Economic Diplomacy Helps Mitigate Crisis

Nepal is now reeling from significant economic challenges. In the country, agricultural and industrial production is declining, exacerbating the trade deficit and unemployment. Most business activities are declining as well. The inflation rate of 8.19 per cent is eroding the people's purchasing power. Growing economic trouble has forced the bulk of youths to desert the nation in search of better job prospects in international labour markets. Every year, thousands of young brains relocate to other nations. The labour force and human resources available to the country for economic growth are being further depleted by this trend. 

A comprehensive strategy is required to handle these complex economic issues. The timely steps should be taken to boost economic growth, generate employment, and deal with the underlying causes of youth migration. The Ministry of Foreign Affairs needs to play a crucial role in mobilising its diplomatic missions and diplomats for effective collaboration and execution of economic diplomacy. 

The foreign ministry should actively engage in holding negotiation and building regional development alliances in line with the nation's economic policy. However, the Ministry lacks a clear understanding of economic policy and has hardly given any directives to its diplomats cognizant of economic policy of other nations.

Foreign investment 

A key component of Nepal's foreign policy and economic growth is economic diplomacy. With their knowledge and expertise in economics, diplomats should actively support the nation's political, economic, and strategic goals. The objectives of economic diplomacy are outlined by Nepal's Ministry of Foreign Affairs in areas such as foreign investment, tourism, development cooperation, export promotion and source countries. Key actors in economic diplomacy include governments, international organisations like the World Trade Organisation and International Monetary Fund, and diplomatic corps and ambassadors working in their countries' economic interests.

  Nepali diplomats can play an important role in mitigating the country's economic crisis by fostering international cooperation.  Nepal government should strategically leverage its diplomatic missions to address demanding situations by interacting with global community. Firstly, diplomatic channels can be employed to forge economic partnerships and appeal to overseas investors. Engaging in bilateral talks with key buying and selling companies can open avenues for financial cooperation and collaboration. Furthermore, diplomatic missions can recommend for Nepal's financial prospect in multilateral forums. Building alliances with countries that have tactfully dealt with similar crises can offer valuable insights. Additionally, diplomatic aptitude can enable to ink favourable trade agreements, thereby reducing tariffs and getting access to foreign markets. 

Diplomats play a major role in managing the crises and redoubling aid relief efforts. They need to hone diplomatic skills so as to build expansive rapports, which will transform them into valuable instruments to navigate the looming financial challenges. Economic diplomacy is vital for achieving Nepal's foreign policy goals and economic prosperity. However, this requires strategic vision and plan.

The country has been facing a soaring trade deficit as its exports dwarfs its imports due to the dearth of comparative export items. This economic imbalance is posing challenges to country’s financial stability. The Ministry should come up with appropriate measures to plug this trade gap while increasing administrative efficiency. The ministry's leadership must show their mettle in accomplishing these tasks.

Foreign Nepali diplomatic missions should organise investment summits, which provide platforms for Nepali and foreign entrepreneurs to communicate and build networks. They can initiate for joint ventures in the areas of tourism, agriculture, hydropower, and information technology. This could promote Nepali products in the international markets, thereby ensuring domestic businesses' sustainability. 

Regional cooperation

Regional cooperation is equally vital in finding the sustainable solutions. Nepali diplomats need to actively engage in dialogue in regional forums for the mutual benefits. This also calls for proper guiding principles for the diplomats to get involved in regional platforms such as SAARC as per the national interest. Their role in this regard is important in enhancing regional trade and connectivity and building resilience against the economic shocks. Engagement in bilateral and multilateral talks is crucial for regional economic integration and harmonising policies among the neighbouring countries. Diplomats can help negotiate for creating economic corridors that promote trade and fuel economic growth in the region.

Strategic engagement, alliance building and advocacy can collectively contribute to securing external support and nurturing a resilient and sustainable economic future. This requires qualified, and innovative leadership capable of handling these challenges. The government should groom diplomats who can efficiently promote economic diplomacy for the broader benefit of the country.

(The author is former ambassador to Australia and New Zealand)