Nepal reports first H1N1 cases

KATHMANDU (AFP) — Nepal has recorded its first cases of swine flu, in three members of a family living in the United States who are visiting their homeland, the health ministry said Monday.

The couple and their eight-year-old son arrived in Nepal via Doha on June 21 and were tested for the virus after the boy complained of fever, the ministry said.

"A US-based non-resident Nepali couple and their son have been diagnosed with the pandemic H1N1 2009 virus," said ministry official Manas Kumar Banerjee.

"The father, 42, mother, 38, and their eight-year-old son, were all diagnosed with swine flu. Infection was suspected after the eight-year-old boy complained of fever."

Samples of their blood have been sent to a World Health Organization (WHO) laboratory for confirmation, the ministry said.

Authorities in landlocked Nepal announced earlier this month they were stepping up checks at borders and airports after India reported its first swine flu cases.

The disease has infected nearly 60,000 worldwide and killed 263, according to the WHO.

Pakistan, Nepal mull over free-trade pact

Pakistan and Nepal are considering a free-trade agreement, said the Pakistan Foreign Ministry on Monday.

It came up for discussion during Pakistan Foreign Secretary Salman Bashir’s three-day visit to Nepal that included meetings with Prime Minister Madhav Kumar Nepal and Foreign Minister Sujata Koirala, as well as bilateral consultations with his counterpart, Gyan Chandra Acharya.

The last time the two Foreign Secretaries met bilaterally was in 2004. This is the first visit by a top Pakistani official to Nepal after the monarchy was overthrown and a new government formed in that country.

According to the Foreign Ministry, Mr. Bashir and Mr. Acharya reviewed the “entire gamut of Pakistan-Nepal relations”.

“They decided to comprehensively upgrade the bilateral relationship and agreed on the essential elements of a shared strategy to take Pakistan-Nepal relations to new heights. Both the Foreign Secretaries attached particular importance to enhancing trade and economic co-operation including through a Pakistan-Nepal Free Trade Agreement,” said the Ministry in a statement on the visit.

They also decided to deepen bilateral cooperation in the fields of agriculture, energy, environment, science & technology, IT, culture, education, and people-to-people contacts. The two officials also discussed “matter relating to connectivity and transport”, the release added. The two countries have discussed a free-trade agreement in the past, and according to diplomatic sources, Pakistan had even drawn up a draft agreement some years ago.

At his meeting with Nepal’s Prime Minister, Mr. Bashir handed over a letter from Pakistan Prime Minister Syed Yousuf Raza Gilani reaffirming his government’s “commitment to further strengthen the long-standing ties of friendship and cooperation with Nepal”, and inviting Mr. Nepal to visit Pakistan.

The Foreign Ministry said Mr. Nepal also underscored his country’s desire “to further deepen bilateral cooperation in the trade, economic, agriculture, energy, environment, and cultural and tourism fields”. The two sides also underlined their commitment to continue to work closely in SAARC with a view to promoting common interests and the imperative of regional cooperation, the Foreign Ministry said.

The Hindu

Nepal coalition looks shaky

Prateek Pradhan in Financial Times

Nepal's ruling coalition was struggling for stability at the weekend. Disputes over the allocation of cabinet portfolios underscored the uneasy balance Madhav Kumar Nepal, prime minister, must strike in guiding the 22-party alliance.

After four weeks of bargaining, during most of which he had the cabinet largely to himself, Mr Nepal has managed to allot 27 of 45 ministerial positions. Yet the business of governing has only just begun.

The Communist Party of Nepal (Maoist), which is the largest party in parliament and led the government until last month, is posing the biggest challenge. Its members are obstructing legislative sessions, blockading government offices, attacking representatives of other parties and holding mass rallies almost daily.

Puspa Kamal "Prachanda" Dahal, Mr Nepal's predecessor as prime minister and the Maoist leader who led the party's bloody decade-long revolutionary war against the government, has said he will launch a new "people's movement".

Mr Dahal's party is focused on the issue that led it to quit government last month - a demand that the army chief be replaced. The new coalition is seen as tilted toward India and the Maoists toward China.

Lok Raj Baral, a political analyst in Kathmandu, said: "Seeing the type of people and the parties in the coalition, I doubt they can work in tandem for long."

Yet Surya Bahadur Thapa, who has been prime minister several times, said he expected the government to hold together because of the coalition partners' aversion to Maoists gaining power again or the option of military rule.

"The future of the government will largely depend on political mobilisation by coalition partners," said Mr Thapa, who heads the Nepal Janashakti party, a coalition member.

Cohesion will be crucial as Mr Nepal responds to the global economic slowdown's deepening effect on Nepal. The country depends on remittances from Nepalis working overseas, particularly in the Gulf states and east Asia.

However, demand for labourers to go abroad has fallen recently by about 10 per cent each month, according to Nepal's Foreign Employment Association. Unemployed youths have burned tyres and attacked vehicles.

On top of this, Mr Nepal faces the challenge of reinvigorating deadlocked discussions on drafting a constitution for the new republic proclaimed when the monarchy was abolished last year, a demand of the Maoists.

The standoff over the army chief also confronts Mr Nepal with the unresolved issue of the Maoist revolutionary army, which has been confined to encampments since the war ended in 2006.

Soap brings message of change to rural Nepal

KATHMANDU (AFP) - When the power cuts that frequently plague Nepal were at their worst this winter, one of the biggest frustrations for many people was missing their favourite television soap opera.

Every Sunday night for a year, entire villages across the country have gathered around a single television for the latest instalment of "Dalan," or "Exploitation," a historical saga set in Nepal's rural west.

In a nation more attuned to the noisy glamour of Bollywood movies from neighbouring India, the popularity of the slow-paced serial about a family of Dalits -- the lowest social caste -- has taken everyone by surprise, not least its makers.

"'Dalan' is a very simple show and we really didn't expect it to be the huge success it has become," said producer Purna Singh Baraily of the soap, which has fans as far away as Dubai, Hong Kong and the United States, where it is shown via satellite.

"The fans say they love the characters and the fact that the show deals with its subject matter realistically," said Baraily, himself a member of the caste once known as "untouchables."

"I have had people say to me that they don't feel like they are watching a television programme, they feel like they are there."

Baraily wanted to make a show that would highlight the problems facing Dalits in Hindu-majority Nepal, where being born into a low caste is still a huge disadvantage.

Discrimination against Dalits, who make up around 13 percent of Nepal's population, was outlawed in the 1960s.

But the tradition of "untouchability" survives, particularly in rural areas, where Dalits are frequently banned from entering temples or drinking from communal wells.

Even in the capital Kathmandu, they are often unable to find accommodation, with some landlords refusing to rent to people with Dalit names.

Baraily initially won a 50,000-dollar grant from the European Union to shoot a documentary, but opted instead to make a soap opera, believing its message would be more likely to reach the rural communities where Dalits suffer most.

He persuaded a well-known Dalit poet to write the script, and the result was a drama that follows three generations of Dalits and the changing attitudes towards them.

Shooting began at the height of the Maoist insurgency in 2003, posing huge problems for the production team, who faced suspicion from both sides in Nepal's decade-long civil war.

"The Maoists were convinced we were spying for the army. And because of the subject matter, the army thought we must be on the side of the Maoists," said Nabin Subba, the show's director.

To make things even more difficult, "Dalan" was shot mainly on location in a remote village with no electricity and no road access during the monsoon months.

The show's cast ran into the hundreds and many of the actors had no experience, having been recruited from local villages to keep costs down.

Even once shooting was over, Baraily and Subba faced scepticism from national broadcaster NTV, which didn't think viewers would want to watch a show about Dalits.

A year later, their simple tale of a high-caste Brahmin who is rejected by his community after falling in love with a Dalit woman has proved a hit, and won a nomination for Britain's prestigious One World Media Awards.

Although Nepal does not measure viewing figures, the show appears regularly in the local papers and has an army of loyal fans who have been spurred into action by the drama.

Subba tells how fans in one town near Kathmandu launched a successful campaign to have Dalits allowed into local teashops whose owners had previously insisted they remain outside.

"Dalan" broadcast its final episode on Sunday, but its makers are planning a series of reruns so viewers can watch the shows they missed during the power outages, and are even considering a feature film.

Subba says they plan to organise a meeting of the 400 fan clubs that "Dalan" has spawned to decide how to keep the momentum going.

"We came to the conclusion through the show that Dalit problems can only be solved by Dalits," he says. "Dalit people have to become politically active."

(By CLAIRE COZENS)

Dethroned Nepal king's palace now a tourist haunt

By TIM SULLIVAN

KATMANDU, Nepal (AP)

He has had to flee his palace, with its Graceland-meets-the-Himalayas decor, and decamp to a house up the hill. His only son, the hard-living former crown prince, has moved to Singapore. And now, in a crowning indignity, tourists are traipsing through what was once a private world sealed off by soldiers and tall brick walls.

Just three years ago he was King Gyanendra, ruling this mountain nation with absolute power as the living embodiment of the Hindu god Vishnu. Today he is simply Mr. Gyanendra Shah, a 61-year-old businessman with interests in hotels and tea plantations who clings to the royal title only by tradition. He lives in a small house in the Katmandu hills with his wife, and doesn't give interviews.

He has become a national shadow, a man seen only in Nepal's tiny high society and known for his cocktail parties but little else.

And his Narayanhiti Palace? Tickets cost about $1.50, payable at the window out front.

Every day, hundreds of Nepalese arrive here to look into the last couple of decades of their country's troubled history, with its royal intrigue, its family bloodshed and its isolated and deeply unpopular monarch who didn't realize until things were beyond his control that history wasn't with him anymore.

Inside, tourists stare at the dusty hunting trophies, the mirrored pillars and the royal portrait — a gift from the Chinese government — that looks like a pencil drawing but actually is made from human hair. They wander through room after room of vinyl furniture, gold carpets and decades-old silver-framed photographs (the Shah of Iran, Bobby Kennedy, various popes).

The palace, a pink concrete hulk built in the late 1960s, stretches across 52 rooms and nearly 41,000 square feet. It seems to go on forever.

"In this age of democracy, how can an enlightened person accept such an institution?" Prime Minister Madhav Kumar Nepal asked in an interview. "The Nepali people are relaxed that they no longer have this burden."

But it's not that simple.

A year after the monarchy was abolished, following 2006 protests that brought back parliamentary democracy, Nepal remains battered by encyclopedic troubles that belie its reputation as a Shangri-La. Democracy has not been the curative that Nepalese had hoped for.

Nearly 70 percent of the country lives on less than $2 a day and its literacy rate ranks it between Yemen and Mauritania. Katmandu is better off than the countryside, but this city was enveloped years ago by traffic and smog and its infrastructure is on the verge of collapse. Power outages often last more than 18 hours.

Then there is the political scene, which is dominated by corrupt, squabbling parties and former Maoist guerrillas whose 10-year war left 13,000 people dead before the rebels entered mainstream politics.

So if most Nepalese seem happy to have left the monarchy behind, it's also not hard to find people who miss the king — even if they are surprised to hear themselves admit it.

"After seeing all this, now I do feel sorry for him," said Durga Shrestha, 31, as he walked through what used to be the private royal quarters. "He had all this, he lived so well, but now he has to live like an ordinary man," said Shrestha, a stationery store owner who cheered on the anti-Gyanendra protests that helped usher in democracy.

Around him, other tourists nodded in agreement.

"I thought it was good the king was thrown out," he said. "But now I wonder, a little, if we made the right choice. Maybe the king is an asset to the people."

"It must have been so hard for him to leave this place," he added.

With its carefully tended gardens and cavernous rooms, the palace can seem immune to the troubles that surround it. But it is also where the royal family turned against itself in a spasm of violence that changed Nepal's history.

For many, the highlight of a visit is the site of something torn down years ago: the house where, in 2001, a drunken and drugged Crown Prince Dipendra apparently gunned down much of the royal family — including his father, the beloved King Birendra — before killing himself.

After that, the throne passed to Birendra's brother, Gyanendra, a distant, scowling man who in 2005 dissolved parliament and seized absolute power, paving the way for his ultimate dethronement.

It was Gyanendra who ordered the massacre house torn down, leaving just an ankle-high brick outline of its rooms, along with a half-dozen bullet holes on surrounding buildings.

Visitors tend to stop there, debating lines of fire and conspiracy theories.

Most of those theories revolve around Gyanendra, who was out of town at the time of the shootings, or his son Paras, the former crown prince. Paras had long been unpopular because of allegations of his involvement in two vehicular homicides and frequent drunken brawls in nightclubs and discos. Paras and his mother, the former Queen Komal, both survived the shootings.

While the official investigation blamed Dipendra, years later many questions remain unanswered, and few of the survivors have spoken publicly.

At what is left of the massacre scene, signs are scattered about indicating where the bodies were found: Prince Nirajan, King Birendra, Queen Aishwarya, Princess Shruti and six others.

But if it's a place where some Nepalese find sympathy for a monarchy they have cast aside, not everyone feels such pity.

Thakur Dangi, a government bureaucrat, simply shrugged. "The king's time is over," he said, walking away.

Spate of kidnappings shocks Nepal

KATHMANDU - The discovery this week of the decapitated body of a 17-year-old girl abducted in Kathmandu has sent shockwaves through Nepal, where police say kidnapping for ransom is becoming a "cottage industry".

High school student Khyati Shrestha was snatched on June 5 after an acquaintance lured her to the kidnapper's apartment.

Later that day, her father received a text message to say she had been kidnapped and demand a one-million-rupee (13,000-dollar) ransom for her return, although police now believe she had already been killed.

The incident has dominated newspaper front pages and alarmed residents in Nepal's capital, where kidnappings for ransom have become increasingly common in recent years as political instability and rampant corruption have led to growing insecurity.

It came weeks after a 10-year-old girl was snatched on her way to school in the capital and whisked away by armed men riding motorbikes, but later rescued by witnesses who chased down her kidnappers.

Police say they are making inroads into tracking down and prosecuting the criminal gangs behind such incidents but they concede that many cases go unreported because families prefer to pay the ransom.

"We are dealing with the problem. More than 90 per cent of the cases filed have been solved and we have been able to free the victim and arrest the kidnappers," said Sher Bahadur Basnet, who deals with kidnapping at the Nepal Police crime division.

"But we can only investigate what is reported to us. Many such cases may have gone unreported."

One Kathmandu businessman told AFP how he was kidnapped at gunpoint while walking home from his office in the capital three months ago, and only released three days later when his family paid a ransom of ten million rupees.

Like many victims, they decided not to inform the police, fearing later reprisals.

"My family had to come up with that huge amount within two days. The initial demand was three times the amount my family eventually paid," said the 35-year-old man, who asked not to be named.

He said the biggest shock came when he decided to tell 10 of his close friends about his ordeal, and discovered that four of them had gone through the same thing.

"It is really shocking that crime is so rampant in our society and we do not talk about it," he said.

Police say kidnappers are targeting the urban middle classes, who have access to money but lack the political connections of the super-rich, and that the easy availability of firearms is fuelling the trend.

"Anyone who has a weapon can go into it (kidnapping) because there is the perception that the government is soft in its approach," said one police officer on condition of anonymity.

"Kidnapping is becoming a cottage industry."

Police say Nepal's affluent Marwari community, an ethnic group with its origins in neighbouring India that is famous for its business and trade links, has become a prime target of the criminal gangs.

According to Pawan Mittal, who runs a group that represents Marwari interests, most victims' families pay the ransom, and some have lost everything they own.

"It's quite impossible to get released without paying a ransom. Many medium-scale businessmen have lost everything they had because they had to pay it in ransom. Not all Marwaris are rich," he told AFP. Mittal said he knew of six Marwaris who had been kidnapped in the past two months. Most were released after paying ransoms, which he said could be up to 200,000 dollars.

"The victims and their families prefer to keep it secret to avoid any further complications," said Mittal. "The mental trauma after the release is unimaginable. They are so scared and life is never the same."

Kidnapping is not a new phenomenon in Nepal and police say official figures do not show an increase - although these do not reflect unreported crimes.

But Basnet said there was evidence kidnappers had become more sophisticated in their approach and admitted the police would have to respond in kind.

"In the end it doesn't matter whether the numbers are up or not," he said.

"It's such an emotive issue that just one case has the power to bring terror to the population."

-AFP

Nepal’s poor suffer as strikes hit food security -WFP

Nepal’s relentless strikes are severely impacting food security where the poor are being forced to scavenge for food and sell off assets in order to survive, a U.N. World Food Programme (WFP) official said on Wednesday.

In recent years, the impoverished Himalayan nation has seen a sharp rise in the number of strikes where everything including transport, government offices, private businesses, schools, hospitals and markets are completely shut down.

Last year, there were 254 days of strikes or “bandhs” in the country, according to Nepalbandh.com, a Nepali website which monitors strikes around the country. In the last three months, there have been over 200 strikes, according to the site.

Richard Ragan, head of WFP in Nepal, said the strikes – which are often politically motivated –meant that roads were blocked, food was not being transported and people were not able to work, losing essential income and unable to buy provisions.

“The immediate impact of the bandhs is on the poor people in the country,” Ragan told Reuters by telephone.

“It means that people lose a day’s wage and can’t make money to buy food. Also, their businesses are closed, they can’t travel to work, and they don’t have access to markets which also means they can’t purchase food if they had some money.”

COST OF STRIKES

He said this was a serious problem in Nepal as the majority of the population was spending more than 60 percent of their income on food, compared with in the United States where Americans spend slightly more than 10 percent of their income on food.

Nepal is reeling from a 10-year civil conflict that ended in 2006. The Maoist insurgency killed more than 13,000 people, displaced hundreds of thousands and devastated the economy.

The U.N. Development Programme’s 2007/8 Human Development Index ranks Nepal 142 out of 177 countries, where more than 30 percent of the population lives below the poverty line.

According to Nepal’s Chamber of Commerce, between $7 and $14 million is lost in revenues every day there is a general strike.

Ragan said people were being increasingly forced to participate in the bandhs that often turned violent.

“There is a general state of lawlessness and people are using the threat of strike or the implementation of bandh to get what they want because it’s one of the few instruments that has proven to be effective, at least in the short-term,” he said.

He said in April last year, the government was forced to reverse its decision on a fuel price hike after days of strikes.

He said the impact of this on humanitarian activities was huge and WFP – which feeds around 3.5 million people in Nepal – was operating at only 50 percent of its capacity.

“People already exist on razor-thin margins. Strikes are limiting our ability to reach them during critical time periods which is pushing them over the edge.”

-Reuters

Nepal Will Spend More on Security as Industrial Output Falters

June 24 (Bloomberg) – Nepal will step up spending on security to protect industries after the nation lost half its working days in the past year because of strikes, road blockades and anarchy, Finance Minister Surendra Pandey said.

“We are facing lots of problems on the law-and-order front and business is suffering,” Pandey, who is scheduled to unveil the nation’s budget on July 9, said in an interview in Kathmandu on Tuesday.

“My priority in the budget will be to address the security issue.”

Regional, ethnic and political violence erupted after the Maoist party, which took power less than a year ago after winning a general election, lost control of the government last month following a dispute over sacking the army chief. The Maoists have pledged to boycott parliament and disrupt daily life until the president reverses his decision to reinstate the head of the army and apologizes.

“If strikes and blockades continue, industrialists will be compelled to close their business,” said Kush Kumar Joshi, president of the Federation of Nepalese Chambers of Commerce and Industry. “The security of investors and their investments are the main problems facing the industry.”

Industrial production dropped 1.5 percent in the eleven months through May. The key challenge facing Nepal is to rebuild the “legitimacy” of the state and maintain law and order, the World Bank said in a report on the Himalayan nation in April.

Pandey said he will increase the allocation for police and set aside money to raise a special industrial security force, without providing further details about the spending.

Disrupt Growth

The unrest may slow growth in the $9 billion economy to 3.5 percent in the year ending June 30 from 5.6 percent in the previous year, Nepal central bank Governor Deependra Bahadur Kshetry said June 22. Obstruction to the transport of farm goods and industrial products has created shortages and pushed the inflation rate to 11.9 percent in March from 9 percent a year earlier, the governor said.

“Law and order must be addressed if business is to flourish,” Mike Foster, U.K.’s Minister for International Development, said on April 2, when he announced 172 million pounds ($283 million) of aid to Nepal over the next three years.

Foster said local business leaders he met considered a lack of basic security as the “major barrier to their success.” In the past few months, 50 businessmen have been killed and $200 million lost to strikes, he said in a speech published on the U.K.’s Department For International Development Web site.

Political Turmoil

The Maoists, who ended a 10-year insurgency in 2006, led the first government since lawmakers a year ago voted to scrap the country’s 240-year-old monarchy and turn the Himalayan nation into a republic. More than 13,000 people were killed in the decade-long civil war between security forces and the former Maoist rebels.

Political chaos has flared up again as Maoist supporters staged nationwide demonstrations after their leader Puspa Kamal Dahal resigned as prime minister last month.

Dahal stepped down after the president overturned his decision to fire the army chief for refusing to integrate former rebel fighters into the military. A group of rival political parties, led by Madhav Kumar Nepal of the Communist Party of Nepal (Unified Marxist-Leninist), formed a new 22-party ruling coalition in May.

“The Maoists are building their political base by inciting the unemployed youth – my budget statement will have programs to increase employment,” Pandey said.

Infrastructure, Energy

Pandey said he will also increase the allocation for infrastructure development including hydro-electric power after Nepal declared a national energy crisis in December.

“We have enough room to spend,” the finance minister said.

He said tax collections have risen by a record 32 percent to 142 billion rupees ($1.8 million) in the current financial year as the government gave incentives to officials who met their collection targets.

Besides, the government borrowed just 8 billion rupees in the fiscal year ending this month against a target of 25 billion rupees in the budget as tension and violence in the country hindered government spending, the minister added.

Nepal, which finances its budget shortfall using foreign loans and local borrowings, expects the budget deficit to remain at about 2 percent of gross domestic product next fiscal year, Pandey said. Nepal had a 265 billion rupee budget for the current financial year.

Nepal urged to reduce Mt Everest climbing fee

KATHMANDU (Reuters) - A leading mountaineering official on Tuesday urged Nepal to reduce climbing fees for Mount Everest and other mountains during the peak climbing season, to lure climbers back from Tibet where mountaineering is cheaper.

Tourists are returning to Nepal, one of the world's poorest countries with largely aid-and tourism-dependent economy, after the Himalayan republic emerged from a long civil war in 2006.

Climbing is one of the most popular tourist pastimes but Ang Tshering Sherpa, chief of the Union of Asian Alpine Associations, an umbrella body of 26 alpine groups, said overcharging was driving climbers across the border to Tibet.

"The royalty rates must be reduced if we have to compete in mountaineering," said Sherpa, who also runs a big hiking agency.

"If the cost of climbing is not competitive, climbers will naturally go to places where they can spend less and we will lose our business."

Tibet is Nepal's main competitor in mountaineering as five of the world's tallest mountains straddle their border, he said.

Nepal charges $25,000 per person to climb the 8,850- metre Mount Everest and $500 for a smaller peak.

Climbers in Nepal must also pay for transporting supplies, equipment and sherpa guides, making climbing pricier than in Tibet from where Mount Everest can also be scaled. Prices in Tibet were not immediately available.

Nepal, which is in political limbo after the former Maoist rebels quit the government in May, earned $230.6 million in 2007 from tourism -- 4 percent of its GDP.

Tourist arrivals grew 4 percent last year from 526,000 in 2007, according to the Nepal Tourism Board, the highest number since Sir Edmund Hillary and Tenzing Norgay climbed Mount Everest in 1953 and effectively launched the country's tourism industry.

The government has set itself the ambitious target of doubling visitor numbers by 2011.

Nepal issues alert on swine flu

Nepal government has alerted the general public about the influenza 'A' H1N1 popularly known as swine flu.

Authorities in Nepal have decided to introduce screening of Nepal-bound passengers at border points from this week in a bid to shield the country from swine flu, officials said.

Although no cases of flu has been detected in the country so far, cases in the neighbouring country has made Nepal susceptible to the deadly flu, officials said.

The National Health Education, Information and Communication Centre has urged any one exhibiting symptoms such as fever, common cold, throat pain, nausea and diarrhoea to immediately contact health personnel and have a thorough check-up.

The World Health Organization (WHO) has declared the influenza 'A' H1N1 (Swine Flu) a global pandemic. The disease is transmitted very easily from one person to another while coughing, sneezing, and using infected items as handkerchief and garments, WHO said.

So, people should be under special precaution to fend off this disease, the Centre pointed out.

Checking of passengers arriving from USA and Canada have already started at the Tribhuvan International Airport in Kathmandu as a preventive measure against the flu.

Nepal's fragile new government

False start

In office but not yet in power

THE ashes of the Maoist government in Nepal have been scattered, but the moderate Communist one that replaced it last month has done little to assure observers that it is the new holder of the country’s seats of power. As rival coalition parties continue to bicker over ministerial portfolios, the country is beginning to tire of waiting for a new cabinet, and worries about instability mount.

Madhav Kumar Nepal, the country’s post-Maoist prime minister, is trying to mediate as best he can, but to little avail. The main coalition partners, including his ruling Unified Marxist-Leninist (UML) party, the Nepali Congress and the Madhesi Janadhikar Forum, this week at last agreed on how to carve up cabinet posts; other, smaller parties are still in talks. Only after the cabinet forms can the Constituent Assembly elected last year hope to get on with its tasks of constitution-making and peace-building.

The Maoists, meanwhile, no longer in government, are making it clear they are not quite out of power. On June 15th activists from their Youth Communist League were able to shut down the capital, Kathmandu, after they accused the UML’s youth faction of murdering one of their leaders. Flag-waving, tyre-burning groups enforced the shutting of shops and held up cyclists; other traffic dared not venture out.

The scene recalled the bad old days of political instability and paralysis in the capital during the ten-year civil war with the Maoists that ended in 2006. The only noises to puncture the padding of pedestrians around the city were the screeching of sirens from ambulances and police cars, and the cheers of animated activists.

This strike was one of many protests across the country over the bigger issue of the aborted sacking in May of the chief of the army by the Maoist prime minister, Pushpa Kamal Dahal (formerly known as Prachanda). This led the Maoists to quit government. But they remain determined that most of around 23,000 former Maoist guerrillas, still in UN-supervised cantonments, will be merged with the national army. The army remains opposed to this, and is backed by the other big parties and by India, an overbearing neighbour.

In the name of civilian supremacy, the Maoists are now blockading the assembly. They have even threatened to set up parallel governments in some districts. A series of attacks—by other groups as well as the Maoists—has raised concerns about worsening political violence. Despite the Maoists’ repeated assertions of commitment to peace, there is a lingering fear that they may return to the jungle.

Nepal has had 18 governments since 1990. So it is not far-fetched to imagine the collapse of this latest one after just a few weeks. Nor is a return to civil war out of the question. When it comes to forming a government, the cards are still in Mr Nepal’s hands. That achieved, it may be possible to coax the Maoists back to the table. But lasting peace still hinges on the future of the two armies and that dispute shows few signs of being settled.

Economist

NEPAL’S DEVELOPMENT HAMPERED BY INSTABILITY, POOR INFRASTRUCTURE

Nepal’s efforts to accelerate economic growth and reduce poverty are being hampered by political instability, poor infrastructure, and other critical obstacles, a new study has found.

The study, Nepal: Critical Development Constraints, is a collaborative effort by Asian Development Bank (ADB), UK Department for International Development (DFID) and International Labour Organization (ILO), that examines the main factors holding back the country’s development progress.

It notes that the unstable political environment, infrastructure shortcomings, labor market rigidities, industrial relations problems, and inequitable access to opportunities have undermined growth and poverty reduction.

The report suggests stronger governance, accelerated infrastructure evelopment, particularly in the power, road and irrigation sectors, labor market reforms and greater efforts to ensure all sectors of society have access to productive assets, education and other key social services, can help address these obstacles.

At the same time it cautions the international community not to burden the government with excessive demands given its limited resources and the political transition the country is going through. It notes that priorities for reform must be determined by the government and the Nepalese people themselves.

“Nepal needs accelerated inclusive growth to create jobs and maintain stability in the long term but its difficulties are mainly to do with internal, structural issues and it can address these issues if the desire and political will is there,” said Ehsan Khan, ADB senior economist and the report’s main author.

While Nepal has made solid progress in cutting poverty over the past decade, its growth performance has sharply lagged its South Asian neighbors, with development constrained by an internal conflict that began in 1996.

“We hope the report will be the start of a process of raising the debate on what’s needed to accelerate inclusive growth in Nepal," said Sarah Sanyahumbi, DFID Nepal Head of Office.

"Improving and promoting inclusive growth, and creating more jobs, is a key focus of our program in Nepal for the next few years and vital for peace and development in Nepal."

The study highlights the need for an improvement in the country’s industrial environment, pointing out that labor strikes, transport strikes, unauthorized levies on businesses and other constraints have led to frequent disruptions in production and exports, under-utilization of capacity, higher costs, a loss of competitiveness and the closure of factories.

“The priority of the ILO’s Decent Work Country Programme for Nepal is to generate productive employment for building sustained peace through labor market reform and this research will no doubt accelerate the process of the ILO’s ongoing reforms which encourage investment, as well as stressing the importance of social protection of workers,” said Shengjie Li, Director of ILO for Nepal.

The study is supported by Nepal’s Ministry of Finance and National Planning Commission ILO is the tripartite UN agency that brings governments, employers and workers of its member states together to promote decent work throughout the world.

DFID is the UK Government Ministry responsible for promoting development and the eduction of poverty.

ADB, based in Manila, is dedicated to reducing poverty in the Asia and Pacific region through inclusive economic growth, environmentally sustainable growth, and regional integration.

Nepal’s post-Maoist government falters

KATHMANDU, June 8, 2009 (AFP) - Two weeks after Nepal swore in a new prime minister following the fall of the Maoist government, analysts say the ruling coalition is looking decidedly shaky as it struggles to form a cabinet.

Maoist chief Pushpa Kamal Dahal – known as Prachanda – plunged the world’s newest republic into chaos in May when he resigned as prime minister just eight months into the job following a failed bid to fire the head of the army.

A group of rival parties led by the centre-left UML – the third-largest party in parliament – agreed to form a new ruling coalition, but have failed to agree on cabinet positions amid fierce political infighting.

On Friday one of the coalition partners withdrew its support, further weakening the already fragile grouping.

“Even if they do manage to form a full government, it will be highly unstable,” said Lok Raj Baral, political science professor at the Tribhuvan University in Kathmandu.

“The culture of mistrust among parties is so high that the government could fall at any time. The rangling for the ministerial berths in parties has made the country’s political future uncertain,” Baral said.

Prachanda and his fellow guerrillas fought against the army in a bloody civil war before emerging as the surprise winners of a 2007 general election with more than a third of the seats in parliament.

However, he resigned as prime minister after Nepal’s president blocked his government’s efforts to sack the head of the army, General Rookmangud Katawal.

On Friday, Maoist lawmakers tussled with police as they protested outside the president’s office, and they have vowed to disrupt parliament and hold street protests until Katawal is removed.

“We want the president to apologise and correct his unconstitutional move,” Maoist party spokesman Dinanath Sharma told AFP.

“We will continue to protest from streets and in parliament unless our demands are met,” he added.

The row between Prachanda’s government and Katawal was centred on the fate of 19,000 former Maoist rebel fighters, who are currently confined to United Nations-supervised camps.

Prachanda demanded that they be integrated into the national army to cement the peace process but the army refused, saying the guerrillas could never become non-partisan soldiers.

The current political uncertainty has cast a shadow over the fragile peace process launched when the 10-year civil war ended in 2006.

Rhoderick Chalmers, Nepal country director for the International Crisis Group (ICG), said the process was “close to collapse.”

“It is unfortunate to see political leaders fighting for petty gains and to fulfill personal ambitions,” he told AFP.

“Consensus was the key for all the parties, including the Maoists, to move forward.

“In order to take the peace process forward, the first thing parties should do is to rebuild consensus.”

A key task is the drafting of a new constitution after the 2008 abolition of the Himalayan nation’s 239-year-old monarchy.

But the process is already well behind schedule, and few now believe the government can meet its May 2010 deadline.

“The peace process will get delayed and at this point it doesn’t seem likely that the government will meet he deadline of writing the constitution,” said Tribhuvan University’s Baral.

Shankar Pokhrel, secretary of the UML party, told AFP discussions on ministerial portfolios were continuing, and expressed hope they would be completed within a few days.

“The biggest challenge is to bring all the leaders under one roof,” he said.

But Gunaraj Luitel, political columnist with the Nepali language daily Nagarik, said the latest crisis had exposed a “deep crisis of confidence” among the party leaders.

“The road to peace and stability looks rocky. Without a politics of consensus, Nepal will remain stuck,” he said.

World Bank approves $782 mln in lending for Nepal

The World Bank on Thursday agreed on a new two-year lending strategy for Nepal potentially worth $782 million.

Under the interim strategy, the World Bank's private sector lender could potentially commit an additional $15 million to $20 million annually during the two-year period.

"The Bank's strategy document supports the promotion of consensus and unity to address key elements of the peace process, including the foundations for state building, growth, and improved basic service delivery for Nepal's poor," the World Bank said in a statement.

The bank said it had prepared an interim strategy because Nepal is in a transitional period with a new constitution being drafted and elections expected in 2011.

Nepal swore in moderate Communist Prime Minister Madhav Kumar Nepal, last month after his Maoist predecessor quit, plunging the nascent republic into a crisis.

Various ethnic groups are now demanding a greater role in running the government, and some are pressing for separate autonomous states as the Himalayan nation prepares a new constitution after its 239-year-old monarchy was abolished.

Prime Minister Nepal was sworn in on May 25, but is yet to name his full cabinet due to wrangling among coalition partners over positions, leaving the country in limbo.

He is expected to face a difficult year with the Himalayan nation beset by crippling power cuts, poor public security, high inflation, unemployment as well as food shortages.

SBI raises stake in Nepal JV to 55%

India's largest lender, State Bank of India (SBI), today said it has increased its stake to 55 per cent in joint venture Nepal SBI from 50 per cent earlier.

SBI has been alloted 4,37,400 shares in Nepal SBI in a divestment of stake by Agricultural Development Bank conducted through a competitive bid process, SBI said in a filing to the Bombay Stock Exchange.

The total shareholding of SBI in Nepal SBI will reach 55 per cent, after transfer of these shares with due necessary regulatory approvals, it said.

Shares of the bank closed at Rs 1,879.80, up 0.57 per cent on the Bombay Stock Exchange.

Nepal SBI Bank is the first Indo-Nepal joint venture in the financial sector sponsored by three institutional promoters -- SBI, Employees Provident Fund and Agricultural Development Bank of Nepal.

Agricultural Development Bank had 5 per cent stake in the joint venture.

Remaining stake is with Employees Provident Fund (15 per cent) and the general public (35 per cent).

The management team and the managing director who is also the CEO of the bank are deputed by SBI. SBI also provides management support as per the Technical Services Agreement.