Economic Diplomacy

Following the landslide victory of the Rastriya Swatantra Party (RSP) in the recently held House of Representatives elections, all eyes are on its leadership to see how it will respond to the economic and foreign policy challenges. The party fought the elections with the slogans of good governance, stability and rapid growth. However, before it takes the reins of the new government, the country has already faced an energy crisis due to the ongoing conflict in West Asia. As a landlocked nation, Nepal has few options for addressing this problem other than engaging in diplomacy. Thus, RSP's litmus test will be seen in its ability to handle the energy crisis resulting from the conflict in West Asia.  

Nonetheless, there has been growing curiosity as to what kind of foreign policy the RSP will unveil and execute, as the party is going to form a one-party government in the country for the first time in 26 years. Given that the country is located in a sensitive geographic region, it must follow a balanced and non-aligned foreign policy guided by national interest and the principle of equal sovereignty. The focus should be on economic growth and inclusive prosperity. Reflecting this reality, the RSP has prioritised economic diplomacy as the core component of foreign policy. The other day, talking to this daily, RSP International Relations Department head and newly elected lawmaker Shishir Khanal said that the new government will accord priority to good governance and economic diplomacy to achieve development goals.  According to him, the RSP government would adopt the foreign policy as outlined in the constitution that stresses Panchasheel (five principles of peaceful coexistence), non-alignment, the UN Charter and international law and conventions.  

Under the economic diplomacy, the RSP has focused on mustering economic cooperation from the neighbours, friendly nations and donors so as to attract foreign direct investment, develop infrastructure, and boost tourism and technological transfer. The concept of economic diplomacy is not new in Nepal. It has been adopted since 1990 but there is little effort to realise it. A number of studies and task forces were formed to implement economic diplomacy but their recommendations were not translated into action. Akin to economic diplomacy, RSP president Rabi Lamichhane floated the notion of developmental diplomacy during his election campaign. He emphasised securing foreign aid, grants and loans without strings attached. This viewpoint seeks to avoid the geopolitical trap in which foreign development projects are laden with conditions. In Nepal's context, Lamichhane's approach sounds appropriate, but many challenges are involved. This requires building national capacity to deal with the international community. 

Nepal's immediate neighbours have become global economic powerhouses. Utmost efforts should be made to bring in investors from these countries by formulating flexible legal provisions for them.  At the same time, our foreign missions and human resources should be strengthened so that they can communicate and negotiate confidently with their counterparts in other countries. The government agencies and the private sector should be capable of translating the economic diplomacy strategy that must be backed by the national budget and suitable programmes. Nepal has witnessed a soaring trade deficit. To reduce it, the government must collaborate with foreign countries and companies to ensure the access of Nepali products in international markets. Equally important is the enhancement of domestic production and trade infrastructure. Diversifying products and markets makes export trade more sustainable and resilient in times of global turmoil. The new government should pay attention to these factors in order to implement economic diplomacy in its true sense.