Last month, European Commission President Ursula von der Leyen announced that the first official <a href="https://nepalitimes.com/here-now/reaction-to-wang-yi-s-nepal-visit-in-chinese-media">foreign visit </a>of the commission in her second term would be to India. On the same day, Marco Rubio held his first bilateral meeting as US Secretary of State with India’s minister of external affairs, Subrahmanyam Jaishankar.
Prime Minister Narendra Modi’s two-day visit to Washington last month confirmed his country’s rising international profile. The visit ended with the promise of what Modi called a US-India “mega partnership.” He has committed to double trade with the US by 2030, increase <a href="https://archive.nepalitimes.com/regular-columns/half-full/A-carbon-neutral-Nepal-is-possible-clean-Nepal,1064">oil and gas imports</a>, and expand US military sales to India.
India is now the fastest-growing major <a href="https://nepalitimes.com/opinion/comment/how-nepal-can-avert-an-economic-crunch">economy</a>, with the IMF forecasting a 6.5% increase in GDP this year. India is expected to overtake Japan and Germany to become the world’s third-largest economy by 2030.&nbsp;
Read also: <a href="https://nepalitimes.com/opinion/india-s-election-and-its-economic-future">India’s election and its economic future</a>, Raghuram G Rajan
Despite its <a href="https://nepalitimes.com/news/missing-out-on-nepal-s-tourism-potential">vast potential</a>, India has long been overlooked by the West, both <a href="https://nepalitimes.com/here-now/ukraine-crisis-hits-nepal-economy-hard">economically</a> and <a href="https://nepalitimes.com/news/the-geopolitics-of-nepal-s-politics">geopolitically</a>. But a fundamental global realignment is now underway. America’s ‘unipolar moment’ has given way to an era of great-power competition that, unlike during the Cold War, features demands by emerging and developing economies for a more <a href="https://nepalitimes.com/banner/making-nepal-accessible-to-all">inclusive </a>and representative multilateral system.&nbsp;
In this multipolar age, both the US and Europe see India, a neutral <a href="https://nepalitimes.com/editorial/no-binary-foreign-policy?fb_comment_id=3583384368393672_3586424038089705">foreign-policy </a>actor and dynamic<a href="https://archive.nepalitimes.com/news.php?id=18861"> emerging economy</a>, as vital to the future of their strategic priorities.&nbsp;
A founder of the Non-Aligned Movement, India has plenty of experience navigating precarious moments in <a href="https://archive.nepalitimes.com/news.php?id=4896">world affairs</a>. During the Cold War, it skillfully balanced its policies toward <a href="https://nepalitimes.com/here-now/america-nepal-and-the-royal-coup-qedzifz9">the US and the Soviet Union</a>.&nbsp;
When it engaged with <a href="https://nepalitimes.com/opinion/so-far-so-good/the-vagaries-of-fate">the Soviet Union</a>, from which it received considerable <a href="https://nepalitimes.com/banner/civil-military-synergy-in-disaster-management">military assistance</a>, it calibrated its approach to offset US support of Pakistan, without taking sides in the <a href="https://nepalitimes.com/opinion/the-rich-get-richer-and-more-powerful">great-power competition</a>.&nbsp;
India has since maintained this pragmatic balancing act, adapting its foreign policy to a shifting geopolitical landscape. Today, that means recognising its potential to shape global affairs, including by playing a leading role in building an efficient, realistic, and inclusive multilateralism.&nbsp;
This is reflected in Modi’s pursuit of a more assertive, internationalist foreign policy. Beyond building new partnerships and strengthening old ones, Modi has sought to increase <a href="https://nepalitimes.com/news/india-s-hindutva-politics-influencing-nepal">India’s influence </a>in traditional and emerging multilateral fora. In 2023 alone, India held the presidency of both the G20 and the Shanghai Cooperation Organisation (a Chinese creation, comprising nine Middle Eastern and Asian countries).&nbsp;
India plays a leading role in the BRICS, and is characteristically nuanced: whereas Russia and, to a significant extent, China see themselves as disruptors of the existing order, India views itself as a reformer. This enables it to maintain strategic flexibility as it advances its interests.&nbsp;
<a href="https://nepalitimes.com/news/india-china-rail-race">India’s relationship with China</a> is complicated by other factors. While the countries work together in some fora, they are also locked in protracted<a href="https://nepalitimes.com/news/india-bangladesh-border-talks-have-lessons-for-nepal"> territorial disputes</a> and a <a href="https://nepalitimes.com/news/the-race-for-shital-nibas">competition for leadership</a> in the so-called Global South.&nbsp;
India’s growing global clout, including its appeal to Western powers, stems in large part from its ability to act as a counterweight to China. It is indispensable to the Quad alliance with Australia, Japan, and the US, a grouping that is officially focused on <a href="https://nepalitimes.com/opinion/the-quad-maritime-security-and-climate-change">maritime security</a> and economic cooperation, though its members clearly seek to provide a buffer against China in the <a href="https://nepalitimes.com/editorial/between-two-oceans">Indo-Pacific region</a>. It is thanks to India that the Quad is not viewed as just another Western vehicle.&nbsp;
Modi has sought to bolster India’s Southern credentials, including by highlighting its status as the “mother of democracy”. By framing <a href="https://nepalitimes.com/news/is-democracy-too-expensive-for-nepal">democracy</a> as intrinsic to Indian civilisation, rather than a colonial legacy, he aligned India with ‘middle powers’ seeking to redefine global governance on their own terms.&nbsp;
To be sure, Modi has moved India away from the secular and pluralistic values that had flourished after <a href="https://nepalitimes.com/news/the-goal-is-empowerment-and-independence-of-women">independence</a>, in favour of assertive <a href="https://nepalitimes.com/news/unconventional-convention">Hindu nationalism</a>. So many international indices have downgraded India’s democratic status that he is now seeking to create his own.&nbsp;
Read also: <a href="https://nepalitimes.com/opinion/borderlines/demodification-of-india">Demodification of India</a>, Chandrakishore&nbsp;
Modi is the second leader of independent India (after Jawaharlal Nehru) to be elected to three consecutive terms, and remains a dominant force in <a href="https://nepalitimes.com/here-now/india-s-faith-in-politics">Indian politics</a>.&nbsp;
And at a time of <a href="https://nepalitimes.com/here-now/the-geopolitics-of-nepal-s-water-and-electricity">rapid geopolitical change</a>, he is committed to leveraging his position, and India’s profound strengths, to turn it into a global player. India has long had the potential to be an active shaper of international affairs. It has now arrived. &nbsp;&nbsp;© Project Syndicate
Ana Palacio, a former minister of foreign affairs of Spain and former senior vice president and general counsel of the World Bank Group, is a visiting lecturer at Georgetown University.

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India has arrived

<img width="1398" height="932" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221109181148/636be8a79c7e80680e087872jpeg.jpg" alt=""/>When it comes to international environmental diplomacy, America has a chequered past. It stood at the forefront of the international battle to fix the ozone hole and has shaped many key international agreements.Sadly, US positions are not always built on solid political ground at home. Twice, in the climate change process, this has led to the United States forging an agreement, only to then walk away. This happened with the 1997 Kyoto Protocol which then Vice-President Gore flew to Japan to sign in the full knowledge that a Republican dominated Senate would never ratify the deal. It happened again five years ago, with former President Obama closing that landmark deal (and John Kerry signing at the UN), only for President Trump to tear it up a few weeks later.With such a background the international community is a little nervous when a new Democrat administration takes the helm laden with robust statements and bold promises, as President-elect Biden is doing now. But, as is so often the case, the prodigal son will get the benefit of the doubt (again) and for good reason!Let’s look at what those reasons are. No-one would argue the fact that the United States are a political powerhouse and an economic superpower. This makes having the US in the climate action tent critically important. But why? Is this about political posturing, or is there something more?When the Biden administration chooses to take an ambitious lead on climate action, the world is wise to take heed. Clear signals from politicians on where the new administration plans to go, have an enormous power in the market. An example. Wind and solar energy made it to where they are today in a hostile economic environment where the playing field was everything but level.Environmental cost is not internalised and fossil fuels are still subsidised to a huge degree. What helped to push wind and solar to the current competitive strength is the hope that, in the long term, things will change and new (climate) challenges be recognised, thus creating a viable market for these technologies.If you are building things (powerplants, factories or refineries) with a technical lifetime of 40 years, you do well to think about how friendly or hostile the operating environment is likely to be over that time period. So a political statement sends strong market signals. Especially if it comes from a superpower and even more so when others are pointing in the same direction.How the market responds to political signals has ramifications around the globe. Our economy is now truly global. This means that when key market players take a course, set an standard or make demands on their suppliers, this resonates around the world. The EU agreeing auto standards with European manufactures immediately sets a trend that Japan and Korea must follow because the European market is so big. American companies like Wall Mart have hundreds of thousands of suppliers around the world. So a direction taken at a corporate HQ is delivered-on in pretty much every country on our planet. The standards the US and other major players set become imperatives, or things you choose to ignore at your own peril.Another important point is that climate action has increasingly become a race to the top that is driven by innovation. Innovators smell a climate market and they are rushing to seize the opportunities. Opportunities around electric vehicles, energy efficiency, clean technologies, low-asset business models, you name it. America has long stood at the forefront of discovery and innovation. Many of the key technologies we apply today have at least part of their roots in America. So the signals politicians send and how the corporate community responds, creates an innovation catalyst that will transform business opportunities both in the US and around the world.America’s proud history in working together with other nations, providing them with the finance, technology and capacity support they need in order to climate proof their energy systems, industry and infrastructure. Reducing emissions in the economic powerhouses of today is obviously critical. But with much of future economic growth and population increase of the future set to happen in Africa and Southeast Asia, we need to fix the future, not only the past.Five years after the Paris Climate Accord was reached, the international process is now in full implementation mode. The purpose of the negotiations will be to ensure that countries individually are delivering what they have promised and that the collective impact of their efforts is enough to keep global temperature increase below the agreed level.The United States returning to the international process at this time is critical to ensuring that especially the major players show leadership, both at home and abroad. At the end of the day, ensuring this happens is in the US’s own interest for a number of reasons. First because the US has in recent years always considered action by others, especially China, as a precondition for its own engagement. Second because bold global action will ensure all nations pull their weight toward a common goal. Third because that global action will create the opportunities for the innovation economy of the future President-elect Biden is seeking to deliver, as opposed to the manufacturing economy of the past.The model outgoing President Trump held up is what should make America great again.<img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221109181148/636be8aa9c7e80680e087873jpeg.jpg" alt="" width="112" height="115">Yvo de Boer is President of the Gold Standard Foundation and former Secretary of the UN Climate Convention. By arrangement with <a href="http://www.ipsnews.net/" target="_blank" rel="noopener noreferrer" data-saferedirecturl="https://www.google.com/url?q=http://www.ipsnews.net&amp;source=gmail&amp;ust=1608449441391000&amp;usg=AFQjCNG3H42XxR35yQ0oIbFhDn1UnMaTag">Inter Press Service.</a>

The right climate for Joe Biden

<img width="1398" height="932" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221109191120/636bef9a4b0ad905ca02efbbjpeg.jpg" alt=""/>When it comes to international environmental diplomacy, America has a chequered past. It stood at the forefront of the international battle to fix the ozone hole and has shaped many key international agreements.Sadly, US positions are not always built on solid political ground at home. Twice, in the climate change process, this has led to the United States forging an agreement, only to then walk away. This happened with the 1997 Kyoto Protocol which then Vice-President Gore flew to Japan to sign in the full knowledge that a Republican dominated Senate would never ratify the deal. It happened again five years ago, with former President Obama closing that landmark deal (and John Kerry signing at the UN), only for President Trump to tear it up a few weeks later.With such a background the international community is a little nervous when a new Democrat administration takes the helm laden with robust statements and bold promises, as President-elect Biden is doing now. But, as is so often the case, the prodigal son will get the benefit of the doubt (again) and for good reason!Let’s look at what those reasons are. No-one would argue the fact that the United States are a political powerhouse and an economic superpower. This makes having the US in the climate action tent critically important. But why? Is this about political posturing, or is there something more?When the Biden administration chooses to take an ambitious lead on climate action, the world is wise to take heed. Clear signals from politicians on where the new administration plans to go, have an enormous power in the market. An example. Wind and solar energy made it to where they are today in a hostile economic environment where the playing field was everything but level.Environmental cost is not internalised and fossil fuels are still subsidised to a huge degree. What helped to push wind and solar to the current competitive strength is the hope that, in the long term, things will change and new (climate) challenges be recognised, thus creating a viable market for these technologies.If you are building things (powerplants, factories or refineries) with a technical lifetime of 40 years, you do well to think about how friendly or hostile the operating environment is likely to be over that time period. So a political statement sends strong market signals. Especially if it comes from a superpower and even more so when others are pointing in the same direction.How the market responds to political signals has ramifications around the globe. Our economy is now truly global. This means that when key market players take a course, set an standard or make demands on their suppliers, this resonates around the world. The EU agreeing auto standards with European manufactures immediately sets a trend that Japan and Korea must follow because the European market is so big. American companies like Wall Mart have hundreds of thousands of suppliers around the world. So a direction taken at a corporate HQ is delivered-on in pretty much every country on our planet. The standards the US and other major players set become imperatives, or things you choose to ignore at your own peril.Another important point is that climate action has increasingly become a race to the top that is driven by innovation. Innovators smell a climate market and they are rushing to seize the opportunities. Opportunities around electric vehicles, energy efficiency, clean technologies, low-asset business models, you name it. America has long stood at the forefront of discovery and innovation. Many of the key technologies we apply today have at least part of their roots in America. So the signals politicians send and how the corporate community responds, creates an innovation catalyst that will transform business opportunities both in the US and around the world.America’s proud history in working together with other nations, providing them with the finance, technology and capacity support they need in order to climate proof their energy systems, industry and infrastructure. Reducing emissions in the economic powerhouses of today is obviously critical. But with much of future economic growth and population increase of the future set to happen in Africa and Southeast Asia, we need to fix the future, not only the past.Five years after the Paris Climate Accord was reached, the international process is now in full implementation mode. The purpose of the negotiations will be to ensure that countries individually are delivering what they have promised and that the collective impact of their efforts is enough to keep global temperature increase below the agreed level.The United States returning to the international process at this time is critical to ensuring that especially the major players show leadership, both at home and abroad. At the end of the day, ensuring this happens is in the US’s own interest for a number of reasons. First because the US has in recent years always considered action by others, especially China, as a precondition for its own engagement. Second because bold global action will ensure all nations pull their weight toward a common goal. Third because that global action will create the opportunities for the innovation economy of the future President-elect Biden is seeking to deliver, as opposed to the manufacturing economy of the past.The model outgoing President Trump held up is what should make America great again.<img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221109191120/636bef9d4b0ad905ca02efbcjpeg.jpg" alt="" width="112" height="115">Yvo de Boer is President of the Gold Standard Foundation and former Secretary of the UN Climate Convention. By arrangement with <a href="http://www.ipsnews.net/" target="_blank" rel="noopener noreferrer" data-saferedirecturl="https://www.google.com/url?q=http://www.ipsnews.net&amp;source=gmail&amp;ust=1608449441391000&amp;usg=AFQjCNG3H42XxR35yQ0oIbFhDn1UnMaTag">Inter Press Service.</a>

<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221108131140/636a4ecf9c7e80680e04fcd6jpeg.jpg" alt="" width="1400" height="933"/><figcaption>Pic: BIKRAM RAI</figcaption></figure>When Nepal’s politicians were asked to list their assets, many disclosed property, bank balances and jewelry. Among his possessions, Nepal’s well-read Foreign Minister Pradeep Gyawali declared that he owned 2,500 books. The soft-spoken Gyawali now has the responsibility of steering the country’s foreign policy at a time of heightened geopolitical polarisation in the region. Sound bites from an interview this week:<ul><li>Nepal used to be a back-bencher in international fora. Now we are being seen and heard. <a href="https://www.nepalitimes.com/here-now/to-davos-with-hammer-and-sickle/" target="_blank" rel="noopener">The Prime Minister’s participation at Davos</a> and hosting the <a href="https://www.nepalitimes.com/banner/bimstec-facelift/">BIMSTEC Summit</a> in Kathmandu has raised Nepal’s international profile.</li> <li>It could be that some cannot digest Nepal’s higher international engagement and are uneasy about it. But there is no question of Nepal ever joining any strategic alliance.</li> <li>We look at our own national interest, and we also try to make sure that our decisions and involvement do not hurt the interests of our neighbours, development partners or other friendly countries.</li> <li>Our long-term foreign policy goals have not changed, but we are trying to adapt to new geopolitical realities by analysing them and formulating new policies of engagement.</li> <li>We want to benefit from the economic growth and development of our two neighbours.</li> <li>We are conveying to China and India that a prosperous and stable Nepal is also in their interest.</li> <li>We are telling our development partners that Nepal is a safe country for foreign investment, from where it is easy to export to other countries.</li> <li>We are very sensitive to the fact that 4 million of our young men and women are working abroad and through diplomacy we want to ensure their security, rights and respect.</li> <li>In the 1990s and 2000s many Latin American countries went nearly bankrupt and had to be bailed out. It was not called a ‘debt trap’, none of them had loans from China.</li> <li>If it is in the national interest, we can take not just aid, but also loans. But if it is against our interest, we will not even take assistance.</li> <li>The suspicions about the Indo-Pacific is a storm in a tea cup. Our Chinese friends are not really worried, they are sure that Nepal will not allow anti-Chinese activities.</li> <li>We do not lean more or less on any one side. We don’t try to compare the relationship we have with our two neighbours.</li></ul>"Nepal has spread its wings"Full Interview with Minister of Foreign Affairs Pradeep GyawaliNepali Times: There have been transformative changes in international diplomacy and geopolitics. But Nepal seems to be stuck.Pradeep Gyawali: Every country has a set of long-term goals, and some flexible policies that change with the times. Nation states have permanent values like sovereignty, territorial integrity, dignity and independence. These beliefs do not change with changes in governments, they do not even change with a change in governance systems. Our adherence to the concept of panchashila, or the United Nations declaration does not change. That is why we also look into our fixed goals and immediate policies based on changes in international and regional relations. We have adapted to new realities from the standpoint of our national interest.Will this be enough for Nepal to reach its goal of being a middle-income country in the next ten years?We have to keep in mind global changes, and specifically the geopolitical, economic, demographic changes in Asia. We have to adapt to the fact that our two neighbours are moving forward rapidly. For this, we do not play favourites, or let our relations with one country be at the expense of another. We want to benefit from the economic growth and development of our two neighbours. We are conveying to China and India that a prosperous and stable Nepal is also in their interest. We are telling our development partners that Nepal is a safe country for foreign investment, from where it is easy to export to other countries. We are very sensitive to the fact that 4 million of our young men and women are working abroad and through diplomacy, we want to ensure their security, rights and dignity. And we will extend our involvement and cooperation with multilateral agencies.<img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221108131140/636a4ed29c7e80680e04fcd7jpeg.jpg" alt="" width="1400" height="1161">The Indian media and intelligentsia are accusing Nepal of tilting towards China.Both our neighbours are equally important for us. We are not tilting more or less in any direction. We don’t compare our relationship with either of them.  Neither of our neighbours should forget that Nepal has neighbours on both sides, and ask us to deal only with one of them.There is lot of talk about Nepal falling into the Chinese debt trap.I keep reminding people that in the 1990s and 2000s many Latin American countries nearly went bankrupt and had to be bailed out. It was not called a ‘debt trap’, none of them had loans from China. Greece still has not been able to come out of its economic crisis, and I don’t think they are in trouble because they had Chinese investments. These accusations are not based on an objective economic analysis, but a negative attitude towards the rise of China and its political system. Besides, Nepal has the ability to decide what is in its national interest and what is not.  If it is in the national interest we can take not just aid, but also loans. But if it is not in our interest, we will not even take assistance.And China seems to be suspicious of Nepal’s involvement in the Indo-Pacific Alliance. Can a Nepal that is already a member of the <a href="http://archive.nepalitimes.com/regular-columns/chinese-ambassador-addresses-bri-conference/" target="_blank" rel="noopener">BRI</a> risk being involved in the Indo-Pacific?The suspicions about the Indo-Pacific is a storm in a tea cup. Our Chinese friends are not really worried, they are sure that Nepal will not allow anti-Chinese activities. The first official visit by a Nepali foreign minister to Washington recently, and the first American visit at the level of the foreign minister to Nepal have added a new milestone to Nepal-US relations. The Japanese foreign minister visited Nepal after many years, we have also deepened our relations with India, the EU and other development partners.  Nepal has increased its involvement in the international arena. The Prime Minister’s recent Europe visit has sent the message that Nepal is no longer what it used to be in South Asia, it has spread its wings. It could be that some cannot digest Nepal’s higher international engagement and are uneasy about it. There is no question of Nepal ever joining any strategic alliance. We look at our own national interest, and we also try to make sure that our decisions and involvement does not hurt the interests of our neighbours, development partners or other friendly countries.What are the main achievements during your tenure?During the conflict, Nepal’s economic development suffered a setback, it affected our foreign policy and we became an arena for proxies. Now, with the end of the political transition and political stability, we are fixing our mistakes and moving ahead.  Nepal used to be a back-bencher in the international fora. Now, we are being seen and heard. The Prime Minister’s participation at Davos, his one-on-one meeting with G-20 leaders sent the message that Nepal should now be heard on the world stage. Recently, the head of the IFC said that Nepal was a ‘rising star’, so that must carry some weight.We have also restored our relations with our neighbours, after overcoming difficult times. Others have now realised that they must take Nepal along. Despite obstacles, we hosted the <a href="https://archive.nepalitimes.com/article/nation/connecting-Bangladesh-China-India-Nepal,2966" target="_blank" rel="noopener">BIMSTEC Summit</a> and the <a href="https://www.nepalitimes.com/here-now/labour-pain/">Colombo Process Ministerial Conference</a> in Kathmandu. I would consider the past year quite successful.Interview by Hari Prakash Chand and Binu PokhrelRead Also:<a href="https://www.nepalitimes.com/here-now/nepal-has-more-self-respect/" target="_blank" rel="noopener">“Nepal has more self-respect”</a>, Nepali Times<a href="https://www.nepalitimes.com/editorial/yam-between-3-boulders/" target="_blank" rel="noopener">YAM BETWEEN 3 BOULDERS</a>, Editorial<a href="https://www.nepalitimes.com/here-now/nepal-now-has-to-balance-not-just-india-and-china-but-also-the-west/" target="_blank" rel="noopener">Nepal now has to balance not just India and China, but also the West</a>, Bhairaja Pandey<a href="https://www.nepalitimes.com/here-now/eminently-beneficial-for-india-and-nepal/" target="_blank" rel="noopener">Eminently beneficial for India and Nepal</a>, Ajit Baral

"Nepal is now seen and heard"

Nepalis worship the sun, and mark its seasonal passage with festivals. Adding to that spiritual reverence now is the economic relevance of solar power. Fast-flowing Himalayan rivers give Nepal a total feasible hydropower generation capacity of 48,000MW, of which only 3,600 has so far been harnessed. Yet, Nepal’s total solar power potential has been calculated to be nearly 10 times higher at 432,000MW. &nbsp; With over 300 days of sunshine a year, the country could produce 3.6 to 6.2 units of electricity per square meter based on its solar radiation levels.&nbsp; This potential, combined with decreasing installation costs of Chinese-manufactured photovoltaic cells and other means, is a viable and affordable alternative to Nepal’s over-reliance on hydropower which faces concerns about the destruction of riverine ecosystems, as well as risk from glacial lake floods caused by climate breakdown. However, restrictive domestic energy policies and geopolitical sensitivities mean Nepal is failing to diversify fast enough to tap this tremendous solar energy potential. Nepal’s hydropower generation is almost entirely from run-of-river projects that do not have large reservoirs. Many such projects in Nepal and across the Himalaya have been swept away by glacial lake outburst floods in recent years.&nbsp; Such risks and limitations to hydropower should have prompted the Nepal government to jump-start investment into solar farms, but the main reason is that the Nepal Electricity Authority (NEA) caps solar power at just 10% of total capacity. There is no official explanation, but it is likely due to the outdated perception that solar technology cannot supply a consistent energy stream at evening and morning peak loads.&nbsp; But today, there are plenty of ways around it, including pump storage schemes that use daytime solar power to pump water from a river to a reservoir and drain it to generate electricity at night. Battery technology is now more advanced, and affordable enough to make grid-scale batteries feasible.&nbsp; But then there is an issue of tariffs, which are much lower for solar at Rs5 per energy unit, and competitive bidding forces companies to lower it even further. But there is no bidding process for hydropower and licenses are given out on a first-come, first-served basis with a fixed rate of Rs6.5 per unit regardless of location.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/2025112303118_c3280cddae6f3305d07319011dd9c187005822a9b905bb849c36b95e3ad0d516.png" data-media-id="editor_0" data-image-id="2025112303118_c3280cddae6f3305d07319011dd9c187005822a9b905bb849c36b95e3ad0d516" data-rendition-name="original" width="1109" height="887" loading="lazy" alt="Here comes the sun"> </figure>  SUPPLY VS DEMAND Hydropower is supply-driven, while solar responds to demand, so under such a discouraging scenario, solar power accounts for only 5% of Nepal’s total energy mix. “Given the environmental risks to hydropower, investors are now demanding tariffs on hydropower to be increased. So the question to the government is, are you paying more money for hydropower or willing to buy more of the cheaper solar power,” said energy entrepreneur Kushal Gurung. Solar investors are lobbying the government to raise the cap on solar power to 30% and expand zoning policies so that solar plants can be built in areas with high potential, such as Dolpo and Mustang in the trans-Himalaya. These regions are sparsely populated, arid, have a cold climate and high solar radiation levels — ideal conditions for photovoltaics. Solar power’s biggest advantage is its cost-effectiveness compared to hydropower, with the operating cost of a hydropower plant up to four times higher than of a solar plant of the same generation capacity. Investors are no longer assured of a return on investment on hydropower due to climate risk which have increased insurance premiums. “Last year, when the government opened a bidding for 800MW of solar power, the private sector was ready to invest 3,000MW. Both banks and investors were convinced about the potential for solar energy, but the government and especially the bureaucracy, was not on the same wavelength,” added Gurung.&nbsp; Interim Energy Minister Kulman Ghising is said to be interested in increasing the cap on solar energy, but there is a question whether he will remain in office since he has launched his only Ujyalo Nepal party to contest elections in March. GEOGRAPHY AND GEOPOLITICS In 2018, Nepal’s only foreign private equity form Dolma Himalayan Climate Fund (DHCF) pitched a proposal to generate 150MW from a solar farm and store 20MW of it in battery systems in Mustang to meet seasonal and daily peaks. It got approval from Investment Board Nepal (IBN) and had already poured millions into the project when the Department of Mines instructed all developers in Mustang to halt their projects, citing the discovery of uranium ore. But insiders say the real reason was due to pressure from the Chinese government’s security concerns about a Western investor being involved so close to the border with Tibet.&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/2025112303118_5946a5f1ba63f34c88f900c6d12b37d0101effb76e8a7a5397cd6451c16cd5b2.jpg" data-media-id="editor_1" data-image-id="2025112303118_5946a5f1ba63f34c88f900c6d12b37d0101effb76e8a7a5397cd6451c16cd5b2" data-rendition-name="original" width="800" height="450" loading="lazy" alt="Here comes the sun NT"> <figcaption>Photo: GHAM POWER</figcaption> </figure>  The same thing happened, but in reverse, when the Chinese company Risen Energy was interested in investing $190 million on a grid-connected 125MW photovoltaic generation system in Banke and Kapilvastu districts near the Indian border. Risen’s subsidiary, Risen Energy Singapore JV, was negotiating with IBN to commit $190 million in the project which would also store 20MW of daytime generation for morning and evening peak demand. But the agreement was not signed because the Indian authorities were concerned about Chinese involvement so close to their border. India has also refused to buy electricity from any hydropower plant in Nepal that has Chinese or other foreign investment or contractors. Indian state-owned companies are currently building or planning hydropower plants in Nepal to generate nearly 3,000MW, mostly for export.&nbsp; But not every Chinese-backed project has been blocked. In 2024, China handed over two solar-powered livelihood projects to a local community in Lalitpur — a community solar bathhouse and a rooftop photovoltaic power system. Funded by the Yunnan People’s Association for Friendship with Foreign Countries, the projects aim to improve living conditions. The initiative forms part of the Chinese Embassy’s ‘Happy Community’ program (幸福社区, Xìngfú Shèqū) under the China–South Asia Poverty Reduction and Development Cooperation Center.&nbsp; Says Gurung: “Hydropower is a geopolitical mess, but it has well and truly started in solar power too. It now all comes down to how we handle it, and we need deft diplomacy to make sure our projects are not indefinitely delayed as has happened in the past.”&nbsp; LOW-HANGING FRUIT Despite domestic restrictions and geopolitics, there are still small-scale opportunities for solar energy entrepreneurs to cash in, such as net metering. Most industries in Nepal have enough rooftop space to generate 500KW to 1MW of solar energy. Combined, they would generate a substantial amount of energy to feed into the grid. Factories, supermarkets and chain stores are often bankable and trusted by financial institutions from which they could easily get credit.&nbsp; China could also take advantage of Nepal’s high solar power potential. Given that the United States has only imposed a 10% tariff on Nepal, China could set up PV manufacturing plants in Nepal.&nbsp; However, this requires government-to-government which could run into trouble, again because of geopolitics. The same applies for the Carbon Border Adjustment Mechanism which is a carbon tariff on carbon intensive products, such as steel, cement and some electricity, imported to the European Union.&nbsp; Chinese products have suffered under this mechanism but Chinese products made in Nepal can be competitive in the European market given lower carbon tax for Nepal. Clean energy has long been an area where Nepal hopes to attract Chinese investment — not only in hydropower, but also in solar and wind energy.&nbsp; With contributions from Qian Sun, Global Voices.&nbsp;

Nepal, here comes the sun

Youth protestors who sustained injuries at the hands of state security forces during the September protest staged a sit-in at Maitighar Mandala on Friday, protesting what they have called the interim government’s inadequate efforts to address the demands of the GenZ movements. The demonstrators also sought to bar the UML from gathering at Maitighar, where party chair K P Oli was expected to announce its Youth Volunteer Force on Friday. The organisers consequently relocated the event. Friday’s demonstration at Maitighar comes as UML and GenZ representatives agreed to sit down for talks in Simara, where a curfew was imposed this week after youth protestors and party cadres clashed near the airport as demonstrators sought to stop UML leaders from flying in for a political event to Simara from Kathmandu.&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20251121131148_c0b3bfb861f73bee456efbd12f523af55ce3c258742c39e1dea7dbf768774ea5.png" data-media-id="editor_0" data-image-id="20251121131148_c0b3bfb861f73bee456efbd12f523af55ce3c258742c39e1dea7dbf768774ea5" data-rendition-name="original" width="2160" height="1440" loading="lazy" alt="GenZ Maitighar"> <figcaption>Youth protestors who sustained injuries at the hands of state security forces during the September protest staged a sit-in at Maitighar Mandala on Friday. Photos: SUBASH SHRESTHA</figcaption> </figure>   <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20251121131152_85f3606728d137b334d782ac1b5d1ed6383544493f96ebcc0398fcd9f0c5add7.png" data-media-id="editor_1" data-image-id="20251121131152_85f3606728d137b334d782ac1b5d1ed6383544493f96ebcc0398fcd9f0c5add7" data-rendition-name="original" width="2160" height="1439" loading="lazy" alt="GenZ Maitighar"> </figure>  &nbsp;Nepal’s interim government is increasingly cautious about the nation’s sensitive security situation in the lead-up to the 5 March election, as evidenced by pro-monarchy businessman Durga Prasai’s midnight arrest earlier this week over his inflammatory remarks as he called for protests this month. On Thursday, the Supreme Court ordered the government to present Prasai before the court within 24 hours.&nbsp; As it stands, the UML’s inauguration of a youth collective amidst its disregard for the demands of Nepalis for party reforms and a change in leadership highlights party chair and former PM K P Oli’s continued lack of remorse for the excesses of 8 September.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20251121131144_aaa296e2e812ef5f6473064bc4b679bf605e14e06ac0ec9be1d6d047b56f96f9.png" data-media-id="editor_2" data-image-id="20251121131144_aaa296e2e812ef5f6473064bc4b679bf605e14e06ac0ec9be1d6d047b56f96f9" data-rendition-name="original" width="2560" height="1707" loading="lazy" alt="UML Youth Volunteer Force NT"> <figcaption>The UML launched its Youth Volunteer Force on Friday. Photos: SUMAN NEPALI</figcaption> </figure>   <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20251121131148_bfa8df3fc382195b4cdb9c4804cd67e169d2d9c0b8d218e61bbef0c4c9dbdaad.png" data-media-id="editor_3" data-image-id="20251121131148_bfa8df3fc382195b4cdb9c4804cd67e169d2d9c0b8d218e61bbef0c4c9dbdaad" data-rendition-name="original" width="2560" height="1706" loading="lazy" alt="UML Youth Volunteer Force"> </figure>  Families of those killed and injured on 8 September have demanded that the ousted PM and home minister be held accountable for state brutality.&nbsp; This week, Human Rights Watch published a <a href="https://www.hrw.org/news/2025/11/19/nepal-unlawful-use-of-force-during-gen-z-protest" target="_blank">comprehensive report</a> concluding that security forces fired indiscriminately on youth-led protestors on 8 September.&nbsp; The human rights watchdog urged the Sushila Karki-led interim government to investigate the excessive use of force as well as arson, vandalism and mob attacks on individuals on 9 September. The government has created a judicial commission to inquire into the deaths of 76 people over two days of protests.&nbsp; “The recent violence in Nepal included serious human rights violations, and those responsible should be held accountable, whether they are security forces or political actors,” said Meenakshi Ganguly, deputy Asia director at Human Rights Watch.&nbsp; She added: “The government should ensure that the investigations are independent, time-bound, and transparent, and that no one found responsible for breaking the law is unfairly protected from proper prosecution.” HRW’s investigation was based on testimony from 52 witnesses, victims, journalists, healthcare workers, politicians, and sources close to security forces. Researchers also verified photos and video footage shared on social media and with researchers; and visited the scenes of protests, properties subjected to arson and vandalism, and hospitals.&nbsp; A police officer said that officers opened fire with lethal force five minutes after the District Administration Office declared an emergency curfew around Parliament. Witness accounts and analysed footage did not show grave and imminent danger to life that would justify the intentional use of lethal force, stated the human rights watchdog in the report.&nbsp; The protestors and witnesses identified security forces who fired live ammunition at the protestors by their uniforms as members of the Armed Police Force (APF) and Nepal Police’s Special Task Force (STF). &nbsp; “They literally aimed at us and started shooting,” said one witness who sheltered behind a barricade as police continued shooting.&nbsp; A retired senior police official said police had failed to follow procedures for dispersing protests and using lethal force.&nbsp; Pathologists at a Kathmandu morgue told HRW that they determined 35 cases of death caused by “high velocity gunshot wounds” to the head, neck, chest, or abdomen.&nbsp; The witness recounted being taken into custody along with 33 other protestors by STF officers in riot gear, and said that police police personnel beat him with batons. Detainees were threatened and their IDs destroyed. Several witnesses said that the mob attacks on businesses, politicians, media companies, and educational institutions were very targeted, noting the absence of security personnel on 9 September as arson and violence raged across the capital.&nbsp; Some suggested that the violence may have been instigated by infiltrators associated with various political movements.&nbsp; On Discord, the platform where a significant number of demonstrators organised, participants noted that while there were calls for peaceful movement in the days leading up to the protest, some on the platform advocated for violence.&nbsp; Human Rights Watch has said that any credible allegations of criminal acts contributing to the violence must be investigated.&nbsp; Said Ganguly: “The authorities should recognise that widespread impunity for human rights violations in the past helped enable the violence that occurred this time in Nepal. It is crucial to reverse the decades-long tendency by successive governments in Nepal to bury investigations and stall prosecutions, and to bring about accountability and security sector reform.”

Security forces targeted protestors disproportionately: HRW

&nbsp;Nepal has finally become famous the world over for something else besides Mt Everest — the GenZ Movement. The 8 September protests in Kathmandu may have been triggered by what happened in Jakarta a week previously, but it inspired street uprisings all over the world. This week, Mexico’s GenZ are clashing with riot police. Last month, the president of Madagascar fled to Dubai. <a href="https://nepalitimes.com/here-now/nepal-genzs-inspired-filipinos" target="_blank">Philippines</a>, Morocco, Peru, Timor Leste all have seen similar anti-government protests against corruption, nepotism and poor governance. A Himalayan republic, a Latin American federation, a Southeast Asian archipelago, or a North African kingdom may have little in common, their histories, religions, languages, and political systems are worlds apart. But <a href="https://www.nytimes.com/2025/10/19/world/gen-z-revolutions-protests-louvre-heist-gaza.html" target="_blank">the common thread</a> running through these demonstrations were the simulacra and symbols spread on social media platforms.&nbsp; The young crowds marching through the streets of these countries were holding up the same icons. They painted the same images on cardboard, waved the same flags, stitched the same badges on their backpacks. They chanted &nbsp;the same references from the same corners of the internet.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20251122031128_2ff7cf4ce7a9590359ed18753f4977648a6db83e95dd62d602a3f81e9eec42c4.jpg" data-media-id="editor_2" data-image-id="20251122031128_2ff7cf4ce7a9590359ed18753f4977648a6db83e95dd62d602a3f81e9eec42c4" data-rendition-name="original" width="1250" height="1047" loading="lazy" alt="Meme movements"> <figcaption> One Piece reference meme on Instagram, 115K likes(Photo: Shristi Karki)</figcaption> </figure>  To anyone who did not grow up online, this looks random. To anyone who did, it feels like the most obvious thing in the world. A new kind of global identity has formed — one that cuts across nationalities and cultures. In Nepal older relatives mock the ‘जेन्जी’. My neighbour asked me if ‘GenZ’ was a new political party.&nbsp; Around the world, when youth-led protests appear, reporters and politicians ask the same question: ‘Who is the leader?’ The answer is the same: there is no leader.&nbsp; Some names come up more prominently, as people did during <a href="https://nepalitimes.com/here-now/nepal-s-historic-youth-dissensus?fbclid=IwY2xjawNPQnZleHRuA2FlbQIxMQABHk5Nazeqz3K9aNddXa-dQfCbwtId0nLclQwHzIYhTfg8tzGWXZMBJ5pjm5Qx_aem_a5JoyT1FRqzCVtnnPM7zUw" target="_blank">the Nepali protests</a>: Sudan Gurung. Miraj Dhungana, Rakshya Bam and other organisers who appeared in livestreams and interviews. But look closely and the leader is hiding in plain sight. The leader is not a person. The leader is the internet meme.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20251122031128_b2319eb8d7abec7ed5e12baf1a53e0a27cfd7a49ee15c058c47cdf2603a7fa8a.png" data-media-id="editor_4" data-image-id="20251122031128_b2319eb8d7abec7ed5e12baf1a53e0a27cfd7a49ee15c058c47cdf2603a7fa8a" data-rendition-name="original" width="662" height="1038" loading="lazy" alt="Meme movements"> <figcaption>Aurafarming, 233K likes(Photo: Shristi Karki)</figcaption> </figure>  <a href="https://nepalitimes.com/here-now/nepal-s-meme-revolution" target="_blank">Memes today</a> are doing the quiet organising work that pamphlets and party cells once did. They offer identity, coordinate action, level power differences, and they do it without any central command. This is not because memes cause revolts. It is because memes are the connective tissue of a generation that grew up on the same visual language, the same jokes, the same references, and the same sense of shared digital childhood. Older generations did not share cultural symbols in the same way. Whether they read a certain comic book or watched the same cartoon depended on class, religion, caste, the country, or neighbourhood they grew up in. These divisions created stratified cultural memories.&nbsp; Today, an entire global cohort has been raised on the same visual media. The same YouTube creators. The same TikTok jokes. The same anime storylines. It is truly what McLuhan predicted the Global Village would be.&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20251122031128_136d009a48d8f8daee82ada1b220e0b0c8ec482b52dcd44e0942e2185a70421b.png" data-media-id="editor_6" data-image-id="20251122031128_136d009a48d8f8daee82ada1b220e0b0c8ec482b52dcd44e0942e2185a70421b" data-rendition-name="original" width="738" height="1012" loading="lazy" alt="Meme movements"> <figcaption>Masked K P Oli, 63K likes(Photo: Shristi Karki)</figcaption> </figure>  This has also created the perfect environment for <a href="https://observer.co.uk/news/international/article/revolution-20-frances-political-future-could-be-won-or-lost-by-bots-and-memes" target="_blank">memes to become political tools</a>. They are instantly recognisable, emotionally charged, and open for remixing. They allow young people to signal their values without stating them. They compress identity, anger, humour, and belonging into something that the rest of the world dismisses as unserious. The perfect example of a GenZ meme is the famous skull and crossbones in protest flags from Kathmandu to Manila to Mexico City. The Strawhat Pirates from the <a href="https://www.france24.com/en/asia-pacific/20251006-one-piece-manga-revolt-morocco-indonesia-nepal-madagascar" target="_blank">anime One Piece</a>, is a show with over 1,000 episodes and a global fanbase that spans continents. One Piece follows Luffy, a justice driven pirate who travels across a world ruled by corrupt older elites who hoard power and suppress dissent.&nbsp; It is not hard to see why that story resonates with young people who feel locked out of political systems built by generations before them. I even printed stacks of my own flyer that explained memetic warfare using Minecraft visuals and handed them out in the crowd. Each one linked to a Telegram group with the Strawhat Pirates logo called MemePack HQ.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20251122031144_1b12e920be6e312e1dc8768d318c1d1332e32694293b48984089867e7e525a27.jpg" data-media-id="editor_9" data-image-id="20251122031144_1b12e920be6e312e1dc8768d318c1d1332e32694293b48984089867e7e525a27" data-rendition-name="original" width="1100" height="1000" loading="lazy" alt="Meme Movements"> </figure>   <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20251122031128_08b720667a9ff36537e58992c8a8030b090900847de5eecd479bbb3fc727349d.png" data-media-id="editor_10" data-image-id="20251122031128_08b720667a9ff36537e58992c8a8030b090900847de5eecd479bbb3fc727349d" data-rendition-name="original" width="696" height="1004" loading="lazy" alt="Meme movements"> <figcaption>Indonesia-Nepal comparison, 17.7K likes(Photo: Shristi Karki)</figcaption> </figure>  CULTURE EXPOSURE The Strawhat logo is not the only symbol making people protest. That would be like saying video games cause real world violence. Instead, the logo works like a modern version of mythology. It packs meaning for those who understand it. It represents loyalty, rebellion, chosen family, and resistance against unfair structures. It works as a rallying flag because it is already a shared story. And unlike older myths, it is accessible regardless of religion, caste, language, or national identity. Across Nepal, the Strawhat symbol has shown up on posters, badges, and protest outfits. But it is only one piece of a larger ecosystem of youth symbols. From Nepali meme pages remixing political speeches into ironic audios, to posts that place politicians into familiar pop culture formats, to clips that exaggerate the absurdity of daily life under slow moving governance, these are not just jokes. These are narrative units. Each post is a tiny story with its own punchline and its own political edge. Each TikTok video or meme functions like a religious shlok, a short piece of narrative that carries layers of meaning depending on who consumes it. Someone who has spent years studying a religion, in this case, inside GenZ online culture will recognise the symbols instantly. Someone outside this world will only see noise. This creates a literacy divide that is not about formal education but cultural exposure.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20251122031128_2d09f075663678fe92d4e4dcc631ee6ad1aa8a99996f4c4a3649e4bf4d85132f.png" data-media-id="editor_11" data-image-id="20251122031128_2d09f075663678fe92d4e4dcc631ee6ad1aa8a99996f4c4a3649e4bf4d85132f" data-rendition-name="original" width="810" height="1208" loading="lazy" alt="Meme movements"> </figure>   <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20251122031128_d591c4dc857864cc833ffc6baece3f4c2798bbaf70b557f965463fc8f802900e.png" data-media-id="editor_12" data-image-id="20251122031128_d591c4dc857864cc833ffc6baece3f4c2798bbaf70b557f965463fc8f802900e" data-rendition-name="original" width="568" height="1124" loading="lazy" alt="Meme movements"> </figure>  Protesting youth spent countless hours scrolling, interpreting, remixing, and responding to content. They built a shared symbolic universe across borders without planning to. This is why their political movements feel leaderless. They are not following individuals. They are following stories that define what justice looks like. Stories that define who the villain is. Stories that define how to respond when power is abused. In Nepal, memes about broken roads, delayed passports, political inheritance networks, and bureaucratic absurdity circulated for months before they became slogans or chants. By the time people took to the streets, the narrative groundwork had already been completed by thousands of posts liked and shared in private. The protests did not emerge from nowhere. They emerge from years of digital storytelling. Which is why the government’s ban on 26 digital platforms on 5 September became such a rallying force. The platforms that distribute these memes are not neutral, they are actually designed to maximise engagement because engagement translates to ad revenue. Right now, there is an engineer in Silicon Valley getting paid an enormous salary to find the perfect colour shade for a singular pixel on your screen so that you linger for fractions of a second longer.&nbsp; Algorithms reward content that trigger emotion. Sometimes the emotion is delight. Sometimes it is envy. Often it is anger. When rage becomes a business model, movements built inside these systems can feel powerful but unstable. The platforms democratise attention but centralise emotion. They allow anyone to broadcast, yet they shape the emotional tone of what becomes viral.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20251122031128_f22baab05910305ea435045824b25b796d5630715e2e17c3f3c0991e8371843c.png" data-media-id="editor_13" data-image-id="20251122031128_f22baab05910305ea435045824b25b796d5630715e2e17c3f3c0991e8371843c" data-rendition-name="original" width="974" height="1156" loading="lazy" alt="Meme movements"> </figure>  GenZ sits inside this tension. Empowered by the ability to speak without gatekeepers. Trapped inside systems that monetise their attention and amplify their frustration. This is why these leaderless online movements feel both organic and volatile. The algorithm filters which stories rise and which fade. It becomes an unintentional political actor. Not elected. Not accountable. Yet influencing millions. When the state is no longer the primary distributor of information, and when the algorithm becomes the new filter of reality, the public is left with a new responsibility. We have to learn to read memes the way past generations learned to read pamphlets or manifestos. A 15 second video can carry more political weight than a two hour speech. A symbol on cardboard might represent a decade of digital storytelling. Older generations often dismiss these images as childish. They are actually literacy markers of a new political class, one that does not wait for leaders. A political class fluent in remixing power, raised on global stories that feel more honest than the institutions they inherited. The youth did not create these platforms. They inherited them. But through memes they found a new language, one that lets them organise without permission. One that lets them build solidarity without needing meetings or manifestos. One that allows them to resist systems that feel too old to reform. It is time to take that seriously. Nobel Rimal is a researcher of digital culture and political communication who studied and participated in the meme driven mobilisations during the Nepal protests&nbsp;

Meme movements

Double-taxation, profit repatriation and capital gains tax have always been a headache for foreign investors in dealing with rent-seeking that Nepal is infamous for.
When Dolma Impact Fund, the only international venture capital company in the country, applied last year for exemption from capital gains tax citing Nepal’s Double Taxation Avoidance Agreement (DTAA) with Mauritius, bureaucrats at the Finance Ministry gave it the runaround.&nbsp;
But the interim government’s Finance Minister Rameshore Khanal, himself a respected former bureaucrat, is someone who knows that international treaties take precedence over national law.&nbsp;
On 30 October he gave Dolma a strategic capital gains tax break, convinced that Nepal needed to restore investor confidence especially after videos of the arson, vandalism and looting of the Hilton and Hyatt hotels and businesses on 9 September went all over the world.&nbsp;
Dolma’s stakeholders include other investment funds in the UK, US, Japan, Netherlands, Finland, Austria, Sweden as well as the World Bank. Nepal needs investment for future large infrastructure projects, and to tap those funds it has to &nbsp;streamline its bureaucracy, increase transparency and adhere to international obligations.
The argument is that making it easier for Foreign Direct Investment (FDI) is a much more efficient way to spur the economy and create jobs than the government raising revenue mainly through taxation, since the chances of that money being leaked through corruption or wastage in Nepal is high.&nbsp;
After news of Finance Minister Khanal’s decision on 3 October exploded in the media, Prime Minister Sushila Karki inquired about it. Chief Secretary of the GoN Eaknarayan Aryal clarified that the decision was not in the minutes of the Cabinet.
TAXING TWICE
Critics like economist Pushkar Bajracharya argue that it is important for Nepal to have a consistent taxation policy for FDI, and apply it uniformly so it does not deter investors. The Dolma decision could encourage other offshore investors to demand similar treatment, hurting Nepal’s tax base.
“Besides, the evidence just isn’t strong that tax cuts lead to higher investment, or more jobs,” Bajracharya adds.
Nepal has double-taxation avoidance treaties with 11 countries, and there are reports of moves to end the DTAA with Mauritius signed in 1999. But just like with the Ncell’s capital gains row and the controversy over the US-funded Millennium Challenge Corporation (MCC) there has also been nationalist flag-waving in Nepal.&nbsp;
“We were raising a fund that could have brought $1 billion in for energy, and we had to stop it due to the reputational damage to Nepal by not upholding an international treaty,” Tim Gocher, CEO of Dolma, told Nepali Times on the phone from London.
Dolma claims that Nepal’s DTAA with Mauritius means profit arising from sale of shares should be taxed only in the resident state and not in Nepal, and also cited the Treaty Act 1990 which states that treaties signed by Nepal supersede domestic law in case they contradict each other.
Gocher said it makes sense for his fund to be based in Mauritius: “When you have investors from all over the world, you have to choose a domicile, and Mauritius is probably the most popular for development finance institutions due to strong governance, anti-money laundering laws and treaties with developing countries like Nepal.”&nbsp;
Nepali officials, however, see Dolma as a conduit company sourcing funds from outside Mauritius or Nepal and label it as possible ‘treaty shopping’. A similar case involving the sale of Ncell ownership went to the Supreme Court and all the way to the International Tribunal at The Hague, and both ruled against exemption to DTAA.
Officials argue that approving an exemption for Dolma would contradict that precedent. The Attorney General’s office cited Section 73 of the Income Tax Act of 2002 which states that to avoid double taxation, more than half of the company has to be owned by individuals residents of both Nepal and a foreign country.
Bureaucrats also seem to be wary about being hauled over the coals at the Commission for the Investigation of the Abuse of Authority (CIAA) if they agree to Dolma’s demands, even though there is a legal argument that the Nepal treat act stipulates that in case of disagreement international obligations take precedence over domestic laws..&nbsp;
“It was when the new government decided to uphold the treaty that the whole hoo-hah started,” said Gocher. “It is crystal clear, and the way international treaties are dealt with all over the world.”
Chief Secretary Acharya, who is retiring next week, seems to want to avoid being haunted by any whiff of controversy before he leaves, but also faces intense lobbying by the international community for Dolma’s exemption.&nbsp;
Dolma currently invests in companies such as Chirayu National Hospital, CloudFactory Holdings Limited, Foodmandu, FuseMachines, Rhododendron Biotech, Setikhola Hydropower, and Solar Farm Nepal.&nbsp;
Dolma has asked to be exempt from being taxed twice: in Nepal, where it invests, and in Mauritius, where it is based, and points to a law that says international treaties override domestic law in the case of a contradiction. Government officials point to the Ncell precedent saying it will be illegal. But the government is not giving in, due to the Ncell precedent and to prevent others in future asking for similar exemptions.&nbsp;
<a href="https://www.youtube.com/watch?v=uNdMuD_4yGw&amp;t=5s" target="_blank">Watch interview</a> on Nepali Times Studio with Tim Gocher.

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