Nepal’s Prime Minister Madhav Kumar Nepal has returned to Kathmandu after concluding a five-day trip to India on Saturday, during which he oversaw the initialling of a revised trade treaty and took home the assurance that, at least for the time being, Delhi would not disturb his reign in power.
But it now seems that Delhi, having succeeded in marginalising the Maoists and brokering the current moderate Communist-Nepali Congress coalition in Kathmandu, wants to send CPM leader Sitaram Yechury to Kathmandu over the next few days to reopen talks with Maoist leader Prachanda. The Maoist leader was travelling in Europe till yesterday, but is now back home
Political sources said the intention was to bring the Maoists on board to ease the writing a new Constitution, which must be ready by May 2010, and which India hopes it can influence to have a parliamentary and federal character.
Yechury did not confirm or deny he had been asked to be the new back-channel for a dialogue with Prachanda, only telling Business Standard that he had “been invited by Prime Minister Madhav Nepal to visit Kathmandu”, and would go there in the next week or so.
Delhi’s decision to mount a new political initiative is an acknowledgement that it has failed to stabilise Nepal after its historic elections last year. And although India at the time welcomed the election of Maoist leader Prachanda as the new prime minister, the bilateral relationship was soon thrown into turmoil when Delhi reacted negatively to the Maoist cosying up with China, while it supported the Nepal army chief’s refusal to integrate Maoist rebels into the Army.
So when CPN-UML leader Madhav Nepal was elevated to the post of prime minister and Nepali Congress leader Sujata Koirala to foreign minister in May, three weeks after Prachanda resigned, it was widely rumoured that India had given Madhav Nepal a helping hand.
Nepal’s just-concluded visit to India, his first to a foreign country after becoming PM, was meant to reassure Delhi that he held India in the “highest esteem and would remain friendly on all fronts, including on security,” said a Nepali analyst. Prachanda’s first trip abroad as PM had been to China.
That is why the detailed 34-point joint statement released at the end of Madhav Nepal’s visit, which aims at taking the relationship to “new heights on the basis of mutual respect, understanding and mutual benefit”, includes promises as varied as upgrading border infrastructure and constructing two integrated check-posts at a cost of Rs 200 crore, improving 660 km of roads in the adjoining Terai region for another Rs 805 crore, allowing Nepal the use of the Visakhapatnam port for transit trade, a goitre control project as well as sending an Indian team to study the Bagmati civilisation project.
Commerce ministry officials said the newly initialled trade treaty — to be signed when the two commerce secretaries meet in Kathmandu next month — significantly expands the list of primary products and areas in which Nepal is high potential, such as floriculture, horticulture, livestock, herbal medicines, etc.
Bilateral trade currently stands at $1.9 billion, and while the new treaty hopes to double this in the next few years, Indian officials said it “would depend on how effectively Nepal was able to take advantage of the new provisions.” India accounts for 44 per cent of Nepal’s foreign direct investment and 70 per cent of its foreign trade.
Second, it was agreed to resolve several operational problems being faced by Nepali industry — in machinery repair, for example, and payments in differential currencies, both rupee and US dollar. Nepali businessmen could not send machinery for repair to India if it was more than three years old – now temporary exports for 10-year-old machinery will be allowed.
Moreover, Nepali businessmen whose trade was valued in rupees and who did not get the benefit of the bilateral export promotion programmes — which was applicable only for trade valued in US dollars — would now be treated on a par.
The Duty Refund Procedure (DRP) between the two sides will also be normalised under the new trade treaty, the commerce ministry officials said, pointing out that India would earlier compensate Nepal about Rs 300 crore annually because of the differential import duty-excise duty structure.
“The whole procedure used to be extremely complicated, but now that will end,” the official said.
The officials also admitted that Nepal wanted a diversification of its dependence on oil imports from India –Indian Oil has a monopoly – to allow private oil producers such as Reliance and Essar, but a final decision had not been taken on this matter.
Nepal-watchers in Delhi who requested anonymity pointed out, however, that the gamut of the reinvented relationship — the 34-point ambitious joint statement, the revision of the trade treaty, the potential revision of the 1950 Treaty of Friendship as well as the Nepali iteration not to allow its territory to be used against India — will remain mere statements of intent, as long as key political issues such as the integration of the Maoists into the political mainstream, as well as the splintered Madhesi movement in the Terai region are not resolved.
The analysts pointed out that Upendra Yadav’s Madhesi Janadhikar Forum, a key political party in the Terai belt adjoining Bihar and Uttar Pradesh, had splintered into four factions (one of which supported the Madhav Nepal government) over the last year, but Delhi did not seem to be overly concerned.
“There are 109 armed groups operating in the Terai, most of which take advantage of the 1,750 km-long open border and seek shelter in Bihar or UP, but it doesn’t seem as if the Indian establishment wants to cut a political deal with the Madhesi political groups in the Terai,” one political observer said.
