This can be achieved through more foreign direct investment, foreign assistance, allowing easy market access to Nepali product abroad, exploring lucrative labor destinations, promoting tourism, and tapping Non-Residential Nepali’s (NRN) accumulated capital, knowledge, skill, outreach, and technical know-how. [break]
The term ‘economic diplomacy’ came into vogue in Nepal after the restoration of democracy in 1990, although the history of Nepal’s economic engagement with the outside world can be traced back to Partap Malla who first established trade relations with Tibet in order to promote national economic interests.
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During the Panchayat regime, Nepal’s foreign policy and national diplomacy came to be used primarily to serve the regime’s interest, particularly towards the promotion and consolidation of the Panchayat regime, by garnering international support and goodwill for its promoters. National economic interest did not get any space in the multiple diplomatic parlays at that time.
Economic diplomacy has become a strong dimension of Nepal’s foreign policy execution and diplomatic dealings. The policy of globalization, liberalization and privatization has been introduced to boost national economic activities so as to attain high economic growth, poverty reduction, and employment generation. Nepal has opened up national economy to international investors as well. Increased foreign investment in the areas of telecommunication technology, civil aviation, national tourism, hydropower, banking and financial and academic institutions are the outcome of this new policy approach.
At present, the Nepali diplomatic apparatus abroad is chiefly directed at promoting national interest through sound economic diplomacy. However, it has not been able to produce any tangible result in national economy so far. The missions’ dilapidated infrastructure, shortage of skilled manpower, meager budget for economic diplomacy, lack of policy priority and clear-cut direction is compounded by the culture of appointing Nepali mission heads on political connections. Furthermore, it’s a daydream to expect the three-person Nepali missions abroad to attain the desired outcome in the context of growing number of Nepali Diaspora which have greatly added to administrative and consular burden.
Nepal’s economic diplomacy has also been adversely suffering from the never-ending political instability, frequent government changes, policy inconsistency and ambiguity and lack of coordination, cooperation and collaboration between concerned stakeholders. Massive poverty, yawning trade deficit, rising unemployment, sluggish economic growth, protracted load-shedding, fuel and food crisis and burgeoning foreign debt servicing costs have become national reality.
For a mountainous, land-locked and least developed country surrounded by two rapidly growing world economies, sound economic diplomacy is vital to protect and promote its overall interests. The massive capital, technology and management skill of its immediate neighbors can be deployed to exploit Nepal’s abundant national resources, which are not being fully explored, utilized and harnessed as of now. This can also change Nepal’s socio-economic condition and materialize the national goal of creating a peaceful, prosperous and inclusive Nepal.
Our handicapped geographical situation also calls for sound economic diplomacy for national socio-economic well-being that is primarily focused at developing, deepening and strengthening trade and commercial relations with friendly countries by avoiding mutual differences and misunderstandings. Furthermore, in the context of shaping international relations in the contemporary globalized, interconnected and interdependent world, it is no longer enough only to focus at home; the broader economic, security and strategic interests need to be served to mutual benefit in the committee of nations as well.
The policy of cooperation (instead of confrontation) adopted by traditional rivals like India and China, the US and Russia, China and the US are examples of growing importance of economic diplomacy in contemporary global affairs. It is economic imperatives and strategic and security interests that have bought them together. They are now working hand in hand in multiple forums to address common challenges and accomplish their economic, political, and strategic and security interests.
The clout and influence in the regional and global affairs of countries like China, India, Japan, Brazil and Indonesia is the outcome of their growing economic strength. Until 1979 China’s socio-economic condition was very disappointing. It has since attained remarkable progress, becoming the second largest economy by reorienting its national economic policy towards a free market approach. This has been achieved through sound economic diplomacy, backed up by adequate financial, technical, and other necessary support for its diplomatic apparatus. Likewise, India is doing well by vigorously pursuing sound economic diplomacy in its multiple external engagements. The US endorsement of India’s proposal for a permanent member status at the UN Security Council is also indicative of India’s booming economy and its growing leverage in international affairs.
Nepal cannot remain an exception to this emerging regional and global scenario. Pursuing sound economic diplomacy in its multiple bilateral, regional and multilateral dealings is vital, in order to expand and diversify Nepal’s international relations and for country’s socio-economic well-being.
The country has embraced privatization, liberalization and globalization and successfully gained membership into WTO, SAFTA and BIMSTEC, thereby enhancing its international dignity. But these engagements are still in an embryonic stage. They need to be expanded many times over, even to tide over hard times. Avoiding adverse consequences of global climate changes calls for sound economic diplomacy to garner international financial, technical and other support needed to tackle this problem.
The task of creation of a peaceful, prosperous, inclusive and just Nepal cannot be completed on the back of empty political slogans. Deft economic diplomacy can be an effective tool to minimize dehumanizing poverty, injustice and discrimination. But it will call for strong political will and clear vision, mission and policies. Sound economic diplomacy through institutional reform, clear policy direction and skilled manpower is the need of the hour to exploit abundant national resources and improve national socio-economic condition. It could also be effective in enhancing national diplomatic maneuvering and leverage in its external parlays.
The author is affiliated
with the Ministry of
Foreign Affairs
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