Off the Record 146: Dahal's house of cards collapses
Issue 146 • 05 July 2024
It’s July 5, 2024, and you’re reading Off the Record.
I’m Pranaya Rana and in this newsletter, we’ll stop, take a deep breath, and dive into one singular issue that defined the past week.
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Good morning, good afternoon, and good evening from Kathmandu.
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That said, let’s move on to what’s happening around Nepal.
Ten more dead in Russia, eleven held hostage in Serbia
This week, the Foreign Ministry confirmed that 10 more Nepalis had died fighting in the Russia-Ukraine war, bringing the total number of confirmed deaths to 35. The actual number of dead is assumed to be much higher but Nepal has no statistics as the Russians refuse to provide any details. At least six Nepalis are being hostage by Ukraine too.
This same week, a news report identified two Nepalis by name as among the primary agents involved in taking Nepalis to Russia to fight as mercenaries. The news report, however, doesn’t provide enough evidence to warrant naming these two people, beyond allegations by individuals who returned from Russia. Still, it warrants an investigation by the authorities.
And as if that wasn’t enough, 11 Nepalis are reportedly being held hostage by kidnappers in Serbia. These Nepalis were attempting to make their way into Europe illegally and were ambushed by criminals who are now demanding a ransom for their release. More and more Nepalis are choosing to migrate to Europe through dangerous routes, as Bhrikuti Rai reported this week. They’re lured by promises of better-paying jobs and eventual residency and citizenship in Europe. The European Union’s document-free Schengen area means that Nepalis hope to make it to countries like Portugal, where residency is easier to obtain, but first, they end up in countries they don’t even know existed, like Serbia, Albania, and Bosnia-Herzegovnia. Of course, most of these illegal migrants find that the jobs they’ve been promised are less than stellar and residency is a long and uncertain path.
With more Nepalis traveling the world in search of better opportunities, crises are bound to arise. Nepalis in the Middle East and Malaysia are underpaid and overworked, with many locked into conditions that amount to modern-day slavery. Nepalis are fighting Russia’s war against Ukraine, a country that they have no enmity with, and dying in the process. Nepalis are being killed in Israel — with Bipin Karki still held hostage — despite having no loyalties to either Israel or Palestine. Nepalis are collateral damage everywhere they go.
Fresh drama inside the RSP
It seems there’s no end to the drama within the Rastriya Swatantra Party (RSP). The country’s newest political party, with 21 seats in Parliament is once again in the midst of more controversy; only this time, it’s internal and not external. On Wednesday, the party held a central committee meeting where party General Secretary Mukul Dhakal was supposed to present a nationwide consultation report. Dhakal had traveled across Nepal and spoken to more than 2,000 people for the report. Last week, on Wednesday, Dhakal submitted the report to party chief Rabi Lamichhane and then spoke to the media about the report’s contents. According to Dhakal, the party’s popularity is fast dipping countrywide, largely due to the numerous controversies involving Lamichhane. Dhakal warned that the party is headed towards a grave ‘accident’ if it continues in the same way it’s been functioning.
Dhakal discussing the party’s internal matters with the media apparently did not sit well with many party members, including chair Lamichhane. This Wednesday, Dhakal was supposed to officially hand over the report to the party’s central committee and hold a discussion. But Lamichhane reportedly did not allow Dhakal to speak. Dhakal naturally took umbrage and protested the meeting by sitting with a cross drawn across his face mask. Afterward, he once again spoke to the media, reiterating his earlier points. Party members, meanwhile, called Dhakal’s report ‘incomplete’ and disagreed with his findings. On Wednesday night, Dhakal was suspended as the party general secretary.
How this clash of personalities has played out is disturbing. For a party that has modeled itself on being different, it is certainly acting just like the mainstream parties. Even if Dhakal was critical of Lamichhane, a mature politician and a mature party should be able to take criticism and hold an open-minded discussion. Many have complained that Dhakal went to the media with his findings but isn’t transparency and accountability a cornerstone of the RSP? This whole thing is hypocritical and if this is how the party will function, then it is destined for the same trash bin that all other parties are headed into.
Nepal transitioning to electric vehicles
In the current 2023-24 fiscal year, Nepal imported 11,466 electric vehicles, a third of which came from China alone, according to a recently released report from the Department of Customs. In the same period, only 3,537 internal combustion engine (fossil fuel) vehicles were imported. With a more reliable electricity supply, low taxes, and more investment in charging stations, Nepalis are fast switching to electric vehicles. The most popular EV brand is BYD, the Chinese EV giant that is taking over the world with its cheap but sophisticated cars. The introduction of a cheaper mid-range vehicle, the BYD Dolphin, has led to the company pretty much taking over the Nepali market with 4,000 EVs sold in this fiscal year alone. Close behind BYD is TATA, with its popular Nexon EV.
This is both good and bad for Nepal. More electric vehicles mean that Nepal will be less reliant on imports of petroleum, saving the country and Nepalis a lot of money. EVs will also reduce exhaust pollution and hopefully contribute to cleaner cities. However, EVs don’t solve the central problem that cities like Kathmandu face — traffic congestion. More EVs mean that cities will continue to be mired in hours-long traffic jams. The poor don’t buy or travel in cars anyway so most of them still depend on public transport. EVs do not solve their mobility issues, confining them even more to the margins. Rising EV sales also lead policymakers to be complacent, believing that EVs will solve all problems and thus not investing in public transport or pedestrian-friendly spaces. A larger budget will be allocated to road expansion and upkeep, along with charging stations, for the hordes of EVs. So while EVs are a good replacement for fossil fuel vehicles, they are not a long term solution to making cities more sustainable and livable for all.
That’s it for this week’s round-up. Read on if you’d like to understand just what is happening with Nepali politics.
The deep dive: Dahal’s house of cards collapses
New partners Sher Bahadur Deuba and KP Sharma Oli. (Image: Setopati)
A former colleague used to say: “You can leave Nepal for a day, come back, and find that everything has changed. But you can also leave Nepal for a year, come back, and find that nothing has changed.”
What he meant is that Nepali politics is unstable but in a very stable way. Governments fall and prime ministers change but the next government will be one led by one of three parties and the next prime minister will also be one of three men who’ve led the country in turns for decades now.
As of Friday, everything has changed and yet, nothing has changed. Pushpa Kamal Dahal of the Maoist party will not be Nepal’s prime minister for much longer and an entirely new team will soon replace his Cabinet. The UML, Dahal’s key partner in the ruling coalition, has withdrawn support after just four months, allying instead with the Nepali Congress to form their own government. A major coalition partner withdrawing support triggers Article 100 (2) of the Constitution, which states: “In case the political party, which the Prime Minister represents, is divided or a political party in coalition government withdraws its support, the Prime Minister shall table a motion in the House of Representatives for a vote of confidence within thirty days.”
Prime Minister Dahal has refused to resign so he will have to face a vote of confidence within 30 days, a test that he is certain to fail now that the two largest parties in Parliament — the Nepali Congress and the UML, who control 169 votes in the 275 member House of Representatives — have allied to topple him. In those 30 days, the UML and the Congress will work out power-sharing deals, including what ministries go to which party. The UML has reportedly claimed the Finance Ministry while the Congress has claimed the Home Ministry. Other smaller parties, like the Rastriya Prajatantra Party, Janata Samajbadi Party, and Janamat Party, will likely be brought into the fold and the coalition strengthened further. Dahal, meanwhile, is hoping that 30 days is enough time for differences to arise between the two new partners, differences that he can probably stoke.
But how did we get here? Let’s take a quick look back.
The 2022 general elections were contested by two blocks of electoral alliances — the Congress and the Maoists on one side and the UML with the Rastriya Prajatantra Party on the other. The Congress won the largest number of seats (88) in the federal Parliament with the UML coming in a close second (79). Dahal’s Maoists came in a distant third (32 seats) and the spanking new Rastriya Swatantra Party of Rabi Lamichhane came in fourth (21 seats). As leader of the largest party, Sher Bahadur Deuba of the Congress naturally laid claim to the post of prime minister, but Dahal had other plans. He asked that the Congress let him become prime minister and when Deuba refused, Dahal quickly pivoted to the UML. Breaking the electoral alliance, Dahal tied up with KP Sharma Oli, chair of the UML, to become prime minister for the third time. Oli, meanwhile, was promised choice ministries and his pick for the new president and Speaker of the House. Dahal, ever the wily politician, managed to become prime minister despite controlling just 32 seats in the House of Representatives.
From the very beginning, Dahal’s position was rickety. In his desperate bid to become prime minister, Dahal had handed over too much to Oli. Dahal and Oli were old rivals, once co-chairs of the Nepal Communist Party, a leftist alliance of the Maoists and UML brokered by China. But the two couldn’t get along as neither was used to playing second fiddle to anyone else and so, the Nepal Communist Party fell apart, as all communist parties tend to do. Dahal didn’t trust Oli and when he saw a chance to betray him, he took it. The UML wanted its pick for president but Dahal instead promised to support the Congress’ candidate if the party would support his government. So, in February 2023, just a few months after government formation, the UML pulled out of government and the Congress stepped in. Dahal supported Ram Chandra Poudel, a veteran Congress politician, for President, and Poudel was duly elected. Dahal seemingly felt that he could play Deuba better than he could Oli, and he wasn’t mistaken.
The Maoist-Congress arrangement continued for a year. The Congress, however, remained skeptical of Dahal’s leadership and decided at an all-party meeting that it would not ally with the Maoists in the next election. Dahal also had strained relationships with Congress ministers, particularly Prakash Sharan Mahat, the Congress Finance Minister. Narayan Kaji Shrestha, who was Home Minister at the time, was in turn frustrated by the Congress’ attempts to stymie investigations into the Bhutanese refugee scam, which had drawn in major Congress leaders, including Bal Krishna Khand, a former Home Minister, and Arzu Rana Deuba, Sher Bahadur’s wife. And so, in March 2024, Dahal parted ways with the Congress and tied up once again with the UML.
The Maoist-UML combine continued for just four months, which brings us to this Tuesday, July 2, 2024. Under pressure from the UML, Dahal was working on shuffling his Cabinet and inducting more UML faces. But Oli had other plans. In a late-night meeting on Tuesday, Oli and Deuba agreed on a power-sharing format. Oli will lead a ‘national consensus’ government — a government that has buy-in from across the political spectrum — for a year and a half, after which Deuba will take over as prime minister for the remaining term. Such a deal was struck before between Dahal and Oli when they were co-chairs of the Nepal Communist Party but back then, Oli was unwilling to let go. Perhaps that history will repeat again. The UML will claim the Finance Ministry while the Congress will lead the Home Ministry. With this new dispensation in place, Dahal was asked to resign but he refused, choosing instead to remain in place as a lame-duck prime minister for another 30 days.
What led to this sudden change, you might ask? For one, there is the male ego. The chiefs of the three major parties — Dahal of the Maoists, Oli of the UML, and Deuba of the Congress — all believe that they should lead the country. Deuba has staked his claim by token of leading the largest party in Parliament; Oli because he holds enough seats to sway the legislature to whichever side he supports; and Dahal simply because he believes he hasn’t gotten a fair shake at being prime minister. Each has been jostling for power ever since the general elections with Dahal outmaneuvering the other two. But now, the chickens have come to roost and Dahal now finds himself betrayed in much the same way that he betrayed the UML first and then the Congress.
There are other reasons though. Dahal and Oli recently clashed over who should lead the new head of the Securities Board of Nepal (SEBON), the government body that oversees the securities market and the Nepal Stock Exchange (NEPSE). Powerful business and political interests have been lobbying SEBON to establish a second stock exchange. Among these are Himalaya Stock Exchange, led by controversial businessman Deepak Bhatta and a host of other powerful business interests, including the Shankhar Group, Shekhar Golcha, Pashupati Murarka, Bhawani Rana, Rajendra Khetan, and Saurabh Jyoti; and National Stock Exchange, led by controversial Non-Resident Nepali Upendra Mahato with Jiba Lamichhane, and President of the Federation of Nepalese Chambers of Commerce and Industry Chandra Dhakal. While the Himalaya group has lobbied Oli and Deuba for their choice of SEBON chief, the National group has done the same with Dahal and his Finance Minister Barsa Man Pun. A second stock exchange could be a very lucrative business and these business interests have placed great pressure on these politicians to either bend or break.
Scuttlebutt around town is also that Congress president Deuba has been growing increasingly agitated at Home Minister Rabi Lamichhane’s attempts to bring more high-profile Congress politicians into the investigation into the Bhutanese refugee scam. Deuba has privately indicated that his wife is a red line for the Congress. Recent news reports have even suggested that Lamichhane had attempted to arrest Arzu Deuba but the Nepal Police’s Central Investigation Bureau rubbished the claims, saying that the news reports were misinformation. It seems even Lamichhane doesn’t want to go as far as arresting Arzu Deuba even though multiple suspects have implicated her in the Bhutanese refugee scam.
The UML and Congress also claim that they want to amend the constitution, particularly the electoral system, to bring more stability to the country. They argue that proportional representation (PR) has created a scenario where no party can attain a majority and thus is always forced into unstable coalition governments. Just to refresh your memory, Nepalis elect 275 members to the House of Representatives, also called the Lower House — 165 members are directly elected through first-past-the-post while 110 are selected from closed lists that include individuals from Nepal’s various ethnic minority groups. Unfortunately, what has happened is that relatives of senior politicians, businessmen who pay their way through, and other unscrupulous actors have monopolized proportional representation (PR). For instance, Arzu Deuba and Manju Khand, wife of jailed Congress politician Bal Krishna Khand, are PR members of the Lower House under the ‘women’ quota.
Constitutional amendment requires a 2/3 majority (184 votes), which the Congress and UML don’t quite have. Combined, they have 167 votes but they can scrounge up 15 more votes from other smaller parties. Since the Rastriya Swatantra Party has declined to join the new coalition, it will probably have to be the Rastriya Prajatantra Party (14 votes), the Janata Samajbadi Party (7 votes), Janata Samajbadi Party Nepal (5 votes), and the Janamat Party (6 votes). But the question is whether they actually want to improve the system (they don’t) or eliminate the inclusion provision so that they can go back to appointing, nominating, and electing whoever they want, which is primarily Khas-Arya men and women and their own wives, sons, daughters, nephews and extended relatives.
Whatever the immediate cause, Dahal’s downfall had been a long time coming. I don’t subscribe to the argument that it was ‘undemocratic’ for the chief of the third largest party to lead government. Democracy is not just majoritarian; it is consensual governance, and Dahal was the one able to get enough votes together to become prime minister. Still, given how he had cobbled together alliance after alliance, betraying one party after another in order to keep his government going, it was only a matter of time before his house of cards collapsed.
What comes now is more instability, both at the federal and the province levels. New governments will have to be formed and there will be more horsetrading, more maneuvering, more corruption, and more quid pro quo. As usual, those at the top will continue to reap benefits in terms of money, power, and patronage while the rest of us can only watch in mute horror and disappointment as once again, the parties put their own lust for power above everything else.
That’s all for this week. I will be back next Friday, in your emails, for the next edition of Off the Record.
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