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By Namit Wagley
Nepal’s recent political turmoil put its internal divisions in the spotlight and raised questions of where the country stands 16 years after the end of its civil conflict and five years after the first elections held under its new federalist constitution. Ostensibly a dispute over whether or not to accept a U.S. aid package—a $500 million Millennium Challenge Corporation, or MCC, grant first initialed in 2017—the crisis saw years of indecision, polarization, disinformation and recently violent protests before Parliament eventually ratified the grant in February. The protracted ordeal over what was seemingly a straightforward development grant exposed deep cracks in the state of Nepali politics and laid bare its fragility in balancing the brewing geopolitical tension at its doorstep between China, India and the U.S.
But as much as a dispute over Nepal’s geopolitical orientation, the standoff highlighted the stalled progress the country has made in consolidating its democracy, while underscoring the challenges it faces moving forward. How Nepal responds to these challenges in the year ahead could make the difference between entering a new political era or returning to repeated cycles of instability.
This year is set to be a big one in Nepali politics. From May to November, the Himalayan nation will carry out its second electoral cycle—including national, provincial and local elections—under its new constitution, which ushered in the transition from a unitary to a federal governance system. But while the country remains on course to achieve a democratic milestone, its resolve to contain political uncertainty relating to its newly federalized system of government, as well as the destabilizing effects of the pandemic, will likely be tested.
Elections are usually a time of heightened optimism, yet public sentiment is currently at the lowest it has been in the past decade. When Nepal finally emerged from a decade-long civil conflict in 2006, there were high expectations for more responsive governance as well as more inclusive economic development. However, these goals went largely unmet over the following 10 years due to political stalemates, and a failure to rebuild effective governance and contain entrenched corruption.
The promulgation of the new Constitution in 2015 marked the beginning of Nepal’s transition to a federal state, paving the way for elections in 2017 and opening up an unprecedented opportunity for Nepal to reset its political, socio-economic and development storyline. In contrast to the frequent changes in government that characterized Nepal’s decade-long post-conflict transition, the 2017 elections resulted in a new government under the alliance of two major communist parties in the country: the Communist Party of Nepal-Unified Marxist–Leninist, or UML, and the Communist Party of Nepal-Maoist Centre. The alliance, which later merged into a unified Nepal Communist Party, enjoyed a historic supermajority in parliament. This inspired a greater degree of public optimism regarding the prospects for political stability, inclusion, good governance and sustainable growth.
However, this optimism didn’t last long, as cracks started to appear early into the government’s term in office due to several key challenges that continue to undermine the country’s democratic aspirations. First, the UML and Maoist Centre alliance was based neither on political ideology nor a commitment to stabilize Nepali politics. Rather, it was formed between the dominant factions of two political parties with the intent of concentrating power in the hands of a few. When the power-sharing agreement between the alliance’s top leaders—K.P. Oli, Pushpa Kamal Dahal and Madhav Nepal—fell through, the alliance disintegrated, splitting into three factions and creating further political instability and uncertainty. Parliament was dissolved on two separate occasions, with the Supreme Court intervening to reinstate it both times. On the second occasion in 2021, the Supreme Court decision ousted then-Prime Minister K.P. Oli, making room for a coalition government to take office. Fallout from the political turmoil at the center was immediately evident at the subnational level, where frequent changes in provincial governments followed. The recent standoff regarding the ratification of the MCC grant was another expression of this political crisis, with the various factions haggling and leveraging the situation for political gain.
Recently, a new coalition government has been formed led by the Nepali Congress party and factions that split off from the previous ruling party, and an alliance among them is in the making for the upcoming elections. But while the new coalition has acknowledged the need for democratic consolidation and political stability, it represents continuity, in the sense that it comprises the same political figures that have held power throughout the post-conflict period. As if to underscore this dynamic, in their recent conventions, all the major political parties returned long-established figures to party leadership positions, ensuring that the next government will in all likelihood deliver more of the same, rather than change.
A second reason that the post-2017 optimism didn’t last long is that, while federalism was in large part a political compromise to put an end to violent conflict, the political elite in Kathmandu continue to be reluctant federalists. They are resistant to devolve power, money and decision-making from the capital to lower levels of government. Compounding their reticence, a powerful, centralized bureaucracy remains strong and is also resistant to significant reform, instead maintaining power imbalances between the largely Kathmandu-based political and bureaucratic class and the rest of the country.
Against this backdrop, the national political parties and central bureaucracy remain unlikely to lead the process of meaningful decentralization without pressure from dynamic subnational actors able to negotiate for more power, both within and outside political party structures, and provide a legitimate counterbalance to the political and bureaucratic elite. However, the failure to reform hierarchical party structures and strengthen accountability mechanism not only prevented this from happening, but also led to widespread and institutionalized corruption spreading throughout the system, generating a status quo that personally benefits those in power.
Third, the new Constitution was a document of significant political compromise between democrats, communists, royalists, nationalists and ethnicity-based political forces. While it set a vision for a federal state comprising three tiers of government—federal, provincial and local—it was also written with significant ambiguity regarding the powers and responsibilities that each level would yield. This ambiguity was further complicated by political instability and the pandemic, resulting in continuous friction, contestation and competition for power, resources and influence, while diverting much-needed focus from critical development issues, including post-pandemic recovery and other needs.
Finally, Nepal continues to struggle with exclusion and discrimination, exemplified by an inability to engage and respond to inequities facing women, minorities and other marginalized groups due to social structures and norms. This failure is exacerbated by decision-making approaches at all levels of government that are unaccountable and concentrated in the hands of the few.
Today, the space for greater political representation remains bitterly contested, in particular among historically marginalized ethnic populations that have demanded—at times through the armed conflict—increased participation and inclusion in the country’s development. Although the country has averted large-scale political violence since the 2017 elections, the broader reform agenda over inclusion, accountability and transparency has been sidelined.
In fact, despite women and marginalized groups attaining over 33 percent representation in elected positions across the three tiers of government in 2017, their presence in executive offices remained nominal, creating barriers to exercising their political agency and authority. This has not only affected the quality of development decisions being made, but also contributed to a failure in activating all of Nepal’s human resources, including women and other marginalized groups, in development and economic growth. The pandemic and political instability has only intensified this trend, leaving many already marginalized constituencies further behind and without external support. As a result, much of post-conflict federal Nepal’s potential has gone unrealized, leaving the country’s citizens with very little to pin their hopes on.
Looking ahead, the next 12-18 months will see the impact of the pandemic tapering off and, in all likelihood, a post-election government trying to acclimate and perform amid political and economic challenges, including a deeply damaged economy, widespread job losses, lowered revenue, widened inequalities and increased pressure on health and welfare services. Moreover, the pandemic is likely to intensify the competition for resources at all levels of government, further deepening distributional inequities in the country.
Given the fracturing of the Nepal Communist Party into three factions, it is unlikely that the upcoming elections will produce a single-party national government. If a coalition government comes to power—currently the more likely scenario—decision-making will likely be slower and less resolute. But it will also be more likely to include a mixture of voices generally more favorable to the federalism agenda. For that to happen, though, it is first necessary to establish political stability and address the long-time grievances of exclusion and discrimination.
If, however, Nepal’s restructured state fails to stabilize, particularly under the stresses of post-pandemic challenges, there is a serious risk of the country sliding back into political instability, rather than emerging from it, as hoped. Given its geopolitical and geostrategic importance as an arena of competition between India, China and the U.S., and amid rising tensions between New Delhi and Beijing, an unstable Nepal can quickly become a playground for its more powerful neighbors to jostle for influence. The recent standoff over the MCC grant was a prelude to what’s in store if Nepal fails to get its act together and strengthen its handle on its own positioning to direct the competing geopolitical priorities within.
Ultimately, Nepal’s path to stability and economic prosperity will depend on its ability to navigate and maintain the transition to federalism, reform political party structures, promote economic recovery, facilitate greater participation for historically marginalized groups and balance the simmering geopolitical rivalry of its two neighbors. The past five years has not only seen very little progress on these fronts but serious reversals, particularly when it comes to inclusion and economic growth. Without a concerted effort to address these issues, Nepal will find it difficult to contain the short- and long-term destabilizing effects of the pandemic and political uncertainty on its newly federalized system of government.
Namit Wagley is the deputy program director for subnational governance programs for The Asia Foundation in Nepal. He can be reached by email here. The views and opinions expressed here are those of the author, not those of The Asia Foundation.
The article originally published in World Politics Review (WPR)
