Khatiwada Stands To Promote Economic Diplomacy
Modnath Dhakal
Dr. Yuba Raj Khatiwada is among the luckiest few to enjoy several high public positions in a short span of time. He has been now recommended for the ambassador to the United States of America (USA) after he served as the Finance Minister. The government has drawn flak for awarding him lucrative posts one after another. However, his critics have not cast any doubt about his capabilities. While acting as the Finance Minister in difficult time of the coronavirus pandemic, he did not earn much appreciation. Like him, most of the leaders managing the treasuries across the globe have met the same fate in recent times.
US aid to Nepal
The USA is the economic superpower and the world's big consumer market. It has advanced infrastructure, technology as well as historical dominance on multitudes of international issues and agenda. Although the USA was recently surpassed by China in terms of the size of economy on the basis of purchasing power parity, the former is still a centre of global economy. Nepal's trade with the USA was in surplus until a couple of years ago. But Nepal witnessed a deficit last year when the country exported goods worth Rs. Rs. 9.4 billion and imported goods worth Rs. 23.5 billion. That caused a trade deficit of Rs. 14.1 billion for us. But the first two months of the current fiscal year have given some hope to us as we have had Rs. 650 million trade surpluses with the US.
The USA had announced Nepal Trade Preference Programme in the aftermath of the 2015 earthquake to support the country's economic activities and create jobs. The US Congress enacted a law to grant duty-free access to about 66 types of products made in Nepal until the end of 2025. Nepal has largely missed the opportunity to utilise this Generalised System of Preference and increase the export of the listed goods such as carpets, rugs, shawls, scarves, luggage articles, handbags, pocket goods, travel bags and containers, blankets, hats and gloves to the USA.
Likewise, the USA is the third largest tourism source market for Nepal after India and China. About 93,218 American tourists came to Nepal last year and the number was steadily increasing over the years in the past. Having run various exchange programmes and volunteer programmes like Peace Corps, the USA was the largest bilateral donor in Nepal and is among the top 10 source of Foreign Direct Investment (FDI). These four economic sectors are the major sources of growth and employment for any country.
Diplomacy in recent decades has mostly been about economic dealings – promoting trade and tourism, attracting investment, facilitating trade and helping the private sector companies or organisations in forging partnerships and understandings between the two or more nations in terms of investment, trade and technology transfer. Diplomats must have a deep understanding of the country's socio-political status, economic strength and weaknesses, and the bilateral historic economic relationship with the country of their appointment as well as the opportunities that could be created in the next couple of years.
This is where Dr. Khatiwada has higher competence than the candidates the critics have fielded. He has worn many hats: bureaucrat, technocrat, economist, politician and planner. With his in-depth understanding of the monetary and development economics, experience in planning, knowledge of the government machinery, and cordial relations with the Bretton Woods Institutions – World Bank, International Monetary Fund and World Trade Organisation, he can play an instrumental role not only at the diplomatic front but also can contribute in channelising tourists, investment and aid to Nepal and in promoting Nepali goods and services in the USA and creating markets for them.
The Bretton Woods Institutions will have tremendous impact on the international aid, trade and cooperation for a quite foreseeable future. Dr. Khatiwada has good connections and experience working with these organisations and - recent rise in the foreign aid to Nepal in the wake of the coronavirus pandemic is partly because of his efforts as well. Meanwhile, with low-price high skill human resources, Nepali software industry can be largely benefitted from the US market.
Utilising the GSP programme announced by the USA for Nepal can promote Nepal's trade and help in reducing trade deficit and creating jobs. Opening up the US market for further investment, trade and promoting Nepali tourism and products should be the objective of the Nepali envoy to Washington. Besides, technology transfer in various economic sectors, including agriculture and manufacturing, services like education and health, is one of the primary areas the representative of Nepal in the USA should work for. At the same time, working with the Nepali diaspora and Non-Resident Nepalis Association can play an important role in channelising capital, skills and technology to the home country.
Suitable candidate
Dr. Khatiwada is, perhaps, the most suitable and competitive candidate to represent Nepal in Washington in decades after Dr. Bhekh Bahadur Thapa who served as the envoy to the USA twice (1980 to 1985) and (1996 to 1997). Thapa was sent to New Delhi after calling back from the USA in 1997. For the matter of fact, Dr. Thapa had served as the governor of the central bank, minister for finance and minister for foreign affairs as well. Dr. Khatiwada has also long experience in planning and banking and working with the multilateral donors like the World Bank. He is getting to Washington at a time when new US President Joe Biden is set to assume the office there amidst a hope of the USA's better international relations and further opening of its economy.
Khatiwada's absence will be strongly felt as the one who held his fist tightly in terms of distributing money from the state coffers, a reason that made him unpopular even among the CPN leaders and cadres. Prime Minister KP Sharma Oli also might feel the absence of a competent economic advisor during the difficult times.
(Dhakal is a journalist at The Rising Nepal. @ModDhakal)