Negotiating with Nepal

The Pioneer
25 March, 2002

Deuba has invited Indian businessmen to invest in the hydro-power generation sector, as his government had formulated a new investment-friendly, hydro-policy which encouraged public, private and joint venture projects. Nepal's Prime Minister Sher Bahadur Deuba's current state visit to India has come at a difficult time for the Nepalese leader, but it has provided the opportunity for discussions on strengthening cooperation with India on the question of security.

The Nepalese government resources have been stretched in tackling the Maoist insurgency, though it has received widespread international backing in its battle against the guerrillas.

In recent months Kathmandu has been on the itinerary of several important visitors on a tour of South Asia. Taking the view that the Maoists were no different from any other brand of terrorists, the US has announced assistance of US $200 million. Most of it will go towards the purchase of much needed equipment such as night vision devices, communication equipment, helicopters and short-takeoff aircraft for use in areas where there is practically no infrastructure or roads. The Chinese have offered non-lethal equipment, while making it clear that there was no link between the Maoist insurgents and any Chinese organisation, even though the rebels had adopted Chairman Mao's name.

New Delhi's world view and its political equations in the region have changed so drastically since the 1980s that the government no longer has any objections to the Chinese and American assistance presently on offer to Nepal. New Delhi has already indicated this view to Kathmandu, though Chinese armament supplies to Nepal had been a sticky point in Indo-Nepal relations in the late 1980s. On its part, India has provided help in the form of material, training of personnel in counter-insurgency operations and closer coordination in management of the open border. Despite the awkward timing of his visit, Mr Deuba will return to Kathmandu with an open endorsement of India's backing to his government. His visit served to fine-tune the cooperation between the two countries on this major threat to Nepal's democratic order.

The state visit to Delhi has been in the offing ever since Mr Deuba ascended for the second time to Kathmandu's hot seat last year. In the merry go round that has been the predominant feature of Nepalese politics in the past decade, Mr Deuba is already facing a threat to his leadership from within the ruling Nepali Congress party. A dissident section within the party joined hands with the main opposition party, the Communist Party of Nepal (Unified Marxist-Leninists), in trying to put pressure on the government to modify some of its policies.

The resilience of Maoist insurgents despite the deployment of the Nepalese army against them is causing grave concern to the Deuba government. Mr Deuba has been criticised for his handling of the six-year long Maoist insurgency, but he was able to get the state of emergency ratified in Parliament and extended for a further three months. The faction-ridden Nepali Congress spends most of its time pulling down its own leaders even during this grave crisis. Mr Deuba's visit to Delhi may help to provide him some respite from the political uncertainty generated by the rebels within his own party.

Speaking at the banquet in honour of Mr Deuba, Prime Minister Atal Bihari Vajpayee said, "We are fully with Nepal in its present confrontation with extremists, who seek to subvert the political system through violence and intimidation. We have always categorically rejected the use of violence for realising political or ideological goals." The porous India-Nepal border facilitated economic exchanges and social interaction, but was also exploited by enemies for disruptive actions. "We are prepared to establish institutional mechanisms of cooperation, intelligence sharing and information exchanges between our security and law enforcement agencies along our borders. This would ensure that no inimical elements can use the territory of either one of our countries to cause harm in the other country," he said.

The widespread support that the insurgents command in the backward, undeveloped regions of the country has become apparent ever since the Army offensive began. But there is a view in Kathmandu that the successes of the insurgents are due to the alleged support the insurgents are getting from radical groups across the border. There have been reports that the Maoist rebels are in touch with other radical communist groups, not only in India, but also in countries such as Bangladesh and even in Sri Lanka in order to establish a larger South Asian base.

In the past few years, successive Nepalese governments have ignored Indian concerns regarding the ISI's use of Nepalese territory and the porous border for its activities. The open border has been used as a route to send fake Indian currency notes as also transfer consignments of RDX. These are some concerns that the Indian side has raised on several occasions. The Nepalese government is now beginning to feel the pains of having an open border that allows free movement to insurgents and others. During the talks in Delhi, there was a more realistic assessment of the kind of assistance both sides required in their fight against extremist forces.

The two delegations discussed the exchange of intelligence information and enhancing surveillance along the border. They discussed the need to create infrastructure in the border region and agreed to finalise a revised treaty on extradition as also the treaty on mutual legal assistance. The talks focused on specific details of coordinated border management. The Nepalese side explained the directives issued to local administration on the registration of madarsas along the border and a proper accounting of their funds.

Addressing a joint FICCI-CCI function, Mr Deuba thanked India for its generous assistance to the efforts to deal with the insurgency in Nepal. He invited Indian businessmen to invest in the hydro-power generation sector, as his government had formulated a new investment-friendly, hydro-policy which encouraged public, private and joint venture projects.

Indo-Nepal negotiations do not always follow a simple path. The Indo-Nepal Trade Treaty had to be extended for three months while the two delegations went through a marathon five rounds of talks on its renewal. The trade treaty was finally renewed for a period of five years earlier this month. The negotiations were meant to remove some of the anomalies that had arisen in the implementation of the earlier treaty. Indian industries involved in the vanaspati, acrylic yarn, zinc oxide and copper wires sectors had been complaining about the cheap exports from Nepal flooding the market. Certain provisions of the trade treaty allowed Nepalese businessmen to export these items to India without much value addition. In effect it meant that Nepalese businessmen with Indian partners imported cheap vegetable oil into Nepal, repackaged it and exported it to India, making huge profits in the bargain.

Indian business ventures affected by cheap exports have claimed that this process did not help in creating industrial capacity in Nepal, but was used by trading houses to reroute their imports using the special concessions offered to Nepalese businessmen. The renewed treaty has sought to deal with this lacuna by incorporating clauses on the amount of value addition and certificate of origin. Nepal should export Nepalese products instead of becoming a staging post for cheap third country imports into India.