April 11, 2008

Article at Reuters

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After poll, job creation key to cement Nepali peace

KATHMANDU (Reuters) - As Nepal wakes on Friday relieved to have got through its first election in nine years in an amazingly peaceful atmosphere, a whole new set of challenges lie ahead.

The first is to negotiate the post-poll period. It is crucial that political parties peacefully accept the result of the vote, the centerpiece of a 2006 peace accord with Maoist guerrillas.

The second challenge will be for Nepal to turn its attention back to other aspects of the peace process, and to the economy, in one of the world’s poorest countries.

And in the end it all comes down to jobs, analysts say.

That means jobs for 20,000 former Maoist guerrillas, who have been interned in camps since the peace deal, and jobs for thousands more members of the party’s youth wing, the Young Communist League or YCL.

More fundamentally, Nepal needs to find jobs for more than half a million young people who enter the labor force each year.

“It’s jobs, jobs, jobs,” said Kunda Dixit, editor of the Nepali Times. “Enough of this bickering over politics, let’s turn our attention to the economy. If we don’t, we’re screwed.”

Unemployed young men and women provided many of the Maoists’ recruits during their decade-long guerrilla war. Youth from the YCL were blamed for much of the violence and intimidation ahead of Thursday’s election.

And in Nepal’s southern plains, mass protest movements and smaller armed groups demanding regional autonomy have found many willing supporters from the nation’s unemployed.

The strikes and blockades they have enforced across the plains of the Terai, Nepal’s agricultural and industrial heartland, have often paralyzed the nation’s economy.

“If young people are hopeless and frustrated, how are we going to control their political aspirations?” Dixit asked. “They can be bent by any political force that comes along, whether it is ethnic, religious or separatist.”


The first step is to overcome the unwillingness of the country’s conservative army to absorb Maoist fighters.

“Nepal’s army has been very reluctant to allow security sector reform, and it has been largely encouraged in that by India,” said a Western diplomat, who declined to be named while discussing sensitive political issues.

“That will have to be high on the agenda when the dust settles after these elections.”

Diplomats and analysts are hopeful that Nepal’s next government can take that particular bull by the horns. Many Maoist fighters and youth cadres can also be absorbed in the large armed police force, which provided security for the polls.

But rescuing the economy could be a harder task.

Even though Nepal is sandwiched between the world’s fastest growing major economies, China and India, an eagerly anticipated peace dividend has still to arrive.

Unrest in the Terai in the south and poor monsoon rains actually led to a slowdown in economic growth to a meager 2.3 percent in the year to July 2007, down from 3.1 percent the year before.

An improvement in agriculture and tourism has given the economy a modest fillip since then, and the Asian Development Bank is expecting four percent growth in the 2007/08 fiscal year.

But the economy remains largely dependent on foreign aid and remittances from Nepalis working in the Gulf and Gurkha soldiers employed by the Indian and British armies.

“What hasn’t really picked up is the industrial sector,” said ADB country director Paul Heytens, blaming political instability, frequent strikes, chronic fuel shortages and regular power cuts.

Heytens said hydro power, tourism, commercialization of agriculture and road building to bring remote villages into the economic mainstream all offer routes to an economic revival.

“But fundamentally, lasting peace and stability is what is going to allow the economy to grow at its potential,” he said.

Rajendra Khetan, a leading food and beverage manufacturer and financial services provider, says the business environment in Nepal has been “a nightmare”.

Khetan changes his mobile phone number every two weeks to stay one step ahead of Maoists and other rebel groups -- as well as communist-backed trade unions -- who extort money on threats of violence or industrial shut-downs.

Yet extortion often costs him as much as or more than taxes. Nor is the government much help, tieing his businesses up in red tape. “Everyone is after business, because they think it’s a milking cow,” Khetan said.

But Khetan says Thursday’s poll has finally given him reason to hope, putting the “derailed state” back on track and electing a government with a popular mandate.

“Because of that, I am optimistic and ambitious,” he said.

Nepal’s politicians have failed the country in the past, though. A decade of democratic rule in the 1990s was marred by rampant corruption and constant squabbling. This time, Nepalis say, it has to be different.