NEPAL-ROAD AHEAD IS NOT EASY

I t may have been just a coincidence that a week after he was sworn in, Nepal’s new Maoist Prime Minister was in Beijing for his first foreign visit. But, for Nepalis, the visit had a geopolitical meaning.

Our leaders traditionally first go to New Delhi, our largest trading partner, after taking office. The picture of Prime Minister Pushpa Kamal Dahal shaking hands with President Hu Jintao was splashed across Nepali newspapers’ front pages last week. Little wonder: Everyone’s looking for signs about how this new government will behave.

Dahal may actually find that waging war was easier than delivering on his party’s utopian promises. Dahal, still known by his nom de guerre, Prachanda, or “The Fierce One,” is the first Maoist in history to be voted in as head of state. The Maoists lead a shaky coalition with the United Marxist-Leninists (which despite its name is a moderate leftist party) and a regional party representing the Madhesi people of Nepal’s eastern plains.

In their ambitious election manifesto, the Maoists promised “revolutionary” land reform, basic health and education, an ethnicity-based federal state structure and a South Africa-style Truth and Reconciliation Commission to investigate war crimes. Overarching all this are their wild promises to deliver 20% gross domestic product growth and $3,000 per capita income by 2020, and to transform Nepal into a Singapore.

The more urgent challenge, howev er, is simply to provide economic relief. More than half of Nepal’s population lives below the poverty line, hunger stalks the land and inflation is running at 20% for foodstuff. The government can’t afford to subsidize petroleum products and people have endured two years of long queues at gas stations.

How well will the new government meet these challenges? Finance minister Baburam Bhattarai wants to launch large showcase projects that generate immediate employment. He has plans for a railway artery from east to west, investments in highways, hydropower and a new international airport. That alone won’t be enough. The government needs to find jobs for the 450,000 Nepalis who enter the labour market every year. About half of them emi grate to find work every year, mostly to India, the Gulf states, Malaysia and South Korea.

The Maoists realize job creation is not possible without foreign investment, and have tried to assure domestic business and the international community that they will respect private property, encourage foreign direct investment and smooth labour relations. Investors aren’t convinced. The Maoists’ youth wing has a habit of extorting businesses. The Maoist threat to enforce a higher minimum wage for foreign-owned enterprises has already spooked multinationals in Nepal, as has the its sponsorship of militant unionism and preferential treatment for domestic enterprises under its concept of “national capitalism.” Still, it does look like Messrs Dahal and Bhattarai are more in line with Deng Xiaoping than with Mao Zedong or the Gang of Four on the economy. But hardcore Maoists in the ranks think the leadership has sold out on the revolution. This faction has to be kept in check.

The coalition’s final challenge is to ensure political stability so that the 601-member constituent assembly can start drafting Nepal’s new constitution. The transition from monarchy to republic in the past two years was delayed, but it went surprisingly smoothly. For that progress to continue, the government must integrate the Maoist army into the national army, while also downsizing it. The constitution framers will also have to grapple with how to divide the country into federal units, each unit’s power over economic policy and how the judiciary should function.

The road ahead is not easy. But the fact that Nepal has seen such far-reaching political transformation since 2006 without large outbreaks of violence and through political negotiations means it could just pull it off.

(Kunda Dixit is editor of the Nepali Times.)