By Hari Prasad Shrestha 4 June 2021
Nepal is a poor and peripheral country, which has been trapped in a cycle of dependency of rich and powerful neighboring core countries. Its landlocked position is least favorable from a development and stability point of view. Poverty, human resource weakness, and economic vulnerability are its main characteristics. Moreover, its economic policy, government capacity, citizen capacity, and economy’s capacity are still far from acceptable standards.
Nepal is strategically dependent on India for almost all imports, of which many items are critical — and in some cases, these could pose a national security risk. India monopolizes Nepal’s vital supplies system caused by Nepal’s inability to produce internally, from sensitive defense materials to petroleum products, medicines, foodstuffs, and other essential items. Nepal is also dependent on transit trade on Indian seaports, and it suffers a cost of trade that is double compared to other maritime neighbors.
Poverty and underdevelopment are not natural phenomena; they are created by the long history of colonial and imperial dominance of strong nations against developing countries. The stronger countries made colonialism and Imperialism moves to ensure more power and strength for themselves. Colonialism also fueled ethnic conflict in many countries.
Imperialism is considered as an idea or a policy, whereas colonialism denotes the execution of that idea. Imperialism could be defined as expanding power by challenging the neighboring states, regions, or weaker countries. This gain of power could be achieved through military force or diplomacy. Former colonial countries were underdeveloped due to their political and economic exploitations by the western industrialized nations.
Nowadays, no colonial countries exist globally, forcefully ruled by powerful countries; only the method has been modified. In the new context, powerful nations control and dominate their peripheral weak countries through political and economic powers, making them direct and/or indirectly dependent upon them.
The involvement of developed countries through their market mechanisms and powerful institutions in the internal dynamics of developing countries hardly gives impetus to better growth and development.
All countries are dependent on each other for better growth and development. Land-locked countries and least developed countries are comparatively more vulnerable due to the one-sided trend of excessive dependence and domination imposed by powerful countries on them.
However, domination and dependency have their own distinct meanings. Domination refers to one-sided intervention and interferences by rich to poor countries, whereas dependency has two sides; both rich and poor are interdependent.
None of the land-locked countries have performed fairly in terms of economic growth and national development except the land-locked countries of Europe. As a result of prosperity and strong unity among countries in the European Union, land-locked counties like Switzerland, Austria, and Luxemburg are self-reliant and well developed.
Nepal is a dependent and underdeveloped country. Its human development indicators—such as macro-economic growth, health, education, and living standards- are framed as the antithesis of a “developed,” modern, or industrialized state. In addition, it has less stable economies, unstable political regimes, greater poverty, malnutrition, and poorer public health and education systems.
Nepal’s economy is subsisted only by external factors like money received through remittances, which are being used to import goods from other countries. The revenue received from import trade maintains government recurrent expenditures. This economic cycle appears to be simple and easy. However, it is playing a negative role by squeezing contributions of internal players by making the country externally more dependent outside. Such trends of the economy may not be sustainable and could be in a serious crunch at any moment unexpectedly.
Nepal never learned lessons to be self-reliant even after many border blockades, a great earthquake, and pandemics, which created an extreme shortage of essential items and supplies.
As the system and subsystems in Nepal are not properly functioning, we can observe its reflection on our national security and sovereignty.
For example, Nepal has border disputes with India in several places, and India occupied a strategic location of Kalapani territory by challenging the sovereignty of Nepal. Nepalese leaders tended to stage big dramas by opposing temporarily, like a bubble in the water against such issues related to sovereignty and national concerns!
Although Nepal is a weak and economically dependent country, its strategic importance is on rising not only for the neighbors but equally for the US. Nepal and the US have excellent relations despite some traditional divergences – especially on the Tibet matter.
In 2017, Nepal signed an MCC treaty under the US Indo-Pacific Strategy with a US$ 500 million grant amount for the construction of power transmission lines and roads in Nepal, which has yet to be ratified by the Nepal parliament.
India, China, and the US have an equal interest in Nepal; however, Nepal seems to be in a critical position and more confused about handling them equally with balanced diplomatic capability!
Nepal’s foreign policy is not stable; it changes its courses based on the whims of leaders who are in power. Independent experts on international relations and foreign policy doyens in Nepal seem to be confused to speak, favouring Nepal in many bilateral issues due to the ever-changing contradictory stances of political leaders.
Only our sustainable economy; appropriate, balanced, and stable foreign policy directions could help move forward to be self-reliant in key concerns of the state.
It does not mean that Nepal has not initiated any steps to overcome these issues; however, our achievements have not been satisfactory. In many cases, our performances have been even worse.
For example, in 2015, a memorandum of understanding (MOU) was signed between the Nepal Oil Corporation and China National United Oil Corporation (PetroChina) in Beijing to supply petroleum products to Nepal. Moreover, Nepal also signed trade and transit treaties to use Chinese sea and land ports. However, it became difficult to materialise due to infrastructural bottleneck and commercial unviability.
In 1974, Nepal was a rice exporting country. By that time, the government had established seven companies specifically for exporting rice, and rice comprised 40 percent of Nepal’s total exports. Now Nepal is importing a huge quantity of rice and other food items.
And, as a result of faulty and import-based economic policy, the private sector feels uncomfortable investing in the productive sector. Consequently, it widened our trade balance, causing negative effects on self-reliance, employment, growth, and poverty reductions. The unregulated open borders between the two countries are major causes for Nepal to be more dependent on India.
Another sector where Nepal is not serious is transforming its petroleum-based economy into an electrical power-based economy. Nepal, a country of abundant hydropower, is completely dependent and based on importing petroleum products. There have been some trivial efforts to substitute petroleum products with electricity; however, the outcomes are not encouraging.
Nepal is also not free in importing arms and ammunition for its internal security from countries other than India. During the Maoist insurgency, it experienced a lack of arms and ammunition for internal security because of dependent on India for its supply. Previously, once Nepal imported arms from China, and it faced a serious border blockade of India.
The formal authorities and informal political and diplomatic elites in India are also comparatively more active in Nepal’s internal matter than other countries in the South Asia region.
They have more leverages and are so easily welcomed in Nepal by political leaders and elites; such environments cannot be found in other countries.
Without national consensus in our overall state strategic thinking and model of development, certain Nepali people would suffer more in days to come with our short-sighted, power-monger attitudes of responsible authorities.
These are the key sectors of extreme dependency of Nepal, where it must bring changes and reforms to be strong and self-reliant by hook or by crook.
First, Nepal must be self-sufficient in the production of foodstuffs. A revolutionary transformation is required in the agriculture sector, including opening certain sectors for external Investments in high-value crops and export of agriculture products.
Thereafter, Nepal must adopt protective and supportive policies for long-term investment in important large industries by currently focusing on textile, processed foodstuffs, and medicines on a large scale.
Moreover, the government must be seriously substituting gas by encouraging electric vehicles, household electrical appliances and supplying cheap and reliable electricity to productive sectors to raise per capita electricity utilization.
Nepal must be bold to procure independent arms ammunition from third countries. It must regulate open borders with India as the Supreme Court of Nepal has already issued a mandamus order in the name of the government to regulate and control the open border between Nepal and India.
Besides, it must start importing petroleum products from China and utilize Chinese seaports for transit trade facilities. To make economically viable and cheap routes, the government agencies should take the lead role by encouraging the private sector to utilize the facilities.
Lastly, as agreed with the US, the Nepal parliament must conclude ratification of Millennium Challenge Corporation; indecisive situations might be counterproductive for Nepal.
These are not difficult areas to accomplish; only strong political wills are crucial. Because soaring dependency, underdevelopment, and unstable policies might be causes of internal conflicts, which could ultimately challenge our national security?