[00:00:13] [SPEAKER_00]: Namaste and welcome to PODS by PEI, a policy discussion series brought to you by Policy

[00:00:18] [SPEAKER_00]: Entrepreneurs Inc.

[00:00:20] [SPEAKER_00]: My name is Khushi and in today's episode I am in conversation with PEI's very own

[00:00:25] [SPEAKER_00]: Shuvangi Poudyal on Infrastructure Diplomacy and Development, how Nepal manages infrastructure

[00:00:31] [SPEAKER_00]: aid from India, China and Japan.

[00:00:35] [SPEAKER_00]: Shuvangi is a public policy researcher based in Kathmandu with a focus on South Asian

[00:00:39] [SPEAKER_00]: geoeconomics, regional connectivity and local governance.

[00:00:43] [SPEAKER_00]: As a programs and outreach officer at PEI, she contributes to research projects like

[00:00:48] [SPEAKER_00]: infrastructure diplomacy and rent, while also coordinating programs and communicating findings

[00:00:54] [SPEAKER_00]: through publications and as an in-house host at PODS by PEI.

[00:00:59] [SPEAKER_00]: Previously she worked with Nepal based think tanks such as SESIF and Governance Lab.

[00:01:04] [SPEAKER_00]: Shuvangi holds a master's degree in International Relations from the University of Warwick.

[00:01:10] [SPEAKER_00]: In this episode, we delve into PEI's latest publication, Off Infrastructure Diplomacy

[00:01:15] [SPEAKER_00]: and Development, a comprehensive study that examines the aid dynamics between Nepal

[00:01:20] [SPEAKER_00]: and its key partners including India, China and Japan and others.

[00:01:25] [SPEAKER_00]: A key contributor to the study, Shuvangi provides insights into the geopolitical

[00:01:30] [SPEAKER_00]: context shaping Nepal's infrastructure landscape, the trends in aid and investment

[00:01:35] [SPEAKER_00]: and the public perceptions of different donors.

[00:01:38] [SPEAKER_00]: We also explore the distinctions between DAC and non-DAC partners, their environmental

[00:01:43] [SPEAKER_00]: and social impacts and discuss recommendations for the Nepali government on navigating this

[00:01:49] [SPEAKER_00]: complex terrain.

[00:01:51] [SPEAKER_00]: Like listening to PODS?

[00:01:52] [SPEAKER_00]: We'd love to hear your thoughts and reviews on Spotify, Apple Podcasts, YouTube

[00:01:57] [SPEAKER_00]: or wherever you listen to the show.

[00:01:59] [SPEAKER_00]: For now, we hope you enjoy the conversation.

[00:02:44] [SPEAKER_00]: Great, so we are here to talk about PEI's latest publication, which is the paper on

[00:02:49] [SPEAKER_00]: Infrastructure Diplomacy.

[00:02:51] [SPEAKER_00]: Now this paper has been more than two years in the making and you and a team of PEI

[00:02:56] [SPEAKER_00]: researchers were a part of it.

[00:02:58] [SPEAKER_00]: Can you introduce the study to our audience and also tell us about the context surrounding

[00:03:03] [SPEAKER_00]: it?

[00:03:03] [SPEAKER_00]: How does a study, based on the study that you have done, help you understand

[00:03:04] [SPEAKER_00]: on Infrastructure Diplomacy come about?

[00:03:07] [SPEAKER_01]: Thank you for your question.

[00:03:09] [SPEAKER_01]: And first of all, I would like to mention and thank my colleagues and co-authors of

[00:03:13] [SPEAKER_01]: the report Nujan Rai on Raghacharya, Somatuniyopani and Srirana for their very

[00:03:18] [SPEAKER_01]: valuable contributions.

[00:03:21] [SPEAKER_01]: Coming into the report, this report examines Nepal's engagement with its major

[00:03:26] [SPEAKER_01]: bilateral donors, India, China and Japan, and some Western donors as well for

[00:03:31] [SPEAKER_01]: infrastructure development in Nepal.

[00:03:33] [SPEAKER_01]: It is positioned between discussions on China's ascendancy and its softball

[00:03:37] [SPEAKER_01]: strategies, and tries to offer a recipient country perspective.

[00:03:43] [SPEAKER_01]: Now Nepal has relied on bilateral and multilateral assistance to address this

[00:03:47] [SPEAKER_01]: report, analyzes each donor's infrastructure aid, highlighting logic

[00:03:51] [SPEAKER_01]: specifics, financing, conditionalities and implementation procedures.

[00:03:56] [SPEAKER_01]: It also tries to provide some observations tailored to each donor country and

[00:04:00] [SPEAKER_01]: relationship, as well as the Nepali perception of their aid, along with

[00:04:05] [SPEAKER_01]: cross-cutting observations on aid and diplomacy characteristics.

[00:04:08] [SPEAKER_01]: The report concludes with some reflections on Nepal's policy discourse

[00:04:12] [SPEAKER_01]: and recommendations for both donors and the Nepali government to maximize

[00:04:17] [SPEAKER_01]: infrastructure diplomacy and development objectives.

[00:04:20] [SPEAKER_01]: Now, the study on Nepal's infrastructure development and diplomacy is

[00:04:24] [SPEAKER_01]: situated within a broader historical and geopolitical context that is

[00:04:28] [SPEAKER_01]: crucial to understand.

[00:04:30] [SPEAKER_01]: For decades, the concept of foreign aid has served a dual purpose, not only to

[00:04:34] [SPEAKER_01]: promote development, but also to increase the political influence of

[00:04:37] [SPEAKER_01]: donor countries.

[00:04:39] [SPEAKER_01]: Now this dynamic has been particularly evident in Nepal's case, as the

[00:04:42] [SPEAKER_01]: country has relied heavily on aid from various bilateral and multilateral

[00:04:46] [SPEAKER_01]: sources to build critical infrastructure projects.

[00:04:49] [SPEAKER_01]: Starting from the 1950s, Nepal has leveraged its relationship with its

[00:04:53] [SPEAKER_01]: neighbors, particularly India and China, to be exact, to secure financing

[00:04:59] [SPEAKER_01]: for major infrastructure initiatives.

[00:05:01] [SPEAKER_01]: India, seeing Nepal's northern Himalayas as an integral part of its

[00:05:05] [SPEAKER_01]: border security, has consistently provided substantial aid as both a

[00:05:09] [SPEAKER_01]: diplomatic tool and as a means to establish political influence in the

[00:05:13] [SPEAKER_01]: region.

[00:05:14] [SPEAKER_01]: Meanwhile, Nepal is also engaged with China as a counterbalance to

[00:05:18] [SPEAKER_01]: India's overwhelming influence, what some Nepalese analysts believe is

[00:05:23] [SPEAKER_01]: India's overwhelming influence.

[00:05:25] [SPEAKER_01]: And using Chinese aid to construct key infrastructure like the road

[00:05:29] [SPEAKER_01]: connecting Kathmandu to the Tibetan border.

[00:05:32] [SPEAKER_01]: However, the landscape of infrastructure financing in Nepal has evolved

[00:05:36] [SPEAKER_01]: significantly over time.

[00:05:38] [SPEAKER_01]: By the 1990s, there was a notable decline in bilateral aid for

[00:05:41] [SPEAKER_01]: Nepal's infrastructure needs as Western donors had pivoted away from

[00:05:45] [SPEAKER_01]: supporting such projects.

[00:05:46] [SPEAKER_01]: This void was then filled by multilateral institutions like the

[00:05:49] [SPEAKER_01]: World Bank and Asian Development Bank.

[00:05:52] [SPEAKER_01]: More recently, there has been a resurgence of interest from bilateral

[00:05:55] [SPEAKER_01]: donors, particularly India and China in financing infrastructure in Nepal.

[00:05:59] [SPEAKER_01]: Now this renewed focus is also part of a larger global trend as China

[00:06:04] [SPEAKER_01]: leverages its rise as a global superpower to project influence through

[00:06:08] [SPEAKER_01]: this infrastructure diplomacy in Nepal and other parts of the world.

[00:06:12] [SPEAKER_01]: While traditional powers like the US and its allies work to

[00:06:14] [SPEAKER_01]: counterbalance India's expanding footprint.

[00:06:17] [SPEAKER_01]: For Nepal, navigating this new era of geopolitical competition has

[00:06:22] [SPEAKER_01]: presented with both opportunities and challenges as it would.

[00:06:27] [SPEAKER_01]: And the country, while the country continues to lead with principles

[00:06:32] [SPEAKER_01]: such as non-alignment and seeking to maintain a delicate balance

[00:06:36] [SPEAKER_01]: between the competing powers, it has become a bit complex because as

[00:06:42] [SPEAKER_01]: constructs of global alignment evolve, Nepal faces the imperative of

[00:06:48] [SPEAKER_01]: enhancing its understanding and updating its engagement strategies to

[00:06:52] [SPEAKER_01]: effectively capitalize on emerging opportunities and things that

[00:06:57] [SPEAKER_01]: serve its own interest.

[00:06:59] [SPEAKER_01]: So I'd say the significance of this study lies in its ability to

[00:07:03] [SPEAKER_01]: provide an objective recipient country perspective on how more

[00:07:06] [SPEAKER_01]: resourceful nations have leveraged aid and infrastructure diplomacy

[00:07:10] [SPEAKER_01]: to influence smaller countries of strategic importance like Nepal.

[00:07:14] [SPEAKER_01]: And by examining Nepal's engagement with its three largest infrastructure

[00:07:18] [SPEAKER_01]: donors, again, India, China and Japan, this offer this report also

[00:07:23] [SPEAKER_01]: offers valuable insights, I believe, for policymakers and researchers

[00:07:27] [SPEAKER_01]: to better understand the complex interplay of infrastructure,

[00:07:31] [SPEAKER_01]: diplomacy and development.

[00:07:33] [SPEAKER_00]: I think that was a really comprehensive background to this

[00:07:38] [SPEAKER_00]: conversation we're having and where this research is situated.

[00:07:43] [SPEAKER_00]: And so zooming into that, like you said, the report examines

[00:07:47] [SPEAKER_00]: India, China and Japan as major infrastructure partners of Nepal.

[00:07:51] [SPEAKER_00]: But it also looks into other partners.

[00:07:54] [SPEAKER_00]: Could you give us an overview of the aid landscape in Nepal?

[00:07:58] [SPEAKER_01]: Right. Like as you said, Nepal's aid landscape is a complex and

[00:08:02] [SPEAKER_01]: dynamic mix of traditional Western donors and emerging powers like

[00:08:07] [SPEAKER_01]: China and India, each with their own priorities and approaches.

[00:08:12] [SPEAKER_01]: Now, traditional Western donors that are primarily members of the

[00:08:15] [SPEAKER_01]: Development Assistance Committee, the DAC, prioritize development

[00:08:19] [SPEAKER_01]: objectives focusing on governance, human rights and climate change.

[00:08:22] [SPEAKER_01]: This is not just in Nepal, but this is the standard elsewhere as

[00:08:27] [SPEAKER_01]: well. And they typically provide a higher percentage of on-budget

[00:08:31] [SPEAKER_01]: aid, giving Nepal more control over fund allocation.

[00:08:34] [SPEAKER_01]: And their aid is often characterized by extensive planning,

[00:08:37] [SPEAKER_01]: negotiation and studies conducted by their agencies.

[00:08:41] [SPEAKER_01]: Grants are limited and they primarily provide highly concessional

[00:08:44] [SPEAKER_01]: loans to promote self-help and recipient country performance.

[00:08:48] [SPEAKER_01]: Japan, a prominent example, provides significant aid through

[00:08:51] [SPEAKER_01]: JICA, J-I-C-A, focusing on hydropower and transportations.

[00:08:57] [SPEAKER_01]: Major projects include Kulekhani hydropower plants, the Sindhuli-Bordibas

[00:09:01] [SPEAKER_01]: Highway and the Melemchi Water Supply Project.

[00:09:04] [SPEAKER_01]: Their aid is generally viewed positively in Nepal, with projects

[00:09:07] [SPEAKER_01]: seen as highly technical and delivered to high standards.

[00:09:11] [SPEAKER_01]: Emerging powers like India and China utilize aid more as a tool

[00:09:15] [SPEAKER_01]: for political influence, often prioritizing diplomatic goals over

[00:09:19] [SPEAKER_01]: development expertise.

[00:09:21] [SPEAKER_01]: They also provide a higher percentage of on-budget aid,

[00:09:24] [SPEAKER_01]: emphasizing South-South cooperation.

[00:09:27] [SPEAKER_01]: India focuses on transportation infrastructure with projects

[00:09:30] [SPEAKER_01]: like the 3-1 Highway and segments of the East-West Highway.

[00:09:34] [SPEAKER_01]: They have also been involved in hydropower projects.

[00:09:37] [SPEAKER_01]: Through these, they have faced challenges due to mistrust and

[00:09:40] [SPEAKER_01]: disagreements, which is a big part of the conversation in Nepal.

[00:09:45] [SPEAKER_01]: Recent focus has been on trade and connectivity infrastructure

[00:09:48] [SPEAKER_01]: projects to enhance regional integration and counter China's influence.

[00:09:53] [SPEAKER_01]: The recently approved MCC project also intends to connect Nepal with India.

[00:10:00] [SPEAKER_01]: China, on the other hand, provides significant funding for infrastructure

[00:10:04] [SPEAKER_01]: projects, including hydropower plants and railway projects.

[00:10:08] [SPEAKER_01]: While projects involve both Chinese and local labor, concerns exist

[00:10:12] [SPEAKER_01]: regarding the treatment and working conditions of Nepali workers.

[00:10:15] [SPEAKER_01]: This is something that has been raised time and again.

[00:10:18] [SPEAKER_01]: Now Nepal faces other challenges, multiple challenges when

[00:10:23] [SPEAKER_01]: navigating this aid landscape.

[00:10:25] [SPEAKER_01]: And there are concerns regarding transparency and accountability in

[00:10:29] [SPEAKER_01]: the use of aid, particularly with non-DAC donors that are typically non-Western donors.

[00:10:35] [SPEAKER_01]: There are also concerns about environmental and social impacts of some projects,

[00:10:38] [SPEAKER_01]: particularly those funded by Chinese companies.

[00:10:42] [SPEAKER_01]: But I'd say overall, the Nepali aid landscape is dynamic.

[00:10:48] [SPEAKER_01]: It is multifaceted.

[00:10:50] [SPEAKER_01]: It has a mix of traditional and emerging donors.

[00:10:54] [SPEAKER_01]: And like I said before, they all have their own priorities and approaches.

[00:10:57] [SPEAKER_01]: And coming back to the report, it emphasizes the need for Nepal to develop a clear strategy

[00:11:04] [SPEAKER_01]: for engaging with its various partners to maximize development benefits and navigate

[00:11:09] [SPEAKER_01]: the challenges of a changing geopolitical landscape rather than the other way around.

[00:11:14] [SPEAKER_00]: Point well noted Shivangi.

[00:11:16] [SPEAKER_00]: One of the other focuses of the study, one of the major focuses of the study is also

[00:11:24] [SPEAKER_00]: exploring the trends in the amount of aid Nepal has received.

[00:11:28] [SPEAKER_00]: Can you elaborate on these trends and also illustrate the key factors that are driving them?

[00:11:36] [SPEAKER_01]: Sure. I mean, like you said, we can understand that there is a shift that Nepal's

[00:11:42] [SPEAKER_01]: aid landscape is undergoing currently.

[00:11:44] [SPEAKER_01]: And we have identified three key trends in this report.

[00:11:48] [SPEAKER_01]: Firstly, I'd say there's a growing reliance on loans instead of grants with loans now

[00:11:54] [SPEAKER_01]: comprising 80 percent of total aid.

[00:11:57] [SPEAKER_01]: This shift creates concerns about debt burdens and potential conditionalities associated

[00:12:02] [SPEAKER_01]: with loans. Nepal's Gautam Buddha International Airport has been a topic of much

[00:12:09] [SPEAKER_01]: debate because of this.

[00:12:11] [SPEAKER_01]: And while loans can provide much needed funding for infrastructure projects, they

[00:12:16] [SPEAKER_01]: also come with the risk of increasing Nepal's debt burden, but potentially limiting its

[00:12:21] [SPEAKER_01]: future development options.

[00:12:22] [SPEAKER_01]: And for a country like Nepal, that can prove to be quite devastating.

[00:12:26] [SPEAKER_01]: And in case of Nepal, we can also see that loan agreements often include conditions

[00:12:31] [SPEAKER_01]: that may affect Nepal's policy choices and economic autonomy.

[00:12:35] [SPEAKER_01]: And that, again, is not a great signal.

[00:12:38] [SPEAKER_01]: Secondly, multilateral institutions like the World Bank and Asian Development Bank

[00:12:42] [SPEAKER_01]: play a significant role in infrastructure development.

[00:12:45] [SPEAKER_01]: They often collaborate with Western donors, the DAC donors.

[00:12:49] [SPEAKER_01]: These institutions bring expertise, financial resources and a focus on development

[00:12:55] [SPEAKER_01]: objectives, contributing to a more coordinated, a more sustainable approach to

[00:13:00] [SPEAKER_01]: infrastructure development in Nepal.

[00:13:02] [SPEAKER_01]: However, it is still important to make sure that these institutions are responsive

[00:13:07] [SPEAKER_01]: to Nepal's specific needs and priorities.

[00:13:10] [SPEAKER_01]: And we don't know if that's exactly what's at play currently.

[00:13:14] [SPEAKER_01]: Finally, the third trend is China and India are expected to dominate infrastructure

[00:13:21] [SPEAKER_01]: diplomacy in Nepal, with India aiming to regain influence in South Asia and China

[00:13:26] [SPEAKER_01]: cautiously engaging while considering the issue of Tibet, which remains sensitive.

[00:13:31] [SPEAKER_01]: This creates a geopolitical dynamic where Nepal must carefully navigate and tread in

[00:13:37] [SPEAKER_01]: its relationships with these powerful nations.

[00:13:40] [SPEAKER_01]: Again, there is a need for Nepal to balance its development needs with its

[00:13:43] [SPEAKER_01]: strategic interests, ensuring that its engagement with China and India does not

[00:13:47] [SPEAKER_01]: compromise its sovereignty or autonomy.

[00:13:50] [SPEAKER_01]: So I'd say this requires a careful diplomacy and a clear understanding of the

[00:13:54] [SPEAKER_01]: motivations and interests of each donor.

[00:13:58] [SPEAKER_00]: I think one of the merits of this paper is that there is a holistic

[00:14:01] [SPEAKER_00]: investigation of this topic, infrastructure diplomacy.

[00:14:05] [SPEAKER_00]: And this includes a very intriguing exploration of general perceptions towards

[00:14:10] [SPEAKER_00]: aid and its different sources.

[00:14:11] [SPEAKER_00]: What were some of the key insights the report uncovered regarding the

[00:14:16] [SPEAKER_00]: perception of Indian, Chinese and Japanese aid in Nepal?

[00:14:20] [SPEAKER_01]: Yeah, I mean, it is a complex situation.

[00:14:24] [SPEAKER_01]: And let's start with India.

[00:14:26] [SPEAKER_01]: India and Nepal have had a long intertwined history.

[00:14:29] [SPEAKER_01]: We can't emphasize this enough.

[00:14:31] [SPEAKER_01]: And India's influence is deeply embedded in Nepal's everyday life, from trade

[00:14:35] [SPEAKER_01]: to cultural exchanges. It's everywhere.

[00:14:37] [SPEAKER_01]: This close proximity has also created a sense of anxiety, however,

[00:14:41] [SPEAKER_01]: among Nepalese.

[00:14:43] [SPEAKER_01]: There's a deep-seated fear rooted in historical realities that India

[00:14:48] [SPEAKER_01]: interferes in Nepal's internal affairs.

[00:14:50] [SPEAKER_01]: This perception of interference, especially in sectors like hydropower, has

[00:14:55] [SPEAKER_01]: led to a lot of skepticism towards India's intentions.

[00:14:59] [SPEAKER_01]: The economic blockade of 2015 really brought this tension to the forefront,

[00:15:04] [SPEAKER_01]: I'd say. It had a devastating impact on Nepal's economy and solidified

[00:15:08] [SPEAKER_01]: perception of India as a controlling neighbor.

[00:15:12] [SPEAKER_01]: And this was right after Nepal was reeling from the earthquakes,

[00:15:16] [SPEAKER_01]: the 2015 earthquakes.

[00:15:18] [SPEAKER_01]: The way India, Indian aid is managed with the Ministry of

[00:15:21] [SPEAKER_01]: External Affairs of India overseeing everything, further reinforces

[00:15:25] [SPEAKER_01]: this perception.

[00:15:26] [SPEAKER_01]: MEA's involvement in every project driven by India's national security

[00:15:30] [SPEAKER_01]: and developmental priorities is seen by many in Nepal as yet another

[00:15:34] [SPEAKER_01]: layer of control rather than genuine support.

[00:15:37] [SPEAKER_01]: Initiatives like the HICDP are even seen as tools for Indian

[00:15:43] [SPEAKER_01]: influence, further fueling the belief that aid is used for political

[00:15:47] [SPEAKER_01]: leverage rather than sincere assistance.

[00:15:50] [SPEAKER_01]: It is a catch-22 situation of sorts because while India has made

[00:15:55] [SPEAKER_01]: significant contribution to Nepal's development, the perception of its

[00:15:58] [SPEAKER_01]: foreign policy characterized by interference and regional hegemony

[00:16:03] [SPEAKER_01]: overshadows these positive contributions.

[00:16:05] [SPEAKER_01]: Many in India express frustration over what they perceive as Nepalian

[00:16:10] [SPEAKER_01]: gratitude, but it is often overlooked.

[00:16:14] [SPEAKER_01]: The deeper undercurrents of mistrust and the need for transparency

[00:16:18] [SPEAKER_01]: and respect for Nepal's autonomy is often overlooked in these

[00:16:20] [SPEAKER_01]: conversations.

[00:16:22] [SPEAKER_01]: So this dissonance further, I guess, demonstrates the broader

[00:16:25] [SPEAKER_01]: challenges in India's neighborhood policy and its ability to build

[00:16:30] [SPEAKER_01]: trust and support with its neighbors.

[00:16:33] [SPEAKER_01]: Coming to China next.

[00:16:35] [SPEAKER_01]: I mean, I think Nepal's view of Chinese aid is very much tied to its

[00:16:38] [SPEAKER_01]: perception of China as a whole.

[00:16:41] [SPEAKER_01]: Nepal, Nepalese, a lot of Nepalese view China as a counterweight

[00:16:46] [SPEAKER_01]: to India, a strategy crucial for its survival.

[00:16:50] [SPEAKER_01]: They admire China's economic growth and hope to benefit from it.

[00:16:54] [SPEAKER_01]: Plus, with China being a close neighbor, they're eager to leverage

[00:16:56] [SPEAKER_01]: that power.

[00:16:57] [SPEAKER_01]: Some even see China's strategy as similar to the US.

[00:17:01] [SPEAKER_01]: Big both big players trying to influence the world.

[00:17:05] [SPEAKER_01]: All of this makes Nepal open to China's gestures of goodwill,

[00:17:09] [SPEAKER_01]: like infrastructure aid, and they want to keep good relationships,

[00:17:12] [SPEAKER_01]: good relationship with China.

[00:17:14] [SPEAKER_01]: But again, there are complexities to this.

[00:17:17] [SPEAKER_01]: Experts are aware of the sensitive issue of Tibet,

[00:17:20] [SPEAKER_01]: which is a big part of the China-Nepal relationship.

[00:17:23] [SPEAKER_01]: And China has managed to get Nepal to take a stronger stance

[00:17:26] [SPEAKER_01]: against those who support Tibet, which has raised concerns

[00:17:29] [SPEAKER_01]: about restrictions on demonstrations and monitoring of the Tibetan

[00:17:33] [SPEAKER_01]: community here in Nepal.

[00:17:35] [SPEAKER_01]: And with the US-China rivalry growing, Nepal's importance

[00:17:38] [SPEAKER_01]: to China's security is becoming more apparent.

[00:17:42] [SPEAKER_01]: On a local level, people are aware of Chinese projects,

[00:17:45] [SPEAKER_01]: but they don't fully understand how they're implemented.

[00:17:48] [SPEAKER_01]: While they generally see China as a friendly neighbor

[00:17:51] [SPEAKER_01]: and appreciate the professionalism of Chinese workers,

[00:17:54] [SPEAKER_01]: there's also frustration that local communities don't benefit enough.

[00:17:57] [SPEAKER_01]: They feel like political leaders are getting the most out of these projects

[00:18:00] [SPEAKER_01]: and that Chinese companies aren't engaging with the local communities.

[00:18:04] [SPEAKER_01]: Some analysts have also raised concerns about corruption in Chinese aid.

[00:18:09] [SPEAKER_01]: It's not unique to Nepal, but controversies around certain projects

[00:18:12] [SPEAKER_01]: have fueled this perception.

[00:18:14] [SPEAKER_01]: However, proving corruption is tough

[00:18:16] [SPEAKER_01]: and pre-existing biases can influence how people see these things.

[00:18:21] [SPEAKER_01]: And also, corruption is a big problem in Nepal itself,

[00:18:24] [SPEAKER_01]: which might encourage more corrupt interactions.

[00:18:26] [SPEAKER_01]: I mean, we shouldn't really be surprised about this.

[00:18:29] [SPEAKER_01]: But we shouldn't also ignore the corruption and we need solid evidence

[00:18:34] [SPEAKER_01]: before we make such strong claims.

[00:18:36] [SPEAKER_01]: Ultimately, I'd say there's a lot of interest in promoting

[00:18:39] [SPEAKER_01]: the idea of China's increasing involvement in Nepal.

[00:18:42] [SPEAKER_01]: It makes Nepal look like it's important on the world stage

[00:18:45] [SPEAKER_01]: and shows that China is a supportive ally.

[00:18:48] [SPEAKER_01]: For India, it highlights China's growing influence.

[00:18:51] [SPEAKER_01]: And for China, it's a chance to show itself as a global superpower.

[00:18:54] [SPEAKER_01]: But the real extent of China's interest in Nepal is up for debate.

[00:18:59] [SPEAKER_01]: With all this uncertainty, Nepal risks making foreign policy decisions

[00:19:03] [SPEAKER_01]: that might not actually benefit its people.

[00:19:08] [SPEAKER_01]: Lastly, Japan.

[00:19:09] [SPEAKER_01]: You know, the general perception of Japanese aid in Nepal

[00:19:13] [SPEAKER_01]: is actually quite positive.

[00:19:15] [SPEAKER_01]: People here really appreciate the high technical standards

[00:19:18] [SPEAKER_01]: and quality of Japanese products.

[00:19:19] [SPEAKER_01]: It's almost like the Japanese have a reputation for doing the right things,

[00:19:23] [SPEAKER_01]: which has even shaped how Nepali officials view them.

[00:19:27] [SPEAKER_01]: They feel less of a need to negotiate because they trust the Japanese to deliver.

[00:19:31] [SPEAKER_01]: A report even by the Japan's Ministry of Foreign Affairs

[00:19:34] [SPEAKER_01]: has highlighted this sentiment.

[00:19:36] [SPEAKER_01]: It said that Japan has built a relationship of trust with Nepal

[00:19:39] [SPEAKER_01]: through years of assistance without any historical baggage or hidden agendas.

[00:19:44] [SPEAKER_01]: Nepalese don't see Japan as trying to influence them politically through their aid.

[00:19:48] [SPEAKER_01]: Plus, the Japanese brand is known for its quality.

[00:19:51] [SPEAKER_01]: Take the Kathmandu walk the road, for example.

[00:19:54] [SPEAKER_01]: Even though it was a short stretch, it was built to such a high standard

[00:19:57] [SPEAKER_01]: with smooth traffic flow and it received tons of praise from both citizens

[00:20:02] [SPEAKER_01]: and officials. But there's a catch.

[00:20:05] [SPEAKER_01]: This emphasis on high quality comes with a high price tag.

[00:20:08] [SPEAKER_01]: And recently, Nepal asked Jaiika for help expanding a road stretch.

[00:20:13] [SPEAKER_01]: But Jaiika's solution involved building two tunnels,

[00:20:15] [SPEAKER_01]: which would have been extremely expensive.

[00:20:18] [SPEAKER_01]: The government just couldn't afford it.

[00:20:19] [SPEAKER_01]: And after some back and forth, Jaiika decided to pull out.

[00:20:22] [SPEAKER_01]: So Nepal ended up having to fund the project themselves.

[00:20:25] [SPEAKER_01]: It seems like sometimes the quality comes at a cost that Nepal can't always handle.

[00:20:30] [SPEAKER_00]: I think it's really interesting to see how historical events

[00:20:34] [SPEAKER_00]: and relationships shape these perceptions.

[00:20:37] [SPEAKER_00]: But at the same time, infrastructural diplomacy,

[00:20:41] [SPEAKER_00]: I think this is where we can see it in action,

[00:20:43] [SPEAKER_00]: how the general public is perceiving it,

[00:20:46] [SPEAKER_00]: which takes me to my follow up question,

[00:20:48] [SPEAKER_00]: which is why did this study regard it important to explore

[00:20:53] [SPEAKER_00]: this aspect of the issue?

[00:20:56] [SPEAKER_00]: Because like I hinted before,

[00:20:59] [SPEAKER_00]: general public perception isn't something that is covered

[00:21:02] [SPEAKER_00]: in a technical study like this.

[00:21:06] [SPEAKER_01]: Right. Well, let's think of it this way.

[00:21:09] [SPEAKER_01]: Imagine you're giving somebody a gift, but they don't like it.

[00:21:12] [SPEAKER_01]: They might even feel insulted by the gift.

[00:21:14] [SPEAKER_01]: That gift wouldn't be very useful, right?

[00:21:16] [SPEAKER_01]: So it's the same thing with aid.

[00:21:18] [SPEAKER_01]: If people don't see it as helpful or feel resentful about it,

[00:21:22] [SPEAKER_01]: it's not going to be very effective.

[00:21:25] [SPEAKER_01]: So studying the perception of aid is like

[00:21:29] [SPEAKER_01]: seeing if they actually like the gift that you're giving them.

[00:21:32] [SPEAKER_01]: It helps understand if the aid is actually meeting their needs

[00:21:36] [SPEAKER_01]: and if it is being used in a way that benefits them.

[00:21:39] [SPEAKER_01]: It also helps us figure out if there are any problems

[00:21:42] [SPEAKER_01]: with how the aid is being delivered,

[00:21:44] [SPEAKER_01]: like if it's not transparent or if it's not reaching the people

[00:21:47] [SPEAKER_01]: who need it the most.

[00:21:49] [SPEAKER_01]: If we know how people feel about aid,

[00:21:51] [SPEAKER_01]: we can make sure that it's actually helpful and build trust

[00:21:54] [SPEAKER_01]: between countries that are involved.

[00:21:56] [SPEAKER_01]: It becomes very important for foreign policy as well.

[00:21:59] [SPEAKER_01]: It's all about making sure that the aid is a positive thing

[00:22:01] [SPEAKER_01]: for everyone involved and not just a one sided transaction.

[00:22:06] [SPEAKER_00]: Moving forward, Shubhangi, in the report,

[00:22:08] [SPEAKER_00]: there's also special attention paid to the distinctions

[00:22:11] [SPEAKER_00]: between DAC and non-DAC partners of Nepal.

[00:22:14] [SPEAKER_00]: What were the main observations here?

[00:22:17] [SPEAKER_01]: Yeah, well, in Nepal, aid from DAC donors, partners,

[00:22:22] [SPEAKER_01]: primarily Western countries,

[00:22:24] [SPEAKER_01]: differs a bit from non-DAC donors like India and China.

[00:22:28] [SPEAKER_01]: While non-DAC donors use aid to exert political influence

[00:22:32] [SPEAKER_01]: like I mentioned before,

[00:22:34] [SPEAKER_01]: DAC donors focus on development objectives.

[00:22:37] [SPEAKER_01]: Indian aid is, like I said before,

[00:22:39] [SPEAKER_01]: managed by the Ministry of External Affairs,

[00:22:42] [SPEAKER_01]: potentially prioritizing diplomatic goals

[00:22:44] [SPEAKER_01]: over development expertise.

[00:22:46] [SPEAKER_01]: Chinese aid is managed by various agencies

[00:22:48] [SPEAKER_01]: with unclear coordination.

[00:22:51] [SPEAKER_01]: Non-DAC donors provide a higher percentage

[00:22:53] [SPEAKER_01]: of on budget aid to Nepal,

[00:22:55] [SPEAKER_01]: giving the country more control over fund allocation

[00:22:57] [SPEAKER_01]: like I also mentioned before.

[00:22:59] [SPEAKER_01]: But Western donors prioritize governance,

[00:23:01] [SPEAKER_01]: human rights and climate change

[00:23:03] [SPEAKER_01]: while China and India emphasize South and South cooperation.

[00:23:07] [SPEAKER_01]: Environmental and social standards in Nepal

[00:23:09] [SPEAKER_01]: is yet another complex issue

[00:23:11] [SPEAKER_01]: because Chinese companies often face criticism

[00:23:14] [SPEAKER_01]: for prioritizing rapid execution

[00:23:17] [SPEAKER_01]: over long-term sustainability and neglecting assessments.

[00:23:21] [SPEAKER_01]: There are concerns about limited engagement

[00:23:22] [SPEAKER_01]: with local communities or stakeholder management struggles

[00:23:26] [SPEAKER_01]: and a lack of consideration

[00:23:28] [SPEAKER_01]: for environmental and social requirements.

[00:23:31] [SPEAKER_01]: However, despite these allegations,

[00:23:32] [SPEAKER_01]: there is little evidence to be found

[00:23:34] [SPEAKER_01]: of their neglectful environmental practices

[00:23:36] [SPEAKER_01]: in Nepal at least,

[00:23:38] [SPEAKER_01]: even in comparison to the rest of the partners.

[00:23:41] [SPEAKER_01]: Donors like India and Japan

[00:23:42] [SPEAKER_01]: while relying on the Nepali government's executing agency

[00:23:45] [SPEAKER_01]: also face criticism regarding the quality of assessments

[00:23:48] [SPEAKER_01]: and delays in project development.

[00:23:52] [SPEAKER_01]: The future of aid in Nepal shows a shift towards loan

[00:23:56] [SPEAKER_01]: instead of grants, like I said.

[00:23:59] [SPEAKER_01]: And multilateral institutions like the World Bank

[00:24:02] [SPEAKER_01]: and Asian Development Bank

[00:24:03] [SPEAKER_01]: play a significant role in infrastructure development

[00:24:05] [SPEAKER_01]: while Western donors coordinate with them more closely

[00:24:09] [SPEAKER_01]: than Chinese and Indian donors.

[00:24:12] [SPEAKER_01]: Yeah, so it is again crucial for Nepal

[00:24:15] [SPEAKER_01]: to reevaluate its foreign policy principles,

[00:24:19] [SPEAKER_01]: engage in public policy discourse

[00:24:21] [SPEAKER_01]: and navigate these challenges and opportunities

[00:24:23] [SPEAKER_01]: presented by our changing geopolitical dynamic.

[00:24:27] [SPEAKER_00]: I think it's the perfect segue that you talk about

[00:24:29] [SPEAKER_00]: the future of aid in Nepal

[00:24:31] [SPEAKER_00]: because we've come to the end of the episode

[00:24:35] [SPEAKER_00]: and based on the study,

[00:24:37] [SPEAKER_00]: it's now time to talk about some of the key recommendations

[00:24:39] [SPEAKER_00]: that you have for the Nepali government.

[00:24:41] [SPEAKER_00]: And this is in terms of navigating the aid landscape,

[00:24:44] [SPEAKER_00]: exploring new avenues and negotiating

[00:24:47] [SPEAKER_00]: or implementing projects

[00:24:49] [SPEAKER_00]: while considering the geopolitical factors.

[00:24:51] [SPEAKER_01]: Wow, thank you for very clearly

[00:24:53] [SPEAKER_01]: laying out that question for me

[00:24:56] [SPEAKER_01]: because Nepal's journey towards sustainable development,

[00:25:00] [SPEAKER_01]: according to this report,

[00:25:02] [SPEAKER_01]: hinges on its ability to navigate the complex

[00:25:05] [SPEAKER_01]: and evolving landscape of foreign aid,

[00:25:07] [SPEAKER_01]: like I've been reiterating throughout this episode.

[00:25:10] [SPEAKER_01]: This report highlights the need for both

[00:25:12] [SPEAKER_01]: the Nepali government and donor countries

[00:25:14] [SPEAKER_01]: to adopt a more strategic

[00:25:15] [SPEAKER_01]: but more importantly collaborative approach.

[00:25:19] [SPEAKER_01]: For the Nepali government,

[00:25:20] [SPEAKER_01]: this means taking a proactive stance.

[00:25:22] [SPEAKER_01]: Firstly, it must cultivate a deeper understanding of aid,

[00:25:25] [SPEAKER_01]: recognizing its dynamic nature

[00:25:27] [SPEAKER_01]: and motivations of various donors.

[00:25:30] [SPEAKER_01]: This requires a comprehensive analysis

[00:25:31] [SPEAKER_01]: on the Nepal government side

[00:25:34] [SPEAKER_01]: of the changing aid paradigms,

[00:25:36] [SPEAKER_01]: a spectrum of opportunities presented

[00:25:38] [SPEAKER_01]: and the geopolitical factors

[00:25:40] [SPEAKER_01]: then shaping this landscape.

[00:25:42] [SPEAKER_01]: The government should leverage

[00:25:43] [SPEAKER_01]: its own research institutions.

[00:25:45] [SPEAKER_01]: Secondly, Nepal needs to capitalize

[00:25:47] [SPEAKER_01]: on new and emerging opportunities.

[00:25:49] [SPEAKER_01]: The increasing competition among donors

[00:25:52] [SPEAKER_01]: with initiatives like BRI, BIMSTEC, Global Gateway,

[00:25:55] [SPEAKER_01]: it provides us with a unique advantage.

[00:25:58] [SPEAKER_01]: The government must analyze the offerings of each donor,

[00:26:01] [SPEAKER_01]: identify those most relevant to its needs

[00:26:03] [SPEAKER_01]: and determine which option then aligns best

[00:26:06] [SPEAKER_01]: with Nepal's national goals.

[00:26:08] [SPEAKER_01]: This requires a thorough understanding

[00:26:10] [SPEAKER_01]: of the shift of aid landscape

[00:26:12] [SPEAKER_01]: and a strategic approach on Nepal's side

[00:26:14] [SPEAKER_01]: to maximizing its benefits from foreign aid.

[00:26:19] [SPEAKER_01]: Thirdly, Nepal must build capacity

[00:26:22] [SPEAKER_01]: to negotiate and implement projects effectively.

[00:26:25] [SPEAKER_01]: This seems to be something that we were very good

[00:26:28] [SPEAKER_01]: in the past but have since faltered from recently.

[00:26:33] [SPEAKER_01]: So this building of capacity

[00:26:35] [SPEAKER_01]: involves strengthening coordination among ministries,

[00:26:38] [SPEAKER_01]: particularly finance, foreign affairs

[00:26:40] [SPEAKER_01]: and relevant line of ministries

[00:26:42] [SPEAKER_01]: to devise a cohesive, well-rounded strategy

[00:26:45] [SPEAKER_01]: during aid negotiations.

[00:26:47] [SPEAKER_01]: Furthermore, Nepal needs to address

[00:26:49] [SPEAKER_01]: its weak absorptive capacity

[00:26:51] [SPEAKER_01]: by improving planning, procurement and project management

[00:26:55] [SPEAKER_01]: to ensure timely completion and project outcomes.

[00:26:58] [SPEAKER_01]: Finally, the Nepali government should prioritize

[00:27:00] [SPEAKER_01]: a clear and consistent foreign policy strategy.

[00:27:03] [SPEAKER_01]: I cannot stress that enough.

[00:27:05] [SPEAKER_01]: We need to find a foreign policy strategy

[00:27:07] [SPEAKER_01]: that genuinely balances Nepal's development needs

[00:27:10] [SPEAKER_01]: with its strategic interests.

[00:27:12] [SPEAKER_01]: We talk about this time and again

[00:27:14] [SPEAKER_01]: but somehow have not been able to find that sweet spot.

[00:27:17] [SPEAKER_01]: So I'd say this would include navigating

[00:27:20] [SPEAKER_01]: the geopolitical dynamics of its relationship

[00:27:22] [SPEAKER_01]: with China and India,

[00:27:24] [SPEAKER_01]: ensuring its engagement with these powerful neighbors

[00:27:26] [SPEAKER_01]: does not compromise on its sovereignty and autonomy.

[00:27:30] [SPEAKER_01]: And Nepal must also address concerns

[00:27:32] [SPEAKER_01]: about transparency and accountability,

[00:27:35] [SPEAKER_01]: strengthen environmental and social impact assessment

[00:27:37] [SPEAKER_01]: and promote meaningful engagement with local communities.

[00:27:40] [SPEAKER_01]: It should be a Nepalese undertaking.

[00:27:45] [SPEAKER_01]: We shouldn't expect that from our donors or our partners.

[00:27:50] [SPEAKER_01]: But on the other hand, for donor governments,

[00:27:52] [SPEAKER_01]: I'd say their approach must shift a bit

[00:27:57] [SPEAKER_01]: from steering to supporting Nepal's development.

[00:28:00] [SPEAKER_01]: It should be recognized by our partners

[00:28:03] [SPEAKER_01]: that Nepal's foreign policy reflects its historical context

[00:28:06] [SPEAKER_01]: and its desire to balance its relationships

[00:28:08] [SPEAKER_01]: with its immediate neighbors for foremost.

[00:28:11] [SPEAKER_01]: Instead of trying to influence Nepal

[00:28:12] [SPEAKER_01]: to choose sides in a geopolitical game,

[00:28:16] [SPEAKER_01]: donors should support Nepal

[00:28:17] [SPEAKER_01]: in maximizing the available opportunities from our partners.

[00:28:21] [SPEAKER_01]: This means offering choices and allowing Nepal

[00:28:23] [SPEAKER_01]: to pursue its own strategic autonomy.

[00:28:26] [SPEAKER_01]: Furthermore, I think donor government should invest

[00:28:28] [SPEAKER_01]: in strengthening Nepal's media and civil society.

[00:28:33] [SPEAKER_01]: These institutions play a crucial role

[00:28:35] [SPEAKER_01]: in fostering informed public discourse,

[00:28:37] [SPEAKER_01]: promoting transparency and accountability

[00:28:39] [SPEAKER_01]: and ensuring that aid projects are implemented effectively.

[00:28:43] [SPEAKER_01]: Look at us, that is exactly what we're trying to do

[00:28:45] [SPEAKER_01]: right now.

[00:28:46] [SPEAKER_01]: By supporting a strong media and civil society,

[00:28:49] [SPEAKER_01]: donor governments can contribute to a more robust

[00:28:52] [SPEAKER_01]: and accountable aid landscape in Nepal.

[00:28:54] [SPEAKER_01]: I truly believe that.

[00:28:56] [SPEAKER_01]: And by embracing these recommendations,

[00:28:59] [SPEAKER_01]: I believe both Nepali government

[00:29:00] [SPEAKER_01]: and donor partner countries can foster

[00:29:03] [SPEAKER_01]: a more collaborative and mutually beneficial relationship.

[00:29:06] [SPEAKER_01]: Again, with the goal of contributing to Nepal's

[00:29:09] [SPEAKER_01]: sustainable development and promoting a more stable

[00:29:12] [SPEAKER_01]: and prosperous region.

[00:29:13] [SPEAKER_01]: I'll stop there.

[00:29:15] [SPEAKER_00]: And that brings us to the end of this conversation

[00:29:18] [SPEAKER_00]: which was so jam packed with information.

[00:29:20] [SPEAKER_00]: Thank you so much, Shivangi.

[00:29:21] [SPEAKER_00]: You were articulate and so refined as always.

[00:29:24] [SPEAKER_00]: Thank you so much for being here with us.

[00:29:25] [SPEAKER_01]: Thank you for creating such a comfortable environment

[00:29:27] [SPEAKER_01]: for me, Kushy.

[00:29:28] [SPEAKER_01]: I really had fun.

[00:29:29] [SPEAKER_01]: Thank you.

[00:29:33] [SPEAKER_00]: Thanks for listening to Pods by PEI.

[00:29:35] [SPEAKER_00]: I hope you enjoyed my conversation with Shivangi

[00:29:37] [SPEAKER_00]: on infrastructure diplomacy and development.

[00:29:40] [SPEAKER_00]: How Nepal manages infrastructure aid

[00:29:42] [SPEAKER_00]: from China, India and Japan.

[00:29:45] [SPEAKER_00]: Today's episode was produced by Niranjana Rai

[00:29:47] [SPEAKER_00]: with support from Ridesh Sabkota,

[00:29:49] [SPEAKER_00]: Pibhuti Bhatta and me, Kushy Han.

[00:29:52] [SPEAKER_00]: The episode was recorded at PEI studio

[00:29:54] [SPEAKER_00]: and was edited by Ridesh Sabkota.

[00:29:57] [SPEAKER_00]: Our theme music is courtesy of Rohit Shakya

[00:30:00] [SPEAKER_00]: from Zindabad.

[00:30:01] [SPEAKER_00]: If you liked today's episode,

[00:30:03] [SPEAKER_00]: please subscribe to our podcast.

[00:30:04] [SPEAKER_00]: Also, please do us a favor by sharing us on social media

[00:30:08] [SPEAKER_00]: and leaving a review on Spotify, Apple podcasts,

[00:30:12] [SPEAKER_00]: Google podcasts or wherever you listen to the show.

[00:30:15] [SPEAKER_00]: For PEI's video related content,

[00:30:17] [SPEAKER_00]: please search for policy entrepreneurs on YouTube.

[00:30:21] [SPEAKER_00]: To catch the latest from us

[00:30:22] [SPEAKER_00]: on Nepal's policy and politics,

[00:30:24] [SPEAKER_00]: please follow us on Twitter at tweet2pei.

[00:30:27] [SPEAKER_00]: That's T-W-E-E-T followed by the number two, N-P-E-I.

[00:30:32] [SPEAKER_00]: And on Facebook at policy entrepreneurs, Inc.

[00:30:35] [SPEAKER_00]: You can also visit pei.center to learn more about us.

[00:30:39] [SPEAKER_00]: Thanks once again from me, Kushy.

[00:30:41] [SPEAKER_00]: We will see you soon in our next episode.