Democracy and Development: Prospects and Challenges

Right Honorable Mr. Girija Prasad Koirala, Prime Minister of the Kingdom of Nepal

New York,
September 8, 2000

Friends at the Asia Society,
Ladies and Gentlemen,

I remember, it was October 1993, when I spoke to you in New York last time. I would like to thank you for inviting me again to speak to you this afternoon. I thank you all for this tremendous opportunity.

I feel honored when I stand here today to speak to my old friends. I think it is my duty to give you an account of what has happened in Nepal since I spoke here seven years ago. Most of you who are interested in our affairs welcomed the restoration of multi-party democracy in our country in 1990. It is now ten years since then. We have successfully held three fair and free parliamentary elections in the last ten years. Today, I am happy to report that there is a strong national consensus among the political parties in Nepal for the preservation and consolidation of democracy that was hard earned after a long and arduous struggle for it. That is good news. I feel that I must tell you this because people often ask me about it.

I must also tell you that we are facing many challenges as we work to deliver goods. It is not an easy job to have democracy work in a poor society. But our conviction is that democracy is the only way to really address the problems of poverty. So, we have enshrined the fundamental elements of democracy as un-amendable principles in our Constitution. In fact, we define these principles as the four pillars of our system. These are: free and sovereign people, free and fair elections, independent judiciary and free press. Nepal has all of these in place. But it does not mean that everything is fine. We know we have a long way to go before this framework of democracy functions to our satisfaction. For example, the elections -- no matter how free and fair they may be-- do not mean much if their results are not respected.

One of the main challenges to our democracy is the attitude of our society. This attitude, which constitutes our political culture, has been influenced by the legacy of a century-long family autocracy in Nepal. The Rana rule has left a deep imprint on the thinking of our society. Having lived under the highly centralized governments during the Rana and the Panchayat regimes, the people have developed a habit of looking to the government for everything, and the governments also have the tendency to look to the international community for aid to meet the demands of our socio-economic development. How to change this attitude is a problem for us.

It is well known that democracy entails the spirit of freedom, rule of law, independence, self-reliance, and, above all, the will to achieve and keep them. But the nutrients of that spirit are still weak in Nepal, where our challenges are compounded by poverty and illiteracy. In order to address these challenges, we have undertaken several measures. Each government since 1990 has been spending every year more than one-third of our national budget in social sectors, such as education, health, drinking water and environment. It is the conviction of Nepali Congress that investment in education and health of our people can have the highest return in economic as well as social terms.

Another measure that we have undertaken to strengthen democracy is decentralization that aims at empowering the people at the grassroots level for self-governance and self-reliance, and enabling them to build their capacity for socio-economic development. We have recently enacted the Local Self-Governance Act, which, we hope, will go a long way in decentralizing political power. We consider decentralization to be the backbone of our democracy. We have held elections for local government bodies twice already in the last eight years. You may know that this regularity, even in many South Asian countries with much longer records of democracy, is rare. I may also add that NGOs in Nepal are working vigorously to empower the people. Our goal is to create a civil society that can effectively oversee the functioning of their government.

As a vibrant democratic society that we want to be, we are well aware of the importance of self-reliance. So we are seriously re-considering the question of foreign aid in our context. My government is going to bring out a foreign aid policy paper in the near future. The main thrust of this new policy will be to gradually decrease our dependence on external assistance. We know it will take a long time for Nepal to be free from foreign aid. But sooner or later, we have to make a move to reduce our dependency on it. Such a move will naturally lead us to another challenge. That is the challenge of mobilizing our own natural and human resources, the challenge of raising a larger amount of internal revenue even at the cost of unpopularity, the challenge of raising efficiency and accountability, and the challenge of increasing our exports through diversification of products. These are the challenges of activating our potentials for good governance, economic discipline and responsible politics.

You know, Nepal has tremendous opportunities for its development. We sit on one of the highest hydropower potentials on the planet, at 83,000 megawatt theoretically, in a power hungry world that is looking for clean energy. Nepal has eight of the 10 tallest mountain peaks along the majestic Himalayas that always beckon tourists from far and wide. Apart from our 22 million population, the people of the two largest countries in the world, India and China with their growing economies, with whom we have liberal trade treaties, provide large homogeneous markets for our goods and services. We enjoy immense goodwill with the United States and other countries that are the main sources of development assistance and the main trading partners.

As you know, we have opened nearly all sectors of our economy to foreign investment: manufacturing, hydropower, transport, tourism, finance, education, and telecommunications. Nepal is keen to promoting information technology; and the calling centres that provice service to companies in the West are increasing as well. The privatization of public enterprises is moving apace. To foreign investors, we provide one of the most attractive incentive packages in the region: tax holidays, repatriation of profit, quick approval of projects, guarantee from nationalization, accessible government services, and so on. We have strengthened the company and contract laws to provide a reliable institutional framework for investment. These are some of the reforms that will also help us in our bid to join the World Trade Organization; the negotiations have already started to this effect.

We are yet to realize full advantage of these measures to foster growth and reduce poverty in Nepal. Our growth, which is still meagre around 4 percent and population growth still a robust 2.1 percent. Nearly 50 percent people live in abject poverty. The country suffers from hunger, iliteracy, diseases, unemployment and lack of infrastructure. The population pressure is causing environmental damage as more people have to make a living off shrinking natural resources. The vast economic potential remains largely untapped. In a country of plentiful water, only 500 MW power is produced and nearly 50 percent people have no clean water to drink. Our topography is not conducive to efficient growth. That we are constrained by geography and that we joined the world from a long isolation lasting more than a century under the Rana rule as late as 1950s, have left us lagging behind others. And the Maoist trouble, which we are trying to resolve through dialogue, is draining our resources. The presence of more than one hundred thousand refugees from Bhutan, with whom bilateral talks have made no progress so far, complicates our problems further.

There are many crying needs in Nepal today. The people's expectations are high, but their technological productive capacity is low. The resulting gap leads to discontent or frustration which is expressed in many ways --sometimes violently.

Nepal is opposed to terrorism, always and everywhere. Even in Nepal, the so-called Maoists, lacking in any practical social vision of its own, through terrorism, have the one and only objective of wrecking violently the recently restored democracy, and the efforts and prospects for its stability.

To sum up, the Nepalese society is waking up from a long slumber and finds itself faced with the challenges of the 21st century. We are passing through a period of transition -- the transition from closed and centralized political system to open and decentralized democracy, and from dependency to self- reliance. I consider it to be transition of historic importance. So, the greatest question for us today is how to manage this transition. As we are grappling with our challenges, we need your support and sympathy. I hope you understand where we stand now.

I thank you all.