Kathmandu, March 23:

Nepal, being sandwiched between the two Asian economic powerhouses India and China, is seen as a lame duck geographically and economically.

However, history has it that Nepal has been a gateway for Indo-Chinese trans-Himalayan trade since the time of Lichhivi kings. A new debate on positioning Nepal on its ancient track and make it a transit state has gained momentum in recent times.

‘Nepal as a Transit State: Emerging Possibilities’ is a compilation of papers presented at a one-day long national seminar organised by the Institute of Foreign Affairs (IFA) in collaboration with Confederation of Nepalese Industries. It explores the positive and negative aspects of being a transit state. The book, which includes four papers that were presented at the seminar and comments on those papers, tries to get a deeper understanding of the social environment and socio-economic costs that Nepal has to bear after becoming a transit state.

In recent years, China and India are trying to expand trade and business between themselves. As the giant Asian neighbours move to improve their relations, strained for decades, two-way trade between them have also grown by more than sevenfold in the past five years. According to the latest data, exports and imports totalled $15 billion in 2005, up from about $2 billion five years earlier between the two traditional rivals.

And there is a potential for much greater trade between them. “It is an opportunity for Nepal, if it can prepare itself for a transit trade route. Could the existing road network and policies of the government help us to become a transit state?”

The answer is almost clear in the book. Without upgradation of roads and other physical infrastructure, it could be a disaster. To boost trade relations between China and India Nepal corridor could play historic and key role. Nepal also could lure them to transfer their production bases here.”

The paper presenters Tara Dahal, Dr Dilli Prasad Bhattarai, Keshav Raj Jha, and Prakash A Raj have elaborated the need of good infrastructure like road links, communication facilities, storage facilities, and business opportunities that Nepal must build. Other procedural, legal and institutional mechanisms must also be looked into if Nepal wants to become a transit state.

According to Dr Dilli Bhattarai, Nepal should give due attention to develop its northern border and link with China, and then build good trade links between Nepal-India-China, otherwise it could miss the opportunity. And for that Nepal needs a massive infusion of FDI to build roads and other infrastructures.

Comments made by Dipak Gyawali, former minister, Dr Shanker Sharma, vice-chairman of the National Planning Commission, and Atma Ram Muraraka of CNI, in response to the presented papers, are also thought-provoking. As foreign minister Ramesh Nath Pandey writes in the foreword to the book, Nepal’s offer to be a transit point linking the two biggest markets in the world is an attempt to make geography a boon rather than a curse.

The book, which is worth reading, is edited by Nischal Nath Pandey, executive director of the IFA.