<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221110141148/636d01db9c7e80680e0a364djpeg.jpg" alt="" width="1500" height="1000"/><figcaption></figcaption></figure>“Countries knock at our doors all the time for capital, as it is getting harder and harder to obtain development funds. We are holding $500 million for Nepal. We cannot wait forever. When will it be the right time for Nepal?”Fatema Z Sumar, Vice President of Compact Operations at the Millennium Challenge Corporation (MCC) appeared mystified about why a country like Nepal that needs all the help it can get to develop its infrastructure, should be so hesitant about the grant her government is offering.Sumar was on the final day of her <a href="https://www.nepalitimes.com/latest/mcc-row-rocks-nepals-ruling-coalition/" data-saferedirecturl="https://www.google.com/url?q=https://www.nepalitimes.com/latest/mcc-row-rocks-nepals-ruling-coalition/&amp;source=gmail&amp;ust=1631579093888000&amp;usg=AFQjCNHAfb7xioCyDtl5OJ53aqyeI5-LuA">four-day visit to Nepal</a> on Sunday, speaking at an engagement with opinion makers. There was a litany of questions from across the table, and Sumar sounded like someone who is getting somewhat jaded answering the same questions over and over again in Kathmandu.“No, the MCC is not part of the <a href="https://www.nepalitimes.com/editorial/between-two-oceans/" data-saferedirecturl="https://www.google.com/url?q=https://www.nepalitimes.com/editorial/between-two-oceans/&amp;source=gmail&amp;ust=1631579093888000&amp;usg=AFQjCNFfIGiI1YhN4TBrqt-_uVwcnhLEPg">Indo-Pacific Strategy</a> and there is no US Army involvement.”“This is a treaty between two countries and has gone through the Obama, the Trump and now the Biden administrations.”“In order to make this a treaty, the Nepal government wanted to ratify it through Parliament. So, we are waiting for that.”Sumar was a former assistant secretary for South and Central Asia at the US State Department before joining the MCC. Her family is Malaysian Indian, so she understands the region well, but she was hearing in Nepal some of the same political rhetoric that led to the Sri Lankans cancelling the MCC last year for being ‘against the national interest’.MCC makes three types of grants: compacts, threshold programs and concurrent compacts for regional investment. Nepal’s grant is a five-year compact agreement with the MCC that allows an eligible country to fund specific programs targeted at reducing poverty and stimulating economic growth.The concept of the MCC is to make US development assistance ‘smarter’, and to study a country’s bottlenecks so that catalytic investment can allow it to take an economic leap. A panel of Nepali and American experts concluded in 2017 that increasing hydropower transmission capacity and upgrading highways would be most cost-effective, at a time when the country was suffering 12-hour daily power cuts.When a country applies for a grant from the MCC, the board examines its performance based on 20 policy indicators, and selects based on policy performance. The MCC says its grants are given to country-driven and country-led investments and infrastructure priorities for achieving sustainable economic growth and poverty reduction, and Nepal qualified.<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221110141148/636d01df9c7e80680e0a364ejpeg.jpg" alt="" width="1500" height="998"><figcaption>MCC vice president Fatema Sumar (third from left) with Prime Minister Deuba on Saturday at Baluwatar. Photo: PMO</figcaption></figure>So far MCC has approved $13.7 billion in compacts and $631 million in threshold programs worldwide. After Sri Lanka pulled out, Nepal is the only South Asian country on the list of <a href="https://www.nepalitimes.com/editorial/a-millennium-challenge/" data-saferedirecturl="https://www.google.com/url?q=https://www.nepalitimes.com/editorial/a-millennium-challenge/&amp;source=gmail&amp;ust=1631579093888000&amp;usg=AFQjCNHcCgQFuOb2-re-ZURkglqZhwDvTg">MCC-approved compacts</a>.“The $500 million we are holding for Nepal is money not given to other countries which need to get out of poverty,” said Sumar’s colleague Jonathan A Brooks at the interaction. Although Brown said he had no idea where the confusion about the MCC having a military component comes from, a <a href="https://www.nepalitimes.com/editorial/knowing-whats-good-for-nepal/" data-saferedirecturl="https://www.google.com/url?q=https://www.nepalitimes.com/editorial/knowing-whats-good-for-nepal/&amp;source=gmail&amp;ust=1631579093888000&amp;usg=AFQjCNHV-jTWUQwTz4eLLTh_R5gdfjVGwQ">comment by US Under Secretary of State David J Ranz</a> in 2019 that the MCC was indeed a part of the US <a href="https://www.nepalitimes.com/editorial/between-two-oceans/" data-saferedirecturl="https://www.google.com/url?q=https://www.nepalitimes.com/editorial/between-two-oceans/&amp;source=gmail&amp;ust=1631579093888000&amp;usg=AFQjCNFfIGiI1YhN4TBrqt-_uVwcnhLEPg">Indo-Pacific Strategy</a> did a lot of self-inflicted damage.Sumar and Brooks fielded <a href="https://www.nepalitimes.com/latest/post-truth-politics-in-nepal/" data-saferedirecturl="https://www.google.com/url?q=https://www.nepalitimes.com/latest/post-truth-politics-in-nepal/&amp;source=gmail&amp;ust=1631579093888000&amp;usg=AFQjCNEL3a5V092kNi8iXts-zWiYBTZWOA">other questions</a> that had become familiar to them during their stay in Kathmandu with answers like: the agreement with Nepal prohibits army involvement, security issues are totally for Nepal government to oversee, the compact has no provisions that contradict Nepal’s laws, the project is not above Nepal’s Constitution, and international law would apply to resolve any disputes.A major chunk of the $500 million MCC grant will go to build the Kathmandu-Hetauda-Butwal 400KV transmission line to distribute 3,000MW which will come on stream in the next three years from new <a href="https://www.nepalitimes.com/opinion/decentralising-hydropower/" data-saferedirecturl="https://www.google.com/url?q=https://www.nepalitimes.com/opinion/decentralising-hydropower/&amp;source=gmail&amp;ust=1631579093888000&amp;usg=AFQjCNGKA68VJytSmPpVqeXiamgpi0kCgQ">hydropower plants</a>. The line will also connect to a high-capacity electricity corridor to Gorakhpur so Nepal can <a href="https://www.nepalitimes.com/latest/mcc-row-damages-nepals-credibility/" data-saferedirecturl="https://www.google.com/url?q=https://www.nepalitimes.com/latest/mcc-row-damages-nepals-credibility/&amp;source=gmail&amp;ust=1631579093888000&amp;usg=AFQjCNEoVnLVfqbE4et0DScH8cbve0ffag">sell surplus monsoon electricity</a> to India in future.This week, the Nepal Electricity Authority (NEA) signed an agreement with the state-run Power Grid Corporation of India (POWERGRID) for the Butwal-Gorakhpur cross border transmission line extension in anticipation of the MCC project being completed.Sumar has seen several changes in government after she started coming to Nepal for the MCC. Prime Minister Sher Bahadur Deuba and his predecessor K P Oli were both in favour of the MCC, but other Communist partners in the ruling coalition are against it.As a descendant of an immigrant family herself, Sumar says she understands that poverty is not insurmountable, and can be prevented with the right government investment at the right time. She calls herself a “development diplomat”, and feels that economic growth built on better infrastructure would also bring Nepal stability.“The MCC will create many thousands of jobs for Nepalis at a time when the pandemic is creating losses of jobs and livelihoods,” she says, adding that when President John F Kennedy launched a major global drive to help developing countries in the early 1960s, Nepal was one of the first countries to receive the support.The criteria Nepal fulfilled to receive the MCC grant was its democratic polity, guarantees of basic freedoms, and protection of human rights. Sumar underlined the fact that the MCC would also help Nepal put renewable energy infrastructure in place that could be an example for a world coming to terms with climate change.The MCC project has become a victim of <a href="https://www.nepalitimes.com/editorial/knowing-whats-good-for-nepal/" data-saferedirecturl="https://www.google.com/url?q=https://www.nepalitimes.com/editorial/knowing-whats-good-for-nepal/&amp;source=gmail&amp;ust=1631579093888000&amp;usg=AFQjCNHV-jTWUQwTz4eLLTh_R5gdfjVGwQ">extreme political polarisation</a> as opponents to K P Oli used the MCC to unseat him, and now it threatens to split the ruling coalition. The anti-MCC rhetoric had been so effective in convincing the cadre and public that it is anti-national, that even supporters in Deuba’s Nepali Congress, Oli’s UML and other public figures and intellectuals are afraid to speak in favour.Social media is full of posts that say Nepal will become ‘another Afghanistan’ if Parliament ratifies the MCC. But now that Sumar and her MCC team has left, the ball is back in the court of the political class in Kathmandu to ensure that <a href="https://www.nepalitimes.com/here-now/power-politics-delays-mcc-in-nepal/" data-saferedirecturl="https://www.google.com/url?q=https://www.nepalitimes.com/here-now/power-politics-delays-mcc-in-nepal/&amp;source=gmail&amp;ust=1631579093888000&amp;usg=AFQjCNHlQppZeGXNXQbC5_D2GZNFz2URgw">Nepal has the capacity</a> to distribute the electricity it generates in future.

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MCC ball in Nepal’s court

<figure><img width="1286" height="1500" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221110141148/636d015a9c7e80680e0a3624jpeg.jpg" alt=""/><figcaption>Vice president of US Mellennium Challenge Corporation (MCC) Fatema Z Sumar arrives in Kathmandu on Thursday.</figcaption></figure>Fatema Z Sumar, vice president of the US Millennium Challenge Corporation (MCC), parachuted into Kathmandu on Thursday amidst a <a href="https://www.nepalitimes.com/latest/mcc-damned-if-we-do-damned-if-we-dont/" target="_blank" rel="noopener noreferrer">firestorm of protest</a> against the project that threatens to divide Nepal’s coalition government.Together with her deputy Jonathan Brooks, Sumar over the next four days will be meeting Nepal’s top politicians who are for and against the <a href="https://www.nepalitimes.com/editorial/a-millennium-challenge/" target="_blank" rel="noopener noreferrer">$500 million grant project</a> designed to upgrade Nepal’s electricity grid and highways. The visit follows Sumar’s written response to concerns raised by Nepal’s Finance Ministry on 3 September regarding the grant. The main objective of the MCC is a 315km transmission line between Hetauda-Damauli-Butwal, important for the distribution of the 3,000MW of electricity that will be added to Nepal’s national grid in the next three years. <a href="https://www.nepalitimes.com/from-the-nepali-press/why-there-is-no-foreign-investment-in-nepal/" target="_blank" rel="noopener noreferrer">Why there is no foreign investment in Nepal</a> , Nepali Times <img width="512" height="461" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221110141148/636d015d9c7e80680e0a3625jpeg.jpg" alt="">The discourse surrounding the MCC has been influenced by geopolitical rivalries between India and China on the one hand and between the US and China on the other, with Nepal’s political parties <a href="https://www.nepalitimes.com/editorial/knowing-whats-good-for-nepal/" target="_blank" rel="noopener noreferrer">weaponising the project</a> to undermine each other.Indeed, support for the MCC by K P Oli was one of the issues raised by the five-party alliance that led to his ouster in July, after which <a href="https://www.nepalitimes.com/latest/deuba-5/" target="_blank" rel="noopener noreferrer">Deuba took over as prime minister</a>.Two months later, <a href="https://www.nepalitimes.com/latest/what-is-delaying-nepal-cabinet-expansion/" target="_blank" rel="noopener noreferrer">Deuba is yet to complete government formation</a>,  and support and opposition to the MCC is now threatening to undermine his governing alliance. The MCC is such a political hot potato that it was not even listed in the coalition’s common minimum program last month despite Prime Minister Deuba being for it.However, critics including his main coalition partner Pushpa Kamal Dahal of the Maoists and Madhav Kumar Nepal of the Communist Party of Nepal (United Socialist) view the project as part of America’s Indo-Pacific Strategy, and superseding Nepal’s Constitution.Sumar’s letter attempted to assuage both of these concerns, saying that the MCC is neither a part of America’s Indo-Pacific Strategy, nor is it not above Nepal’s Constitution. However, the response added that the points previously agreed upon would not be subject to amendments, which did little to quell the growing protest, including street demonstrations. The delegation led by Vice President Samar met with opposition leader K P Sharma Oli on Thursday afternoon to discuss the project, and is also set to meet with Prime Minister Sher Bahadur Deuba, Finance Minister Janardan Sharma and Energy Minister Pampha Bhusal (both Maoists). <figure><img width="1800" height="1200" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221110141148/636d01609c7e80680e0a3626jpeg.jpg" alt=""><figcaption>The delegation led by Sumar met with opposition leader K P Sharma Oli on Thursday afternoon. </figcaption></figure>The MCC compact has clauses requiring that it be ratified by Nepal’s Parliament, and that the project be completed five years after the work officially commences. Nepal had committed to ratifying the MCC in Parliament by September 2019, but the <a href="https://www.nepalitimes.com/editorial/just-do-it/" target="_blank" rel="noopener noreferrer">process has been deadlocked</a> by the feud in the ruling Communist Party of Nepal while Oli was prime minister.Lok Raj Baral, Nepal’s former ambassador to India, says that there has been unnecessary over-politicisation of the issue that has harmed Nepal’s international credibility."The opposition to the MCC seems to have been led by those in power who were also trying to stop the Arun III hydropower project," says Baral. “That the opinions of individual leaders dominate the discourse over official party decisions speaks to the selfishness of Nepal’s political leadership.”Former Prime Minister Oli backed the MCC after he took over from Deuba in 2017, but his main party rival Pushpa Kamal Dahal and dissidents from his own UML used provisions in the MCC that they saw as being anti-national <a href="https://www.nepalitimes.com/banner/own-goal/" target="_blank" rel="noopener noreferrer">against Oli</a>.  <figure><img width="1800" height="1121" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221110141148/636d01639c7e80680e0a3627jpeg.jpg" alt=""><figcaption></figcaption></figure>Now, with Deuba being Prime Minister once again, the debate surrounding the MCC is likely to put a strain on his ruling coalition, made up of Dahal’s Maoist Centre and Madhav Kumar Nepal’s breakaway CPN (United Socialist) which are opposed to the project.On the other hand, the Nepali Congress and another coalition partner Janata Samajbadi Party (JSP)  seem open to ratifying the agreement in Parliament, but they do not have enough numbers in the House for it to be successful. Deuba has been sending feelers to the opposition UML to see if it will back the ratification in Parliament. For his part, Pushpa Kamal Dahal has been saying that the MCC is a conspiracy to break the ruling alliance. However, experts see Dahal’s position on the MCC as being inconsistent and opportunistic. He went along with the project, and then <a href="https://www.nepalitimes.com/here-now/power-politics-delays-mcc-in-nepal/" target="_blank" rel="noopener noreferrer">weaponised it during his power struggle </a>with Oli."It should not come as a surprise to anyone if the ruling coalition collapses because of the MCC,” says political analyst Punaranjan Acharya, who adds that it is not Prime Minister’s Deuba’s intention to go against the agreement, but  that of the “so-called” communist parties in Deuba’s alliance. "The prime minister has tried to be transparent regarding the matter,” says Acharya. “The problem is with the double-dealing leaders of the coalition partners.”Former speaker Krishna Bahadur Mahara, who resigned from his position in 2019 following allegations of rape, said last year in a statement that he had been falsely accused for opposing the MCC. His successor Agni Prasad Sapkota has also blocked the MCC Compact for discussion on the House floor.Rastriya Janamorcha Party Chairman Chitra Bahadur KC, who is a member of Deuba’s coalition, says that the MCC will not be allowed to reach Parliament, and will not be ratified in the event it is presented before the House. “We continue to oppose the MCC, which is not even included in the coalition’s Common Minimum Program,” says KC.Constitutional expert Bipin Adhikari says it would be ironic if the MCC is not allowed to be presented before the people’s representatives in the House because of the political self-interest of the Speaker and other powerful political leaders.Other analysts insist that the political process surrounding the MCC should be moved forward in a way that the project is ratified in the House without breaking the coalition and without the party whip being applied.Read also: <a href="https://www.nepalitimes.com/latest/using-the-delay-in-mcc-to-dissect-it/">Putting the MCC in context</a>, Jeevan R Sharma and David Seddon

MCC row rocks Nepal’s ruling coalition

There were two Bhutans on display during Narendra Modi’s visit this month. The first: a trusted partner, modernising rapidly with Indian support, inaugurating hydroelectric projects, and signing healthcare deals. The second: a nation that <a href="https://www.fmreview.org/gazmere-bishwo/#:~:text=In%201990%2D91%2C%20about%20a,are%20therefore%20not%20Bhutanese%20citizens.">ethnically cleansed 17% of its population </a>and has never been held accountable.
Modi chose to see only the <a href="https://kuenselonline.com/news/pm-modi-concludes-bhutan-visit-with-prayers-for-peace-and-prosperity">first </a>during his <a href="https://economictimes.indiatimes.com/news/india/india-announces-rs-4000-cr-concessional-credit-line-to-fund-energy-projects-in-bhutan/articleshow/125253915.cms?utm_source=contentofinterest&amp;utm_medium=text&amp;utm_campaign=cppst">11-12 November visit</a>, granting $450 million in credit, offering birthday tributes to Fourth King Jigme Singye Wangchuk, and inaugurating another hydropower project.
New Delhi has opted for strategic silence on Bhutan’s systematic persecution of the Lhotshampas in the 1990s. The displaced remain scattered across the world and in refugee camps in Nepal, their property seized, their citizenship revoked.&nbsp;
Now, on that same contested land Bhutan is building the <a href="https://nepalitimes.com/here-now/small-bhutan-dreams-big">Gelephu Mindful City (GMC)</a>, a megaproject intended to <a href="https://kuenselonline.com/news/pm-modi-announces-inr-40-billion-credit-line-new-rail-links-and-land-for-bhutanese-temple-in-varanasi">connect directly to Indian infrastructure</a>. The victims are gone, and democratic India’s values remain conspicuously absent.&nbsp;
With no Lhotshampas left to challenge the official narrative and India unwilling to raise it, Bhutan continues to suppress dissent with impunity.&nbsp;
Earlier this year, social media influencer Raghu Pati Subedi was arrested on the Assam side of Gelephu after returning from a visit to relatives in India. His family members reportedly came under intense pressure, including threats of arrest, accusing them of hiding his whereabouts. After his arrest, he was transported to Thimphu and imprisoned.
This was not an isolated incident. It is part of systemic repression that first gained international attention in the 1990s, when over 100,000 Nepali-speaking Lhotshampa were systematically stripped of their citizenship and forcibly exiled. This mass expulsion, which human rights organisations have characterised as ethnic cleansing, created a decades-long refugee crisis that continues to define the regional political and human rights landscape.&nbsp;
EXODUS
The Lhotshampa crisis of the 1990s was not a spontaneous event but the culmination of years of state-led discrimination. Through a series of legislative acts, notably the 1985 Citizenship Act and the 1989 Driglam Namzha, the ‘One Nation, One People’ policy, the Bhutanese state systematically dismantled the rights of its Nepali-speaking citizens.&nbsp;
The use of the Nepali language was suppressed, the traditional dress of the ruling ethnic group was mandated, and citizenship was revoked en masse, rendering a significant portion of the population stateless in their own homeland.
The new manuscript I am editing has harrowing accounts by the authors of those atrocities. The parallels with what happened to Subedi recently are striking and troubling, showing that even after 35 years the regime has not changed its spots. The methods may have evolved, but the repression against dissidents remains disturbingly consistent.
This refugee exodus was an immense and unasked-for burden on Nepal. Despite being a country grappling with its own political instability and limited resources, Nepal accommodated them on humanitarian grounds. Nepal has consistently advocated for a durable solution centered on the refugees’ right to safe, voluntary, and dignified repatriation.
For years, it engaged in bilateral talks with Bhutan, culminating in a joint verification process. However, these efforts ultimately foundered on what Nepal described as ‘continued rigidity and non-implementation of the agreed decisions by the Bhutanese side’.
Nepal fulfilled its moral and humanitarian duty, but the international community largely failed to hold Bhutan accountable. Bhutan’s rulers deflected global attention with the masterful narrative of Gross National Happiness (GNH), while the grim reality in the refugee camps persisted.&nbsp;
Ultimately, with repatriation proving impossible, Nepal acquiesced to a third-country resettlement program led by a group of eight countries, including the United States, Canada, and Australia. From 2007 to 2016, more than 113,500 Bhutanese refugees were resettled in <a href="https://www.unhcr.org/media/nepal-factsheet">one of the largest group resettlement programmes globally</a>, though 6,365 remain in refugee camps in eastern Nepal.
While this solution provided a lifeline for thousands, it was a tragic capitulation to Bhutan’s ethnic homogenisation project. The refugees’ right to return to their homeland has been denied. It is a cautionary tale about the limits of international diplomacy in the face of state intransigence.
Bhutan’s global brand is one of its most successful exports. The <a href="https://www.gnhcentrebhutan.org/">Gross National Happiness </a>doctrine, which promotes holistic well-being over just economic growth, has captivated the Western imagination and policymakers. It offers a vision of a mindful, environmentally conscious, and peaceful Himalayan kingdom. This carefully cultivated image has historically aimed to shield Bhutan from the level of scrutiny applied to other nations with similar human rights records.
The GNH facade, however, cracks under the weight of documented evidence. The same kingdom that champions ‘happiness’ has, for decades, maintained a justice system that human rights groups allege relies on torture, coerced confessions, and draconian laws to silence opposition.
The 1992 National Security Act, with its vague definitions of ‘treasonable acts’ against the Tsa-Wa-Sum (King, Country, and People), has been a primary tool for suppressing political dissent, particularly from the Lhotshampa.
Overlooked by the international community and ignored by global powers including India, in responding robustly to the ethnic cleansing of the 1990s sent a clear message to Thimphu: such actions could be undertaken with impunity. The monarchy emerged unscathed, its reputation burnished rather than tarnished.&nbsp;
This historical impunity now echoes in the case of Raghu Pati Subedi and the <a href="https://www.cijnepal.org/new-list-of-political-prisoners-expected-to-set-off-discussion-on-bhutans-human-rights-record">continued imprisonment of dozens of political prisoners</a> of conscience. The global community’s reluctance to challenge the GNH narrative has, in effect, become a form of complicity.
The arrest and sentencing of a social media influencer demonstrates how old tactics have been adapted for the digital age. Subedi, 40, was a new kind of threat to the state-controlled narrative and he had to be made an example of.&nbsp;
As the founder and administrator of the popular Facebook page ‘The Don of Asia’, he bypassed traditional, state-influenced media to speak directly to about 78,000 followers. His content, informational and satirical videos on rural poverty, corruption, and the GMC project, was the kind of social media activism that was deemed intolerable.
Subedi was arrested in early 2025 and sentenced to 24 years in prison. The charges allegedly stemmed from Subedi’s social media criticism of the GMC, a flagship project of Nepal-born Bhutanese fifth King Jigme Khesar Namgyel Wangchuck.&nbsp;
For <a href="https://thenewamericansmag.com/2024/11/18/the-kings-gelephu-mindfulness-city/#:~:text=Ganga%20Lamitare%2C%20who%20owns%20four,ancestors%20in%20building%20the%20nation.">Bhutanese refugees like Gangaram Lamitare</a>, the GMC represents a bitter irony, a development rising on their confiscated ancestral lands.&nbsp;
Gangaram, who owns four acres where the GMC’s international airport is now under construction, says: “Many people from villages fled at night in 1990, leaving everything behind to escape oppression. Now, the Bhutanese king and ministers are spreading falsehoods worldwide, calling this land vacant, which actually belongs to those forced to leave the country.”&nbsp;
There are signs that international support that has benefited Bhutan may be waning. The United Nations has become increasingly vocal and last year the <a href="https://www.ohchr.org/sites/default/files/documents/issues/detention-wg/opinions/session101/a-hrc-wgad-60-2024-bhutan-advance-edited-ve.pdf">UN Working Group on Arbitrary Detention</a> said the detention of several Bhutanese political prisoners was arbitrary and illegal under international law.&nbsp;
In April 2025 from a group of six UN human rights experts raised grave concerns about the use of torture, denial of fair trials, and the ‘severe chilling effect’ of Bhutan’s legal framework on civic space. These developments owe much to the consistent advocacy of the Hague-based Global Campaign for the Release of Political Prisoners in Bhutan (GCRPPB) since its formation.
However, they also reflect broader shifts in international human rights scrutiny. This places Bhutan’s key international partners, particularly the European Union, in a critical position. Bhutan enjoys lucrative benefits under the EU’s ‘Everything but Arms’ trade scheme, which grants developing countries tariff-free access to the EU market contingent on respect for human rights.&nbsp;
The EU is also a significant provider of development aid to Bhutan which provides it with substantial leverage. In April 2025, members of the <a href="https://bsky.app/profile/saskiabricmont.bsky.social/post/3lmrn5mkmrs2q">European Parliament formally called on Bhutan</a> to release all political prisoners. This action signals a growing recognition that trade and partnership cannot be divorced from human rights obligations.&nbsp;
“Bhutan’s international partners and investors, including the EU, should make it clear that they expect Bhutan to comply with its human rights obligations and release them without further delay,” says Meenakshi Ganguly, of Human Rights Watch.&nbsp;
Bhutan stands at a crossroads. Its desire for deeper global economic integration is colliding with its unresolved history of human rights abuses. The international community now has a choice: either continue being charmed by the myth of a happy shangri-la or insist that the kingdom adheres to democratic values it professes to the world.&nbsp;
Nepal’s recent Gen-Z uprising offers a lesson to Bhutan. In September, when authorities attempted to ban 26 social media, Nepali youth took to the streets and, within hours, toppled the entire pro-establishment political apparatus. Their message was clear: in an age of digital connectivity and mass mobilisation, authoritarian tactics such as detaining social media influencers are both unjust and ultimately unsustainable.
This incident echoes the prophetic warnings of Devi Bhakta Lamitare, Bhutan’s first-generation democratic leader, who died in exile in India in 2022. In his seminal 1970 book
Dankindo Bhutan, Lamitare chronicled the systematic suppression of people’s rights and envisioned a path toward liberation.
Before his death, I worked with him to update and edit this work, which the Bhutan Media Society published posthumously in 2023. In a December 2020 interview I conducted for the book on the Ganga riverbank in Haridwar, Lamitare laid out a stark three-front offensive: political mobilisation from within India to awaken resistance inside Bhutan itself, relentless pressure on New Delhi to champion democracy, and a global ‘pamphlet war’ waged by resettled Bhutanese in the West.&nbsp;
Only through such sustained action, he argues, can Bhutanese citizens win the right to choose their own rulers, a principle India, the world’s largest democracy, should be championing, not abandoning.
Binod Dhungel is the Nepal correspondent for Reporters Without Borders.
<a href="http://linkedin.com/in/dhungelbinod" target="_blank">linkedin.com/in/dhungelbinod</a>, @BinodDhungel

Bhutan imprisons social media influencer

We often see ourselves reflected in the other. For someone who grew up in Kathmandu Valley in the eighties and nineties, this maxim comes alive with an even greater force. Nepal’s media ecosystem was dismal, the school curriculum was narrow and did not provide opportunities for creative expression. Perhaps that is why I became obsessed with MTV videos and Bollywood films. I saw my developing self reflected in these story-lines and razzmatazz. When the media and education system do not engage the public and reflect myriad interests, aspirations and lifestyles of the population, citizens get detached and disconnected from their roots. I left for America for further studies, and was somewhat determined to never return to Nepal. It was a country full of potholes and black-outs. But foreigners have been fascinated with our country for decades. In the early 19th century, Francis Buchanan-Hamilton led a pioneering expedition and documented more than a thousand species of plants native to the region. Almost a century later, in 1905, Frenchman Sylvan Levi published ‘the first attempt to produce a comprehensive study of Nepal’, drawing on not just indigenous but available Chinese and European sources as well. After Nepal opened up in the 1950s, different kinds of foreigners have traveled here -- most notably, cold-war era spies disguised as diplomats, and later came the hippies. I returned to Nepal in 2013 and was primarily struck by two major demographics - the artists and the expats. Energised by the recent revolution, the creatives were making vibrant, powerful works. The expats, on the other hand, demonstrated a different way to navigate life in Kathmandu Valley. These two groups of people re-introduced Nepal to me and I began seeing my country and my hometown with a renewed perspective. Which is why one particular image from Giovanna Caruso’s ongoing show at the <a href="https://www.instagram.com/thekalasalon/?hl=en" target="_blank">Kalā</a><a href="https://www.instagram.com/thekalasalon/?hl=en" target="_blank"> Salon</a> curated by <a href="https://nepalitimes.com/review/facades-and-flowers-from-nepal-to-italy" target="_blank">Sophia L Pandé</a> instantly caught my attention -- rather, it called out to me, as if it was composed for me, framing a key moment from my own life. Its title is, coincidentally, 2013. Like most of her other works, the pen-and-ink drawing is punctuated by an explosion of watercolour: a woman standing confidently in front of a Newa-style house, a leg arched up, as if she is fixing a strap around an ankle before stepping out on an adventure. The watercolour depicts a rainbow streaming out of a pot through a second-floor window. The rest of the details are rendered in realism – clusters of garlic and onion hanging to dry from the rafters, and further down a stack of corn. There are towels drying, even an old water pump.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20251201121216_f440de5b5402fe0877dc46d94f41647bd46b00035b61241d46fc9f7ffbd87d0f.jpg" data-media-id="editor_3" data-image-id="20251201121216_f440de5b5402fe0877dc46d94f41647bd46b00035b61241d46fc9f7ffbd87d0f" data-rendition-name="original" width="4032" height="3024" loading="lazy" alt="art review Kala Salon"> </figure>  When I walked over to this artwork with Caruso, she chuckled, “Ah, this work is a celebration of my 30 years in Nepal.” It was while trying to calm a restless group of students during her teaching days in Italy that Caruso first came across an iconic image of Kathmandu Darbar Square. She had found an old box of slides and while projecting images from the Himalaya to engage her students, the artist was determined to travel to Nepal. The first flat she rented was close to the square and the view from her rooftop was the same as the one she had encountered inside her classroom. She has been traveling to Nepal every year since. Some of her favourite drawings depict Khokana in morning fog. From 1993-2006, she drew murals at Ram Mandir and Pashupatinath, asking sadhus to guide her and correct her depictions. Caruso received a classical education, which means she was trained to focus on perspective and geometry while capturing mainly portraits and still lives. She is influenced by M C Escher and his explorations of mathematics and symmetry. No wonder she finds the Darbar Square architecture so compelling. She also names as inspiration Gustave Dore, whose style is different from Escher’s and I can see how she has fused these influences in her body of work: Escher’s austerity complimented and slightly dislodged by Dore’s comics and caricatures. “Before starting, the painting needs to be complete in my mind,” she explains as we pass a series of portraits titled Saraswati, Lakshmi, Kali Dancing, and Durga dominated by a roaring tiger. “These are all real people, I ask my friends and family members to sit for me.” The Kali in the drawing has the artist’s fiery copper red hair and she is dancing, surrounded by various men with flowing hair. The artist seems to have experimented here, drawing the revelers from above, and indulging in playful abandon. Depictions of Nepal are often in danger of being exoticised. But Caruso is familiar with her subjects, knows our alleys and temples intimately. Her colours and compositions are passionate and dense. In an essay, Anirudh S Chari writes the artist’s work is splashed with rapturous energy and most drawings have a carnivalesque element. ‘Kali Dancing’ illustrates this idea perfectly in that she has turned Kali’s usual fearsome portrayal on its head by depicting and embracing another feminine principle - the capacity to celebrate and create joy. Apart from drawing inspiration from Hindu goddesses and Nepal’s multi-colored rituals, Caruso has also drawn the Sumerian Ianna and Lillith and the Egyptian Nut. She enjoys drawing Nataraja, and says it is because “Shiva is a good husband”. We stand another painting titled 100 Days a Lion. “There is a saying in Italian, Better one day as a lion than a hundred days as a sheep, but I thought why not 100 Days a Lion?” This sentiment captures this nomadic artist’s spirit spanning four decades, in which she has captured urban energy as well as the sacred imagery of ‘life diaries on canvas’. From Venezia to Kathmandu and Journeys In Between Giovanna Caruso The Kalā Salon Chhaya Centre Mall, Thamel Till 12 December 10am- 8pm

Looking at Nepal from Venice

The COP30 climate summit in Brazil ended this week <a href="https://nepalitimes.com/opinion/cop30-to-cop31">without tangible commitment</a> from countries to reduce fossil fuel emissions. Its impact will be felt halfway around the planet here in Mustang which is already seeing weather extremes.&nbsp; Geographically, Mustang is on the Tibetan Plateau, north of the main Himalayan chain. It is in the rainshadow, and a high altitude desert. Winter snow has failed for eight of the past ten years, unseasonal blizzards, and frequent glacial collapse leading to floods. The Kali Gandaki Corridor follows one of the deepest gorges in the world between Annapurna and Dhaulagiri, the world’s seventh and tenth highest peaks. Lush pine forests cover the southern flanks of these mountains, but within a few kilometers the vegetation undergoes a dramatic change to a landscape of red, brown and grey cliffs.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20251129021144_c66ade5e32d20530003abba893869426d75b42d10e4725c28361d738b402721f.jpg" data-media-id="editor_1" data-image-id="20251129021144_c66ade5e32d20530003abba893869426d75b42d10e4725c28361d738b402721f" data-rendition-name="original" width="1500" height="1000" loading="lazy" alt="Too little snow, too much rain NT"> </figure>  It gets more arid the more north you go. Snow and rain in Upper Mustang used to fall mostly in winter, but now there are cloudbursts and blizzards at other times of the year.&nbsp; In the ancient walled city of Lo Manthang, elderly men have gathered at a local tea shop to drink the salted butter tea. Some sip home-made liquor infused with medicinal herbs.&nbsp; The sun has set, the temperature plummets, and the wind howls outside. Everyone agrees it does not snow like it used to any more. Read also: <a href="https://nepalitimes.com/here-now/comings-and-goings-in-mustang">Comings and goings in Mustang</a>, Shrijan Pandey  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20251129021144_ffaabf00a533984cadf160b2e56734cddb6f64d1a660401417d2982a3818f161.jpg" data-media-id="editor_3" data-image-id="20251129021144_ffaabf00a533984cadf160b2e56734cddb6f64d1a660401417d2982a3818f161" data-rendition-name="original" width="1500" height="1000" loading="lazy" alt="Too little snow, too much rain NT"> <figcaption>The flat mud roofs are leaking because rain is now falling where there used to be snow.</figcaption> </figure>  “The weather has changed drastically over the years,” says Lopsang Tsomfel Bista, Chair of the Lo Dekhar Municipality. “It doesn’t snow in winter, and it falls when it is not supposed to.”&nbsp; Lack of snow means that in spring, the pastures where nomadic herders graze their yaks and goats do not have enough grass. Previously, winter snow on the meadows would seep slowly into the soil with the spring thaw, bringing out fresh grass shoots. &nbsp; In recent years, even if there is winter precipitation, it falls as rain. The soil is not able to soak in rain as efficiently, and torrential downpours increase the risk of soil erosion and floods.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20251129021144_93ca69bec63577c5f6cbff8db809c11bce2d8fe01469d3374c20a6f20a7c93f1.jpg" data-media-id="editor_4" data-image-id="20251129021144_93ca69bec63577c5f6cbff8db809c11bce2d8fe01469d3374c20a6f20a7c93f1" data-rendition-name="original" width="1500" height="1000" loading="lazy" alt="Too little snow, too much rain NT"> </figure>  “There used to be up to 1,500 mountain goats in every village, but now they have stopped keeping livestock,” says Bista. This is due to lack of grass and new lowland diseases moving up the mountains. Mustang has lost 28% of its population between the census in 2011 and 2021, and outmigration also means there are fewer people left to carry on a pastoral lifestyle.&nbsp; “Herders have asked for vet services in their communities because there are new insect-borne diseases,” says Yangchen Dolker Gurung of the Lo Gyalpo Jigme Foundation. Read also: <a href="https://nepalitimes.com/opinion/winds-of-change-sweep-mustang">Winds of change sweep Mustang</a>, Jagannath Adhikari  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20251129021144_902593732af83db5792128be5a3bd87c00e0c62ff894afa4c98bffde64e96d26.jpg" data-media-id="editor_6" data-image-id="20251129021144_902593732af83db5792128be5a3bd87c00e0c62ff894afa4c98bffde64e96d26" data-rendition-name="original" width="1500" height="1000" loading="lazy" alt="Too little snow, too much rain NT"> <figcaption>The mud walls of monasteries and homes are crumbling because of unseasonal rainfall. </figcaption> </figure>  Mustang is flanked to the east and west by mountains that rise up to 6,000m, and glaciers on their slopes are melting fast, turning into lakes. With the rising temperature, the risk of Glacier Lakes Outburst Floods (GLOFs) has also risen.&nbsp; At the rate global average temperatures are rising, scientists say that the Himalaya will lose up to two-thirds of the remaining ice caps. When glaciers melt, it not just raises the risk from GLOFs but also affects water supply downstream.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/2025112903114_1a6af68965ded5f23897a623bec2e2bed0da4c6663f0af5b5bf79883f2a11c9f.jpg" data-media-id="editor_7" data-image-id="2025112903114_1a6af68965ded5f23897a623bec2e2bed0da4c6663f0af5b5bf79883f2a11c9f" data-rendition-name="original" width="1022" height="767" loading="lazy" alt="Mustang map NT"> </figure>  FLOODS Ringzin Sangbo Gurung in Chumjung village recalls the devastation caused by a GLOF on 8 July this year that swept away a newly inaugurated bridge. The floodplain is now strewn with boulders and sand brought down by the flood which caused damage worth Rs28 million. The flood also damaged the irrigation canals that feed riverside farms where locals grew potato, buckwheat, millet and spinach. Nyima Wangmo Gurung runs a homestay in Nyamdok village, and says: “We don’t have water when we need it. And there is too much when we don’t need it.”&nbsp; Read Also: <a href="https://www.nepalitimes.com/banner/mustang-forced-to-adapt-to-climate-crisis">Mustang forced to adapt to climate c</a><a href="https://www.nepalitimes.com/banner/mustang-forced-to-adapt-to-climate-crisis">risis</a>, Ronan Wallace and Yungdrung Tsewang Gurung  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20251129021144_7ae98274ea20e910311ec4431ba0aa3ecd9fe92caaed029a33c185198b33d0d2.jpg" data-media-id="editor_10" data-image-id="20251129021144_7ae98274ea20e910311ec4431ba0aa3ecd9fe92caaed029a33c185198b33d0d2" data-rendition-name="original" width="1500" height="1000" loading="lazy" alt="Too little snow, too much rain NT"> </figure>  With warming temperatures, farmers in Mustang are growing lowland vegetables which was not possible before in plastic greenhouses. The farms depended on snowmelt in spring to irrigate their fields, but there is less snow to melt in past years. “The last heavy snowfall in winter was about eight years ago, since then we have got little or no snow,” says Tashi Norbu Gurung, Chair of Lo Manthang Rural Municipality. “This affects farmers during the April planting season.”  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20251129021144_010e09f4e9335f39c62f4d6027489c86423b3d10ddfb83558820f6a7a56a477b.jpg" data-media-id="editor_11" data-image-id="20251129021144_010e09f4e9335f39c62f4d6027489c86423b3d10ddfb83558820f6a7a56a477b" data-rendition-name="original" width="1000" height="1500" loading="lazy" alt="Too little snow, too much rain NT"> </figure>  It is not just lack of snowfall that is a problem. Springs have gone dry, and some villages like Dhey have been forced to relocate because life became &nbsp;impossible without water.&nbsp; Villagers of Samjung also <a href="https://nepalitimes.com/news/climate-migration-is-already-happening">migrated</a> to Namashung, near a river when water sources dried up. But now the new settlements are threatened by GLOFs. Karma Gurung, who runs a lodge in Choser, remembers the big flood of 35 years ago which swept away farms and covered them with debris. There have been more frequent, but destructive floods since then in Kagbeni, Lubra and other valleys. Read also: <a href="https://www.nepalitimes.com/banner/mixed-blessings-in-mustang">Mixed blessings in Mustang</a>, Mukesh Pokhrel  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20251129021144_da2212bc1ad49c17d126e24bbd92d3fca18e3e6bdd58ac61df14c962deb2edcd.jpg" data-media-id="editor_14" data-image-id="20251129021144_da2212bc1ad49c17d126e24bbd92d3fca18e3e6bdd58ac61df14c962deb2edcd" data-rendition-name="original" width="1500" height="1000" loading="lazy" alt="Too little snow, too much rain NT"> </figure>  MUD WALLS Because snowfall has been replaced by rain, Mustang’s traditional mud-wall architecture is now in <a href="https://nepalitimes.com/here-now/leaky-roofs-on-the-roof-of-the-world">danger of collapsing</a>. The homes here are closely packed, have flat roofs stacked with juniper branches for firewood. With rain in place of snow, the roofs now leak.&nbsp; Women in Thinkar village say their walls are falling apart. Some homes have collapsed, and families forced to move out. Yangchen Dolker Gurung of the Lo Gyalpo Jigme Foundation says locals need plastic sheets, cement walls and corrugated roofs to cope with the rain.&nbsp; But this would mean that Mustang’s villages would lose their traditional architecture style.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20251129021144_59c475cdde3bee8d03ed05e9038c0cf36f1acd31e3d3596f145469e5b4404d9d.jpg" data-media-id="editor_16" data-image-id="20251129021144_59c475cdde3bee8d03ed05e9038c0cf36f1acd31e3d3596f145469e5b4404d9d" data-rendition-name="original" width="1500" height="1000" loading="lazy" alt="Too little snow, too much rain NT"> </figure>  The ancient 1.5m thick mud walls around Lo Manthang built 600 years ago, the king’s palace, and monasteries are also at risk. “Changes in precipitation patterns, altering the intensity, frequency, and timing of rainfall and snowfall, have damaged traditional and cultural infrastructure, particularly mud-built private and public buildings as well as religious and heritage sites,” explains Bhawani Pandey at the Lo Gyalpo Jigme Foundation. “With the rain, and because the monuments and stupas are made from mud, they have eroded. There is leakage, and the monuments are in a dilapidated condition.” Read also: <a href="https://www.nepalitimes.com/banner/climate-smarter-himalayan-infrastructure/" target="_blank">Climate-smarter Himalayan infrastructure</a>, Sonia Awale  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20251129021144_dfc8c93a0a8619893f0d97076d1f9cbba3818e1cc716a903ff9908dbb8939ef6.jpg" data-media-id="editor_18" data-image-id="20251129021144_dfc8c93a0a8619893f0d97076d1f9cbba3818e1cc716a903ff9908dbb8939ef6" data-rendition-name="original" width="1500" height="1000" loading="lazy" alt="Too little snow, too much rain NT"> </figure>  The Lo Manthang Rural Municipality along with Lo Gyalpo Jigme Foundation, are working on a Local Adaptation Plan of Action and the Disaster Preparedness and Response Plan, which the Nepal government has made mandatory for every municipality. “We took a bottom-up approach and collected data from each village, they know best the impact of climate change and what their needs are,” says Yangchen Gurung. To address the hazards of climate change, local communities and municipalities are adapting through their own resources, without waiting for outside help to improve water conservation, control soil erosion and protect from flood.&nbsp; Says Pandey, “We are returning to conserving traditional drought-resistant crop varieties, organic pest and disease control, cultivating high-value crops and fruits, and practicing sustainable pasture management through rotational grazing. We have also developed new building codes for homes that incorporate water-resistant coating for mud roofs and walls.” &nbsp; Additional Reporting by Tashi Wangyal. &nbsp;

Too little snow, too much rain

The September protests and worry about what is in store for Nepal in 2026 have added more uncertainty to a <a href="https://nepalitimes.com/here-now/nepal-needs-to-use-its-money-better">struggling economy</a>. Real estate transactions are stagnant, industries are operating below capacity because of declining domestic demand, the construction sector is slack, and investors are in wait-and-watch mode. In contrast, total bank deposits increased by Rs124 billion in the month before mid-October to Rs7.4 trillion. Official remittance inflows hit a record $13 billion in the past year. Nepal’s banks are flush with cash, with nowhere to put it. &nbsp; “The economy has flatlined. Non-performing assets are up, and real estate is at a standstill,” said Ashoke SJB Rana, CEO of Himalayan Bank.“There is excess liquidity in the market, with not many places to invest.” The main reason seems to be that both <a href="https://nepalitimes.com/here-now/relocate-reallocate-recover">domestic and foreign investors were spooked</a> by the targeted violence of 9 September, and are so worried about the runup to elections in March that they are holding on to their wallets. Not just businesses, the political uncertainty is keeping individuals &nbsp;from making big financial decisions.&nbsp; Sujeev Shakya, author of the <a href="https://nepalitimes.com/review/retrofitting-nepal-for-future-shocks">newly-released book Nepal 2043</a>, notes that the current doldrum is due to Nepalis playing it safe with their money. &nbsp; “People are holding on to their assets, and keeping their cash,” he says. “They are not investing in real estate, and avoiding buying gold because it is so volatile.”&nbsp; One sector in which banks have a lot of exposure is hydroelectricity, but even here recent floods have shown that this investment is <a href="https://nepalitimes.com/here-now/global-warning-bell-in-belem">increasingly at risk from climate breakdown</a>.&nbsp; Nabil Bank, with its focus on sustainable banking, for instance, has financed 56 hydropower projects with an installed capacity of 3,000MW.&nbsp; Says Nabil CEO Manoj Kumar Gyawali: “We cannot ignore unpredictable rainfall, increased glacier melt, more frequent glacier lake outburst floods, and landslides. These risks mean that while hydropower is essential, Nepal must diversify its energy mix." &nbsp;&nbsp; An open secret in the banking sector is that much of the liquidity is supected laundered money. Banks also have close ownership links with big businesses, and this means that even with a slow economy, banks lend to themselves or to each other to keep transaction volumes up.&nbsp; This is one reason for a high default rate. In the first three months of this fiscal year, 4.86% of bank loans were non-performing, meaning one out of about every 20 borrowers had defaulted. A year ago, this figure was 4.04%. Banks are therefore reluctant to lend, dampening the overall investment climate. &nbsp; Ironically, the high default rate is keeping mainstream newspapers in Nepal afloat at a time when the media business is also in crisis. Even as they suffer from a massive drop in advertising revenue, most daily newspapers often add pages to fit notices to borrowers about repayment, or announcements of bank auctions of collateral property. “While banks may be making a much smaller percentage of income compared to a few decades ago, they are still making a profit,” notes Shakya. “And so they are actually quite happy to be in this low-risk situation. Banks are conservative organisations after all.”&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20251128041136_b33dd18d7ce221e273bd18d8a5c4ba4c9196f762b95b87fd24c60df6c2426065.jpg" data-media-id="editor_4" data-image-id="20251128041136_b33dd18d7ce221e273bd18d8a5c4ba4c9196f762b95b87fd24c60df6c2426065" data-rendition-name="original" width="1500" height="1022" loading="lazy" alt="Banks"> <figcaption>Illustration: BHANU BHATTARAI / NEPALI TIMES ARCHIVE</figcaption> </figure>  Among the most striking videos of the September protests that was shared globally by tens of millions of people was the Hilton and Hyatt hotels and the Ncell building burning. That recognisable international brands were targeted did not just cause huge losses to owners, but also damaged Nepal’s overall investment climate. Looting Bhat-Bhateni and homes of businessmen also sent a negative message, spurring capital flight.&nbsp; “That was very bad optics for potential investors, you simply worry about the security of your investment when you see things like that,” says Himalayan Bank CEO Ashoke SJB Rana.&nbsp; Nepal will graduate to Middle Income Country status next year, and donors are set to move from aid to private investment. While this could reduce misuse of money, it could dry up grants and soft loans to the health and education sectors.&nbsp; But the harm may go deeper than just the aftermath of the September events. The recent<a href="https://nepalitimes.com/news/double-trouble-with-taxes"> double taxation issue</a> involving the Dolma Impact Fund, and an earlier controversy over Ncell’s capital gains tax have also put Nepal’s business climate in negative spotlight internationally.&nbsp; The banking sector is firmly on the side of investors. Says Ashoke Rana at Himalayan Bank: “This is a tax regime, it is absurd to order the payment of these taxes retrospectively. When investors see that the rules of the game can change arbitrarily, they won’t really want to put their money here. ” &nbsp; One of the positive changes in the ways Nepalis are using money is digital transactions through QR codes and mobile banking. With smartphones making up 70% of all mobile phones, QR transactions are easy and have become a part of daily life. ONLINE BANKING&nbsp; Most businesses and ride shares have this feature on board, and people do not need to carry a lot of cash or multiple bank cards. But as digital payments become the norm, the days of free transactions may be coming to an end.&nbsp; “Right now these transactions are free for the most part. This is a subsidy by the banks, because of course, it does cost something to make sure the payments go through,” says Rana at Himalayan Bank. “However, as income decreases, banks may have to look for ways to make money, so they may charge small percentages on each QR transaction.”&nbsp; Rapid digitisation has changed not only how customers use money, but also how banks think about their offices. Himalayan Bank’s new Thamel branch, for example, has cancelled plans to redesign the office for 20 tellers.&nbsp; “We realised that people were able to do so much of what they wanted digitally that we plan to have only four tellers,” says Rana.&nbsp; But cutting down on facilities and staff has not always made for a better customer experience at some bank branches.&nbsp; Economist Sujeev Shakya conducts ghost customer experience checks for banks which involves decoys entering banks to evaluate what it is like for somebody to set up a bank account.&nbsp; The stealth missions found that standards of service have regressed, with banks having a working environment reminiscent of government offices.&nbsp; Shakya points out that the general experience of going to the bank should be much better. “Sometimes it’s a knowledge issue -- banks may try to ask for non-disclosure contracts even when they don’t know why they want them,” he says.&nbsp; Despite digitisation, many banks still require paper-based forms and documents. Bankers and customers alike note that it feels archaic, almost absurd, to have to carry multiple copies of documents, sometimes only in Nepali lokta paper, across several family members and fill out what seems to be the same form over and over even though digital files exist. That could soon be changing as well. As more and more Nepalis adopt the National ID, banks have adopted pilot programs that use it to create bank accounts, replacing the myriad documents that customers had to previously present to officials, making all banking transactions more efficient and less of a hassle for the customer.&nbsp; DIGITAL SECURITY As Nepalis move their cash online, digital infrastructure needs to become more secure as well.&nbsp; Bankers spend quite a lot to make sure necessary digital security infrastructure is in place, but some banks could be using pirated software which are not trustworthy.&nbsp; There has to be better regulatory oversight to prevent phishing and fraud as online payments and digital banking spread across Nepal.&nbsp; Banks must also be innovative and ambitious. Says Shakya: “Nowhere else in South Asia are bank loans such a high ratio of the nation’s GDP. &nbsp;This actually points to a well-developed financial system and we have to take advantage of it."&nbsp; Shakya also notes that many bank executives in foreign countries, like Myanmar are actually Nepali, and that banks from Nepal could use their staff and know-how to partner with or acquire banks overseas.&nbsp; While these innovations are all welcome, it is unclear how Nepal's banking sector can jumpstart economic activity in the country. Nepal’s political future looks uncertain and stability is not a guarantee.&nbsp; In the face of continuing progress in hydro electricity and the IT sector seems to be the way forward to stimulate the economy.&nbsp; The GenZ movement was a wakeup call also to financial institutions and the need for greater transparency. Nabil Bank CEO Manoj Kumar Gyawali says the September protests sent a clear message that young Nepalis want an end to corruption, good governance, and real opportunities at home: "The banking sector has a &nbsp;responsibility to direct more lending toward the real economy, sectors that create jobs, build productivity, and strengthen long-term growth," he says.&nbsp; Despite a subdued investment climate, Gyawali is optimistic. "I do see early signs of improvement. Lower interest rates are beginning to restore public and business confidence. Rising remittances provide a safety net and fresh investment capacity for households," he says. "If government capital expenditure continues to improve, it will boost private sector activity."&nbsp;

fatima-sumar

MCC ball in Nepal’s court

MCC row rocks Nepal’s ruling coalition

Bhutan imprisons social media influencer

Looking at Nepal from Venice

Too little snow, too much rain

Cash rich, but poor