By Haider Abbas
There is an understandable unease in New Delhi, since the Communist government has been sworn into office on December 26, 2022, in Nepal, under Pushpa Kamal Dahal, popularly known as “Prachanda”, as the Prime Minister after he had joined hands with former premier KP Sharma Oli. Prachanda and Oli lead the Communist Party of Nepal (Maoist Centre) and the Communist Party of Nepal (Unified Marxist-Leninist), respectively. Most arguably both the parties are pro-China. This is obviously a blow to India which is in a duel with China over its geopolitical influence in Nepal.
It is therefore not even a fortnight that the specter of Financial Action Task Force (FATF) grey-list status for Nepal has started to loom large, in order to rein-in Nepal on the same lines, as what was done to Pakistan, from which it has been lately delisted, and has gained entry into FATF white-list after four years. There is no doubt that FATF is where US monopoly is writ large. It is interesting to ponder that once after a pro-US and a puppet government was installed in Pakistan, after PM Imran Khan was ousted, FATF on its sweet-will, came out to rescue Pakistan to help it qualify FATF white-list. India, of course is a US ally, and has a convergence of interests with US in Nepal against China. FATF is a Paris based body, formed at the initiative of G-7 countries, which is the global money laundering and terrorist financing watchdog.
The assuming of power by a pro-China government in Kathmandu, is not a welcome-step for US apart from India, hence, the FATF stick has to be brandished. By the coming February, Nepal is to sit under the grey-list, with only China at its rescue end. The decision is to come on Nepal’s performance until December 15, 2022, hence, Nepal qualifying into the grey-list is now a foregone conclusion. Interestingly, China was also on the Pakistan side, but Pakistan, in the last four-years, lost to the tune of 38 billion USD in terms of its GDP, informed The Economic Times 1 on June 28, 2021. What however, deserves a mention, is that this sword of damsel i.e. FATF grey-list was nowhere, until the last week of December 2022, when a pro-China government took its place in Nepal. Everything is so meticulously cooked. Within no time, US woke-up to the terror-funding of Nepal, and therefore, Nepal is now to be consigned to it. A whole report, on NDTV 2 on January 3, elaborates on the intricacies involved, which claims that ‘Nepal is struggling to address a number of deficiencies to comply with the standards of the Paris-based regulatory body.’
What also needs to be known is that once a country enters into the FATF grey-list, there are all kinds of ‘enhanced monitoring’ on remittances, banking flow, foreign direct investments, donations, charities etc. FATF furnishes around 40 recommendations, which countries under grey-list have to comply, towards transparency in terms of money laundering etc. Therefore, now Nepal’s new power dispensation will ‘be into for a shock’ and it will obviously take a long time for its economy to recover, particularly when this FATF baton is to hit too hard and too early as well. Nepal had been on the grey-list earlier too (2008-14) which happened interestingly when Prachanda had a brief stint as PM (2008-09) and now again.
US has resurrected the skeletons out of the closet as news reports, from the past around four-years, are being ‘put to table’ afresh, to push the case against Nepal. The news report as per ANI 3, published on November 6, 2019, said that, according the US ‘Nepal, now biggest operation hub for Indian Mujahidin.’
As per the same report, the US State Department had accused Indian Mujahideen, to have ties with Pakistan based Laskhar-e-Taiyyaba, Jaish-e-Muhammed and Harkat-e-Jehad-e-Islami, and was involved in Nepal to carry out terrorist activities against India. The report was based on a US document ‘ Country Report on Terrorism 2018’, towards which US State Department had designated Indian Mujahideen as a ‘foreign terrorist organization by the US since September 2011’ suspected to have obtained funding and support from sources in Pakistan and Middle East and that it had expanded its area of operations in Nepal.
A grave fallout is what awaits Nepal, as its economy is heavily dependent on foreign trade, remittances and imports. A slump in Nepal’s trade opportunities, its downgrade of ratings, no loans from World Bank or Asian Development Bank, heavy downfall in investments, and subsequent shrinking of its economy, which automatically, would mean Nepal going further into the fold with China-which is not to be good for Indian ears. No wonder, Nepal has already issued a war-cry towards the impeding gloomy economic scenario, as according to Reuters 4 on April 17, 2022, it had given a call for its overseas nationals to come to help resuscitate its foreign exchange reserves! Nepal government had tightened imports of cars, gold and cosmetics after its foreign exchange reserves had fallen.
Nepal will now need to fend for itself, as this FATF stick will continue to disturb its economy, which may have the potential to have an adverse effect of Nepal-India relations, as India will not be in a position to solicit any help to Nepal, as after all now Nepal will be in the China camp. How this FATF will reshape the geo-political scenario between the two neighbours, is what the time is to tell. Nepal is therefore has become a new recipe ‘for a tussle’ between US and China, and who knows, until US changes the regime in Nepal, this FATF ‘stick and carrot’ is slated to remain in force.
China and Russia have come together to de-dollarise the world economy, hence, this match between the giant world powers is to be in for the next few decades. Until, of course the Russia-Ukraine war does not spill into a more bigger war. Let’s see what happens until then.
The writer is a former UP State Information Commissioner and writes on international politics.