Eddie Walsh is the President of the Emerging Science and Technology Policy Centre, a Senior Fellow at the School of Foreign Service - Georgetown University, and the Director-General of the Pacific Islands Society.

The poverty rate in Nepal has decreased from 42 per cent in 1996 to 25 per cent in 2011 [GALLO/GETTY]

For some, Nepal conjures up images of snowcapped mountains, Buddhist monasteries and adventure tourism. Unfortunately, such an idealised depiction belies the whole story. Despite its natural beauty, Nepal remains a small, impoverished country emerging from a decade-long civil war.

Deeply cleaved along ideological, ethnic and caste-based lines, Nepal has struggled to achieve political stability since hostilities formally ended in 2006. The question is whether the coalition government can overcome these challenges and build a foundation for a new Nepal.

Eddie Walsh spoke with Nepali Ambassador to the United States, Shankar Sharma, to share his views on why recent developments in Nepal suggest significant progress is being made. The ambassador also addressed how global issues, including climate change, the rise of China and India and the strategic shift in US focus toward Asia, are affecting Nepal’s national security interests.

Eddie Walsh: Last year, Nepalese political parties reached agreement on the remaining terms of the Comprehensive Peace Agreement. This was hailed by many as a major step forward, but not everyone is happy with the final compromise. Are you concerned that disenfranchised parties will undermine domestic stability as a result in the future?

Shankar Sharma: All of the political parties have now signed the agreement. I think there has been some disagreement within the political parties. But, the government will move ahead with what has been agreed to as it has been accepted by almost all of the parties and external forces.

EW: The next step in the framework is to finalise the constitution. With the peace agreement behind you, the international community is expecting the constitution to be finalised this year. Is this a reasonable expectation?

SS: I believe so. Within the final peace agreement, there was a clause to establish a high-level committee to look into the disputed issues in the draft constitution. They have formed and they are now working on it. There are only two issues that need to be discussed more. The first is the form of government – whether we will have a presidential or Westminster form of government. That is still being discussed and has not been finalised.

The second is the restructuring of the country into federal states. Very recently, an expert committee was formed that will give its recommendations in the next two months. That will help the political leaders to make decisions but that is not an easy issue. If there is only one thing preventing the elections, the government will find a mechanism to overcome it. The political parties are the representatives of their people. We see in the blogs and other media that the people are pushing the parties to come to a resolution as soon as possible.

EW: The regional autonomy could be a destabilising issue for Nepal. There have been rumours that the Maoists have agreed to provide the Madhesi with regional autonomy. Is this true?

SS: That will be decided by the restructuring of the state. Given the situation of Nepal, there is a strong role for the federal government to play with the provinces and states. But, we will have to see how the constitutional committee decides. They will need to choose how the provinces and states are linked to the federal state. Even if the constitution is very relaxed though, the government will have very strong powers. Ultimately, it is up to the Nepali people. We are not receiving external pressure on this.

EW: Regarding military integration, the military and police structuring will be a huge issue. Will Nepal seek to refocus the military on external threats or will the army remain focused on domestic security?

SS: After the completion of the peace process, it can be discussed. Everyone currently is focused on implementing the peace process, which includes the rehabilitation and integration of PLAs in the security forces. Once this is done, we will be talking about the right-sizing of Nepali forces, including the Nepal army and police. But, never in our history have we changed the role of the military into police.

EW: Recently, Nepal enacted the Caste-based Discrimination and Untouchability Act of 2011, which received widespread acclaim from the international community. How big of a shift will this be for Nepal and what other policy initiatives are you putting in place to overcome the reinforcing cleavages of caste, ethnicity and race in society?

SS: This is written in the interim constitution. There will be no discrimination against any race, caste, region etc. And, if there is any discrimination, it will be punished and liable for compensation. If some of the things have been there traditionally, it will not go away right away even if you have a very strong act. But, we have seen very significant changes in Nepal in terms of these problems with the caste and racism. The government is already inclusive politically. Even in the other areas – [such as] socioeconomic [trends] – there have been efforts by the government to make Nepal more inclusive.

Recently enacted policies will punish those who discriminate based on caste [GALLO/GETTY]

EW: Nepal is trying to overcome some huge socioeconomic challenges, such as physician availability in rural areas. How are you working to overcome these issues, particularly in poverty, healthcare and education?

SS: Over the last few years, we have made significant progress in the areas of health, education and poverty. Poverty declined from 42 per cent in 1996 to 25 per cent in 2011. Mortality rates, such as infant mortality, similarly declined.

Our focus has been on education and economic upliftment. Nepal has emphasised education because that has been identified as one of the important factors to eliminate discrimination. Researchers and scholars have proven that. We also have targeted programmes to address discrimination.

In the area of health, you are probably right on the physician issue. We have overcrowded physicians in the urban areas because they do not want to go to the rural areas. But, the government recently adopted a new strategy to provide additional incentives, so that they are promoted at a faster pace and go for higher education.

Ultimately, we are looking into the possibilities of achieving the Millennium Development Goals. We probably will achieve most of these goals, which is very significant. Nepal recently received a special award from the UN and other donor agencies for making significant progress in the socioeconomic area. While progress has been significant, there are still areas that we need to focus on, especially in the remote areas.

EW: Previously, you mentioned domestic issues – such as poverty and education – as your top security issues. That suggests that your national priorities remain focused inward at this point. Is it accurate to say that Nepal will remain focused on domestic stability for the foreseeable future?

SS: That is true. While there are other security issues, for the last several years we have been struggling with our internal problems. During the armed conflict, everything was focused on our internal security issues. Very recently, there has been a big change. All political parties have signed the historic agreement to complete the peace process, but this took some time. So, I think the focus remains on internal issues at this point.

EW: Climate change is a major issue for your country. How are you going to adapt?

SS: This is a global issue. From our perspective, we very recently developed the National Action Plan of Adaption to Climate Change. We are trying to see if we can get some support from other countries. We have limitations. If we are talking about the glacial melt, we can’t do much about that – it is a global issue. There is another linked issue – black carbon.

There are a number of regional and international issues related to climate change. But, we are trying to see how we can adapt and how we can prevent some of the disaster.

There will be an impact on health issues. There will be an impact in agriculture. The farmers who are growing certain kinds of plants in certain areas will not be able to grow them. Even in the [areas of] hydro power and water resources, we have already observed the amount of glacier melt declining, especially in the winter time. So, I think we have already seen some of the impact. But, this is very preliminary. There are a number of people in the government working on these issues to see how we can adapt.

EW: From your perspective, what are Nepal’s top national security issues? Are they domestic issues, such as political stability and socioeconomic equality, or transnational ones, like climate change and terrorism? As a member of the international community, what do you think the top global security issues are at this time?

SS: At this point in time, I think we would like to see poverty reduced and socioeconomic development of the country. The reason that I am not saying climate change is our number one national security concern is because there is still the perception in the country that we have plenty of water resources and we have not been able to harness them and manage them. But, if we are talking about the regional context, I think it is very important.

At the international level, climate change remains a big concern for many countries. But, the overall global economic situation itself remains a big concern. There is a significant change in the structure of the global economy. The role of Asia is increasing, especially China and India. Everybody is focused on the change of the economic structure of those countries. Some countries in Europe are in decline. The competitiveness of the US economy is talked about a lot as well and its implications.

EW: As a small landlocked country, how does the strengthening of US-India relations affect Nepal’s security environment and diplomatic efforts?

SS: We would like to see a more stable and secure region in Asia so that will definitely help all of our neighbouring countries, including Nepal itself. Being a landlocked country, we have to use the transportation and transit facilities of other countries. The more stable the region is then the more we will benefit.

Nepal’s Tibetans fear China’s growing influence



EW: Nepal has requested that China extend a rail link from Tibet to Nepal. How does that affect your interests in the region?

SS: Being a landlocked country, we want as much infrastructure as possible within the country. That could mean rail links. But, we also have a large number of airports in the country, especially in the remote areas. Developing the infrastructure facilities is one of the challenges for the country … But, India is also trying to help improve the rail facilities in the southern part of the country.

EW: One of the issues raised regarding the new China-Nepal rail link is that it could provide the Peoples’ Liberation Army with a means to project military power into India in the event of a future regional conflict. How then do you assuage Indian strategic concerns over the new rail link?

SS: What has been agreed is that it will come to the border point. Beyond that, the feasibility study has not been done. It will be up to the government and the domestic political parties to decide what to do then. That will be a domestic decision. We will focus on economic development; not just internal, but the cost of doing business with other countries through a low cost transportation network.

EW: Port access can provide considerable political and economic leverage over landlocked countries. Is Nepal concerned that India would ever try to use such leverage over it?

SS: At this time, we would like to see alternative port facilities in India. Aside from Tibet and India, our other exports must go through Indian ports. We therefore would like to see improved port facilities in India. It is economically feasible to have enhanced facilities in India at this time.

EW: One outstanding transnational issue for Nepal is the demarcation of its border with India. What progress is being made on that front?

SS: Statistically speaking, 97 per cent of the border issues have been resolved. But, when we talk about the border issue, even .001 per cent would cause problems. We have the joint committee which is working on it. I do not think there is a timeline for completion. They have completed the survey and agreed upon 97 per cent. Now, that has to be signed at the political level. There are still issues to be resolved on the [remaining] three per cent. Because of the open border between Nepal and India, the issues can be complicated, but I think we can resolve it.

EW: On the human rights front, there are concerns that Nepal could leverage Nepali Tibetans and access to Tibet to help China curb separatism in Tibet. Is this a legitimate concern?

SS: We have a One-China Policy and we will stick to that. We have already accepted that Tibet is part of China. If there is anything that is illegal in the country, the government will come after it. We will follow international norms and regulations on this issue. So far, I do not think there has been a problem, despite it being raised in the press.

EW: Hydro electricity is seen as a major investment area to repay Nepal’s debts, particularly to India. But, there does not seem to be the political stability to move forward with those investments. Is that a reasonable criticism and do you see the investment environment changing? Also, how will you address Indian concerns about how your management of domestic water resources affects their energy and water security?

SS: My understanding is the BIPPA agreement and draft constitution will address this. The draft constitution has identified the basic issues regarding ownership and rights of the local people on natural resources. It is very clearly written – I was the one who was working on that one – in the draft constitution. So, we are hoping that, once it is established, all of these things will be settled.

But, even before that, looking at the interim constitution, other rules and regulations, and export promotion strategy of Nepal, there should be no problem in investing in the country. Yes, there are some local problems at this time, but they are not so many. And, as we have seen over the last few years, there are many companies coming in to invest in the hydro power of the country.

At this point in time, we are trying to do programmes for domestic consumption in not just the northern part, but also the southern part of Nepal. We are in the preliminary stages in the development of water resources and hydro power.

Definitely, we need co-operation not only in the supply of water to India, but also its advantages in terms of flood control, irrigation and hydro power exports. There are so many issues with respect to the development of water resources in our country. I think we will need to co-operate and that will be the best solution.

EW: There have been a lot of changes in US-Nepal relations over the past year. Part of this can be attributed to the US strategic shift toward Asia. But, from our talk, it appears that this has more to do with the changing domestic situation in Nepal. How would you characterise the current state of US-Nepal relations?

SS: We have probably never had such strong relations before for a number of reasons. First, despite the economic and budget problems in the US, American assistance going to Nepal has been increasing; including Nepal being a country of focus for the Global Health Initiative and the Feed the Future Initiative under this administration.

Second, there were problems with the Peace Corps programme before and it was suspended in 2004. But, those issues have been corrected and the programme has resumed. We are now hoping to welcome the new Peace Corps group in 2012, which has more or less been confirmed.

Third, the trade and investment framework agreement was agreed to last year – the first between Nepal and the US. Fourth, there has been a Congressional Nepal Caucus formed in the House of Representatives for the first time.

Fifth, Nepal has been selected in the Millennium Challenge Corporation programme also for the first time. Given that all of these have been achieved, we see this as the best time for US-Nepal relations.

Eddie Walsh is a foreign correspondent who covers Africa and Asia-Pacific.

Follow him on Twitter: @ASEANReporting

The views expressed in this article are those of whom they are attributed to, and do not necessarily reflect Al Jazeera’s editorial policy.