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Nepal's Nationality & Foreign and Economic Policy

A national seminar organized by BP Chintan Pratisthan in Lalitpur on 18 July 2013

By Ritu Raj Subedi
Associate Editor, The Rising Nepal

The issue of nationalism or nationality has been a hot topic for the political parties ever since Nepal moved on the path of modernization following the 1950 change. Like the leaders of first generation of democratic movement, the leaders, who championed the republican system, are also emphatically raising the issue of nationalism. There is no dearth of people to argue that the nationality is in jeopardy as a result of the collective failure of the parties in writing constitution and their obsequiousness towards the foreign power centers. Like nationality, the matters of foreign and economy policies have been also contested because of the growing deficit-trust among the major forces. These topics are actually complementary each other. Without a dynamic foreign policy boosted by strong economy, nationality simply turns out a hollow slogan only to be exploited by demagogues to lead the masses into a populist trap.

In principle, all agree that national interest should be the central plank for the formulation and execution of foreign policies. However, it requires a minimum consensus among the key domestic players. A divided society cannot frame and implement independent foreign policy effectively. In the era of inter-dependent world, the foreign policy should be a catalytic factor to spur economic growth by activating economic diplomacy and attracting investment to the country. Only with a vibrant economy, the country can perform in the international forums with considerable aplomb.

At the same time, consideration of the security concerns of the neighbours is another important aspect of any foreign policy because this will enhance mutual confidence to respect each other’s sovereignty. Against this backdrop, BP Chintan Pratisthan and FES jointly organized a one-day seminar 'Nepal's nationality, and foreign and economic policy' on July 18 with the objective of brainstorming as many ideas as possible on the given topic. A motley of people, including politicians, intellectuals, professionals, students and cadres of different political parties, shared their views in the seminar.

National interests must guide foreign policies

As a chief guest of the program, Nepali Congress senior leader and former prime minister Sher Bahadur Deuba said that the national interest should guide the country's foreign policy.

"The foreign policy should not be swayed by anti-Indian or anti-Chinese rhetoric. We should develop cordial ties with India, China and the western countries," said Deuba.

He noted that Nepal should be sensitive about the security concerns of the neghbouring countries.

He claimed that the NC government formed after 1990 introduced programmes and policies in line with BP’s thoughts. Accordingly, it gave priority to education, health and irrigation.

“The high ratio of literacy and expansion of drinking water facilities are due to the policy of NC,” he said.

Deuba also said that the trend of going abroad for higher study had declined as the schools and colleges here started to impart quality education.

Deuba admitted that education became expensive for the poor, so, the government should pay attention to enhance the access of all to the quality education.

Touching his recent India visit, he said that India was ready to provide soft loans to Nepal to set up industries that would, in turn, help reduce trade deficit of the country.

Stressing on foreign investment for economic growth, he took a swipe at those who blow up the issue of nationality.

“No matter how much they make a big talk about nationalism, the country could not reduce its trade deficit,” he added.

He said that BP stressed value-based democracy and we should all follow it.

Madhesi Janaadhikar Forum Nepal chairman Upendra Yadav said that geopolitical reality should be taken into account while devising and executing its foreign policy.

Nepal should assure its neghbours that its land would not be used against any neighbour.

"The political players should prove their mettle in managing the domestic problems at the micro level," he said. He admitted that the nation's foreign policy became weak following the establishment of republican system.

Touching on BP Koirala thoughts and philosophy, Yadav said that democratic socialism, propounded by BP, emphasized on social security, welfare state and social justice.

Stating that BP followed the value-based politics, he said that the parties should also emulate his ideals to implement social democracy’s principles.

“When we talk about equality and prosperity, we often tend to forget social equality. This is why our party accentuated the issues of social exclusion, Dalit emancipation, and uplift of marginalized communities. These people are illiterate, highly exploited and living in penury. How to ensure social justice for them is the challenge to all.”

Yadav said that the parties always talked about political equality but there was the urgency to ensure equal opportunity to disadvantaged people.

“The unitary system promoted social exclusion and class disparity while federalism will bring an end to such structural injustices,” he said and put emphasis on the balanced development to guarantee social rights of the marginalized.

He noted that there lacked policies based on multiculturalism, giving rise to opportunistic characteristics.

CPN-ML general secretary CP Mainali said that except for UCPN-M chairman Pushpa Kamal Dahal Prachanda all had admitted that the country’s nationality had been in the weakest position in its history.

Mainali said that the autocratic system compounded the internal problems associated with castes and ethnicities in the past.

“A commission on inclusion should be formed to address the man-made discriminations and social exclusions,” he said.

Stating that the problem of exclusion should be dealt with through constitutional and legal measures, he said that CPN-UML and NC lacked their clear vision on this matter while the UCPN-M distorted it.

On the other, regional and ethnic leaders sought a vulgar solution to it. “The slogan of one madhes one province is the result of such approach. It is in the interest of India, not of Nepal. The Madhesi leaders failed to see this politically. They see it only through regional aspect.”

Mainali said that the ethnic states were not in the national interests, which will only give birth to conflicts and tensions.

Nepali nationalism was now in serious crisis as the domestic players capitulated to the design of the foreigners and carried the agenda of foreigners. "They will be also the matter of security concerns for the neighbouring countries," he added.

Former minister Dr. Prakash Chandra Lohani said that there were two types of nationality- ruler-centric nationality and inclusion-centric nationality.

The nationality based on the participation of all people is strong; he said and added that the parties should promote citizen-centric nationalism that should be nourished by basic democratic values and principles.

Describing the three elements of foreign policy, namely, political, economy and security, Dr. Lohani suggested that Nepal should protect its national interest by considering the concerns of neighbours.

He urged the parties to rise above the partisan interest while pursuing a balance foreign policy. “We are economically dependent on other countries that must be reversed.”

The leaders should seek blessings from the Nepalese people, not from foreigners, he said and stressed on trade specialization.

CPN-UML leader Ghanshyam Bhusal noted that the country could not witness economic prosperity until the national sovereignty was well protected.

"Our relations with India are characterized by the elements of cooperation, conflict and competition. However, the competitive dimensions became weak owing to the unequal relations with India," he said, adding that the relations with India should be improved.

He said that it was the state, not any individual that should take initiatives to balance the ties with the neighbours.

Bhusal said that owing to the instability the internal unity became weak.

Offering his political insights, he said that the state should guarantee work to the working people. “Panchayat system collapsed because it failed to give work to the working people. So, the successive governments face problems as they falter in managing this group of people.”

On the national unity, Bhusal suggested that the parties should explore common grounds and common agenda to come together on the matter of internal politics and nationality.

FES, Programme officer CD Bhatta said that foreign policy should be devised in a way that defended the national interests. It should also aim at boosting the country’s economy.

“Our foreign policy experts failed to take the heed of the common people’s concerns. The country survives only when its culture and language were well preserved,” he said.

"Nepal is one of the oldest nations in the world but it is today coping the ideas of foreign nations in almost every domain," he said and added that the country's national sovereignty was really in jeopardy because the leaders forgot the judicious foreign policy guidelines suggested by the unifier of Nepal Prithvi Narayan Shah.

“There is a wide gap between the people’s expectations and the leaders’ perceptions,” he said and called for bridging this chasm.

Going back to 1990’s economic moves, Bhatta rued that the country’s public domains were virtually destroyed, giving rise to the creation of two classes of the people. “Today’s economy that has been left at the mercy of market forces is largely symbolic. In consequence of which, the people are facing multiple crises.”

Underlining the need of linking democracy to the life of the people, Bhatta called for reviving the people’s faith in politics and checking the erosion of legitimacy.

He noted that the country could regain democracy but not nationality once it was lost.

Although the characteristics of Nepali villages resemble what BP described in his works decades ago, there is the need of contextualizing his thoughts in the changed context, he said.

BP Chintan Pratisthan chairman Haribol Bhattrai pointed out the need to formulate the pro-poor and pro-peasant policies to develop the country.

“We have to create indigenous economy by mobilizing the local resources,” he said and added that the people wanted a system that would live up to their aspirations.

There is no need to be apprehended by federalism as it aims at overcoming the structural inequalities, he said.

Narayan Koirala of BP Chintan Pratistha said that nationalism was facing a grave crisis as the parties failed to abide by the value-based politics.

Paper presentation session

Contrary to the existing practice, experts had presented their working paper before the leaders delivered their speech. The attending leaders listened to Dr Jaya Raj Acharya and Dr Ram Prasad Gyawali’s papers - ‘Nepal’s nationality and foreign policy' and 'Democratic Socialism and Its Relevance’- respectively.

The gist of Dr Acharya’s paper:

We need right leadership, right idea: Acharya

There is only one goal of Nepal’s foreign policy that is to protect and promote our nationality. The foreign policy operates at two levels- strategic and political. Our relations with India and China are at strategic level. A small mistake on our part could imperil the country’s existence. Since we are very small and weak compared to our neighbours, handling the foreign relations is a very sensitive matter for us. The term ‘strategy’ is related to war or military action. We could not imagine the use of military force in our foreign policy or diplomacy. The intention to use the word ‘strategy’ here is that whatever steps we take to execute foreign policies, they will amount to a strategy adopted in the war.

It is a matter of satisfaction that India and China have respected Nepal’s independence, sovereignty and territorial integrity. However, Nepal should achieve political stability and economic prosperity to attain independence and sovereignty in the real sense. Otherwise, our independence and sovereignty will merely be confined to papers or slogans. We should also assure our neighbours about their security concerns.

China has never demonstrated its ‘superiority complex’ despite being a big country. It treats all neghbours - big or small- on equal terms. It behaves with the neighbours as per its own national interests, not based on any political ideology.

Nepal and Indian share open borders; some of them are in disputes, creating occasional hiccups. Closing borders is not the solution. We have to manage them. It is in the benefit of two sides to resolve the border disputes based on the mutual understanding. A benign cooperation from India is widely expected to solve the border disputes because this issue has brewed anti-Indian sentiments here that will hurt both the nations in the long run. India has played its role in the political movements of modern Nepal. But, following the Janaandolan II, a hard reality came to the fore- whether India likes it or not - China’s influence on the Nepalese politics has increased with the rise of UCPN-M. This is like a windfall for China and it is interesting to see how India will react to this development.

As one US scholar put it, Nepal’s foreign policy has been guided by a strategy for survival since centuries. Our ancestors fought throughout history to keep Nepal’s dignity intact. This is a reason why the country has remained independence till the day. The strategy for survival helped to protect the nation. Now we have to shift from survival strategy to development strategy. Without development, our survival has become almost impossible. Therefore, peace, unity and socio-economic development should be the cornerstone of the country’s foreign policy. We should focus on following three facts:

  1. There are many countries in the world that are smaller than Nepal. But, they are more independent, self-reliant and enjoy more self-dignity than Nepal. For example, Switzerland is three times smaller in geography and five times smaller in population than Nepal. But, it exercises more freedom than Nepal because it is very rich. Nepal also possesses big potential in terms of natural and human resources. What we lack is the right leadership, right idea, right policy and programs to achieve the development goals.
  2. The issue of federalism, particularly ethnic federalism, has been flared up because of the lack of balanced socio-economic development. Ethnic federalism will push the country towards disintegration. What we need first – development or ethnic identity? Had the Nepalese lost their ethnic or linguistic identity? The small country like Nepal houses 103 ethnic groups and 93 languages. Development will not happen overnight if the federal states are carved out on the basis of castes. Let’s make our development process proportionate and inclusive, and introduce reservation for the backward people. Let’s promote the works that enhance meritocracy but do not recommend incompetent persons in the name of inclusion.
  3. If we continue to blame each other for the failure of social-economic systems, if we always keep the country in the state of instability, this will naturally be a matter of concerns for our neighbours. The situation may lead them to intervene in Nepal. It is difficult to gauge the nature of the intervention. But, the interference seems to be inevitable. In order to avoid their interference and maintain our independence, the strategic dimension of our foreign policy would be the development of the country. Viewing from the point of comparative advantage and pace of the economic development taking place in India and China, we have to develop water resources, agriculture, health and education into the industry at full throttle.

The gist of Gyawali’s paper

Liberalization & socialism can go side by side: Gyawali

Democratic socialism is a middle path between capitalism and communism. It adopts economic equality as advocated by communism and political equality as espoused by capitalism. Unlike Marx’s Das Capital, BP didn’t have any book that expounds his ideas on democratic socialism (DS). His thoughts on DS have been drawn from his speeches delivered in different periods and interviews published in different newspapers. BP said that the society is not a divine-made structure. It is purely a material arrangement and can be restructured to the welfare of all the humans living in the society, and it operates through rules and regulations formulated by the people.

Political equality can be attained once the political revolution completes but economic equality is a long process. It depends on the growth of production that requires capital saving and reinvestment. The economic equality does not mean the distribution of poverty. BP’s economic concept was influenced by the economic growth model proposed by economists Harrod, Domar and Solow. He was inspired by the ideas of Mahatma Gandhi, Jaya Prakash Narayan and Schumaker, the writer ‘Small is beautiful’. BP used to say that the village should be self-reliant and would not seek support from outside for its existence. He wants to promote indigenous technology to enhance the agriculture products and reduce the dependency on foreign technology. BP thought that foreign aids would give rise to a nouveau riche class that has nothing to do with the economic conditions of the country. Rather, it breeds corruption.

Nepal adopted privatization and liberalization policies under the aegis of IMF and World Banks in 1985. Launched in the guise of Structural Adjustment Policy in initial phase, these policies led to the imposition of the several conditions, including the removal of price control and subsidies and the guarantee of the right of foreign investment in the state economy. Many public enterprises were privatized, which helped reduce the budget deficit. However, the prices of public services and goods reached stratosphere. The education and health sectors were hit hard. Education and health services went beyond the reach of the common people. Those with the fat purse could become doctor but the talent students coming from the poor family were deprived of that opportunity.

Nonetheless, the privatization brought about a revolution in the communications field. It drastically helped cut the prices of communications items and enhanced access of a large chunk of population to the means of communications. In the absence of capital, the country had to seek financial support from international institutions and multinational companies. The nation economy fell into the hands of foreign institutions. We lost out bargaining capacity resulting in the loss of national independence.

Some planners and former finance ministers claim that BP’s socialist philosophy has lost its relevance in the era of economic liberalization. But, I do not agree on this conclusion. The NC should unveil its official views on the matter. Socialism does not die even though there is the wave of liberalization. The tools to implement socialist prograrms in the controlled economy differ from that of liberal economy. The neighbouring China is its glaring example. Swayed by the idea that socialism is in crisis, Nepal adopted neo-liberal economic policy but China accepted these challenges on its own terms. It allowed the multinational companies working inside the country but it did not lose its grip on the banking sector. All lands have been nationalized. The governments build houses and lease them to the people for a period of 70 years. China’s economy is close to socialism although its politics is devoid of democratic system.

The socialist ideas can be practiced even in the liberal economy. Sweden is another instance. It amply shows that a socialist society can be created in the age of economic liberalization and international competition. It developed new economic model characterized by periodic election, competitive and open policy and the need-based control on the market economy.

Discussion Session

The discussion session was chaired by former NC leader Sudish Lal Das. Sambhu Ram Simkhada commented on Acharya’s paper while Tika Prasad Pokharel on Gyawali’s paper. A sizable number of the participants put forth their views.

Simkhada’s comment:

The country’s politics since 1950 has been revolving around BP’s thoughts. We are now facing a crisis of confidence as justified by the parade of former prime ministers to meet an Indian minister in Dwarika Hotel where he was staying. The country is waiting for radical and fundamental changes. Our condition is reeling under the cycle of fusion, confusion and diffusion. India and China are concerned about the political developments happening here because any political changes in the Himalayan nation will have bearing on their security. Domestic economy needs to be consolidated for the political stability. We will continue to be weak until we become dependent in the field of economic development. Today’s world is economically globalized and politically fragmented. We can’t move ahead by indulging in the nostalgia. The political parties should forge a minimum consensus on foreign policy.

Tika Prasad Pokharel’s comment: Gyawali’s paper employs simple language to elucidate BP’s democratic socialism imprecise manner. For the capitalist economy to function smoothly, it requires certain elements – privatization, liberalization, mature and pragmatic policies and laws, their effective implementation and finally honesty in the political leadership. If capitalistic system is not well managed, it increases exploitation, corruption and gaps between the poor and the rich. BP envisioned building a society based on democratic socialism sans the ills of capitalism. Although BP favoured the concept of small is beautiful, he was not against the opening up of the big industries. He did not at all reject capitalism. He primarily focused on the justifiable distribution of resources and means to ensure social justice.

Participants from the floor

Kamal Koirala: We have many leaders who fought for democracy throughout their life. Democracy is panacea for the solution of all political crises. So, the poll is the key to returning to the functional democracy. The day when the NC and UML come on track, democracy also gets on track.

Purnakant Adhikary: China recently invited Prachanda to alert him about the chaotic domestic politics. We have to establish cordial ties with India, China and the West. Democratic socialism is people’s centric political system. Government-centric socialism is of authoritarian nature. BP wanted to create a political system that would fit for the working class people.

Dr Birendra Mishra: Nationalism should be reflected on ideology and an alternative view should be entertained.

Umeshjung Rayamajhi: BP always emphasized on balance and strong state. It is wrong to label BP as a monarchist. When BP said that king’s and his necks are conjoined, he meant to say that if the monarchy negated the NC, the NC would also negate the kingship. The NC took the republican line because the monarchy constantly went against it.

Dr. Kapil Shrestha: BP had magnetic power to pull the people towards him. This is a reason why we switched to him when we were young. The working paper of Jaya Raj Acharya is status quoist and based on out-dated model. Nepal did not get its sovereignty at the mercy of India and China. Diplomacy is a powerful tool to get rid the country of its landlocked position. The social democracy models of 40s, 50s, and 60s have become outdated.

Phanindra Nepal: Acharya’s paper is incomplete as it failed to address the national interests. Nepal loses much owing to the open borders with India. We have to review 1950 Nepal-India treaty. There persists Indian phobia among the intelligentsias. We need to redefine nationalism and our outlook towards India.

A woman participant: The republican system was established based on BP thought. This is a matter of pride. We need to devise self-dependent foreign policy.

Naresh Rimal: We should focus on reflection and context. We should reflect on agrarian society but the working papers fail to reflect on this context. Ethnic diversity is also an opportunity.

Charan Prasai: We need to make soul-searching where the BP’s thoughts are now. Are we pursuing the value-based politics as followed by BP? The external influences on the internal politics remain high. The external forces dominated the Nepalese politics following the April movement. Which power centre put Lokman Singh on the driving seat of CIAA?

Dinbandhu Aryal: BP’s thoughts are still relevant. They should be contextualized to bolster democracy. The NC should vigorously pursue democratic socialism.


  • Safeguarding the national interest should be the primary goal of foreign policy
  • Nepal needs to be sensitive towards the security concerns of its neighbours
  • The country’s foreign policy lost its compass because we disregarded far-sighted foreign policy guidelines of the country’s unifier Prithvi Narayan Shah,
  • Today’s world is economically globalized and politically fragmented. The political parties should forge a minimum consensus on foreign policy,
  • Now we have to shift from survival strategy to development strategy to carve out an independent image of the country,
  • The nationality is in grave crisis owing to the collective failure of the political parties,
  • Political stability, internal unity and economic prosperity is the key to the execution of independent foreign policy,
  • We need right leadership and right policy to tap abundant water resources, and the potentials of tourism and agriculture sectors.
  • BP Koirala’s ideas are still relevant and democratic socialism should be applied to transform the Nepalese villages,
  • Follow value-based politics that BP used to accord high priority,
  • Liberalization & socialism can go side by side,
  • No to ethnic federalism but ethnic diversity is also an opportunity,
  • The issue of social exclusions must be addressed to ensure social justice and security
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