuted the Government’s claim and said that Yunus’ position was legal. Speculation is on that the dispute might result in a legal battle between Grameen and the Central Bank.

Yunus, who founded Grameen Bank, received international accolade for initiatives in poverty-alleviation activities. He had begun with an initiative to provide loans to the poor, who had always been overlooked by the traditional banks, from his home village of Jobra in Chittagong district. His humble initiative has emerged as a major tool for poverty-alleviation, globally. Countries, including the US, China and India, have embraced his model of micro-finance.

Yunus got into a controversy after a documentary film was broadcast in a Norwegian TV channel, which alleged that he had transferred donors’ money, given to Grameen Bank, to a sister organisation. However, his removal now has come in for criticism, with intelligentsia calling it unfair. US Ambassador in Dhaka James Moriarty has pressed the Government to treat Yunus with respect, and the Embassy said it was "deeply troubled" by the attempt to remove him. Opposition Bangladesh Nationalist Party described the removal as an ill-motivated decision and the Government had shown disrespect to the country by insulting the Nobel laureate.
< class="text11verdana">Source: The Daily Star, March 3, 2011

< class="heading12boldGeorgia">Islami Bank spends 8-pc profit on militancy

In a sensational revelation, State Minister for Home Shamsul Huq Tukuhas said that the Islami Bank Bangladesh was spending eight percent of its profit to fund militants in the country. The Minister claimed that the bank was spending this money through the Islami Bank Foundation. The Government has asked the bank authorities to submit a report before April 7 on the spending of its profit.

In November 2010, the Bangladesh Bank assigned a senior official to identify any suspicious transactions by Islami Bank Bangladesh and its Foundation. Earlier, a ban was imposed upon the bank on transferring funds to the foundation on charges of lack of transparency.

The Islami Bank officials, however, denied the bank’s involvement in financing militants.
< class="text11verdana">Source: The Daily Star, March 1, 2011

< class="heading12boldGeorgia">PM promises enhanced vigilance along Indian border

Voicing concern over the rise of militant activities along the Assam-Bhutan border, Bhutanese Prime Minister L Jigme Y Thinley has underlined the need for steps to contain them. Thinley also asserted that Bhutan will never allow any anti-India militant group to set up its camps on its soil and made it clear that there were no North-East militant hideouts in the country since 2003. According to him, there were no hideouts of North East-based militant groups in Bhutan after ’Operation All-Clear’ by security forces in 2003.

Bhutan has since decided to step up vigilance along the border to prevent any kind of violence and border crime, official sources said. On February 20, a convoy of Bhutan police personnel was ambushed at Serpang along the border in which one security man was injured, while seven volunteers of the World Wildlife Fund for nature were recently kidnapped and subsequently released.
< class="text11verdana">Source:, February 25, 2011

< class="heading12boldGeorgia">Budget puts growth at 8.9 per cent

Claims to impressive fiscal consolidation, significant progress in critical institutional reforms and dynamism in the rural economy were among the highlights of the Union Budget for the fiscal year 2011-12, presented by Finance Minister Pranab Mukherjee on February 28. He said that structural concerns of inflation management, expanding domestic demand, fiscal consolidation, leakages in public program and corruption were major challenges that needed to be dealt with a joint effort. There was emphasis on a transition towards a transparent and result oriented system.

The Minister said that the economy had shown remarkable resilience to grow at 8.6 per cent in 2010-11 in real terms. Exports had grown by 29.4 per cent and imports at 17.6 per cent, during April-January 2010-11.Outlining the aspects for sustaining growth, the budget focused on issues of tax reforms, specifically highlighting the Direct Tax Code (DTC) and Goods and Service Tax (GST), expenditure reforms, subsidies and disinvestment.

There was also an emphasis on further liberalising foreign direct investment (FDI) and enhancing flows to the infrastructure sector by raising Foreign Institutional Investment (FII) limit for investment in corporate bonds. Financial sector legislative initiatives were also mentioned. It was said that a Financial Sector Legislative Reforms Commission would be set up to rewrite financial sector rules and regulations. Other issues such as tackling black money, increasing spending on social sector skill development, environment and technological upgradation were addressed.
< class="text11verdana">Source: Finance Ministry, GoI , February 28, 2011

< class="heading12boldGeorgia">SC strikes down CVC appointment

The Supreme Court on Thursday quashed the appointment of P J Thomas as Central Vigilance Commissioner (CVC). The Supreme Court rejected the contention that the CVC appointment must be made through consensus among members of the High-Power Committee, comprising the Prime Minister, Home Minister and the Leader of the Opposition in the Lok Sabha, stating that this would amount to granting a veto right to one of the members. It also held that the Selection Committee should adopt a fair and transparent process of consideration of the empanelled officials, short-listed for the post.

Pointing out that the CVC Act had restricted the choice of candidates for the post to civil servants, the Bench said: "No reason has been given as to why in the present case the zone of consideration stood restricted only to the civil service. In future, the zone of consideration shall not be restricted to civil servants. All the civil servants and other persons empanelled shall be outstanding civil servants or persons of impeccable integrity."
< class="text11verdana">Source: The Hindu, March 04, 2011.

< class="heading12boldGeorgia">EC fixes dates for five-State Assembly polls

The Assembly elections in Assam, West Bengal, Tamil Nadu, Kerala and Puducherry will be held from April 4 to May 10. Announcing the schedule, the Election Commission said that the counting of votes would be uniformly taken up on May 13.

While West Bengal will have a six-phase poll ? April 18, 23, 27, May 3, 7 and 10 ? the elections in Assam will be held in two phases ? April 4 and 11 ? and in Tamil Nadu, Kerala and Puducherry the poll will be held on April 13.

With the announcement of the poll schedule, Chief Election Commissioner S.Y. Quraeshi said that the model code of conduct had come into immediate effect. Violations would entail penal action. For the first time non-resident Indians, who had already registered themselves as voters, would be eligible to vote and instructions had been given to polling officials in this regard.
< class="text11verdana">Source: The Hindu, March 02, 2011.

< class="heading12boldGeorgia">India opposes UNSC general sanctions against Libya

The Indian delegation at UN Security Council has been instructed to oppose the imposition of sanctions because they hurt people at large. Earlier, India and 14 other members of the powerful UNSC unanimously voted to impose sanctions on the Gaddafi regime in the form of an arms embargo, asset freeze, travel ban and an immediate referral of the use of Sate force to put down anti-democracy movement, to The Hague-based International Criminal Court for crimes against humanity.

India has approved sanctions including three measures ? travel-ban affecting 15 members of the regime and the assets freeze. India, along with Russia, China and others, opposed the move and advocated partial sanctions but no use of force.
< class="text11verdana">Source: The Hindu, March 04, 2011

< class="heading12boldGeorgia">U.S. court issues summons to Congress for anti-Sikh riots

A US court has issued summons to the Indian National Congress in connection with the 1984 anti-Sikh riots, acting on a Sikh rights group’s petition charging it with "conspiring, aiding and abetting" organised attacks against the community. The proceedings are still at the pre-trial stage in New York.

Senior Congress leader and Urban Development Minister Kamal Nath is a defendant in the lawsuit. The complaint against Mr. Kamal Nath stated, "The defendant was seen and heard by many on the scene of GurdwaraRakabGanj (in New Delhi). In this particular incident, defendant was leading and in control of a mob of about 4,000 people."Mr. Kamal Nath has repeatedly denied any involvement and has been cleared by the Nanavati Inquiry Commission.

According to the Government of India’s record, as many as 3,296 Sikhs were killed while 35,535 claims for deaths and injuries were received throughout India after the riots.
< class="text11verdana">Source: The Hindu, March 03, 2011.

< class="heading12boldGeorgia">Speaker asks Majlis to speed up legislative work

As the People’s Majlis reconvened for the first time in 2011, Parliamentary Speaker Abdulla Shahid called on MPs to speed up the rate in which they worked to pass legislation with a very "busy" session ahead. Shahid’s comments came after President Mohamed Nasheed opened the year’s first parliamentary session with an address to MPs on the current state of national finances and developments.

Nasheed used his annual address in order to play up what he saw as "marked improvements" in various national sectors, as well as warning of the need for further national budget cuts and unity amongst MPs in relation to recently formed local councils over the year ahead.

"The most important accomplishment is the establishment of local councils. Obviously, there are obstacles in the management of some of these councils," Nasheed said during his opening remarks. "The government’s aim is to solve these complications in introducing decentralisation in a manner that does not compromise the features of a unitary state stipulated in the Constitution."
< class="text11verdana">Source: Minivan News, March 03, 2011

< class="heading12boldGeorgia">Opposition joins IMF on budgetary concerns

As the International Monetary Fund (IMF) this week released its latest update on the Maldives’ finances, prominent opposition MPs have criticised the Government’s budget strategy in areas such as decentralisation, despite conceding the need for greater political cooperation from rival parties.

Ahmed Nazim, MP for the People’s Alliance (PA) party and member of the Majlis’ Public Finance Committee, said that he believed current government policy was ultimately stifling economic development, claiming administrative costs within the civil service remained a notable problem.

"We have a small percentage (of funds) to invest in the economy. We cannot move finances to a higher level though as the government doesn’t have the right policies to do this," he claimed. "For instance, we need to reduce the number of (inhabited) islands by linking them and cutting the overall number of cost centres required for decentralisation."

The comments were made as the IMF claimed that the Maldives economy was currently "unsustainable" even after cuts made to the annual 2011 budget, as it concluded its Article IV consultation.

The IMF’s Mission Chief to the Maldives, Rodrigo Cubero, told Minivan News at the time, that while the Government had introduced the core components of a modern tax regime that would begin generating revenue from this year, these achievements were offset by new spending on legislative reforms such as the Decentralisation Act.
< class="text11verdana">Source: Minivan News, March 04, 2011

< class="brown12verdana">Contributors:

Afghanistan & Pakistan: Kaustav Dhar Chakraborti;
Bangladesh: Joyeeta Bhattacharjee;
India: Akhilesh Variar;
Nepal & Bhutan: Anjali Sharma;
Maldives & Sri Lanka: N SathiyaMoorthy;

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