Nepalese Government ‘not capable of handling the crisis’

After two decades of antagonism, Nepal’s major political parties are still at loggerheads and the country does not have a functioning Government. Nepal’s political infirmity makes it imperative that the international community stays to finish the long-term job of reconstruction.

After two decades of antagonism, Nepal’s major political parties are still at loggerheads and the country does not have a functioning Government. Nepal’s political infirmity makes it imperative that the international community stays to finish the long-term job of reconstruction.

The weakness of its economy and the impotence of its national Government mean that Nepal will need massive and continuing support from the international community to cope with the aftermath of April 25’s earthquake. The disaster has killed more than 7,500 people and there is a grave risk that outbreaks of diseases, such as cholera and dysentery, could kill many more thousands.

The long-term financial costs are harder to assess, but the economic losses could be as high as US$10 billion, according to the US Geological Survey (GS). The GS said, however, that there was a 13% chance the devastation would cost more than US$100 billion. The enormity of such a sum is clear when one considers Nepal’s annual GDP of US$19.2 billion. Other estimates have been a tad more cautious. Rajiv Biswas, the chief economist for the Asia-Pacific region at US-based consultancy IHS, put the cost of rebuilding at US$5 billion over five years.

The challenges for the Government of one of the world’s poorest nations, whose economy ranks behind those of Afghanistan and Uganda, appear almost insurmountable.

“This Government is not capable of handling a crisis of this scale, said Gyan Pradhan, a native of Nepal and now an economics professor at Eastern Kentucky University in the US. “The politics of Nepal is hugely dysfunctional and there isn’t really an operating government. There is so much discord between the parties that they can’t agree on anything. The Government is such an impediment to the economy and the daily lives of the people that it’s surprising that society and business are able to move along at all.”

The quarrelsome reactions of Nepal’s major parties following the earthquake suggested that recent events are more likely to widen their divisions than persuade them to act together in the country’s best interests. A spokesman for Nepal’s Maoist Party, Dinanath Sharma, castigated Prime Minister Sushil Koirala for moving too slowly to help stricken citizens and “showing an insensitive attitude at this time of great national loss”. Sharma also claimed – implausibly, given the scale of the damage – that Nepal’s reliance on relief assistance from India, China, the US and other countries, was “a matter of great shame”.

The antagonistic relationship of Nepal’s parties has been the major characteristic of the country’s modern politics. An extraordinary period of national discord began in 1996, with the emergence of the Communist Part of Nepal (Maoist), which began an armed rebellion against the Government. It lasted a decade and saw the deaths of more than 13,000 people.

But there was a further complicating factor in Nepalese politics: The involvement of the royal family. In 2005, the then-king took over absolute power in a coup supported by the army, beginning a three-way conflict between the “democratic” parties, the Maoists, and the military-backed monarchy. The king’s period of absolute power only lasted a year before there was a second mass uprising, led by a joint alliance of the democratic parties and the Maoists.

It looked promising for a while as they promised to put differences aside. A 601-member body was charged with creating a new constitution, the monarchy was abolished and Nepal was declared a republic. But the following election proved the end of the politics of consensus and for the next few years, there were a number of unsuccessful governing coalitions and huge debates about federalism. Finally, in February 2014, a measure of stability was achieved when Sushil Koirala of the Nepali Congress became the new Prime Minister. But the infighting has continued and Koirala has little control over his country, according to Professor Pradhan.

“There is effectively no operating government,” he said. “Even after the earthquake took place, the Nepalese Government was conspicuous by its absence from major news channels. On the BBC, we saw interviews with the Indian Government and ordinary Nepalese people, but very little reaction from the Nepal Government. This incapacity makes it imperative that the international community comes to Nepal’s aid and it was marvellous to hear India make major commitments within hours of the tragedy,” he said.

The international aid community reacted strongly and there are more than 100 teams of foreign relief workers in Nepal. Their task is immense. Around 3.5 million people are in need of food assistance and eight million people across the country’s Western and Central Regions have been affected by the disaster, many of them in the two largest cities, Kathmandu and Pokhara. The Asian Development Bank has pledged US$200 million, while dozens of governments and aid organizations have promised, or donated, tens of millions more. The aid is the only way Nepal will be able to afford to restore so many devastated roads, utilities and other infrastructure.

Historically, the two neighbours – India and China – have been rivals in Nepal, but they are the best sources of long-term help and their immediate reactions promised a great deal. There is hope that Nepal’s plight could spark a new era of regional cooperation and economic partnership. “China and India have significant vested interests in helping out. They have been competing to strengthen their respective influence in Nepal and for economic as much as humanitarian reasons, I expect a lot of ongoing assistance from these two adjoining countries,” said Professor Pradhan.

Once the immediate crisis is under control, attention will turn to long-term economic consequences. Despite its inept Government, Nepal’s economy grew by 5.5% in 2014, according to the World Bank. But the earthquake has set it back years, or even decades. Nepal is among the poorest countries in the world. Around 25% of its 31 million people live below the poverty line and there is an unemployment rate of 40%. Remittances from workers abroad make up 22% to 25% of GDP.

Agriculture is the main industry, supporting more than 70% of the population and providing more than a third of GDP. But tourism plays a significant and growing role. It supports more than a million jobs and contributed about 9% of GDP in 2014 thanks to the more than 800,000 visitors, many of them from India and China.  

“The economy is likely to be affected all round,” said Professor Pradhan. “It will reduce tourism because the mountain areas devastated in the earthquake to the east and west of Kathmandu are popular with visitors and also because there will be lots of irrational fears about what might happen in the future.”

“But it will also hit small businesses and manufacturing. Nepal has a fairly labour-intensive economy and small businesses are a significant part of it. But in addition to continuing power shortages, the road links between areas – not great to begin with – have been damaged by landslides. This means even greater isolation for some rural areas from major urban areas, which will hamper trade and commerce.”

The severe damage to the city of Kathmandu is another severe blow. Kathmandu is the economic centre of Nepal, contributing 25-30% to GDP. It is the centre of banking, information technology, media and education, as well as central government offices. In the nearby Kathmandu Valley, four of the country’s nine world heritage sites have been badly damaged, which will reduce tourist revenues.

It is unclear how much damage there has been to the hydropower sector, which is an important source of potential growth in Nepal. Two of the largest hydropower facilities are in the worst-hit areas. They are the 144-megawatt Kaligandaki to the west of the epicentre and the 22.1MW Chilime plant north of Kathmandu. But the extent of the structural damage is not yet known and hydropower structures are over-engineered to withstand tremors.

There are, though, positive elements in the overall picture. The vital agriculture sector appears to be relatively unscathed. Agricultural productivity is mainly in the plains bordering India in the south and that area was far from the epicentre. There is also a strong possibility that an extensive rebuilding programme could boost employment. At the moment, good jobs are in such short supply that 1,500 Nepalese depart each day for nearby job opportunities.

“In some rural villages, there are hardly any men left so the women and grandparents bring up the children on their own. But most workers would prefer to be living at home and considerable reconstruction work could see a reversal of outward migration.”

Nepal will be incapable of rebuilding the infrastructure on its own and will need help for a decade, or more, from the international community. This makes it imperative that programmes are long-term and Nepal is not left to stand alone.

“Once the immediate needs are met and most of the international aid workers have gone, there’s a danger Nepal will be forgotten,” said Professor Pradhan. “We saw that happen in Haiti, which was largely left to its own devices once the limelight faded following the 2010 earthquake. That can’t be allowed to happen in Nepal.”