Once again President of Nepal Communist Party – Unified-Marxist-Leninist (CPN-UML) KP Sharma Oli, 72, became Nepal’s Prime Minister on July 15, 2024, after his predecessor Pushpa Kamal Dahal failed to prove a majority in the Nepalese Parliament, the House of Representative (HoR). In the 275-member HoR, the Nepali Congress is the largest political party with 89 seats while Oli’s CPN-UML is the second largest party with 78 seats. To form the government, Oli needed the support of a minimum of 138 members, but in the floor test, he got the support of 188 lawmakers, including that of the Nepali Congress which was almost two-thirds of the lawmakers in the parliament.

After being sworn in as the Prime Minister, Oli said that his new government would help bring political stability to the country, besides improving the economy and creating jobs. He also said that he would try to address the outstanding issues like the border problem in Kalapani, Lipmiyadhura and Lipulekh areas with India.

Indian Prime Minister Narendra Modi hoped that India would work closely with Nepal to strengthen the bonds of friendship. He said that he was looking “forward to working closely to further strengthen the deep bonds of friendship between our two countries and to further expand our mutually beneficial cooperation for the progress and prosperity of our peoples.”

Oli’s greatest challenge at the moment is to balance Nepal’s relations not merely between India and China, but also between India, China and the USA backed by the European Union. India has tremendous influence in its backyard in Nepal because it is surrounded on three sides by this country. Besides, the cultural, historical, open border system and economic factors have also helped India to have a stronger influence in Nepal.

After 2008, China’s interest in Nepal grew to such an extent that it started competing with India on several fronts in Nepal, which is a major cause of anxiety for this country. Over and above, the USA which earlier used to deal with Nepal through an Indian lens has now started taking a direct interest in Nepal through the Millennium Challenge Corporation (MCC) that challenges China’s Belt and Road Initiative (BRI) projects in Nepal.

This multi-cornered competition among the three major power blocks – India, China and the USA – has made Nepal an open ground for the play of foreign forces in this country. It is mainly on account of political instability that the foreign powers have become active in Nepal.

The era of political instability in the country began after the end of the party-less Panchayat system and the restoration of multiparty democracy in 1990. Following this political development, the King who was an absolute monarch and was above the constitution was forced to work under the constitution. The situation aggravated and political instability became the order of the day when the 239-year-old monarchical institution was abolished in 2008. Ever since then no government on average lasted for a year and a half. Oli’s government this time is 14th in succession after 2008. He has become the fifth Prime Minister in the last five years.

One of the impacts of political instability in the country is that the leaders mostly remained engaged in a political game, struggling to make or unmake a government for their survival. Nepal which was almost on par with China and India until the 1950s or 1960s now remains one of the poorest countries in the world, though it is likely to graduate from a Least Developed Country (LDC) to a developing country in November 2026. The per capita income of the country is still US $ 1337 (2022). Though rich in water resources, it has not been able to generate more than 5 per cent of its hydropower potential of nearly 40 gigawatts.

Amidst political instability, only the old faces one after the other have been able to run the governments. In the last three decades, there has been repetition and re-repetition of the same five or six faces as executive heads of the governments. Those leaders are tested and retested time and again. Therefore, it is not difficult to understand how they would work. For power, these leaders have made ideology a mockery and they can align or shun their relations with other parties at any time if that serves their vested interests. Since the leaders are not sure how long they would remain in power they are involved in several scandals like the Bhutani refugee, Lalitaniwas, and Giribandhu Tea estate in recent years.

Political instability has not only spoiled the investment climate, but it has also hobbled the economic growth of the country. As such millions of youths in the country have been forced to leave the country for employment in different destinations in the world, including in Malaysia, South Korea and the Middle East.

In such moments of political instability, political leaders even sign agreements with foreign countries that could have long-term negative impacts on the future of the country. It was unfortunate that just certain hours before he lost the confidence vote in the Parliament, Pushpa Kamal Dahal gave a nod to the agreement to connect Nepal with China by rail under the BRI of China, though knowing well that its geo-political implications could be serious. Before this, Nepal had signed a transit agreement with Beijing when Oli was the Prime Minister in his first term in 2015-16 in his effort to reduce the country’s dependence on India.

If history is any guide, it is least likely that the present government under PM Oli will last long and also that political stability will be restored in the country in the foreseeable future. As per the agreement made between Prime Minister Oli and Sher Bahadur Deuba, the two leaders will be Prime Minister for a half period. On this term, Oli has become Prime Minister first and he will give way to Deuba later to become Prime Minister until the next elections in 2027. But the fact is that no leader in the past who shared power for the first time handed over power to the other. Given this fact, it will not be surprising if Nepali Congress leader Deuba pulls the government under Oli as and when the situation favours him. Thus, political instability in the country is not likely to go at least in the foreseeable future.

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