Nepal-India: Tht rTeorwmics ofjfjfl
(ha etpirailon onuch ol Iht Ml mm ttaixt Ibal fovetn bade arte! ir.mil btiwnn India and NtpnLeononwc tiiuiirm Ui IcUrtcntcd India baa allowed only two at iheorder croiint rents, vital liana in iheofto aad from NetaU. ic remain open Coed*re oedytbe border .
am tuned tabe Nepaka* beau hewa aWKaralRwof falarc ihortaaci.are reojecas* eewrd turn mo tatnf the .mrwiw lori net end
Nepali desire toaate-iindependence and to-teecfiny and Jodai enrwppintu wilh what il tre> at Nepal.ollclel over the. pail lav yearaisturbed relation* bciwceo ihe mo wenlrie*he pcdnl where ibey have been unable.ut new Hade and irantil wen tier India hai been anaiy over Kaihmandu't imposition ol "or* permits onndian, living in Nepal. Hi ciToria lo five prefer mi in! treatment iolarnmerdal products and to awnrdajor rvadbnlidiat cemtracl tear (lie Indian border, aad Itddition. New Delai Na. been annexed with Nepali con.irutd loohyia, feeee* of Peace praprmal Nepal, faro break free ofracfewaJltadMtiteoadooanaoti rtiattnaWaat pauica Nepal cm the nrae tceaian; at any other cewatry. For Nepal. lhn main wt
ttfach arcm
the Iwo countries will eventun'.ly hare to nert out ne-alhminrfa cannoi halo out for Vmt became of iu deteranratinr ecoaornic titiialinn. "bar* hai alratdy sparked internal untcit Ne- Delhi doei
not -antecn ai Ihi bully of Scott Alia, norepal to mm from India'* teeurlt. tpbtre toward China. AJihcueh Nepal nay eventually becornt meet telf-uehcieai ia trade, it waieVtpand on ladta for tcceu to tbe port ai Calcifa and far ro.ua to tbe NeoeMjdB
TWaUtM.*!
Taatnvatv_
Nepal aad ladaa1
tue Nepal aad that Nepal hat probatf,
count, hare| PeaceUeh -a, .nierded to create tneciala the(oimctl.nd cullcral field. Ihu treaty wu the can.act.ui the early IWOt and pcrwd.ci'ly renr-ed. rea.ulat.ni Napal'i Irtdt wilband transil rieht ihrouah India andpeeial retationthrp that prondrd adaltkvtal UnetMt lot Nepal.H ihe trade and irantil pact wai aeparaledirtemenu, and the Indian! aircedtar's err-betueen nnaoittiioiu for each
ties. Si "ei! as presided tie
severity eti->prtaa lor lacU'i aai
India it under It- leEtlobliaabon*epal Natal hiember nf General Ajrn Tariffsattd Trade, aad ltd* hn not ratiaed either the Inicriubceul Convention on Transit Tradendnxked Coantnei nfor thenvctuon aa Law of the Sea Nc-erlSrttM. New Delhi accorded tpeeialroikeet ta Nepal
An Mrpc-Ut dementrnlese ecoreemr rtiiiioa. hattoumhiaide. parallel to new orTita' irmu border iradt.htch,uBUcty iep-eaird by both coBro. aaa
U d. 6 h
mnov
.'I
WC-ided beneftlr. ton, Mttnii imports from third countries not readily avaihlblt rr.hate been illegally shipped icon ihe porous aid poorly iTteeuored border Into India for immediate sale oirawingercent lao pract.ee has been tnlernted by the two government* because cttirens of both ceanlna nre in^lved, and the targe profit Is beingin the economy on bcth sides cf ttte border. Tie volume of thisra caanot be accural.
-
from such basinets has contributed sigaincantly to ceTsetiir* Nepal'* perennial trade deficitIndq. This activity tt likely to continue, etc mcrease. in the course of the current
In addiWo, rood product, pradteed in Nepal', Terai region towering India have eormdly moved into ladia in bulk and then been reexportedsmaller quantities to Kepal. Because so many loadt go from points in Nepal into India rather lhan linking pecan within Nepal. Ibis distribution netuork will be difficult io rtpfact il ihe borderfd, tltoed.
or,Treaty
a tingle trctiy. the Indiiia nuuld beosition lo apply pressure on Nepal on both trade and irarttiiairly regular batit Ne- Delhi warns thr two treaties cctnbined. in ouro slop
The trade treaty, which provides for renegotitticn at five-yearormally expired inB batextended for Iwu sls-mcnih ptricds The traniit iteaiy rs valid for seven yeart. bjfffffflflflj |escceSciaa Mce that by delaying ihc ratificationrw irade treaty, ihe Indian Government hopes lo forte the ccatoiidition of the twond limit the.gwnicmerm of nvr year* Theovern mewlo eiicnd iht period of ibc transit tgrecmcat-considercd the more important or the two bya term ofenrsl
tM; drill ol Nepal* trade away (torn India In Nepal'sseparateatn caring unirpnlcd iterant ana. at Ike unaar nriaVLij laipon aad itemM
India* wedomlnance intrio* hai iliatiruihed io"ie-hai inewcadymadcnd handiereffj -aod liberilired .sport pohcar*taaltedan opaaxw ef trade ana ttwd uiaaricr Th* thano*t* lo India dediaed fnm tt percrni in Aacalo J7 perecm, whil* eaport* toiled Siaiet went up conudiiibiy. The there ol Nepal* imponi to India aaejtnal'tamercentercent inEos: aad Tnaiaaart Aaaa coiawai hat bee*atatnOf Urn rinft- Ii tnairui. Nepal account* foreiceM of India* ripwit and leuercent ol India* Imperii auuuuuuj
Ihe volume of trade between Nepal and India totaled USI million7 8a. only slightly lugleriha
n IStc-BT and the IU) radical iaepal aa* Oontmeatifrade>itaouath Hiit third couniriea toko* together, it larger fJ^pj
PMrokum.Shortaiti
With the Breakdown in economice bellevt
'vniri1 hith.-rund j'| MX V
urnai probiem- Nejnl kat no rttnery af In own. ind Mar imreuicKi to provatt niahtdprodacit cannot be tvraotiited on abort< Accurdini io the WorM Bank. Ihe Nepaleteno more ihan three to four weekt of fuelal Ctrl rani reduced leveli of untu nipt ion. fMMMM
Nepal hat beer; llkiicton in porch urn
ciitit itt ibe tbort lervn fMamt"iporuri.'ai arritieif wi' Cm
^^Kpt" vune needed pel rot com and Bioglaoeit rut
piomiatd ioCO metric torn each of diatel aad ktioicrc. Olher alternative! under considernn by
Nepalese foreign cichiagcstimated al sii mmuht' -onb ofre sufficiently strong to allow Nepal to shift purchases, elsewhere io ihe near term.recaution, lhe Nepalete have setcu con rationing tyaem todiilnbule petroleum and dieteJ fuel for .ehielet. In addition, Nepalese autkcrtties base cut electric rates and fuclwcod prices byercent io lighten Iht harden on t
Nontlhekm. Nepal* oat look for fadot good ia the short man. Switclkageat don not do ataca rood rf Ibara lOajhti caaaat get 'hrivug- Newapable cl imputing adm.nlitralive hurdiei that could dog irantti po-ti. making lhe -vovement of good* tlow and etptnuae Furiliermnec ihird-counlry fatl sources are probtcmatio betautc of ihe lime lag beiwtr* oidtnng ard arrivil and the inadequate unrig: raOlilvm in Nepe'. Get'agroducts from Chiaa it aaraalniic beta we of toe proLtative ocau.rantprxuiicei ro-tet the road from Tibet to Nepal as often blocked by lanoWida>-and limited Chmtsr supplie* BBBBBJ
Ibe uiunilabiliiy of hoiiahdd fuel couldar-reach tig impact en Nepali eniiicament Proiuicnn alrenoi depicted foeeiu fa* fuefwoodiate imported tomefori* may atftte ibeproaress lhat haa bean made through etptaalvc reforetuoor prciriti Thr fragile hid treat of Nepal will be mou t'cttrd
2 J
NEPAL: TRADE BALANCE BY AREA
tOreta
hecaurc ta W) aipeeti of ihr Ncaaket rxravawiy depend on Indita tupplir* and markeu. Nepal will tiputfiKB oihcr dihViliiet ifnew irade and traaoil agreement with I'dit an wi corcluded
- Newarrirn will be erected on Ncpairtc ptoduoti For eiample. agricultural gtcdt from Iht Tqrai region lhat ara latppcd to lie* will IVe
f apO percent,il
iiicomiwtitirtIbtiae narked
At ihcetagc* develop, heightened larhllonnry irnwrn ouldto adevoluatot of the Neptlrtc iwpee. aad ihit woald damage etpo.it.nd loarmnv
A flight of capital could devalue, further lemic ig Nepali eeonoeiwctn or tatngt ccutd eir.be fueled by Ihe pcenical ajluauon or by ertn ihe rumor of Ihe failuref ISaaall major bank) Nepal Itio earaUl flagwirge pertamagt of the couniry'i unngt belong* tc reltlivtly few individual* oroftndia and cc-aU ir infer faadt and beta am there are rcliiivtiy ha bialing intlitxiinnt in Niptl
epal HaU Oat?
Ihtrnturet mil aot allow Nepal to hutd out for long, laflalionaryl auicklv become acule I*ly of Civa" icrvuait on filed talartaa. Pretaar* aa Ibe ajuaaianttat to reach an agreerneni wiih India will be Mica* front both oultide and inwrM lhe govrenmcnt. At Ihr welfare of government worker) it threatened, we belie"*IgtatWafH baraaaggaaila crrtcirncy and may even tollapte.
In contrast.i i
aartnaa lector raotJd be lean electo hecaute they depend leu oa trade wiih Indie.
Fuiihermorc. lhe more developed aad itaucal Terai rtgioa ahncfc at oaary rataeeti i'-' bat rncet tah Indiawith Kathmandaand lhe hillf Neitil -it likely lo litem tt tie) to India. Crott-reorderaay aboutt'ttte. with guoch cntertag Nepal Imm Indra rather lhaa ibe atber any
i m!
The government it alto concerned with internal unreal. In early April tmdeat dcrnomi rat lorn preeeslwg ihoelaget of cut nidi commodliicialbmindu Although the protcttt -ere qoicMyBBJ
Newlw offcuhceuilfthe fuel ciliii it not adeauaiely addrettcd.
Nepal cannot etcape iht fad that 1'.aitdaxhed erraatty wheat oceaoaty irtia in large pan oa aorcat ihrough India He tutor aunn in relation! with India could rwullibiadon that could compkUly darupt the Nepalete etancur- If iha' kapoeav ihe< be thrtaicnC aaaaaa
We believe Nepal1ew trad* treaty lhat will be km tevtniageov* lhaa what Ntptlarter Thaun Nepal economically, bul Kilhniuali sppton willing to give up Ihote advantage) lo Stmmstrtie ill tcnereigniyow ixcaafri lUihmaaCmorm (Itting aeeonomii relationthip with India will largely depead on wbai it worked aui in ihr way regime aaaa>
Nepal will probably need lo rcQoett imreattdfrom iu bilateral and muliitaieral donorl About halforeign iidoam from rullilaievil ekvtiapmcal be alt. aad Nepalpeoeacay rvcrucv an Incieue Ii may oak ihe Untied Sulci and other major contfibuiuri to tlicit luiit lo iolcreedron it) behalf The WorM Beak, ikrougli it toft loan aavoow. hu eofi'.baitd heavily to Nepali long.terra
devclop-Ticnl elforit, which have been tlow io get off
Thr imbroglio wiih lac ii will ce much io merit rcceni ecanarnii. achiexmrntt in Nep.ilrecent yean lite goveromeru hai launched ihrat mn.'orc Seventhgrim, and tie basic Need* Frogeorienl pcuietti and Inillluitoni, I*
i- growth, ltd to meett lb*
pnea tt rtJarnH at aot =aart. (hat period may bt vie-en at yel another 'us: upwrlon t> BBjBBjl
0 2 7 3
NepaliB( ruttack if aeapitc ium ktrrulirrnr< urta by Klnc Birtadr*ibe mit decader ihe appearanceore tcpcacntitivc ic-rcincncat Afiti owi thiccipotuii lo collide Intlaencn.ileud, little-here chinaelb* aid pnhrrewve foreel are divided end -eat Kint Birtrdrt'i control baa been enhanced by ihe absence of strongpolitical onptniilon I'oliihal panioare olfrially banned In Nepal The montrchyational legialature.riya Pmchayat. in ihe carry IWi lohe imprcukia of leprettnialive grnemmtnl. but il ia titeniiall,tubicct in ihe Kini'idiraciion bjj-|
IWilxal activttia-iaeludinf ilaeenri andf die officially ben art Ccnirettenaasaaisi pamaa- -WI cootiaw to erne (or rtfortat. aad they ma, ate tbe current imnatae bei.een Nepal and Irdta ne. trad* and traaan mm t< pan* lee attnt repnlar
bet af ranntaaaatme eeaaraar-nl have craftedke
ncsa* awetio. bt abet loatoairerikrow IN
ATrajj AVrmaYa
Kiai eU/tWra Bli nVArnm*h,it1 aulhowy/or all rowmm whomttlttmait deottonmaktt on foftttn and
counter popular mot. far refer, at ike eonntry txnaaret (or ibe nut National Lecivlatnre Ilreiiooendra may Inriitlc tomeea. I0 ine-eaae popular rrprctrntiiiun Hit rec.nl hardline tcetttwt ia dtleaae of Ihr noripany lyiieni logged he will iryold liking ilnpt lhald icrltri.ly challenge mynl control bj1j
I he MoiMttby: Hotting onr
The King it the moil powr-ful ncAiiul force in Nepal, and Hie monarchy itugnilicani political laitilutkmeeply rooied in Ntpai'i huuory and religion, nnd Brtndrnriticald .uitnlmnt.ep.kie *rvcr:ig,vy "rlitai tiae. bind the Kin( and hn pecric.nf fcVeadru'i power Iwi In Ibe aretptiaec by Nepal', brat Mi-du majority lhal aaciaor-aiaa> of the
Vithia-aa ancient tradtton rrwrx* lo-Ncrnaatlinf. Academe icpuri lhal Birrneiak power ake ret, on his ability lo rtta* thed hey cro.piatiered. locali, rtoWtad. and muiticthmcHt rrt.rs he, I, on the influence of elite families that rroituerediiirye landboldlnn, ce commercial xnlia and wfaoseehreat
The muturchy hat not tlwayt tiercittd lupif me pouer in Nepal. Necaltw kfmt, foreMwry while ihe couniry am ruled in notation from ihe -orldy of herediiiry pHmi Mmtann, the Rami. King fiireml.ai graidfather, in atloDCc -iih progrcMive politician! and wilh Indian tarpon retained comrol ul the
The monarch, relinquished power9rief experiment within keepingcmnsiimentbed nude when il rcasiumed powercarter. Tbe Congress Party, aparly tnnueaced by India, easily won aof the sett, in the new partammi,bceorae rulme mir'
ou King Mahendra. Bircndr.'s feUusr. chsfed ai ait unaccutiomod constitutbntl role. He dissolved tho parliament, charging the experiment had filled became of party inrahting. jailed many Centres! Party leaden, and banned all political parties. He replaced tbe parliamentary systemwhat ia known as the "partylewier of ftnr cottecilt. or panchayats. beginning nt the national level and e. tending down to the ullagehe member.a" whichepresent political parlies. Upon bis assumption of powering Birccdrt cacsetomaintain the tame insUluliontl frame week.
TWBaslriyatitesrraiaasp lasuttatw
Blrendii rtewi nonparty democracy at essential to the maintenance of Nepars stabiliiy.
! thei both hit gesture to rerxeseniatire Btnemmeni and hi* limit on participatory politicaln asseenbeyember! electedive-year term lhat mteu only threeear, the Kastiiya Panchayat oJTer! symbolic but eoemially powerless participation In the country's
Hieof Ibeetain*society, with the palace making the real ektlitoea. Although panchayat democracy arret the impression of endoning popular sovereignly, it bt altHBt totally subservient lo tho palate, andelien thr mnnarchj eontin'at to trcp ithort
The Ict'Sbllvt election tchtduled1 i. likely lo beigiien popular interest in greater participation in tht Eoverninerii. Daring16 national rueclloni. members of liberal and leftist sentiment 3rtd from more raried clats backgrounds were elected. Wc tipect tirr&kr results
Ithe Current legislative reflect* KrtciitionalwTof ical dinikeii, and ihc neat one probably -ill be even more likely to reflect political and axial
Even if the King1 ecctlon, we believe be will notlegislature sufficient power topeech last December atDay celebration. Birecdra praised
derrtectetie and nectssnTyTorrtabtftyTlcTeavee. In os* new, the King's deep suspicionystem involving freely contesting pctilKal panics would create opening* for interference by eratssOctaeb as India, the Soviet Union. China, or Wesiernitrengtben hit resolve to maintain rnyal ccntrol. Bjstsj
FtaticalaatTtcrln Challenger.
Political rnulks are cfflcially banned in Nepal, bul the monarchy does tolerate mine low-level party activity. Disunity and weak leadership etttoag the parties, alone -llh Ibetr limited popular support, leave Ibc monarchy free to ignore their demands for pctlliCsl reform The largest moderate apposition group It ihe Congress Party, while the faaiccaliied Ceoimunisi Party conies clcteti to rivaling the Centres* Party, mmg
nt Coaamt Parry Ihe Congresseans of cable political change,option! other than toforhile trying ia conn in factionalism -rltmThe party lacks Ihe power io press Bircndrasteps to increase representative government
democratic the parly is.
|pcrsonalily and adeologiclr"
iicreased pany -eaknesses. wilh members in the lower ranks generally dispirited. We believe nonee current leadere ability to strengthen tke party.
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Kastriya Panehayat
Raitnyaonparty unicameral national kydtleiure chart*}developing end poising tetUlation. appropriating governmentnetint the day-to-day administration of ihe government. As Ihe only body directly eleeied by universal adult suffrage, the Itgltlaiure it an important symbol* democracy In Nepal The palace, hewer, mote, all real decisions and closely welches ihe letitlaiure to insure that it does not cornier palace withes. The legislature Is largelyo dominie affairs and proscribed from merfatng In palate activities, foreign affairs, and other broad policy areas, which are the province af the King and hi, adrimt. All legislation parsed by the assembly must be approved by the King before ii becomes law. Criticism of the monarchy and Constitution it nor allowed. H
TV legitleture eontimemberi. ofr, popularly elected end ii appointed directly by theember serves afire-year term and mustepeleie cltlien averember af one of the tlx gcreernment-sanctlorted orgenitatiom of imponant social gremps-joutb. elders, pemuitis. women, ex-serrlcemen. andare intended to fill the roll of the banned political parties. The letitlaiure elects from among usrime minister, who must win at leanercent tuppari.hairman, both with final
approralbylheKiag. The prime minuter, tnturn. selects the Cabinetbo men alia havr royal approval. The legislature's steering committee advites the chairman on the proper conduct of bwetshe legiilaiure and til five functional committees, whkh deal with finance, -octaleielopment. water retourees. and legitlaliee affairs. The llgittatmeUnormally in saltan only threeear.
The ttastrlye Panehayat tspartaflhefour-riir panehayatand town, district, zone,yBlrendra, father. Klny Mahendra. to provide popular ptnicipatlon in government under royal tutelage.eted on Ihe viltast eentncU gatherings lhat an pan af thetraditional political structure.ational referendum held ino choose ihe country's future poliilcal system. Si percent of the voters reaffirmed the nonparty tytlim. Thr King submuenily amended ihe Comtiiatlon to allow /he direct election af member, of the Raittiya Panehayat. itt nominationntie candidate for the rrime ministership, and its olenitis of the Council of htlninen^m
ir boycotted the national election*1c^iacm that retailed in sUengikenuia the panehayat jyjtem and the lelttiti -ho participated.7 the part,u position and allowed iu members to run in local elMioftt a* Independent candidate* Pany rrxrrabcw vronacene important urban kj-iIJ
i unsuccessfuland weakCCfaaiial (party leaden continue to arguto participate. More nvodcrate party membtn believe participationccetttry step buck from relative oblivion, while purists toe IIistaken violation of party principles. IT mote party members octree to run as independents and can tain seats in the National Legislature, rrtoreelTective representative government might erolve ISSSSJ
Scene party leaders are Icsoleirj to tacticalNepal's hrtatthe
who advocate inch ^thlc^beli^iTmTnce is the only *ay to ginbde the system sufficient
iKf mill ia challenge ii and forcecktngi Olher leaden believe lochrclalinruhlp will fuilher weaken end irttredii iht party. The ConireM aad CommuniH pa it let itaacdjoint tutomen early ihil year ce.ttroli-1lifting ef lhe bai enal%eameep ihetadra from ea'.mdiag their caoperaioa beyond takent" tupport. Congrett Parti involvement wiih Iht Lorrtmun-tlt probably would lurther tplii the
i-iihI'i.ii -
Thtffir We believe thai the Com rnun ulro-Soviet and pro-Chinese fi'iiii'i'i. i'ci;atc receni gain* are incapable of ecatnahint latest el vet at an'lentil! fat'c* sn Neeo'ete co jis. Sect me ol* taaalty aaai Unfitl. itha party has failedvcid i't main
to punier* ummploied yniih and aiwn ty
a ugnirkant poiitital force Wc believeSept lew Uo<emment will continue lo keep the Ccmmuiuiti in check tmmW
likely will continue lo tee his near absolutenherent under lhe Hindu religion and io believe he masi retam il to carry out ihe program* he envlt*of for ihe development ofbisto mamam Nepali souerenrni) agamsi caiernnl meddling.
Not Yetrowoidi
We believe BneWra list no inleniion of voluntarily surrender!ag real power lo moderate oppotitioo rrcmcnts, and Ihe monarchy hu noi come under torticitnt dornnlic pretsuichange its potilion. The cunenl ocorecnic impasse between Nepal and India hot heightened lhe opposition* criticism of the Kins, but noi enough, in our judgment, to force himake radical stops toward reform. Birendra more
Without attdHioral reforms. Birendra risk* binding hlraaelf tnd the monarchy to the lata uf the nonpany paocbtyal tytiam Hit arapnken oofrvictlon that lheparliaa wooH tell out Nepal't inttreiti io lhe Indiana, in Ihe cat* of lhe Congreta Parly, or lo thehe cat* of the CoraaaanMaa dutuniaged irtnda towardpotiieal cnaageraaiired the atare minrilt Botaaca)ii an worthy of being Uirttcd onh (hr nation* lulu re
Butndu may mitcalculate the amouai of limr he hatntplcvf ni change al ha pace If ho ignoru lhe popilarin favorore refeuenlaUve in'eai aac undercut ihr moderate* favoring otfrhHriiic ehaige.anger tha* he maytc acre radical clement* If It*grow kaepnticar, meet of them My aetata
lo increase inrpeiii <c* wilt the rtfluM ahiie hopng
he rarjicali from atUiraaa thru goal of overthrowing ihe monarchy The mailMlliy alio ousts thai over lime mere Nepalete may wil.ile thai ibeet Mve btaei tntiftctive ia bunging ubcmt riformi nrd tarn ihor support lo Iht -idiia iggaTggTtgl
2 7
Original document.
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