Why Nepal is stuck

Illustration by Subhas Rai in Nepali Times #51 of 13-19 July 2001.

As a former broadcast journalist and ex-employee of the World Bank’s Nepal office, Rajib Upadhya is the right person at the right time to come out with an account of the political economy of Nepal’s development since 1990.

The title of Upadhya’s book released on 5 August, Cabals and Cartels: An Up Close Look at Nepal’s Turbulent Transition and Disrupted Development, pretty much sums up its content. During his tenure at the Bank between 1995-2018, Upadhya served as the eyes and ears for successive bosses in their dealings with Nepal’s politicians and bureaucrats.

The result is an insider look at how the powerful multilateral lender interacted with Nepal’s officialdom. Over the years, the Bank has on the one hand been criticised for meddling too much in state functions, and on the other for not meddling enough when Nepal was in deep crisis. So, it must be doing some things right.

The book begins in the heydays of the mid-1990s when democracy and the market economy brought hope that Nepal could finally take a great leap forward. However, some comrades took ‘great leap forward’ to mean something else, and decided to wage a ruinous war.

Upadhya’s first task at the Bank was to work on a report titled Political Economy of Reform in Nepal which concluded that politicians with short-term time horizons, a rent-seeking culture, and vested interest groups were preventing reforms. Sound familiar? Cabals and Cartels takes us through the early reform years of the 1990s, the insurgency, Gyanendra’s reign, the peace process, and finally the new federal system – with Nepal’s politico-business nexus as the thread running through it all. 

The book is a roll call of World Bank experts who visited Nepal: Ashraf Ghani, Mac Maharaj, Emmanuel Tumsiime. There were Bank’s successive South Asia chiefs like Mieko Nishimizu and Praful Patel, as well as past Country Directors that Upadhya advised: Hans Rothenbühler, Ken Ohashi, and Johannes Zutt.

They all came and went at various historical milestones in Nepal’s past 25 years, and Upadhya’s book has revealing anecdotes about their meetings with Nepali officials.

Rothenbühler arrived in Nepal in 2000 just as ‘shit was about to hit the fan’ (in his own words) over the Bank’s insistence on reforms in Nepal Bank Limited and Nepal Banijya Bank which were being bled dry by wilful defaulters. 

Needless to say, they were cartel members with cabal protection, as the Nepali Times reported at the time. They were so powerful that they could collude to get the CIAA to frame reformers on trumped up charges, and lean on Supreme Court justices to convict them.

Upadhya becomes close to Madhav Ghimire at the Foreign Aid Division of the Finance Ministry who fought hard for reforms, and later in his career conducted the tricky 2013 elections. He was tragically killed in a car crash in 2016.

Madhav Ghimire was in a panel discussion with David Dollar of the report Assessing Aid, which the Bank had asked me to moderate in 2000. Upadhya’s account of that conference reminded me of something I had long forgotten: how difficult it was to get government officials in the audience to ask a question. Ghimire was irritated because he had coached them to be pro-active. 

Nepal’s misfortune is that we do not make bureaucrats of the calibre and integrity of Madhav Ghimire anymore. Upadhya recalls that Ghimire went to Manakama Temple in 1998 to ask for his wish to be fulfilled. But he did not have a personal request for the priest, he asked for divine help to complete the Melamchi Water Supply Project. Twenty-two years later, plagued by corruption and mismanagement, the project is still in limbo.

Upadhya played a behind the scenes role in setting up the Society of Economic Journalists of Nepal (SEJON) with a bunch of bright young boys, some of whom like Ameet Dhakal, Prateek Pradhan, and Kiran Nepal have gone on to become editors of influential media.

Cabals and Cartels has some fascinating chapters on how even an honest prime minister like K P Bhattarai could be forced by the cartels to appoint Tilak Rawal as Rastra Bank governor. Some at the World Bank office in Kathmandu described this as akin to  ‘putting an arsonist in charge of the fire department’. Finance Minister Mahesh Acharya resigned over the appointment, and Rawal had so much clout he got his own dismissal overturned by the Supreme Court.

The next Country Director Upadhya worked under was the soft-spoken but plain-speaking Ken Ohashi. He wrote surprisingly critical op-eds, including for Nepali Times, but in one of them in Kantipur he defended the government raising fuel prices that triggered student protests. Ohashi summoned the student leaders to his office, and convinced them about why it needed to be done. Among the student leaders was Gagan Thapa, now an opposition MP.

Upadhya is also critical of the Bank’s colonial heavy-handed approach. He cites how bosses in DC even suspected Ohashi had ‘gone native’ when he started engaging with Babu Ram Bhattarai and Pushpa Kamal Dahal after the peace process. The Bank also got flak for its $50 million grant for Maoist camps, after  Dahal boasted on candid video that he had hoodwinked donors by inflating guerrilla numbers four fold.

Experts the Bank had invited accurately analysed Nepal’s malaise. Asraf Ghani, the author of Fixing Failed States, who is now Afghanistan’s president, put his finger on the root causes: over-politicisation, last-minute problem fixing, lack of rule of law, and low performance. 

Mac Maharaj, a confidante of Nelson Mandela, advised Nepal not to follow South Africa’s example in the peace process. Ugandan public finance expert Emmanuel Tumusiime said ‘lack of money is not a problem in Nepal, access to easy money is’. Even as far back as 1964, an early World Bank consultant had concluded about Nepal: ‘The central government in Nepal is not conditioned to get things done … money is certainly not the problem.’ 

Upadhya notes rather depressingly: ‘For all the outward signs of progress, our structural problems remain fundamentally unaddressed since the early 1960s … the World Bank economists could be writing about present-day Nepal.’ 

Indeed, Nepal’s progress is stymied because of state capture by a cartel of cannibals. We know what the problems are, we know the solutions. Nepal just does not have leaders with the political will and capability to implement them. 

Cabals and Cartels: An Up Close Look at Nepal’s Turbulent Transition and Disrupted Development

by Rajib Upadhya

FinePrint Books, 2020


282 pages    

summary by Rajib Upadhya of his book will be online on nepalitimes.com Weekend Longreads on Saturday.

Kunda Dixit


Kunda Dixit is the former editor and publisher of Nepali Times. He is the author of 'Dateline Earth: Journalism As If the Planet Mattered' and 'A People War' trilogy of the Nepal conflict. He has a Masters in Journalism from Columbia University and is Visiting Faculty at New York University (Abu Dhabi Campus).