On November 21, 2006, Nepal's government and the Communist Party of Nepal signed a comprehensive peace agreement to formally end their ten-year conflict, which has resulted in an estimated 13,000 deaths. The agreement has been widely hailed as historic and many observers feel cautiously optimistic, in spite of the hurdles that lie ahead. What are the challenges Nepal faces during the peace process?

On November 21, 2006, Nepal’s government and the Communist Party of Nepal (Maoist) signed a comprehensive peace agreement (CPA) to formally end their ten-year conflict, which has resulted in an estimated 13,000 deaths. The agreement has been widely hailed as historic and many observers feel cautiously optimistic, in spite of the hurdles that lie ahead.

On January 22, 2007, the U.S. Institute of Peace sponsored a one-day program in Washington, D.C., to address the challenges Nepal now faces. It brought together a broad spectrum of attendees, from representatives of academia and international organizations such as the International Monetary Fund (IMF) and World Bank to the U.S. Departments of State and Justice. Presenters were asked to comment on particular challenges that Nepal faces during the peace process.

This USIPeace Briefing provides an overview of the presentations given at the conference, and includes remarks from Ambassador Julia Chang Bloch (former U.S. ambassador to Nepal and president of the U.S.–China Education Trust); Dr. Chitra K. Tiwari (journalist, The Washington Times); Dr. Jaya Raj Acharya (senior fellow, USIP); and Kul Chandra Gautam (assistant secretary-general of the UN and deputy executive director of UNICEF). It was prepared by Lynn Tesser, program officer in USIP’s Jennings Randolph Fellowship program.

Peace in Nepal: An International Perspective
A summary of Ambassador Julia Chang Bloch’s remarks

Ambassador Bloch said that the international community welcomes without hesitation Nepal’s CPA, which was signed on November 21, 2006, after months of difficult negotiations. The agreement enjoins the Seven-Party governing Alliance (SPA) and the Communist Party of Nepal (Maoist) to end the 11-year civil war by locking weapons under UN supervision, thus paving the way for inclusion of the rebels in mainstream politics and the scheduling of elections for a Constituent Assembly to decide on the fate of the monarchy and to prepare a new constitution.

While the peace process has shown momentum and delivered significant results, old problems persist, said Bloch, especially with regard to the successful implementation of the peace agreement. Among these challenges are weak governance, security, the need for truth and reconciliation, the mainstreaming of the Maoists, and economic development.

The most serious problem is that the CPA represents a temporary convergence of interests more than a permanent conversion of beliefs, philosophies, or interests on either of the two sides. The SPA and the Maoists still retain different visions for Nepal’s future. The peace agreement will not, in itself, change the dynamics of Nepali governance, alter the exclusionary character of Nepali public life, deliver the urgently needed economic development and progress, or erase the underlying causes of the civil war. Conflicting individual party and electoral interests will increasingly come to the fore as the June 2007 elections for the Constituent Assembly approach.

To expect a smooth and quick transition from civil war to peace would be foolhardy. The government’s failure to meet the November 26 deadline for forming a new parliament and the December 1 target for forming an interim government are clear reminders that Nepal’s climb toward peace and progress is not going to be easy. Of the new challenges that have emerged, the most dangerous is the growing militancy in the Terai region (an area comprising 20 districts and inhabited mainly by people of Indian descent, the Madhesi), led by the Janatantrik Terai Mukti Morcha (JTMM).

Yet, positive moments in the peace process have indeed emerged, said Bloch. Despite Herculean problems, the seating of 73 actual Maoist members of parliament and ten others nominated by the Maoist party in the interim legislature on January 15 is another landmark in the peace process. The Maoists now constitute 25 percent of the 330-member legislature, the clearest indication yet that they are embarked on a political path. The Maoist party may also be the first in the world to have implemented UN Security Council resolution 1325, which directs governments and the world body itself to integrate women fully in preventing and resolving conflicts in post-conflict peacebuilding processes.

Concerning international involvement, in January 2007 the Security Council backed Secretary General Ban Ki-moon’s call for the speedy deployment of a year-long UN political mission in Nepal to monitor the cantonment of weapons and help organize elections for a Constituent Assembly. He recommended that the mission comprise up to 186 armed active and former military officers to monitor Maoist cantonments and army barracks, together with the deployment of a small team of monitors to review all technical aspects of the electoral process and a small UN police advisory team to help ensure “critical” security during voter registration, campaigning, and polling.

On the other hand, Bloch noted, the United States has not removed the Maoists from the U.S. list of Designated Foreign Terrorist Organizations. According to James Moriarty, the U.S. ambassador to Nepal, they will not be removed until and unless they have “completely given up violence.” U.S. assistance under the circumstances is prohibited by law, a fact that compounds the challenges facing the successful implementation of Nepal’s peace process in the short term.

While the Maoists’ pledge to respect a multi-party system of democracy may have surprised many, the international community should give the Maoists as much of a benefit of the doubt as they gave the king during his coups, said Bloch. It would be foolish to take the Maoist commitment to democracy for granted, but it should not be prejudged. After two failed peace deals in 2001 and 2003, this CPA offers genuine prospects of peace for the nearly 30 million long-suffering people of Nepal. Democratic peace is far from won, but this accord gives peace a chance. Foreign powers such as the United States, India, and Britain have played a crucial role in prodding the parties in conflict to reach accord. The world community should certainly do no less in its support to wage peace, and this support is needed before the Constituent Assembly elections are to be held in June 2007.

Maoist Politics in Transition: Some Challenges Ahead
A summary of Dr. Chitra K. Tiwari’s remarks

In Nepal, Maoists are on the way up, not down, said Dr. Tiwari. While they have indeed succeeded in thrashing the monarchy and its traditional network, they have abandoned the idea of imposing one-party rule by accepting multi-party democracy. They believe that they can bring about communism through competitive politics.

Maoists succeeded in dismantling many old political, social, and economic structures—‘the old boys network’—at the local and village levels in a ten-year deadly fight with the state. But this entirely indigenous movement faced a government that had foreign backing from Washington, London, and New Delhi. The Maoists were able to emerge as a formidable force due to their smart game of dividing the old establishment following the crisis in the royal household. Ultimately, through protracted negotiations, the Maoists have destroyed the old boys network and created a space for themselves in the interim constitution while also giving space to others.

Why did the Maoists respond to the SPA’s overtures to develop an understanding in November 2005? The former clearly saw the opportunities to: 1) isolate the monarchy by fostering an anti-monarchy alliance; 2) render useless the Indo-U.S. policy based on a “twin pillar” theory that emphasized unity between the king and the parties to block the Maoist advance; and 3) use the parties as a shield against potential foreign intervention. Ultimately, Maoists rightly perceived they could achieve their goals peacefully by responding to the overtures of the weak political parties hounded by an absolute monarch.

Tiwari said that the short-term challenges that remain include not only integrating the Maoist fighters into the national army, but also integrating the Maoists into Nepali party politics. After all, Maoist politics is in transition. Not all leaders are happy about the compromises made by Prachanda, the Maoist leader, and his colleagues. Despite this, a Maoist victory in the forthcoming Constituent Assembly elections seems quite likely given that it is the only well-organized party with a nationwide network spanning all classes. Tiwari predicted political dynamics would emerge in Nepal similar to those that emerged in Singapore, where Lee Kuan-yew’s People’s Action Party controls everything but allows the existence of opposition parties with a few token seats in the parliament.

The question for the long-term is whether Nepal will be restructured politically, economically, and socially according to the Maoist model. On the political front, this model seeks an inclusive Nepal that will empower women, minorities, and different ethnic communities and decentralize power to different regions with a federal concept. Economically, it seeks equitable distribution of resources, particularly land. Maoists have assured the business and industrial communities that they mean no harm to them, and it’s unlikely that the Maoists would nationalize everything. If they can show the world that they can provide a “corruption free industrial and business atmosphere” in Nepal, the international community should not shy away from Nepal. Nevertheless, Maoists could face challenges from the international community, particularly from the United States, which continues to label Maoists as ‘terrorists.’

Nepal’s Foreign Policy: A Long-Term Security Perspective
A summary of Dr. Jaya Raj Acharya’s remarks

Nepali rulers have always worried about external threats to their country, said Dr. Acharya. Today, however, it is poverty that is the real threat to their rule, because it is poverty that has fed the homegrown Maoist insurgency. With 13,000 lives lost and the Maoists establishing a new state power in the midwestern districts, Nepal’s sovereignty and territorial integrity has come under severe attack. Nepal’s national security and sovereignty should ultimately be addressed through internal socio-economic development.

The failure of Nepal’s government to address the political crises in 1951 and 1990 and the Maoist insurgency in 1996-2006 raises questions about the capacity of Nepal to manage its own internal security and deal with external threats effectively. Nepal’s vulnerability to external pressure has traditionally been dealt with using various foreign policy strategies: 1) friendly isolationism; 2) confrontation; 3) submissive isolationism; 4) projection of independent national identity through UN membership and expanded international contacts; 5) participation in the non-aligned movement; and 6) proposing Nepal as a zone of peace. However, those strategies did not address the problems of poverty and regional inequalities threatening national integration, which remain unfulfilled challenges.

While one would expect a fresh approach to foreign policy after the epoch-making changes in 1990—particularly in Nepal’s relations with India—there has been no significant change or new initiative taken. As a result, Nepal has reaped few benefits in its relations with India. Now the question is: how is Nepal going to deal with the issues of poverty and unemployment without bold policy initiatives requiring greater cooperation with the two fastest growing economies of the world, namely India and China? Nepal is on the verge of repeating past foreign policy mistakes, a problem that would be exacerbated if the Maoists came to power, even if they governed in coalition with other political parties. One of their primary demands is the abrogation of the 1950 treaty with India that is decried as “unequal” because it restricts Nepal’s freedom to import arms without India’s approval or cooperation. Yet, its abrogation will neither diminish fears of another uprising, nor mitigate concern over ethnic conflict or secession of the Tarai, since the Tarai-based unrest will have serious implications for Nepal and the 1950 treaty. The emphasis on military preparedness is a futile strategy for ensuring peace and security in Nepal—a futility demonstrated when King Gyanendra had to restore the dissolved parliament in 2006 after the uncontrollable April uprisings.

In addition to laying the theoretical foundations for strategic interdependence between Nepal, India, and China, Acharya recommends several policies to shift the focus of Nepal’s security and sovereignty to address the internal threat: 1) more balanced internal economic and social development; 2) more realistic diplomatic relations with India and China so that Nepal can benefit from better trade, greater aid and foreign direct investment from these neighbors; 3) more-focused policy on foreign aid from the donor community (the EU and Japan in particular) for more priority-based economic development; 4) greater role in the South Asian Association for Regional Cooperation (SAARC) and global bodies such as the UN; and 5) better relations with the United States.

Envisioning a New Nepal: Planning for Reconstruction and Development to Consolidate Peace and Democracy
A summary of Kul Chandra Gautam’s remarks

Gautam said that the overarching aim of an ambitious post-conflict reconstruction and development plan should be to lay the foundations for long-term human and economic development and to alleviate the suffering of the Nepalis. He proposed a plan with six key elements: 1) relief and rehabilitation of displaced persons and victims of conflict; 2) rebuilding and upgrading of destroyed infrastructure; 3) massive expansion of basic social services; 4) targeted interventions to reduce disparities and exclusion; 5) some major flagship projects of infrastructure development; and 6) creating a conducive environment for private sector development and foreign investment.

But the ultimate aim of the plan goes beyond these material developments, Gautam said. Nepal must take advantage of this unique and historic opportunity and this unprecedented wave of optimism among Nepalis to usher in new ideas and greater openness to attitudinal and behavioral changes. The process of developing a new reconstruction and development plan must ensure that it is not only an expert-led exercise, but that it taps into people’s aspirations by ensuring their active participation through a variety of consultative mechanisms. Key stakeholders—political parties, civil society, and development professionals—must ultimately enjoy a feeling of ownership of the plan.

To enjoy broad support nationally, the planning process needs to be steered by a high-level committee of representatives from the interim government comprising the SPA and Maoists at the cabinet level. A respected personality not affiliated with any particular political party might be enlisted to lead a small core team to ensure a high-quality plan that will enjoy national and international credibility.

Besides meeting the needs expressed in the Millennium Development Goals, the new plan should also include some bold and visionary flagship projects that the Nepali people will consider as being commensurate with their inspiring people’s movement of 2006, projects that will capture the imagination of the present generation and will be seen as worthy and far-sighted by future generations. Gautam suggested that such flagship projects could include the creation of an alternative national and regional transportation grid, a new international airport and twin-capital city, major hydro-power plants, investment in new regional growth poles and urban centers, national computer literacy and high-tech education, and jobs, vocational education, and training.

Financial estimates of the investment requirement from 2007-2017 show a need for $40 billion over a ten-year period. Of this amount, up to $9 billion could come from private sector investors (particularly for flagship infrastructure projects) and from households and communities; $11 billion could come from the Nepal government’s own budget, leaving a funding gap of $20 billion.



This USIPeace Briefing was written by Lynn Tesser, senior program officer in the Grants and Fellowships program. The views expressed here are not necessarily those of the Institute, which does not advocate specific policies.


The United States Institute of Peace is an independent, nonpartisan institution established and funded by Congress. Its goals are to help prevent and resolve violent international conflicts, promote post-conflict stability and development, and increase conflict management capacity, tools, and intellectual capital worldwide. The Institute does this by empowering others with knowledge, skills, and resources, as well as by directly engaging in peacebuilding efforts around the globe.

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