Nepal + 1 more

Resident Coordinator’s Annual Report 2012

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Brief description of major developments:

As in the previous years, the UN Country Team (UNCT) in Nepal has needed to continue adjusting to the uncertainties and challenges resulting from Nepal’s complex transition process. 2012 witnessed a major setback in Nepal’s political transition when the term of the Constituent Assembly (CA), elected in 2008, to write a new constitution and extended four times, finally ‘expired’ on May 27 without completing its task. The CA had voted itself repeated extensions to its original two-year mandate in 2010 and 2011; however, this time, following a Supreme Court ruling that no further extensions would be lawful, the CA was dissolved.Nepal has been without a Parliament since. The design of Nepal’s new federal structure was the principal issue on which constitutional negotiations failed. The final weeks of the CA’s term were dominated by this issue and featured tense, occasionally violent protests in different parts of the country, including in Kathmandu. Nevertheless, the proposals for Nepal’s federal system that had been put forward for negotiation between the parties were more balanced than much of the public debate that raged around them. Overall, the federalism debate exposed ongoing ethnic grievances and anxieties in Nepali society, and these contentious issues are expected to return to the fore during future elections or whenever constitution drafting resumes. In the aftermath of the CA’s dissolution, the short-term calculations of various political forces, and the dynamic which the federal debate created towards polarization, carried considerable risks. Nepal now faces the challenge of having to re-establish a process that enables understanding between all groups and balances the sensitive treatment of diverse identities with the rights of the individual and the need for national unity.

After the dissolution of the CA, attention shifted to how the political and constitution writing process could be put back on track. This was made much more difficult by the fact that the Interim Constitution - under which Nepal is currently governed - did not envisage this situation and was designed to be a ‘one election’ Constitution, that would be replaced by a new Constitution with a new electoral regime.
For some time, political leaders considered reviving the dissolved assembly, before settling on fresh CA elections as the best way forward. However, in the absence of a consensus among the parties on an array of challenging questions, the timetable and framework for elections remain uncertain. The original November 2012 election date passed without substantial progress. The revised April/May 2013 election date also looks uncertain due to the political deadlock. Several legal and constitutional provisions need to be revised before voting can take place, and urgent appointments are required to several posts which are crucial to the functioning of the State, including to the Supreme Court and the Election Commission. Until political agreement is reached on the way forward, the country remains in an alarming constitutional and political limbo.

Progress in a number of other areas covered by the 2006 Comprehensive Peace Agreement (CPA) remained equally stalled. These include the formation of a Truth and Reconciliation Commission (TRC) and Commission of Inquiry on Enforced Disappearances, democratization of the Nepal army, and land reform. The withdrawal of cases from the Courts by Cabinet remained a matter of deep concern and seen by many as proof of the continued state of impunity that permeates the country.
One bright spot was the full demobilisation of the Maoist army and the closing of the Cantonments.

On the economic front too, politics continued to frame reality. Nepal’s 2012/2013 budget was brought through Ordinance instead of being approved by Parliament with restricted budget ceilings based on the previous year’s expenditure. At the same time, the political uncertainty stalled the pace of many development projects and discouraged investment in productive sectors. Continued power outages lasting more than half the day, near double digit inflation (8.3%) and slow credit growth all have contributed to poor performance of the non agricultural sector. Nepal is in a position to reap the potential benefits of the “demographic dividend” in the next few decades as 57% of the population represents working age population (15-59 years). However, the economic downturn and lure of higher wages abroad has meant that the working age population continued to leave the country in large numbers.