The lifeline of Nepal’s economy is threatened by conflict in West Asia and weak currencies
As Saudi Arabia began bombing Yemen last year, tension rose not only in the Gulf but also in the Nepal Embassy in Riyadh. Reports started pouring in that Nepali migrant workers were trapped in the deadly conflict.
The embassy cautioned Nepali workers against visiting the Najran region of the Kingdom where Yemeni forces had launched a counter-offensive. As it turned out, the Saudi military forced the Yemenis back, and an evacuation of migrant workers was not required.
“Nepali workers are safe so far in Saudi Arabia, and there is absolutely no need to worry,” Labour Secretary Ram Kumar Acharya told Nepali Times. However, the war in Yemen is not over. In fact it is getting more brutal with daily air strikes by the Saudi Air Force.
Indeed, the situation in West Asia with multiple conflicts in Yemen, Syria and Iraq, and terrorist attacks in Egypt, Turkey and Saudi Arabia have raised fears about not just the safety of migrant workers, but also about what would happen to a major job market for Nepalis if conflict in the region spread.
Saudi Arabia is not just involved in Yemen, but is fighting several proxy wars across the Middle East – from Iraq to Syria. There is simmering tension with Iran, which has more or less annexed Iraq. The falling price of crude oil, as well as the cost of waging conflict has meant that in 2015, Saudi Arabia recorded its largest budget deficit since the Gulf War.
Udaya Raj Pandey, Nepal’s former ambassador to Saudi Arabia, rules out the possibility of a full-blown war in West Asia involving Saudi Arabia, but says the threats to the kingdom’s economy from falling crude oil prices are real.
“If oil prices continue to slide like this, the Saudi economy could suffer badly and that in turn could affect Nepali workers there,” he says. Saudi Arabia and Qatar are the two main destinations for Nepali workers in the Gulf, and together have more than 1 million Nepali contract workers. The remittances from them and another 750,000 Nepali workers in Kuwait, Oman, Bahrain and the UAE prop up Nepal’s economy.
The other big destination for Nepalis, Malaysia, is also facing political and economic crises. Being a major exporter of crude oil, the Malaysian economy has taken a hard knock with the Ringgit having tumbled 30 per cent in a year.
Bimal Dhakal of the Nepal Association of Foreign Employment Agencies says Nepali workers are not willing to go to Malaysia anymore because of the weak Ringgit. Only 30,414 Nepalis left for Malaysia between August 2015-January 2016, whereas more than 152,453 left during the same period the previous year, according to figures from the Department of Foreign Employment.
Ram Koirala, a 32-year-old security guard in Malaysia, used to earn Rs 60,000 in 2013. He is now earning less than Rs 40,000. “My salary has not decreased, but I am earning less because of the weak Ringgit. My family believes I should be earning more because I am more experienced now, and it is really difficult to explain it to them.”
Overseas remittances pumped in nearly $6 billion into Nepal last year, and this inflow of cash is what is propping up the economy by helping us pay for imports. Remittances make up more than a quarter of Nepal’s GDP.
The nightmare scenario is if the Syrian war spreads to the rest of West Asia, pitting Shia against Sunni Muslim states and dragging Qatar, Saudi Arabia and Bahrain into the conflict. When asked about whether Nepal has at the very least a contingency plan for evacuation if not for alternative destinations for migrant workers, government officials tried to play down the threat.
“I don’t think we will have to face this situation in near future – our workers are not in Syria or Iraq,” Labour Minister Deepak Bohara told us. He admitted that it would be better for Nepal to minimise the push factor of migration by creating more jobs at home.
“To begin with, I am introducing some schemes to encourage the youth to stay back,” he said. “Post-earthquake reconstruction could be another area where more jobs can be created.”
However, a work-plan unveiled by Bohara last month contains programs aimed more at promoting out-migration than encouraging the youth to work within the country. He is exploring new labour destinations, but instead of choosing safer destinations he is looking at Lebanon and Jordan which are also in the throes of simmering conflict.
Nepali migrant workers have had to flee wars several times since 1990 during the first and second Gulf wars. More recently in 2011, hundreds had to be evacuated. A future war in the Gulf, however, could be much more violent and disruptive, experts say.
Nepal’s economy has survived the Maoist insurgency, a decade-long protracted political transition, the recent earthquakes and the Indian blockade solely because of remittance. In fact, soaring inflation back home means that overseas workers now have to send more money to their families. A Nepal Rastra Bank report shows the flow of remittance in the first five months of this fiscal year is 20 per cent higher than in the corresponding period last year.
“The blockade could have caused much more trouble if it was not for remittances,” says Dipendra Bahadur Chhetri, former Vice-chair of the National Planning Commission. “But this is only a temporary solution. It is going to go down if there is instability in the destination countries. We must be prepared to act immediately.”
Labour migration expert Ganesh Gurung criticises the government for not trying to minimise out-migration of able-bodied men. He says: “We have a foreign employment promotion board, not a board that aims to create employment opportunities within the country.
It seems the government believes that the youth will always keep migrating, earning and sending money.”
Gurung is convinced that it won’t even take a full scale war in the Gulf to bring the Nepali economy to its knees. A prolonged economic downturn in the Gulf or Malaysia would have the same effect.
As Nepal lacks capacity to airlift hundreds of thousands of migrant workers in case of an emergency in the Gulf or provide employment for them within the country, it would be wise to identify safe destinations and avoid unsafe ones, according to experts.
Says Bhaskar Koirala of the Nepal Institute for International and Strategic Studies: “It is not that the whole Middle East region is volatile and unsafe, there are still pockets in the region that are safe. We need to assess which countries are more suitable and secure to send our work force.”
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