Nepal's Maoists Turn Capitalists

Former Rebels Promise to Embrace Capitalism and Revive the Economy

Apr 23, 2008

Maoist leader Prachanda promises to embrace capitalism in an effort to revive Nepal's battered economy during a meeting with the country's business leaders.

Now that the Maoists have won majority in Constituent Assembly elections in Nepal, debate over the way former rebels would handle the country's economy is growing.The anxiety is largely due to the former rebels not so friendly relationship with the business community during their 10 year armed struggle against the Government.

Rocky Relationship

During their 10 year long violent struggle against monarchy and the Government, the Maoists routinely attacked businesses and factories, often to extort money and material support to keep their campaign running. In remote parts of the country where the rebels had managed to oust Government control and influence, there was a steady decline in economic activity and rise in unemployment.

As a result, growing number of laborers from the remote districts began migrating to the Middle East and India in search of jobs. With the violent struggle growing, laborers from across the country (not limited to the areas under Maoist influence) began to leave for Saudi Arabia, Oman, United Arab Emirates, Qatar, and Bahrain.

From 1996 to 2006, business environment in Nepal suffered; country’s dependence on remittance money grew. In two years since the Maoists signed peace agreement, Nepal’s economy is yet to revive. Road to recovery has been slow and with the Maoist victory in the elections, some observers believe that unless the former rebels are able to convince the business community that they are willing to work together to revive the economy, Nepal’s economy will continue to suffer.

Although blessed with stunning natural beauty and cultural diversity, Nepal is one of the poorest and least developed nations in the world. Based on the data provided by CIA World Factbook, one third of Nepal’s population lives under poverty. GDP Per Capita is $1,100 (2007 estimate) and unemployment is staggering 44% (2004 estimate).

Nepal lacks adequate infrastructure and skilled labor for large scale manufacturing plants. The country depends heavily on tourism and foreign aid, remittance from expatriate population to fund the budget.

Effort to Calm Anxiety

In an effort to calm down the anxiety, Maoist leader Prachanda, who will most likely lead the new government, has said that the party will embrace capitalism. According to The Hindu, he made the announcement while meeting with country’s business leaders. He also met with Federation of Nepalese Chambers of Commerce and Industries leaders to set the record straight on growing speculation that the Maoists will move towards nationalizing property as soon as they form a new government. Baburam Bhattarai, Maoist party’s second in command and the economic bureau chief Krishna Acharya was also present during the meeting.

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