Nepal to sign framework deal on OBOR

May 09, 2017

The Kathmandu Post, Anil Giri, 9th May 2017, Kathmandu

After blowing hot and cold for months, the government has decided to become part of China’s Belt and Road Initiative, a flagship project of Chinese President Xi Jinping to build a modern-day Silk Road across Asia, and is set to sign a framework agreement this week in Kathmandu.

Beijing is investing billions of dollars in infrastructure projects including railways, ports and power grids across Asia, Africa and Europe through its One Belt One Road (OBOR) initiative.

A Cabinet meeting on Monday decided to sign the framework agreement on OBOR this week just ahead of the OBOR Conference in Beijing on May 14-15.

The government is set to sign a framework agreement after long negotiations with China keeping Nepal’s national interests at the centre, Minister for Foreign Affairs Prakash Sharan Mahat told the Post. “We will sign a framework agreement this week”. Foreign Secretary Shankar Das Bairagi and Chinese Ambassador Yu Hong are set to sign the framework agreement.

“Once the agreement is signed, we will start negotiations with Beijing on various sectors included in the OBOR, namely infrastructure (rail, road), investment, trade, commerce, using Chinese and other ports, currency arrangements, financial institutions and others,” said Mahat. “We have tried our best to keep Nepal’s interests at the centre. Once we sign the framework agreement, we will gradually enter into negotiations with China on other sectors,” he said. Signing of the framework agreement will pave the way for Nepal’s link to India and Europe, said Minister for Information and Communications Surendra Karki after Monday’s Cabinet meeting.

A high-level delegation led by Deputy Prime Minister and Minister for Finance Krishna Bahadur Mahara is set to participate in the May 14-15 OBOR Conference. Two other ministers and senior government officials will accompany Mahara.  The Nepali delegation will sign a memorandum of understanding during the conference in Beijing.

Beijing has agreed to Nepal’s request regarding the free trade agreement between the two countries.  Kathmandu had said that such an agreement would not bode well for a country like Nepal which has a small economy compared to that of China. “As a small economy, Nepal cannot sustain customs and duty-free access to thousands of Chinese goods, and given the least development stature, economy of Nepal will be suppressed by that of China, so we had requested the Beijing to take our request into consideration,” officials said.

On currency related matters, China had proposed to invest and doing business in Chinese currency, but the Nepali side had requested to make it more flexible. The Chinese side has agreed to do transactions either in rupee or dollar, an official said.

“Some other issues like Nepal getting access to Chinese ports, including one near Iran, and rail and road links will be discussed with the Chinese side later,” said the official.

Nepal had agreed, in principle, to become part of China’s Silk Road initiative in 2014. China the following year had sent a proposal to Nepal seeking its participation in OBOR, after which negotiations had started.  During his recent visit to China, Prime Minister Pushpa Kamal Dahal had assured the Chinese leadership that Nepal would support Chinese President Xi’s flagship initiative and that Nepal would attend the OBOR Conference.