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Dec 18, 2015 12:15 EST

Another Himalayan Blunder

iCrowdNewswire - Dec 18, 2015

Another Himalayan Blunder

 
NEW DELHI, Dec 17 2015 (IPS) – South Asian integration remains a distant dream as some member countries like Nepal resent India’s big brotherly dominance in the region. They perceive that they have no stakes in India’s rise as an economic power. Ensuring unrestricted market access perhaps would have made a big difference in this regard. Their resentment has only deepened as this hasn’t happened. Instead they have registered growing trade deficits with India! The on-going travails of the Himalayan kingdom vis-a-vis India exemplify the problematic nature of integration in a region that accounts for 44 per cent of the world’s poor and one-fourth of its’ population.
 
N Chandra Mohan

N Chandra Mohan

 

Nepal appealed to the UN to take “effective steps” to help remove an “economic blockade” imposed on it by India. According to SD Muni, Professor Emeritus at the Jawaharlal Nehru University, this situation is reminiscent of what happened in 1989 when King Birendra’s decision to import anti-aircraft guns from China and his refusal to reform the Panchayat system in the face of a democratic movement precipitated tensions in bilateral relations. India closed down the special entry points for trade and transit, resulting in a severe shortage of essential supplies. Twenty-six years later, Indian trucks have been stopped from entering Nepal.

This blockade similarly has resulted in a shortage of fuel, food and medicines in the Himalayan Kingdom. Supplies of vaccines and antibiotics in particular are believed to be critically low. UNICEF has warned that this will put more than three million infants at risk of death or disease as winter has set in. More than 200,000 families affected by earthquakes earlier in the year are still living in temporary shelters at higher altitudes. The risks of hypothermia, malnutrition and shortages of medicines will disproportionately affect children. As if all this weren’t bad enough, fuel shortages are resulting in illegal felling of forests.

Nepal’s non-inclusive constitution is the proximate cause of this development disaster-in-the-making. The blockade is being spearheaded by ethnic communities who make up 40 per cent of the population like the Madhesis and Tharus from the southern plains or the Terai These minorities have strong historic links with India and are protesting that the recently promulgated constitution marginalizes them. They have stopped goods from India entering the country by trucks since September. India of course formally denies that it has anything to do with the blockade but it is concerned that the constitution discriminates against these minorities.

As Nepal shares a 1,088 mile open border with it, India is concerned that the violent agitation over the constitution will spill over into its country. The bulk of the Himalayan Kingdom’s trade is with India, including a total dependence on fuel. It is also a beneficiary of special trading trade concessions and Indian aid. Nepali soldiers in the Indian army constitute one of its leading infantry formations — the Gurkha Regiment. Nepali nationals freely cross the border and work in India. Normally, such interdependence should occasion closer bilateral ties and integration. Unfortunately, this hasn’t happened till now.

Nepal’s ballooning bilateral trade deficit is of course one factor behind the lingering resentment of India. Realizing this, India’s PM Narendra Modi assured South Asian leaders during a summit meeting in Kathmandu in November 2014 that this trade surplus was neither right nor sustainable. That India stood ready to reduce deficits which South Asian countries were incurring in exchange of their goods and services. This is as clear as it gets that India might roll out unilateral trade liberalization; take whatever they have to offer to boost trade within South Asia from the lowly five per cent level at present.

India’s compulsions to do so are simple. If the drift in South Asian integration is allowed to continue, it will only be to the advantage of China. The dragon’s shadow is indeed lengthening over the region, as it is rapidly developing port and transport infrastructure in Pakistan and Sri Lanka. It has promised aid to Nepal to develop its northern border districts. Nepal has also opened more border trading points with China. That China has become Bangladesh’s largest trading partner is a painful reminder to India of its failure to deepen economic cooperation in the neighborhood. Clearly, the challenge for India is to defend its turf against China.

It is in Nepal’s interests, too, that it addresses the sources of discontent over the constitution through dialogue to ensure broad-based-ownership and acceptance. Its top leadership has also agreed to amend the constitution within three months. A more harmonious relationship with India, too, is in its interests. For instance, it has not been able to tap its abundant water resources by developing hydroelectricity generation. South Asia’s diverse topography lends itself to greater cross border power trade, but political inhibitions have ensured that progress has been less than the potential. Some power trading is taking place in the region bordering Bhutan and India.

Nepal has of late seized this opportunity but politics can swiftly derail this process. The signing of a much delayed $1.4 billion deal between the Investment Board of Nepal and India’s GMR Group to develop a 900 MW dam and tunnel system on the upper Karnali River is exactly the sort of big ticket project that can transform the economy of this Himalayan kingdom. Another Indian firm, Satluj Jal Vidyut Nigam Limited signed a deal with the Nepal Government to build a 900 MW project known as Arun-3 in east Nepal. These are just two examples of India’s involvement to help Nepal realize its hydro power potential.

Nepal is also part of India’s efforts to secure greater connectivity by road, rail and sea within South Asia with Bangladesh and Bhutan. These countries have signed a motor vehicle agreement for freer movement of passenger, cargo and personnel traffic within these countries. These processes must be allowed to fructify. This is exactly the sort of stake that Nepal needs to develop in an economics and business-driven partnership with India. Allowing the processes of regional integration to drift is another Himalayan blunder that Nepal can do without.

 

Contact Information:

N Chandra Mohan

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