I’ve been here for 7 months now and it has been a tremendous experience.  In fact, this assignment is something of a homecoming for me – one of my early jobs in the Foreign Service was as desk officer for Nepal in the 1980s.

When I think back to that time I am struck by how much Nepal has changed and, if we look back just a few decades further to the early 1950s when the U.S.-Nepal relationship first began in earnest, the enormity of the change is almost staggering.  In 1950 Nepal was an absolute monarchy, politically closed, and deeply traditional.  Kathmandu was quiet, almost sleepy.  A colleague who served in our Embassy then recalls parking her car, one of only a few in Kathmandu, in the middle of New Road so that it would be out of the way of the carts and bicycles moving on either side of the road.  Most Nepalis lived out their lives isolated in rural villages, and the country was just starting to open its doors to the rest of the world. 

Today, Nepal is a robust, albeit struggling, democracy, with a free and vibrant press.  Kathmandu is crowded, teeming with people from the many and vastly varied ethnic groups that make up Nepal’s rich demographic tapestry.  In today’s Nepal women no longer just work in the homes and fields but are making vital contributions throughout the economy including as bankers, university professors, economists, parliamentarians and Cabinet ministers.  Hundreds of thousands of Nepalis travel abroad for work and study and those that return bring back their experience and education to make Nepal a stronger country. 

Over the last two decades, the pace of change has accelerated and the country has undergone an almost dizzying political, social and economic transformation.  And, as is so often the case with true transformation, these changes were preceded—or more accurately perhaps, shaped by—a sustained period of profound upheaval and persistent turbulence that wrenched an ironclad class hierarchy from its centuries-old moorings and catapulted it into the modern age.  1996 saw the beginning of a violent ten-year Maoist insurgency that upended Nepal’s rigid social structure, 2001 brought the horrific massacre of nearly the entire royal family, and in 2006 we saw the end of the monarchy and a multiparty agreement to craft a new constitution that radically decentralizes power. 

Just one of these developments would be enough to alter a country’s national identity.  Taken together, they are redefining Nepal, and Nepalis are still deciding exactly what that new definition will be.  How will you choose to govern yourself, to share power, to share resources?  How will you address the needs and aspirations of a population strikingly different in ethnicity, language, faith, economic and social status?  How will you heal the wounds of 10 years of conflict?

Change is not easy, especially the rapid socio-economic change that is radically transforming Nepal.  In the past, Nepalis, despite their ethnic and linguistic and religious and cultural differences, found a common identity as subjects of the king.  Now they have to determine what principles and values will unify them as they move forward.  The path toward those crucial decisions is not necessarily straight or short.  Government institutions remain fragile.  Society is changing quickly and in unpredictable ways.  These changes present enormous challenges to the Nepali state and to its people. 

When I was in Washington a month ago, the Parliament was engaged in the 10th round of voting for the Prime Minister and people asked me how I viewed Nepal’s “political crisis.”  I told them then what I tell them now.  I don’t believe that Nepal is in crisis – at least not yet – and I do not believe that this needs to become a crisis.  The challenges the nation faces are indeed difficult and at times painful and the transition I discussed a moment ago will not be accomplished overnight.  Established political parties are being forced to redefine their roles and relationships in a political environment in which there is no longer a monarch to blame for constraining the exercise of the people’s democratic voice.  The Maoists, having entered into the political fray, are learning, I think, that working constructively to build a nation is a much more difficult task than trying to overthrow one.  All the parties need to learn to work together, find a common definition of the nation’s interests, and then jointly make the compromises necessary to advance them.  

This is not a “crisis”; it is an emerging and evolving political process that will take time, and commitment, on the part of all.  The process will not be smooth and I fear it will stall as much as it advances.  But I believe it can, and likely will, advance and I remain confident that Nepal can become a stronger and more prosperous nation and one that will play a positive role in South Asia and the world. 

Meanwhile, U.S. policy goals in Nepal are few, but they are clear.  We wish to see a stable, democratic and prosperous Nepal in which the rights of all citizens are respected and protected and in which adherence to the rule of law is a core value for all.  Our goals reflect, I think, the aspirations of most of the Nepali people.  They also echo our values as Americans while serving to advance U.S. national interests: a happy intersection of the motivations of head and of heart.  To accomplish these goals, we are focused on seven key areas.

Peace Process

In the view of the U.S. Government there is no single issue more important for immediate action by Nepal’s leaders than the completion of the peace process.  The war started in 1996 and ended in 2006, but the peace process is far from finished, and the ability of the nation to address effectively the myriad of other serious issues Nepal faces will continue to be a hostage to the tensions and mistrust that arise from this incomplete peace.  An honorable completion of the peace process is arguably the essential step – to help the country move past conflict and build a stable foundation for the future.  The conflict was, we can all agree, a dirty business all around, and there were no white knights.  Let’s be frank: the then-Government of Nepal was not representative of the people, and services were far from adequate and their distribution far from equitable.  The Maoists were violent, more destructive than constructive, and engaged in horrific acts often directed against innocent people solely because of their differing views.  The state security organs were also violent in their conduct of the war.

But now the conflict has ended and, although issues of accountability for abuses during the conflict remain to be addressed, trading accusations and offering litanies as to why the “other side” cannot be trusted does not move the nation forward.   I have found that virtually every political leader I have met agrees that the conflict is over, its resumption is increasingly unthinkable, and the process must move to completion.  The debate, unlike that about the constitution, is not about “core values.”  It is about process.  And, if as political leaders so often profess -- and as I believe -- there is no more important issue than completing the peace, then there should be the ability to compromise on the modalities of that process and finally move the nation forward.  I would argue that this is about political will and a willingness to set aside partisan politics to do what is best for the nation.

The most important component of the peace process is the integration and rehabilitation of the approximately 19,000 Maoist combatants who remain in UN-monitored cantonments around the country.  We have strongly urged the Maoists, whose role is central to this process, to allow it to move forward and complete it as rapidly as possible.  Until they cut their links with their former insurgent military forces their commitment to peace and democracy will be questioned and others will not feel confident enough in their intentions to make the necessary compromises on critical issues of constitution drafting and power-sharing.  The UCPN-Maoists are the largest party in the Constituent Assembly, and I would argue that they do not need a military force to pursue their political agenda.  In fact, so long as they retain a military force, on whatever basis, I believe that they cannot credibly engage in a democratic political dialogue.
 

To be fair, however, the Maoists are not the only ones with responsibility. Yes, we urge them to honor their commitments, but the other parties also need to engage constructively to ensure that Maoist combatants to be integrated into the state security forces do so under fair terms and others are demobilized with subsequent opportunities to live lives of dignity as citizens of Nepal.  We understand that the process of integrating a portion of the former Maoist combatants into the security forces – as envisioned in the peace agreement – is complex and requires flexibility on all sides, including the Nepal Army.  But we believe these challenges can be addressed if the leadership remains focused on the key issues and open to creative thinking. 

And we have seen some progress.  In January, the Maoists finally released the roughly 4,000 disqualified combatants, many of whom had been child soldiers.  While long-overdue, this was a positive step.  In another positive recent step, the Maoists have committed to transferring control of their combatants to the Special Committee and forming a Secretariat to oversee the integration and rehabilitation process.  While we want to see action, not just words, there are signs that the Maoists may finally be getting more serious about pursuing the peace process, and finalizing the peace.  We hope that the other parties will respond with a similar spirit.
 

The international community is prepared to help.  The US, for its part, is more than ready to help fund the Secretariat’s work and the creation of field offices.  We are prepared to support programs to help those former combatants who want to return to civilian lives and are prepared to fund vocational training programs that lead to real jobs.  We recognize, however, that this process must be led by Nepalis; not by the US or any other power and thus, while we offer our support willingly, we wait for guidance from the political leadership here as to how it might best be given. 

Finally, I would note that we remain very conscious of UNMIN’s pending mid-January departure.  We have long supported the important contribution by UNMIN but at this point we believe that completing the peace process is about the parties finding the political will, and the trust, to do so.  Only the parties can do that.  Not UNMIN, not the US, not any other organization or country.  The peace process will not collapse when UNMIN leaves, and the international community will continue to offer its support.  But now is the opportunity to resolve these issues once and for all while UNMIN is still here.  Now is the time to close the Maoist cantonments and move the country forward.  Now is the time to show the world that Nepal’s political leaders are as committed to the peace process as the international community, which has funded UNMIN’s continued engagement and pressed for peace for four years. 

Now is the time for bold and wise leadership; with it, the peace process can be completed.  We hope it will be.

Democratic Constitution

To build an enduring peace, however, it is not enough to just address the issues of the former combatants.  The Constituent Assembly must also complete the task of drafting a new constitution for the peace process to be complete.  The peace agreements call on the political parties and legislators to draft a transformative document that redefines power and the control of resources in a new Nepal.  This is a difficult job in any country, made more difficult here by the legacy of the conflict.  Women, ethnic minorities, and members of historically marginalized groups have tasted political empowerment and are justifiably determined that their voices will be heard in this process and they should be.  Traditional elites, meanwhile, struggle to ensure that the pendulum does not swing so far as to leave them as the ones marginalized in the new Nepal.  

At the same time, the drafting process is further complicated by the political parties’ competition to shape a constitution that will best reflect their values and political agenda, even as they try to define what those values are and should be in post-monarchy Nepal.  This is an issue for all the parties, but perhaps particularly for the Maoists, as they work through their own transition from being an insurgent force seeking to impose their political viewpoint through violence to a political party committed to working in a multi-party democratic system.  Doubts about the Maoist commitment to a democratic polity complicate efforts to reach agreement on a national political framework.  Similarly, Maoist concerns that other parties will seek to exclude them from a meaningful role in national governance equally complicate efforts to sort through pronounced differences between the parties on core values and on the nature of government. 

For our part, we are encouraging the parties to refocus efforts on drafting a new constitution before the May 2011 deadline.  Despite the sometimes negative assessments, we believe that real progress has been made, and many Constituent Assembly members and others have worked tirelessly on this vital task.  Eleven different thematic committees have produced reports, with specific recommendations.  At the technical level, the dialogue on constitutional issues has been serious and constructive.  Recently we have seen resolution of disagreements on key issues by the task force being chaired by the Maoist Chairman Pushpa Kamal Dahal.  He and colleagues from all parties have reached agreement on the independence of the judiciary, on citizenship issues and on language questions.  All sparked vigorous debate, but agreement has been reached and the constitution is that much closer. 

But the toughest questions remain unanswered.  What form of government to have, what will the electoral process look like, and what type of federal structure makes sense are among the most difficult issues, and resolving these will require leadership from the top officials of all parties.  I’ve met and had lengthy, in-depth discussions with most of them, and I believe they can yet rise to the occasion and that it is possible to draft a constitution that will enjoy the support of most of the Nepali people before next May 28.  Of course, if my short experience in Nepal has taught me anything, it is that we have to wait – often breathlessly -- for deadlines to near before decisions are made.  If that holds true, it suggests that May 26th and 27th could be very busy days, indeed.    
 
The U.S. does not have a prescription for the “right” constitution for Nepal but we do believe that there are basic principles that define a democratic state anywhere in the world.  These include respect for the rights of the individual, the independence of the judiciary, separation of powers among branches of government, a free and unfettered media, open public debate, and regular and open democratic elections as a means of expressing the people’s sovereign will.  They are, in our view, essential components of democratic society.  As with the peace process, however, neither we, nor any other outsiders can define the democratic values and structures that will work for the people of Nepal.  That is for Nepalis to choose.  We can and do hope, however, that Nepal’s constitution, whatever its final shape, will reflect these principles, and we believe such a constitution will lay the foundation for stability and desperately needed economic growth.

Security Sector Reform

After resolving the future of Maoist combatants and once the constitution is finished, the government needs to reform its security institutions.  We believe this issue is critical for the country’s future.  Nepal’s security forces – the Nepal Army, Nepal Police, and Armed Police Force – retain the same size and much the same structures they had during the conflict.  During the conflict, the Army swelled to more than 90,000 troops, compared to roughly 45,000 before the conflict started.  It is simply too large and not configured in a way that addresses Nepal’s current security challenges.  While patriotic, professional and committed, it’s an army that must move beyond its historical identity and evolve to better serve the nation in the future.  For its part, the Army says it is committed to diversifying its ranks, including more women and disadvantaged ethnic groups, and we believe this is a positive step for a modern Nepal.

Nepalis must develop their own vision for a security sector that addresses the country’s national security interests.  And, I would add, it is not only the Army, but also the police and armed police which need to define their respective roles and mission clearly. 

The benefits of a reformed security sector will go a long way toward addressing one of Nepal's most pressing concerns -- the lack of security for its people, especially in the Terai plains bordering India.  In large areas of Nepal, neither police nor local government officials are present.  This “ungoverned space” leaves Nepalis vulnerable to criminals and other elements who seek to exploit this environment for their own end.  Extortion, kidnapping, and general lawlessness undermine economic development and basic human rights.  The Government deserves credit for recognizing this challenge, putting more and better trained police into problem areas.  But more needs to be done and we are trying to help.  
 

Enhancing the Rule of Law and Human Rights

Improving security will also lay the groundwork for greater respect for human rights, both in principal and in practice. We remain deeply troubled by the culture of impunity that prevails in Nepal.  Those who are politically connected are rarely punished for breaking the law, and abusing positions of power.  This in turn seriously erodes popular respect for the law and the democratic institutions behind it.  This is a recipe for chaos, not for peace and prosperity.

Impunity also breeds corruption, which signals citizens that laws don’t matter while also acting as a drag on development.  We continue to hear allegations of rampant corruption, both at the national and local level, and the press recently gave prominent attention to Nepal’s low ranking from Transparency International.  More must be done to hold officials accountable and build a culture that respects the rule of law.

What I hear often as I travel the country and as I talk to political leaders is that the country remains scarred by the atrocities committed during the conflict.  No one has been seriously punished for conflict-era abuses – neither the Army nor Maoists have cooperated meaningfully with officials in prosecuting effectively the most egregious human rights violators even in cases supported by solid evidence.  A healing process is needed to ease these scars of war and we are hopeful that the parliament will enact the necessary legislation, and the Government will implement, the long-promised Truth and Reconciliation Commission and Disappearances Commission. 

Another significant law-and-order issue, trafficking-in-persons, remains a major concern for the U.S. Government.  Each year, many thousands of Nepalis, mostly young, uneducated, and more often than not female, are trafficked to India, the Middle East, and other countries and within Nepal as well.  Their stories are simply heart-wrenching: this is a moral issue of paramount import, and yet another eroder of the rule of law and a diversion of the human talent the country so desperately needs.  We are committed to working with the Government of Nepal to address this issue and hope to see increased prosecutions of key traffickers, some of whom have political connections that have heretofore protected them.  We are confident the Government recognizes its larger interests, as well as its moral obligation, to provide bold and decisive leadership in this area and we applaud the efforts by Chief Secretary Ghimire and others in the concerned line ministries to do so.

Development Agenda

The United States is committed to working with Nepal on all of the tough issues I've just mentioned, plus many more.  We are a long-time partner of Nepal.  The United States was the first country to sign a technical cooperative agreement with the Government of Nepal on January 23, 1951.  Over the past 60 years, the United States, through USAID, has provided over $2 billion in official development assistance to Nepal.   Other U.S. government agencies, along with the American private sector have pumped in hundreds of millions more in the form of innumerable individual company and community efforts and major philanthropic organization projects.

In those 60 years, this partnership has contributed to remarkable development outcomes: the elimination of malaria from the Terai, the establishment of the College of Education, the installation of the first telephone exchange in Nepal, and the training of Nepal’s first public health nurses, not to mention hundreds of libraries and schools and thousands of water and other infrastructure projects.

Over the next three years alone, U.S. Government assistance to Nepal from a variety of sources is projected to top $225 million.  These funds will be used, among other things, to support the peace process; strengthen democratic institutions; improve governance and rule of law; provide training and education for youth employment; support early childhood education; fight trafficking in persons; provide sustainable, accessible, and quality basic health services; enhance economic competitiveness, promote inclusive economic growth; assist with humanitarian crises; fight against hunger and ensure food security; cope with global climate change, train police, professionalize the military, and prepare for disasters. It’s a long list.
 

This assistance includes $47.7 million this year alone, to achieve the objectives of the three new initiatives announced by President Obama, addressing health and climate change and global hunger and food security. With this focus, our USAID Mission hopes for further attention and possibly increased funding for Nepal, as a strong partner in all three initiatives.   

I am particularly proud of our efforts to improve healthcare for Nepalis.  There is an extraordinary health development program in Nepal, one that we've been working on for at least four decades.  In fact, Nepal is one of very few countries on track to meet more than one of the Millennium Development Goals in Health, an accomplishment for which it was just recognized at the UN General Assembly on September 20.  Specifically, Nepal was congratulated for its remarkable achievement in cutting in half the number of pregnancy-related deaths and the child mortality rate between 1996 and 2006.

Nepal has also been a global leader in highlighting the unique impact global warming has on high mountain watersheds and the downstream implications from receding glaciers.  The expected impact of climate change in Nepal includes: overflowing glacial lakes, massive downstream flooding, and seasonal drying-up of water supplies for tens of millions in both Nepal and India.  Nepal is already looking at mitigation strategies, and we are working closely with them on solutions. 

Economic Growth

We know that development assistance alone cannot improve the lives of Nepalis.  It is the private sector – not international donors – that will transform Nepal’s economy and create opportunities in Nepal for Nepal’s young people. 

When one sees Nepalis queuing up at the Foreign Ministry by the hundreds every day for passports in the pursuit of jobs in the Gulf States or elsewhere, one cannot help but feel depressed by the large number of young people choosing to leave their homes to work abroad.  I fear that many of the people in those lines do not intend to return to Nepal, draining the country of a tremendous resource.  Nor is an economy built largely on labor remittances and customs revenues sustainable over time.

The key to turning this situation around is to create an environment where the private sector can thrive, both domestically and in the international arena.  We are seeking to do just that.  We want to work with the government and the private sector and other international partners on much needed economic policy reforms.  We want to help the private sector create the jobs that are so desperately needed.  One of our new USAID initiatives will invest $30 million over three years to help strengthen Nepal’s trade competitiveness, expand exports and make agriculture more efficient.  We will discuss the reform of labor laws so that politically-linked labor unions cannot cripple economic growth and we will work with the private sector and government to identify and eliminate bureaucratic barriers to trade and business development. 

The country is well-positioned between two of the largest and fastest growing economies in the world with huge markets on either side of its border.  This may indeed be a time when being the yam between two boulders can be an advantage for the nation.  Nepal has enacted a new trade policy in response to economic changes that have occurred in recent years, both inside and outside the country, replacing a policy adopted in 1992.  This new policy is well positioned to strengthen trade ties with the United States, as well as other countries, because it addresses new economic realities, including the fact that some of Nepal’s traditional exports no longer enjoy a competitive advantage in the global market.  The updated trade policy aims to promote, in partnership with the private sector, “new exportable goods of comparative advantage.”
 

Fifteen “special thrust areas” have already been identified.  Nepal’s advantage in terms of production is not the only thing that makes these agricultural and handicraft goods prime targets for export promotion.  All of these goods also fall within the various categories of products that enjoy duty-free access to the U.S. market under the Generalized System of Preferences. Nepal’s hydropower potential is also, as everyone knows, considerable, and we are seeing increasing activity in this area.  We have also seen the growth of the information technology sector and believe there are increased opportunities there as well.  

We remain committed to work with the Government of Nepal and the private sector to create new opportunities and help ensure the right macroeconomic and trade policies are in place to help Nepal’s economy flourish.  I can tell you that my desire is to spend my time not talking about politics but about development and job creation and about helping to build an economy where young people have alternatives that will allow them to build promising futures in Nepal rather than traveling abroad.  These are the issues that really matter to most people and make a difference here and now in the lives of the people and their children.

Disaster Preparedness

Finally, let me just mention an issue of particular interest and concern to me – disaster preparedness.  As many of you know, Nepal tops the lists of countries most vulnerable to a catastrophic earthquake and the Kathmandu valley with its significant and dense population is particularly vulnerable.  A major earthquake today would be devastating.   Realistic projections suggest that in the valley alone hundreds of thousands – yes, hundreds of thousands – of people will die.  Many more hundreds of thousands will be homeless and much of the Valley’s infrastructure will be destroyed.  The damage will likely be comparable to the devastation of Haiti’s earthquake early this year, or worse.  Such a quake would set Nepal’s development timeline back by decades.

We want to help change that picture.  We want to save lives and preserve the development gains that this country has made.  I can tell you that we are committed to working with government, NGOs, and with private citizens, to help them to mitigate the potential damage, as much as possible, from the impending disaster.  Much needs to be done.  Retrofitting schools and hospitals, enforcing building codes, prepositioning supplies, and training community first responders, are among the many steps that we can take together to mitigate the impact of the disaster and improve the capacity to respond when it happens as it, unfortunately but inevitably, will.  We have already begun to engage actively with the Government of Nepal through the Home Ministry, Nepal Army, Armed Police Force, and Nepal Police. This is a partnership that must be energetic, and that must have a strong commitment from the Government of Nepal and the entire donor community – and that must begin now.    

Government Formation

You’ll note that the one thing I have not addressed, but about which I am often asked is government formation.  I will tell you what I tell everyone else.  The question of who governs and how that government is structured is not a matter for anyone other than the people of Nepal to decide.  We will continue to engage all parties and all elements in society here to build for the future, and we will work with whatever government is chosen in a democratic political process.  Our concern is not with who will lead, but that whoever leads, is able to do so effectively; to conclude the peace process and to tackle successfully the challenges of building consensus on the constitution.  It is tall order for any government, but I believe that Nepal will ultimately find a government capable of doing this and moving the nation forward. 

Conclusion

While the list of challenges facing Nepal is daunting, there are also real opportunities and, overall, I am hopeful and even optimistic about Nepal’s future.  That optimism, however, is tempered by a healthy dose of realism.  In my view, Nepal today is closer to a lasting peace and a democratic constitution than it was four years ago, or even one year ago.  But a cold-eyed analysis must also acknowledge that significant challenges remain and, without committed bold leadership and engagement, the process could break down with troubling consequences for the future.  I believe, however, that there is a foundation of accomplishment in recent years to build upon and a widespread realization among leaders of all parties that the country must continue to move forward.  There is no other choice. 

At the end of the day my faith rests with the people of Nepal.  I believe in the resilience, the decency, and commitment of the people of this nation and the determination of Nepalis of all communities to see this transition through to a successful conclusion.  I believe that further positive change will come and that concerns about failure will be supplanted as a new reality takes hold; one that finds Nepal transforming into the democratic, stable and prosperous nation that so many people, including Americans, want to see.  I also believe that young people like you can and should be at the heart of this change.  You must play a constructive role and all Nepalis must press political leaders to give you the peace and the constitution you deserve after all the challenges you have faced in recent years.  And I look forward to the US playing its role, as friend and partner, in helping Nepal seize the opportunities to build that stable, prosperous and democratic future.

Excerpts of the statement delivered by US Ambassador Scott DeLisi at Tribhuwan Univesity on November 18.