<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221114111124/637217bd9c7e80680e0baa03jpeg.jpg" alt="" width="1802" height="1160"/><figcaption>On 25 June 2021, China inaugurated a 435km section of the Lhasa-Nyingchi Electrified High-speed Rail. The ‘bullet train’ will have a top speed of 160 km/h and bring Chengdu closer to the Nepal border when completed in 2025. Photo: Xinhuanet</figcaption></figure>Nearly a decade since China adopted the Belt and Road Initiative (BRI) and five years after Nepal signed it, the connectivity project is trying to rebrand itself.The $1 trillion program focused on trade, development and connectivity is financed largely by Chinese banks and SOEs.The Green Finance and Development Center of Fudan University says a total of <a href="https://www.sciencedirect.com/science/article/pii/S004016252100740X#bib0154">$755 billion has been spent</a> on BRI projects of which more than 65% has gone into energy and transportation.In 2013, President Xi envisioned the BRI as<a href="https://press-files.anu.edu.au/downloads/press/n9514/pdf/book.pdf"> an aspirational world</a> of peaceful connectivity and friendship — one that is free from conflict. Yet, over the years, its success has also drawn widespread criticism questioning its sustainability.Chinese infrastructure projects in BRI include energy, transportation and real estate require construction inputs — like steel, cement and glass that remain oversupplied in China.For example, the utilisation capacity of the total production of steel and oil refining in China had gone down by <a href="https://onlinelibrary.wiley.com/doi/10.1111/1758-5899.12439">10% from 80 to 70</a>% between 2008 to 2015, signaling bad loans for the banks due to overproduction and negative effects on its overall economy.BRI projects allowed the Chinese government to take steps to ensure that the vast majority of the <a href="http://www.axel-dreher.de/Dreher%20et%20al._Aid_China_Growth.pdf">construction inputs will be sourced</a> from China to offset its industrial overproduction. This allows a large volume of trade to be in China’s favour while creating a huge trade imbalance between China and recipient countries.In 2021, China’s <a href="http://country.eiu.com/article.aspx?articleid=250850808">trade surplus with BRI countries</a> had reached $199.2 billion. For some countries like Italy which saw a rise of exports by 63% in 2021, others like Nepal <a href="https://kathmandupost.com/money/2022/02/05/nepal-s-trade-with-china-going-through-rough-patch">had a trade deficit of Rs232.9 billion</a>, when total exports was only Rs1 billion.One thing has remained clear: while Chinese exports will continue to grow until the BRI projects are completed, countries at the receiving end must bet on export competitive projects that can reduce the trade deficit and ensure sustainability.Secondly, the Chinese <a href="https://madeinchinajournal.com/2021/12/01/builders-from-china-from-third-world-solidarity-to-globalised-state-capitalism/">consider themselves</a> ‘builders’ rather than ‘financers’ projecting their capacity to build projects under the BRI. It is no surprise that China dominates international project contracting. By 2018, <a href="https://www.enr.com/toplists/2019-Top-250-International-Contractors-1">75</a> of the world’s top 250 international contracting firms were Chinese.Most BRI projects have been funded by large state-owned banks of China and implemented by Chinese international contractors and SOEs, at times they have been subject to reproach due to poor labour relations including a lack of awareness of local rules and regulations, and especially on the hiring of Chinese labourers in large numbers instead of locals.Maria Carrai, Professor of China Studies at NYU Shanghai argues in favour of  <a href="https://d1wqtxts1xzle7.cloudfront.net/65743046/WD_1_s2.0_S0305750X20305167_main-with-cover-page-v2.pdf?Expires=1651327708&amp;Signature=OG1O4XNvHSblwIsYUfrb5blQwbiy0b~SuXiq9aKfw-STjlYGahGVTKHwgN7DXOm3WDAerWqfKY0iHspunM2n9IAGOfzYkuZCryKq8eq0PPgvLwdQG6Ufl3HoizzJTEQAHgj3x627V3359aWAyCxLSa-H6SYYTD2VxbkPQpV2vpOrNQ2YzX886Y0NK0t-s9WCt6Lf7ZlMy2evz54aewwDQJvS3Ki-P2ybBibKxQ5mNtJBd1xZYEe19UvN15ZLL3rmNXTCus2QW6mO6BflTSeGGcPbMsOiD-e-977Qh7KUg46GKxIvGJ8houVVqpvyq7-OoDY3nVJVjAgi3NPhOU0yVQ__&amp;Key-Pair-Id=APKAJLOHF5GGSLRBV4ZA">local adaptive governance</a> because the success of BRI projects relies on effective communication of its social responsibilities to recipient countries with their local governments and making sure that working with the contractors or SOEs can enhance good governance.The Addis - Djibouti SGR railway operation and maintenance <a href="https://qz.com/africa/1634659/ethiopia-kenya-struggle-with-chinese-debt-over-sgr-railways/">were awarded to construction contractors with no actual railway operation experience</a> resulting in a lack of adequate technical capabilities to complete the project.Yet, the major challenge is still that Chinese BRI projects are heavily invested in countries that have historically demonstrated poor and weak governance, lack of transparency and are vulnerable to political shocks and instabilities.Since the start of the BRI in 2013, more than 80% of total Chinese foreign assistance <a href="https://www.cgdev.org/blog/three-key-shifts-development-cooperation-chinas-2021-white-paper">has gone to low-income countries</a>, and for some like Angola, and Montenegro the BRI loans continue to risk having an <a href="https://www.cgdev.org/sites/default/files/examining-debt-implications-belt-and-road-initiative-policy-perspective.pdf">unfavorable degree of dependency</a> on China as its prime creditor.Despite this, BRI in itself has gradually undergone reform over the years. From its lofty and vague ambition in early 2016 that did not indicate its focus, we now know its priority areas.President Xi during the 2nd Belt and Road Forum in 2019 <a href="https://www.business-humanrights.org/de/blog/chinas-white-paper-and-the-bri-can-we-expect-china-to-deliver-on-the-sdgs/">called for cleaner, greener, high-quality infrastructure projects</a> that are “sustainable, affordable, inclusive and accessible”.Chinese-backed projects have previously been under heavy scrutiny due to a lack of transparency and growing debt burden. A 2021 white paper on Belt and Road highlights the need for high-quality sustainable projects and the 2022 MOFCOM’s ‘Guidelines for ecological environment protection of foreign investment cooperation’ stresses the need for Chinese investments to meet international standards of environmentally sustainable projects.In 2021 China declared to <a href="https://greenfdc.org/wp-content/uploads/2021/07/21_07_22_BRI-Investment-Report-H1-2021.pdf">not to invest in coal-power plants</a> and also to cut funding for loss-making projects. Regulatory scrutiny has forced Chinese contractors under BRI to significantly up their game, which means we will see it focusing on smaller and fewer projects of higher quality, particularly in areas of the green and sustainable energy sector.It has been five years since Nepal signed the MoU but has so far seen little in terms of the impact. The BRI projects use the <a href="http://www.edcnepal.org/wp-content/uploads/2018/11/DAY-4-LECTURE-5-NHDP_Hydropower-Financing-Traditional-Project-Finance-EPC-and-EPC-F_2018-11-29_FINAL.pdf">Engineering, Procurement, Construction and Financing (EPC-F)</a> used in infrastructure projects and are particularly preferred in developing countries where debt markets are less mature and there may be wide variations in the availability and cost of debt financing.The EPC contractor will be responsible to finance a large portion of the project and the government has to provide a sovereign guarantee to safeguard lenders’ interests and provide payment security guarantees on behalf of off-taker, usually government-owned entities.This has generated controversy for the huge risk involved to the host country. The selection process tends to be restrictive to a particular country or set of manufacturers, in this case only to Chinese contractors.For example, only a few weeks back the government of Nepal <a href="https://myrepublica.nagariknetwork.com/news/china-miffed-with-deuba-govt-s-decision-to-deny-chinese-company-to-develop-budhi-gandaki-hydro-project/">revoked the license</a> issued to the Chinese state-owned China Gezhouba Group Corporation (CGGC) for the development of the Budi Gandaki Hydropower Project under the EPCF modality with a total cost of around <a href="https://www.hindustantimes.com/world-news/nepal-refuses-china-s-offer-to-fund-multi-billion-dollar-power-project/story-cfRJPHSKJkn2gqyon7anUL.html">$2.73 billion.</a>After the 2017 BRI agreement, for the first time, Nepal developed a project under the EPC financing modality of $88 million financed by China and with MoU between Nepal’s People’s Energy and China’s Chongqing Water Turbine Works Co. Ltd.The agreement was to develop a 48.8 MW Khimti-2 hydropower project on the border of the Ramechhap and Dolakha districts in Province 3. However, the project suffered a major setback: 500 Chinese workers were prevented from coming back to Nepal due to the Covid-19 outbreak. Similarly, the EPCF model requires the contractors to be present in the project while the main construction takes place.The high-interest rates associated with BRI loans with a relatively short payback period is another drawback for Nepal which prefers grants. Furthermore, in BRI projects there is a right to bid reserved exclusively for Chinese firms, but the Nepali side demands to be open to all.Back then the BRI used to run projects on an ad-hoc basis but by 2022 it has undertaken various reforms to properly guide sustainable infrastructure development.Because the BRI is enshrined into the CCP’s constitution, there is no question regarding its sustainability, but as BRI puts its focus on environmentally friendly infrastructures, countries like Nepal should prioritise projects that can yield better results and help strengthen Sino-Nepal relations.Abiral Khatri is with the NIFRA bank and is a research scholar based previously at Erasmus University Rotterdam, IIM Bangalore and Renmin University of China. Raunab Singh Khatri is the co-founder of The Araniko Project and is a Yenching Scholar in Chinese studies at Peking University.

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BRI enters the tenth year

<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221109171156/636bdc2f9c7e80680e080301jpeg.jpg" alt="" width="1500" height="998"/><figcaption></figcaption></figure>Pradumna B Rana is Visiting Associate Professor at the Centre for Multilateralism Studies of the S. Rajaratnam School of International Studies (RSIS) at the Nanyang Technological University (NTU) in Singapore. He has authored or edited 20 books, and his latest is China’s Belt and Road Initiative: Impacts on Asia and Policy Agenda co-authored with Xianbai Ji. Nepali Times: Why the BRI, and what is the value-added of your book?Pradumna B. Rana: As you know, the BRI is President Xi Jinping’s foreign and economic policy initiative to connect and develop the Euro-Asian super-continent. Over 165 countries in Asia, Europe, Africa, and Latin America have signed up for the BRI. It was launched in 2013, in the usual top-down campaign style manner, with few details. Issues are only now becoming clearer. We wanted to document these details.Also, existing analyses and commentaries are based on narrow samples and case studies. We wanted to capture the views of opinion leaders (defined as policymakers, academics, and representatives of businesses and media) from a broad range of stakeholder countries, 26 Asian countries that have signed the BRI MOU with China.Hence, Japan, Australia, and India were excluded from our survey. China was also excluded for obvious reasons. To the best of our knowledge, our survey is the first of its kind.  In addition, our book also presents the simulation results of a computable general equilibrium model of the world economy. This is another value-added.Will the BRI lead to a win-win situation for both China and the BRI stakeholder country as claimed by China, or will it benefit only China as alleged by Western countries?The answer is: it depends. The 1,200 plus opinion leaders from 26 countries who responded to our perception survey felt that the present version of the BRI or BRI 1.0 has a number of problems like lack of transparency and openness, China’s lack of sensitivity to local conditions, and its unwillingness to allow local contractors to bid for BRI projects. Despite this, most respondents felt that if China reformed the BRI along the lines suggested in the survey, then ultimately BRI 2.0 could lead to a win-win situation.The BRI is frequently portrayed as a geopolitical strategy that ensnares countries in unsustainable debt or the so-called debt trap diplomacy. Is this true?Although 27% of our respondents had yet to decide, 40% felt that the debt-trap argument was not true. Only 30% supported the debt-trap diplomacy theory. Some respondents felt that domestic factors (such as corruption and reckless borrowing) were responsible for the rising levels of debt in several BRI countries like Malaysia, Pakistan, and Sri Lanka. Yet others felt that China’s financial system was too fragmented and poorly coordinated for it to pursue detailed strategic objectives such as snaring countries in debt traps. So, the debt-trap argument is probably more a myth rather than a reality.How can Nepal itself benefit from the BRI?The simulation results of econometric models show that landlocked countries are the largest beneficiaries of the BRI. Mongolia is fast-becoming a land-link between China and Russia. Countries in Central Asia (such as Kazakhstan and Kyrgyzstan) are also becoming land-links between China and Europe. Nepal could similarly benefit by becoming a land-bridge between China and India, but at the present time the proposed Trans-Himalayan Economic Corridor is not feasible because of the strong opposition to the BRI from India.Our simulation results, however, show that even without India, the Nepal-India Trans-Himalayan Multidimensional Connectivity Network agreed when President Xi visited Kathmandu in October 2019, could have sizeable, although much reduced, economic benefits. Nepal should, therefore, take actions to diversify its trade by making the Protocol to the Agreement on trade and transit signed in April 2019 effective as soon as possible and also by seeking financing for viable infrastructure projects from China.How has the BRI been affected by the COVID-19 pandemic, will it ultimately fizzle out?The BRI has been adversely affected by the pandemic because with massive lockdowns and border restrictions, the physical dimension of the BRI ground to a halt. China, therefore, started to focus instead on building the Health Silk Road (manufacturing and distributing PPEs and ventilators) and the Digital Silk Road (mainly for contact tracing and e-commerce). As the pandemic situation improves, China will surely restart the Physical BRI.Exports of many BRI countries also suffered because of the pandemic, and they are facing difficulties in servicing their debt to China. Beijing is helping these countries restructure their debt including forgiving of part their debt obligations. So, the BRI is not about to collapse.China will not let that happen because this project, labelled as the ‘project of the century’ by many, marks China’s re-emergence in the global scene and its eventual ascent to be the number one economy in the world.<img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221109171156/636bdc329c7e80680e080302jpeg.jpg" alt="" width="400" height="602">

“China’s BRI will ride out the pandemic”

<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/2022110914114/636ba5639c7e80680e0736c1jpeg.jpg" alt="" width="765" height="576"/><figcaption></figcaption></figure>When Chinese social media posted photographs last month of engineers surveying the extension of the Tibet Railway, one of the images showed Mt Everest to the south looming over the plateau from the proposed route of the tracks.Suddenly, a promise that Mao Zedong had made to King Birendra back in 1973 to build a railway from Lhasa to Kathmandu looked like it was finally going to happen.Reports suggest the Chinese want to finish the Xiagtse Gyirong (Kerung) extension of the Tibet Railway by 2025 -- although its further extension across the Himalaya to Kathmandu is going to be a <a href="https://www.nepalitimes.com/banner/which-way-will-the-tibet-nepal-railway-go/">much more technically and financially challenging prospect</a>.The railway project was brought up again in 2008, and got a push after the Indian Blockade of 2015 forced the Nepal government to plan alternative trade routes. The trans-Himalayan train was discussed between Prime Minister K P Oli and President Xi Jinping in two meetings in Beijing and Kathmandu last year.In 2017, Nepal also signed a framework agreement on the Belt Road Initiative (BRI) of which the railway project is a part. A feasibility study for the train link from Kerung via Rasuwa to Kathmandu and onward to Pokhara and Lumbini was completed in 2018. But not much else has happened since – largely because of the COVID-19 crisis and political uncertainty in Kathmandu.Most observers agree that despite the lackadaisical attitude on the Nepal side, the Chinese are forging ahead with their BRI strategy in general, and the plan to extend the railway line from Xigatse to Gyirong with the survey of the route.When the first Belt and Road Forum was held in Beijing in May 2017 amidst much fanfare, the much-anticipated conference attracted more than 60 countries which wanted to partner with China on upgrading infrastructure and connectivity.<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/2022110914114/636ba5669c7e80680e0736c2jpeg.jpg" alt="" width="1500" height="1000"><figcaption>Trucks carrying imported Chinese goods cross over from Kerung to Rasuwagadi, the proposed route for the trans-Himalayan railway under China's Belt Road Initiative. Photo: NABIN BARAL</figcaption></figure><figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/2022110914114/636ba5699c7e80680e0736c3jpeg.jpg" alt="" width="826" height="680"><figcaption></figcaption></figure>Three years later, more than $70 billion worth of project have been completed, while other projects to the tune of $100 billion are ongoing across the world. Despite criticism about lack of transparency, environmental impact and a Chinese ‘debt trap’, for Nepal the attraction is that projects like the trans-Himalayan railway could be an economic and geopolitical game-changer.Initiated by President Xi in 2013 and enshrined in China Constitution in 2017, the BRI is seen as a strategy to diversify China’s infrastructure investment abroad, and to expand its geostrategic space.The focus of the BRI has itself changed over the past four years to encompass not just infrastructure but also a ‘Digital Silk Road’ of connectivity. As more and more Chinese investors and tourists travel abroad, the <a href="https://www.nepalitimes.com/latest/china-builds-digital-and-medical-silk-roads/">Digital Silk Road</a> is already functioning as a new payment gateway involving Chinese digital giants like WeChat and Alipay. By not making grand promotions and sticking to its domestic consumers, these companies have simply followed <a href="https://beltandroad.ventures/beltandroadblog/2018/7/8/where-the-chinese-go-alipay-and-wechat-pay-go">Chinese travelers wherever they go</a> (see map).Nepal initially banned Chinese digital payment giants WeChat and Alipay after loss of revenue from the increasing influx of Chinese visitors into the country.But the government decision to legalise both payment systems to benefit entrepreneurs and facilitate remittances from Nepalis shows China’s growing financial clout. As Nepal aims to lure more Chinese tourists in future, it is clear that Digital Silk Road will become an important artery for e-commerce.<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/2022110914114/636ba56b9c7e80680e0736c4jpeg.jpg" alt="" width="645" height="427"><figcaption></figcaption></figure>The ‘<a href="https://www.nepalitimes.com/latest/china-builds-digital-and-medical-silk-roads/">Health Silk Road</a>’ is another <a href="https://www.cfr.org/blog/mapping-chinas-health-silk-road">rhetorical extension</a> of the BRI, and a response to the COVID-19 crisis to also boost China’s leadership in bio-technology and medicine. China has used this concept to rebrand the existing BRI by becoming a frontier in health technologies like using <a href="https://asia.nikkei.com/Spotlight/5G-networks/Coronavirus-helps-China-pull-ahead-in-the-5G-race">5G drones to deliver medical assistance</a> in Beijing, and emergency COVID-19 assistance all over the world.China <a href="https://news.cgtn.com/news/2020-07-27/China-to-enhance-cooperation-with-neighboring-countries-over-COVID-19-Stv2SvH9RK/index.html">recently held a joint conference</a> between Nepal, Pakistan and Afghanistan to combat COVID-19 together by building a new health network involving advanced digital connectivity and promoting it under the umbrella of the overall BRI mandate.Although in 2017, there was a flurry of activities in Chinese universities and think-tanks to discuss BRI initiatives, interest in it appears to have become somewhat subdued of late. Partly, it is the fallout of the pandemic, but even before the crisis hit BRI faced criticism in partner countries like Malaysia and Sri Lanka about risky, expensive projects that could be a ‘debt trap’. Large state-owned enterprises and banks started reconsidering how they viewed risks overseas, and advised a slowdown in investment promotion.In China itself, many <a href="https://www.ft.com/content/fb7436d6-b006-11e8-8d14-6f049d06439c?mc_cid=060a04b9b2&amp;mc_eid=f877bd4bdd">netizens were not happy</a> with their country’s eagerness to lend billions of dollars overseas when China itself has not fully lifted its own people from poverty. Managing public opinion in China is a sensitive topic for the leadership, and this could be another reason for large BRI projects not getting as much public exposure as before.However, even though within China the government may be keeping BRI in low profile for now, its activities and projects are up and running, though delayed somewhat this year by the global pandemic. The ongoing survey of the Xigatse-Gyirong railway is an example.<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/2022110914114/636ba56d9c7e80680e0736c5jpeg.jpg" alt="" width="773" height="309"><figcaption></figcaption></figure>In Nepal, the public discourse on BRI has largely been associated with its geo-political risk, particularly because the MCC is seen as a countervailing American initiative in the global great game between the two world powers.China uses the BRI brand to project not just its strategic need for connectivity, but also as an extension of its soft power. However, in Nepal, the public perception of the BRI will be determined largely by its geopolitical content. For now, the BRI is equated almost solely as being synonymous with a future Gyirong-Kathmandu railway, and there is widespread public support for what many see as a catalyst for Nepal’s future development.But Nepalis may soon realise that the trans-Himalayan train may take decades to materialise, and in the meantime the BRI and its other initiatives are here to stay.Raunab Singh Khatri is a graduate student in Economics at the Yenching Academy of Peking University, Beijing.

BRI and trans-Himalayan connectivity

<figure><img width="1750" height="1110" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221109101132/636b73d49c7e80680e06235ejpeg.jpg" alt=""/><figcaption>Photo: PMO</figcaption></figure>When the CPN (UML) unified with the CPN (Maoist) two years ago, most hoped that it would lead to the UML-isation of the Maoists, steering them towards democratic norms and values. Instead, we seem to be witnessing the Mao-fication of the Nepal Communist Party.Evident proof of this was the first Central Committee meeting of the unified party last week — nearly two years after it was formed. The meeting of the 445-member jumbo Committee at the City Hall happened even as divisions sharpened between the party's two top leaders: Prime Minister K P Oli and his co-chair, former Maoist leader Pushpa Kamal Dahal.Read also: <a style="background-color: #ffffff; font-size: 15px; letter-spacing: 0.01em;" href="https://www.nepalitimes.com/?p=40191&amp;preview_nonce=4843c358ff&amp;preview=true" target="_blank" rel="noopener">Own goal,</a> Kunda Dixit<a href="https://www.nepalitimes.com/here-now/which-way-nepali-politics-in-2020/">Which way Nepali politics in 2020?,</a> Saindra RaiDahal and Oli have tried to hide their power struggle, but their one-upmanship is on full public display in just about every noteworthy issue these days, from the selection of Parliament Speaker to the controversy over the <a href="https://www.nepalitimes.com/latest/mcc-row-damages-nepals-credibility/">Millennium Challenge Corporation</a> (MCC). The Central Committee gathering itself was structured like an NGO annual general meeting, complete with a review paper and 15 thematic breakout sessions from which hand-picked spokespersons reported on conclusions to the plenary. This allowed the leaders to keep a tight lid on dissent. The merits of issues and problems of internal party decision-making were therefore sidestepped, and the discussion reflected the party’s deep polarisation.The other tactic that Oli and Dahal effectively employed was of scathing self-criticism on issues on which they expected to be censured by members. Oli’s more than two-hour-long review was a mea culpa, admitting to delays in reorganising the unified party, failure in delivery of services by the government, and unconstitutional behaviour by the same. This is a trick often employed by communist parties elsewhere when faced with severe criticism for failures. And it worked. There was no real debate on issues, and Oli managed to deflate and defuse most of the criticism of his leadership.However, the prime minister is getting physically weaker and politically more isolated. At a three-hour tête-à-tête with editors at his residence on Tuesday, Oli said he was going to get another kidney transplant soon, and exuded confidence about serving out the next three years in office. But a transplant would keep him away for at least two months, and Dahal is waiting in the wings, becoming increasingly impatient.Read also: <a style="background-color: #ffffff; letter-spacing: 0.01em;" href="https://www.nepalitimes.com/editorial/a-millennium-challenge/">A millenium challenge</a>, EditorialOli and Dahal had agreed to rotate two-and-half years each as prime minister, but Dahal agreed to let Oli to serve the full term — probably gambling on Oli’s health preventing him from doing so. Now, Dahal is stepping up the ante. He has wooed away former UML leaders like Madhav Kumar Nepal, Bam Dev Gautam and Jhalnath Khanal who are disgruntled with Oli, to his side. <a href="https://www.nepalitimes.com/editorial/a-millennium-challenge/">This block vote was seen most clearly in the MCC controversy</a>. Dahal himself did not even mention the $500 million American grant aid project in his 32-page report, although he praised the Chinese Belt and Road Initiative (BRI), criticised the <a href="https://www.nepalitimes.com/editorial/between-two-oceans/">US Indo-Pacific strategy</a>, and took the populist stance on the Lipu Lekh territorial dispute with India. However, he got his faction to oppose the MCC tooth and nail, accusing it of being a <a href="https://www.nepalitimes.com/here-now/nepal-now-has-to-balance-not-just-india-and-china-but-also-the-west/">US military plan</a>. The MCC became the focus of much of the discussion at the Central Committee because Dahal remained silent on it and Oli spent so much time defending it.This exposed the rift at the top of the party, and allowed former UML leaders like Bhim Rawal make a scathing attack on the grant. In the end, the Committee decided to form a Taskforce that has to present an evaluation of the MCC by next week.Signs of the former Maoist leader Dahal starting to wield an upper hand can be seen in the revival of the proposal that Nepal's Constitution be amended to allow for the abandonment of the parliamentary system to be replaced by one with a directly-elected executive president. This has been Dahal’s long-standing wish for himself ever since the end of the conflict.There are other signs of the NCP accumulating Maoist traits. The drift towards a personality cult were clearly visible at City Hall with Oli and Dahal’s portraits on prominent display on the stage.And despite all the rhetoric about inclusion, the party made a mockery of the Constitution because the nine senior leaders on stage were all men, and mostly from a dominant caste group. <h2>10 years ago this week</h2> In a <a href="http://archive.nepalitimes.com/news.php?id=16774#.Xjv8rTIzaUk" target="_blank" rel="noopener">report aptly titled ‘Snailport’</a> by Dewan Rai and Suvayu Dev Pant (<a href="http://archive.nepalitimes.com/issue/488" target="_blank" rel="noopener">issue #488 5-11 February 2010</a>), Nepali Times looked at the congestion in Kathmandu airport on the occasion of Visit Nepal 2010. 10 years later and as we mark another Visit Nepal Year, unsurprisingly, the state of the country’s only international gateway remains the same. Excerpt:International aircraft arrivals increased by 8.41 per cent and domestic aircraft arrivals by 19.72 per cent in the first nine months of 2009 compared to the same period in 2008. Yet there have been no major additions to infrastructure. “Our airport doesn’t meet the requirements for an international airport, so it is very difficult to accommodate all the tourists,” says Amar Bahadur Shakya of the Civil Aviation Authority of Nepal (CAAN).Although the airport was designed for only 1000 passengers daily, the actual turnover today is close to 2000. Likewise, the departure lounge was designed for 350 but sees up to 1000 passengers daily. Congestion at the air terminal may even have contributed to the death of a Korean woman, of a heart attack, three weeks ago.Such problems were anticipated long ago, but officials have been slow to respond.<a href="http://archive.nepalitimes.com/issue/488"><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221109101132/636b73d79c7e80680e06235fjpeg.jpg" alt="" width="502" height="799"></a>

Awesome party

<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221108151128/636a67779c7e80680e0599dcjpeg.jpg" alt="" width="3000" height="1668"/><figcaption>Illustration: BHANU BHATTARAI</figcaption></figure>Legend has it that the real reason Nepal stayed an independent nation state while all around us were colonised was that our powerful neighbours took one look at the terrain and people here and concluded that the country was ungovernable.In the three decades after 1990, Nepal’s elected leaders have shown even fewer smarts than past feudal dynasties. The <a href="https://www.nepalitimes.com/editorial/another-decade-to-get-it-right/" target="_blank" rel="noopener">biggest let-down has been in the last two years</a>, after the unified Nepal Communist Party swept the country’s first three-tier federal elections. The strongest government in Nepal’s democratic history is showing itself to be more feckless than those fragile do-nothing coalitions.Perhaps the latest example of shooting ourselves in the feet has been the wrangling within the NCP over the US Millennium Challenge Corporation (MCC). If there was one vivid example of how not to look a gift horse in the mouth, this is it.The awkwardly-named MCC was launched by President George W Bush in 2004 after the 9/11 attacks to reorient American aid towards the kind of infrastructure projects that USAID or the World Bank would not touch. At first, with an ongoing war Nepal was deemed ineligible for the MCC.But by 2012, with <a href="https://www.nepalitimes.com/banner/how-will-nepal-develop-in-the-next-decade/" target="_blank" rel="noopener">progress in health and education and economic</a>, political and press freedom, as well as prospects for the rule of law, Nepal qualified for membership. A threshold program in Kathmandu went about shortlisting investments in infrastructure that could jumpstart development.Nepali planners, working with their American counterparts, singled out transmission lines and highways as main economic bottlenecks. But they worried that Nepal did not have a governance track record, transparency or policy continuity to guarantee that the MCC’s $500 million could be effectively spent in five years.Finally in 2017, the Nepal government committed $130 million as counterpart funds, and the Hetauda-Damauli-Butwal 400kVA transmission line, as well as rehabilitation of 305km of highways from Itahari-Kakarvitta and Pokhara-Butwal, were selected for the MCC.These were not chosen arbitrarily — serious homework was done to find catalytic projects that could transform economic growth through quick returns on investment. This was a departure from the way planning is normally done in Nepal: ad hoc, whimsical, wasteful. The MCC also made provisions to ensure transparency and minimise the kind of delays in large infrastructure projects that Nepal has become notorious for.Any other government worth its salt, and one that knows what is good for its people, would have jumped at a deal like this. But not Nepal under the NCP. Members of the party’s central committee have objected that the MCC is part of the US <a href="https://www.nepalitimes.com/editorial/between-two-oceans/" target="_blank" rel="noopener">Indo-Pacific Strategy</a>, objecting to a clause that would require Indian go-ahead on the transmission line, and at provisions for independent outside auditing.It is true that there is rarely a free lunch in official development assistance — even a grant is somehow tied to the strategic interest of the donor. But the MCC predates both China’s Belt and Road Initiative (BRI) and the Indo-Pacific Strategy. Yes, there is a new cold war between Beijing and Washington, the two compete globally for political, economic and military domination, and both superpowers have <a href="https://www.nepalitimes.com/here-now/nepal-now-has-to-balance-not-just-india-and-china-but-also-the-west/" target="_blank" rel="noopener">strategic concerns in Nepal</a>.But it would be in Nepal’s own strategic interest to take maximum advantage and get both the BRI and the MCC to contribute to Nepal’s infrastructure development. Instead, some sections of the NCP are doing their best to wreck both initiatives so Nepal is left with neither.The reason the MCC needs to be cleared with Delhi is because Nepal’s planners decided to upgrade the transmission line to 400kVA so it can also export electricity to India through Gorakhpur. And having Parliament ratify the compact would ensure political continuity and commitment.Last week in this newspaper we projected an optimistic scenario of <a href="https://www.nepalitimes.com/banner/nepal-in-2030/" target="_blank" rel="noopener">what Nepal may look like by 2030</a>. Infrastructure-led development is necessary because jobs will be created during construction, and improved connectivity will have downstream benefits into the future.However, there are good, bad and ugly infrastructure projects. The ‘excavator roads’ that maul our mountains are not just ugly, they are an environmental disaster.  <a href="https://www.nepalitimes.com/banner/pokhara-nepals-new-aviation-gateway/" target="_blank" rel="noopener">Pokhara’s new international airport</a> is too costly for its capacity, but at least it is being built and may help diversify tourism while decongesting Kathmandu.The <a href="https://www.nepalitimes.com/banner/does-nepal-need-a-4th-international-airport/" target="_blank" rel="noopener">proposed airport in Nijgad</a> is an example of ill-advised megalomania. In fact, it is not an airport project but a timber concession. Yes, it is a game changer but only in the sense that it will <a href="https://www.nepalitimes.com/here-now/economy-ecology-of-nijgad-airport/" target="_blank" rel="noopener">wreck both our economy and environment</a>.Decisions on large, expensive projects must be taken by technocrats and planners who know what they are doing, not by ignorant, populist politicians with edifice complexes who want to commit <a href="https://www.nepalitimes.com/editorial/megalomania-kleptomania/" target="_blank" rel="noopener">colossal blunders like Nijgad</a> and sabotage a worthy initiative like the MCC.<h2>10 years ago this week</h2>Go back 10 years to read <a href="http://archive.nepalitimes.com/issue/482" target="_blank" rel="noopener">Nepali Times #482</a>, 25-31 December 2009, and its front page news roundup titled ‘<a href="http://archive.nepalitimes.com/news.php?id=16624#.XgRialUzaUk" target="_blank" rel="noopener">End on a high</a>’. It shows us that the more things change in Nepal, the more they remain the same. An excerpt:‘A rollercoaster week of recriminations and reconciliations began with a three-day Maoist bandh marked by violence and intimidation across the country. It peaked with a massive Maoist assembly in New Baneswor. Chairman Pushpa Kamal Dahal then delivered a fiery anti-Indian tirade during which he labelled the rest of the political leadership ‘remote-controlled robots,’ who he would bypass to hold direct talks with Delhi.Amidst widespread condemnation, the Maoist supremo weakly argued the following day that his comments were meant to be a ‘satire’ on the shape of things in Nepali politics.’<a href="http://archive.nepalitimes.com/issue/482"><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221108151128/636a677a9c7e80680e0599ddjpeg.jpg" alt="" width="506" height="807"></a>

A millennium challenge

<figure><img width="1400" height="920" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221108131140/636a4e509c7e80680e04fcabjpeg.jpg" alt=""/><figcaption>Illustration: BHANU BHATTARAI</figcaption></figure>The trans-Himalayan railroad has been in the news lately. And like everything else in Nepal, it is difficult to separate hot air from a cool breeze. The Chinese cannot hide their irritation anymore about Nepal’s politicians day-dreaming. Ambassador Hou Yanqi was as blunt as a diplomat can be at a recent interaction in which she said (we paraphrase): “Not so fast.”Read also: <a style="background-color: #ffffff; font-size: 15px; letter-spacing: 0.01em;" href="https://www.nepalitimes.com/?p=29461&amp;preview=true" target="_blank" rel="noopener">Which way will the Tibet-Nepal railway go?</a>, Ramesh Bhushal<a style="background-color: #ffffff; font-size: 15px; letter-spacing: 0.01em;" href="https://www.nepalitimes.com/?p=29395&amp;preview=true" target="_blank" rel="noopener">Dream Train</a>, Ramesh BhushalThe extension of the Qinghai-Tibet Railway to Nyalam and Kerung, then onwards to Kathmandu, Lumbini and the Indian border constitutes a part of Beijing’s <a href="http://archive.nepalitimes.com/news.php?id=15892#.XRsdKz8za70" target="_blank" rel="noopener">Medium and Long-term Railway Network Plan</a>. But laying train tracks on the rugged terrain of the Tibetan Plateau has been a daunting challenge even for the Chinese.After the Lhasa line was connected to Xigatse and beyond, it was expected to reach <a href="https://nepalitimes.atavist.com/the-tibet-train" target="_blank" rel="noopener">Kerung</a> on the Nepal border by the next year, but now it looks like it will be pushed back five more years. Yet Nepal’s hyperbolic politicians talk about it as if the locomotives will be chugging in by next Dasain.The railway to Nepal was listed as one of the 64 Belt Road Initiative (BRI) projects at the second Belt and Road Forum in Beijing in April. The ambitious BRI aims to improve China’s overland connectivity to countries across its western border in Central Asia and beyond to even Europe. The Nepal link is not directly on the main line, but part of a <a href="http://archive.nepalitimes.com/blogs/thebrief/2017/05/12/nepal-joins-new-silk-road/" target="_blank" rel="noopener">sub-Silk Road</a> that could, in the future, offer an alternative to two-way trade between China and India, which today follows a maritime route through the Strait of Malacca.China is India’s largest source of imports, and it is in Beijing’s geostrategic interest to find land alternatives to choke points on its sea routes to the Indian Ocean. Two-way trade between India and China is now nearly $100 billion a year and a stable land corridor would be in both the countries’ interest. Besides that, China wants to integrate its southwestern regions of Tibet and Xinjiang with central and southern Asia.  But what does Nepal get out of the proposed rail link? First of all, theoretically, we can have <a href="https://www.nepalitimes.com/editorial/yam-between-3-boulders/" target="_blank" rel="noopener">cheap and reliable alternative access</a> to sea ports. That Nepal needs this trade bypass is a no-brainer considering the five-month Indian Blockade of our southern border in 2015. Despite its initial cost, train travel is cheaper and environmentally much cleaner. A railway track through the mountains could interlink trade and tourist travel between the two countries, and be a catalyst for other train lines within Nepal. Nepal’s politicians, including Prime Minister K P Oli, came to power riding the nationalist wave after the Blockade, and promised better access to the north. But one just has to see the slow progress of the road on our side of the Rasuwa border today to realise that it was all talk. Whatever progress there has been in upgrading the checkpoints in Rasuwa and <a href="https://nepalitimes.atavist.com/bordering-on-helplessness" target="_blank" rel="noopener">Kodari</a>, or the dry port in Larcha, are being built by China in our territory.The biggest uncertainty about the trans-Himalayan railroad is who is going to pay for it, and if it will pay for itself. The 170km stretch from Kerung to Kathmandu will cost at least $5.5 billion. It is unlikely the Chinese will just gift the railroad, and a loan could be a debt trap. Unless Nepal’s exports to China rise dramatically, this railway will not make much economic sense.Nepal’s trade deficit with China is expected to grow to $15 billion this year, as imports rose by 40% and exports fell by 30%. A cargo train makes sense if we can use the wagons to send goods back to China, not just to buy more.China used its comparative advantage in the past to produce labour-intensive goods which it exported worldwide to buy knowhow. Now, China has attained an income level where some of those goods can be produced more cheaply elsewhere: like Nepal. In the 1990s, tax rebates attracted multinationals to set up manufacturing bases in Nepal for export to India. We do not have to reinvent the wheel.Greater connectivity between India and China through Nepal, however, could open a new trans-Himalayan trade corridor which can offer Nepal another chance to be a manufacturing base for specialised products to be sold to both our giant neighbours. But for that, we need a strategic vision and pragmatic policies. Nepal’s strategy should be to serve as a land bridge between India and China and get these two giant locomotives to pull in the same direction.10 years ago this weekNepali Times <a href="http://archive.nepalitimes.com/issue/458" target="_blank" rel="noopener">#458 of 3-9 July 2009</a> dealt with the Constitution deadline being only 11 months away, and the political parties paralysed by wrangling. Our<a href="http://archive.nepalitimes.com/news.php?id=16083#.XR7YWeszaUk" target="_blank" rel="noopener"> editorial</a> blamed the fecklessness of the democratic parties and the Maoists wanting to go it alone:‘D Day for the completion of the new Constitution is now only 11 months away. The Constituent Assembly’s self-imposed deadline has been pushed back over and over again. Maoist chairman Pushpa Kamal Dahal said after his Politburo meeting this week that his party will lead a national government. How that will be possible considering the non-Maoist parties are on the other side is difficult to imagine. Maybe the strategy is to split the big parties, but then domestic and international geo-politics are both against them. What the Maoists couldn’t achieve with armed struggle and elections, they will now try to do by mobilising a mass movement on the streets.’<a href="http://archive.nepalitimes.com/issue/458"><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221108131140/636a4e539c7e80680e04fcacjpeg.jpg" alt="" width="800" height="1242"></a>

bri

BRI enters the tenth year

“China’s BRI will ride out the pandemic”

BRI and trans-Himalayan connectivity

Awesome party

A millennium challenge

TRILATERAL TRAINS