Democracy and Governance in Nepal
The Development Challenge: In the last 54 years, Nepal has made a remarkable transition from an isolated kingdom with limited basic services and infrastructure to a functioning constitutional monarchy. Progress has been notable: substantial road infrastructure; large decreases in child mortality and fertility rates; functioning ministries such as education, finance, and health; gains in agriculture, forestry, and literacy; and increased access to basic services.
The most pressing problem facing the country today is a rebel insurgency and its profound impact on Nepal's political and economic development and overall security. The Maoist insurgency, which began in 1996, found fertile ground largely in response to Nepal's poor governance, poverty, and exclusion. The initial pro-people approach, which won the Maoists converts among the disenfranchised, has mutated into a campaign of violence, lawlessness, intimidation, and destruction. More than 10,000 people have been killed by the Maoists and security forces, with the bulk of these deaths, almost 9,000, occurring since 2001. While the Maoists have adopted terror as an instrument of policy, human rights abuses are committed by both parties to the conflict. In addition to the human toll, the continuing violence drains budget resources, restricts delivery of services and prospects for socioeconomic development, and stifles economic growth. The conflict has inflicted combined estimated costs to national property and the economy of over $1.5 billion in the already-impoverished country.
On the political front, there are new reasons for concern given the King's February 1 dismissal of multi-party democracy, declaration of a state of emergency, suspension of fundamental constitutional rights, and detention of politicians, journalists, and human rights activists. This serious setback for Nepalese democracy risks eroding even further the Nepalese Government's ability to resist the Maoist insurgency.
On the economic front, government measures to improve the business environment, encourage investment, reduce avenues for corrupt practices, and improve the service orientation of key government agencies are progressing. In addition, Nepal joined the World Trade Organization in 2004.
Absolute poverty declined from 42% to 30% between 1996 and 2002, attributable largely to increased remittances from Nepalis living abroad. Nonetheless, Nepal remains one of the poorest countries in the world, with an annual per capita income of $276 and 38% of the population living below the national poverty line. Life expectancy at birth has increased but at 59 years, is still lower than its neighboring South Asian countries. The literacy rate is 54% nationwide. Population growth has fragmented land holdings and depleted forest resources, negatively affecting the livelihoods of the 80% of Nepalis that depend on agriculture for their livelihood. Maternal mortality is amongst the highest in the region. One of 11 children dies before they reach their fifth birthday - the majority during their first year. Moreover, Nepal is in the midst of a concentrated HIV epidemic. The World Health Organization/UNAIDS estimate that 14 Nepalese adults become infected with HIV in Nepal every day.
The United States has an interest in an economically and politically stable multiparty democracy in Nepal. Nepal serves as a geographic buffer between the world's two most populous nations in a volatile region. By supporting efforts to resolve the Maoist insurgency and addressing the underlying causes of poverty, inequality, and poor governance in Nepal, the United States is making an important contribution to fighting terrorism, promoting regional stability, and diminishing the likelihood of a humanitarian crisis.
(Excerpted from the 2006 Congressional Budget Justification for Nepal)
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