https://www.youtube.com/watch?v=PVs9hoIwFUc&amp;feature=youtu.beAt a donor conference after the 2015 earthquake, more than $4 billion was pledged to Nepal by the international community, multilateral banks and aid agencies. Germany was prompt in signing a reconstruction agreement with the Finance Ministry in December 2015, for €30 million.Three years and three agreements later, a part of the negotiations suddenly broke down last month, as the German government decided to withdraw from a project to restore monuments, schools and streets in Bhaktapur <a href="http://archive.nepalitimes.com/page/tourists-trickle-back-to-Bhaktapur" target="_blank" rel="noopener">destroyed by the earthquake</a>. This was surprising since Germany, <a href="http://archive.nepalitimes.com/news.php?id=19496#.WxElhu6FPIV" target="_blank" rel="noopener">involved in Bhaktapur’s restoration since 1970s,</a> had allocated a third of its total outlay for earthquake reconstruction to Bhaktapur.At a time when only 75% of the aid pledged in 2015 has actually materialised, and only 16% of the money has been disbursed, the cancellation of a €10million restoration initiative for Bhaktapur was a big loss for the country. Nepali Times has tried to piece together what went wrong.This was the first time that the German Embassy in Kathmandu contracted German Development bank (KfW) as an implementing partner in heritage conservation. The bank has been active in Nepal’s hydropower, health and sustainable development projects. Being a bank, KfW had different and stricter operating procedures than the German aid agency GIZ and other non-profits.Previously, <a href="http://archive.nepalitimes.com/news.php?id=19495#.WxElh-6FPIW" target="_blank" rel="noopener">Bhaktapur had rebuilt monuments</a> like the historic 55 Window Palace with local means and expertise. But KfW’s rules required international bidding, and its inability to alter this procedure as demanded by fiercely independent-minded Bhaktapur leadership after last year’s local elections, led to a deadlock.“<a href="https://www.nepalitimes.com/here-now/bhaktapur-shows-the-way-by-rebuilding-itself/" target="_blank" rel="noopener">Locally-led construction</a> gives better quality at lower cost,” says Mayor Sunil Prajapati, pointing out that Bhaktapur is already working with local user committees to rebuild damaged monuments, and 27 have been restored by the municipality and the Department of Archaeology.<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221107111144/6368e2299c7e80680e033313jpeg.jpg" alt="" width="4000" height="2707"/><figcaption>Vatsala mandir was damaged in 1934 and again in 2015 earthquake. Rejecting modern materials even in such a fragile temple, Bhaktapur is adding traditional style wooden pillars to this formerly stone structure. Pics: Monika Deupala</figcaption></figure>However, these are smaller monuments with budgets up to Rs15 million each, and larger complexes like the Pujari Math, Phasi Dega, National Art Museum (formerly a Rana palace) still await restoration.Piecing together accounts of the negotiations from both sides, what appears to have led to the deadlock was a clash of cultures. The Germans, used to lack of transparency in other projects in Nepal, wanted to ensure full compliance with the rules of its banks on the tendering process.Bhaktapur’s leaders, on the other hand, didn’t want to be told what to do when they felt perfectly capable of carrying out their own restoration.The main point of dispute appears to have been KfW’s insistence that the reconstruction contracts be open to a global tender process, international consultants, and the possible use of modern construction materials as has been done in previous German restoration here, including the octagonal Chasin Dega.<img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221107111144/6368e22d9c7e80680e033314jpeg.jpg" alt="" width="640" height="761"><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221107111144/6368e2319c7e80680e033315jpeg.jpg" alt="" width="640" height="427">Bhaktapur has finished rebuilding 27 monuments, including the gate to Bhaktapur Durbar Square. Bhaktapur has always aspired for independence, not just from foreign donors, but Kathmandu. Its political landscape has been dominated by the Nepal Worker’s Peasants Party (NWPP) under <a href="http://archive.nepalitimes.com/article/nation/Bhaktapur-dear-leader,3010" target="_blank" rel="noopener">Narayan Man Bijukche</a> who is not shy about his open admiration of the North Korean ideology of self-reliance called ‘Juche Idea’.Mayor Prajapati is from the NMKP and won a landslide in last year’s municipal elections. In an interview with Nepali Times last week he sounded defiant: “We will not tolerate foreign interference in the name of aid. We will not let our sovereignty be compromised.” (See full interview online.)Bijukchhe has now retired from politics, but is still the driving force behind the party. He has urged the government to take reconstruction upon itself and not depend on foreign aid. In the absence of elected officials before last year’s local elections, NWPP members had been present at negotiations with KfW at every stage. The party is confident it has public opinion in Bhaktapur on its side in the dispute.German Ambassador to Nepal, Roland Schäfer, admits that after two years of negotiations, "One had to come to the conclusion that KfW had to defend modalities for a reconstruction grant because of its general mandate, not related to Bhaktapur, and that this could not be adapted to where Bhaktapur's leadership saw the city moving between 2015 and 2017."  (Full interview below.)<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221107111144/6368e2359c7e80680e033316jpeg.jpg" alt="" width="5472" height="3648"><figcaption> </figcaption></figure>The city’s pride and self-reliance are all well and good, but we asked Mayor Prajapati if a compromise could not have been reached, especially because Bhaktapur stood to lose so much promised aid at a time when cash crunch is the main reason for delayed reconstruction. Prajapati was adamant: “Without foreign aid, it may take us longer to rebuild these monuments, but we have now decided that it is the best way.”Some experts are not convinced that losing the KfW aid was good for Bhaktapur. “That amount would have been enough to reconstruct all of Bhaktapur’s monuments, and more,” said Rabindra Puri, Bhaktapur’s noted heritage conservationist. “It is a great loss for Bhaktapur that the two parties could not come to an agreement.”For others, this is a lesson in how not to negotiate in Nepal’s new federal state structure, where local elected leaders are much more vocal about what they want. Bhaktapur’s politicians may have blocked the agreement when they found out architects and engineers at Khwopa College would lose out in the bidding system. Meanwhile, KfW could have predicted the fiercely-independent spirit of Bhaktapur’s leaders, and fielded locals who spoke Newari for the negotiations.With inputs from Monika Deupala in Bhaktapur<h2>"Sovereignty is foremost"</h2>Bhaktapur mayor Sunil Prajapati explains why independence is so important to Bhaktapur, and how it plans to rebuild monuments on its own.<img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221107111144/6368e2399c7e80680e033317jpeg.jpg" alt="" width="1840" height="1564">Nepali Times: How is the reconstruction of monuments in Bhaktapur going?The reconstruction is forging ahead in good speed, according to the economic means of the municipality. We are building monuments like pati, pauwa, sattal, temples and ponds of each ward though user committees. When we work through user committees, people feel ownership of the monuments, and they also contribute voluntary labor. We get more value out of it than the money we spend on it. That is why we choose to work with user committees. 27 out of 35 infrastructures, 27 out of 47 monuments, and 24 out of 28 roads that were approved for reconstruction have been completed, the rest are under construction.The municipality is using its own funds and collecting donations from local residents, at a time when the German government has withdrawn its grant of 10 million Euro. Is that a loss for Bhaktapur?Not everything is about money. Our independence is important, and we should never forget our sovereignty. Though we are prepared to tolerate everything, we should not let our independence, sovereignty, and self respect be compromised. We say this to everyone. After the 2015 earthquake, the German government had signed an agreement with Nepal government, to give €10 million to Bhaktapur to rebuild its monuments. There were many points of the agreement that we did not agree with.What was the disagreement about?For example, the audits would have to be done according to German regulations. If there are any disputes, they would have to be taken t German courts. Many monuments here are very sensitive, but the agreement required an international bidding process to restore them. We said that we have skilled experts right in Nepal who can complete the restoration, and the people here are willing to help. We have repaired Nyatapola, 55 window, Bhairabnath on our own. We want to go through user committees. But maybe they don't know what are user committees, they just did not agree to it. Plus, 20 percent of the cost would be ours, so we are already putting so much money in it ourselves.In Bhaktapur we have two engineering colleges, and many people who are very skilled in traditional craft and techniques. We said we will do it on our own, and will accept your help when we need. Bu they said we would have to do exactly as they said: use materials and techniques they specified. They would call for bidding, they would appoint the technicians, and they would specify the building materials. If that happened, we would look like mere eyewitnesses.We don't always need to take from the world, we can also give to the world. The 315-year old Nyatapola temple, the valley's tallest temple, is an example. It was not destroyed even in 1934, nor in 2015. Our technologies last 315 years! We are very rich in technology.Does that mean that the local government here is powerful?The law has made us powerful. We adhere to the law. The constitution has given us the right to make rules, working procedures, etc. We have prepared our own regulations regarding education, cooperatives, and sports. We make rules convenient to us in a way that they do not clash with federal laws.In Bhaktapur we don't easily give permission to anyone to work in the town. We take our own decisions.  That is what independence means. If we do as foreigners say, that is not independence.How do you plan to take the restoration forward, since money is still a problem?We have prepared our own designs for restorations, with a committee of 9 architects, 2 civil engineers and 2 senior advisors. Yes, we have some economic needs, and we have thanked those who come to our aid. But we do not agree to their conditions. In fact we agreed that the operating procedures of KfW are not appropriate for this project. We should not forget our identity. We also want to convey this to all Nepalis. If you have self respect, you will not bow to money or power, and you should not do so either. We should always think about what interests the other party has. It is wrong to be a slave for money.We are so independent, and so were our ancestors. If we cannot even restore the monuments that our ancestors left for us, how can we claim to be citizens of the 21st century? Though our ancestors were not as educated as us, they were advanced in arts and crafts. And we want to do justice to their art by restoring them to their glory. If we work with this spirit, then it probably won't be difficult to bring change to the country.<h2>“History with a capital H”</h2>German Ambassador Roland Schäfer talks to Nepali Times about Germany’s ties with Bhaktapur, and the latest controversy over a restoration project.<img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221107111144/6368e23d9c7e80680e033318jpeg.jpg" alt="" width="1512" height="1430">Nepali Times: Why does Bhaktapur hold such fascination for you?  As a young student, I trained as a historian. We have a shared history with Bhaktapur, and I often talk to those who remember. I was fascinated to see that the relationship between Bhaktapur and Germany is History with a capital H. This relationship is interwoven with Nepal's decade-long struggle for democracy and local autonomy, and it changed both Bhaktapur and Germany.It changed Germany. German development cooperation came in the late seventies to reconstruct or preserve some of the world heritage treasures Bhaktapur harbours. What many people don't know: the encounter with Nepali politics in Bhaktapur had a deep influence on how the Germans thought and acted. The German development cooperation changed their original ideas, the methods, and even the staff.I also believe that it also changed Bhaktapur. The city’s political leadership adapted to those "foreigners" who stubbornly wanted to help, and they kept this relationship alive over the decades. Over the decades, Bhaktapur's success was a shared success story.Today, if you walk through Bhaktapur, the people of the city point not just to the buildings which still stand or function because of this relationship. They also tell you the stories about those who spent parts of their lives talking, negotiation, building and restoring in the city, and they reminisce that also the water supply ion the city was improved, architects were trained and schools flourished, because of this relationship.I believe our relationship is strong because it was able to incorporate big political change. Change over decades is the most important ingredient in the success story which German development cooperation shares with Bhaktapur.I am therefore confident that this relationship is there to last, and that it will be able to adapt again. To new capacities in the city, new challenges and to citizens which enjoy more rights than ever before.  I think we will again be able to see the city as a whole. Not just the havoc which the 2015 earthquake wrought over the city, but a living political entity with manifold and amazing capacities.Why did the German government pull out of the agreement to restore Bhaktapur monuments? "Pulled out" does not describe what happened, if you allow me to say sp. KfW cannot just "pull out". KfW, the German Development Bank, is an instrument of German Development Cooperation, a very valuable one, but it does not take those kind of decisions.What happened is that after two years of negotiations, one had to come to the conclusion that KfW had to defend modalities for a reconstruction grant because of its general mandate (not related to Bhaktapur), and that this could not be adapted to where Bhaktapur's leadership saw the city moving between 2015 and 2017.The conclusion was reached by the German Government and communicated to the Nepali Government before I reached Nepal. The recently elected mayor and myself, the new German ambassador, we have now the task to take stock and do what predecessors have done in the past: adapt to the realities and keep the relationship moving. For that is certainly what we want to do.I do not wish to discuss whether this disappointment could have avoided, because I was not there when all this happened. I prefer to think that those involved did actually try their best and that they still wish to help those who have to pick up the pieces where they lie and move on. If one modality of cooperation does not work, for a short period of time, that is not the end of the world, is it?Will the budget set aside for Bhaktapur be used elsewhere? By the end of the year, I expect the Nepal and German governments to take decisions on the current earthquake recovery funds in their entirety -- that is an immediate administrative necessity. That has to be awaited. But we have been transparent with the leadership of Bhaktapur during the preparation of this decision.What is at stake now is to listen very carefully to the political needs which Bhaktapur's leadership seen in a new, federal environment. We need to do this in a really holistic way. My hunch is that it will be very interesting to listen to Bhaktapur, not just for the Germans, but for many mayors and reconstruction experts in Nepal. That is what we think is a way forward.Bhaktapur, today, is not the Bhaktapur of the 1970s. But also the Government of Nepal is not the Government of that period of a king's rule. In this environment, Bhaktapur must be listened to, and I call on Bhaktapur to talk, teach, demonstrate and help analyse all things related to municipal development. How does it relate to tourism, local economy, religious heritage, infrastructure and buildings? That is at stake for so many more cities in Nepal, and we Germans want to use our contacts in order to be able to join the learning process.If in this process, good ideas emerge and people come together who have the courage to make them happen, the Germans will be part of it. I am sure we will find the best modality for cooperation in this new context. KfW was a possible instrument, but not the only one.Readers write<a id="js_blp" dir="ltr" href="https://www.facebook.com/devendra.basnet?fref=ufi&amp;rc=p" target="_self" data-ft="{" data-hovercard="/ajax/hovercard/hovercard.php?id=100000012551306&amp;extragetparams=%7B%22is_public%22%3Atrue%2C%22hc_location%22%3A%22ufi_admin%22%7D" aria-describedby="js_blo" aria-owns="">Devendra Basnet</a> As the saying goes 'there's no free lunch.' Specially when it comes to the world of foreign aid.<a href="https://twitter.com/KtmAktivist" data-user-id="2449702855">Amit Aryal‏ </a>This is inspiring on so many levels. Thank you for being a visionary leader! This is not only a learning moment for our cultural preservation but for Finance Ministers and Nepali bureaucrats that are often too eager to accept foreign assistance without realising its pitfalls.

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Clash of cultures in Bhaktapur

Sixty years ago Nepal established diplomatic relations with Germany when both countries were emerging from dark and difficult times, and both were trying to establish a new identity. They wanted to open up to the world and define a new place for themselves within it.Look at Nepal today: it has overcome decades of profiteering by a rent seeking elite, it has overcome a decade of civil strife, it has given itself a new, democratic, republican and federal constitution, and the Nepali people have validated all this by voting massively last year, installing the most <a href="http://archive.nepalitimes.com/article/editorial/government-to-governance-editorial,4200" target="_blank" rel="noopener">powerful government</a> in Nepal’s modern history.This government, carried by a united party, knows it has to fulfill the promises which got it elected. It has the power and the wisdom to reconcile the country with its past and help it look boldly to the future. Building the future on the foundation of a well understood past shared by all will be a process.It cannot be achieved by the stroke of a pen or the handing out of some money from state coffers. But if this process gets to a credible start now in the coming two to five years, it will be empowering Nepali women and men like never before in history.From many conversations in the last nine months here, I am confident to say: It seems to feel good to be a Nepali today. And I can tell you myself: it feels good to be a German today.<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221107101156/6368d6cb9c7e80680e0314a6jpeg.jpg" alt="" width="1372" height="1832"/><figcaption>Foreign Minister Pradeep Gyawali and German Ambassador Roland Schafer unveil the logo for the 60th anniversary of Nepali-German diplomatic relations on Monday. Pic: German Embassy</figcaption></figure>We have been holding joint consultations on the next two years cycle of development cooperation between Germany and Nepal. Germany will continue to engage in the health and energy sectors, and will continue to work on enabling Nepali small and medium sized enterprises for a competitive world market.Our cooperation builds on decades of common work. <a href="http://archive.nepalitimes.com/news.php?id=19496#.Wwb1vzSFN0x" target="_blank" rel="noopener">Bhaktapur</a> may have the longest story to tell about successes in our cooperation, about trust built, even after initial failures were overcome. This learning process never ends. I am happy to further engage with this proud, able city and its citizens on a cooperation that makes best use of what Bhaktapur can give to the nation and of what a modern Germany can contribute to this long standing partnership.Not all is government to government cooperation. We want to make Nepal a place for German and European industry to invest in. Employment will be created durably and reliably in this competitive world through private sector engagement.I thank Nepal for extending support to Germany in the upcoming election to non-permanent membership of the United Nations. We count on the support, so that we can work for multilateral peace-making, something to which Nepal’s army is contributing so much.And look at Germany today. The country is reunited, its 80 million people are part of a European Union of 500 million citizens who freely trade, travel, work and transfer assets among themselves. The European Union ensures the rule of law for all and organizes the outside protection of the Union territory.Germany has established its own particular brand of foreign and security policy – not so much by talking, but by how we behaved. We have taken on responsibility such as intervening militarily against dictatorship and ethnic cleansing in the Balkans, offering the parties to the conflict the option to become members of the European Union. But we refused to participate in the invasion of Iraq at the beginning of the century. The most important point for us today: the European Union as a whole is establishing its own Foreign and Security policy of which Germany is fully a part.Excerpt of a speech by Roland Schäfer, Ambassador of Germany to Nepal, on 20 May to mark the 60th anniversary of Nepal-Germany diplomatic relations.Read also: <a href="http://archive.nepalitimes.com/regular-columns/Comment/Memory-and-forgiveness-internation-holocaust-day,1109" target="_blank" rel="noopener">Memory and forgiveness</a>, Roland Schäfer

Six decades of cooperation

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;

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