Over two and a half centuries ago, Prithivi Narayan Shah proclaimed Nepal to be a yam between two boulders. In the north, the king noted the presence of the mighty Chinese empire, and in the south, he was suspicious of the expanding influence of the British, whom he saw as “cunning”. To survive in this setting, Shah counselled balance in foreign relations, vigilance on national security issues, good governance and economic prosperity for citizens.

​A link state?

​Shah’s visualisation of Nepal’s position as a yam between two boulders has often been seen as too simplistic and irrelevant to our present reality. Some writers have noted that Nepal is neither a yam nor a buffer but a “link” state between powerful South Asian nations. Others have described Nepal as a “bridge state” between India and China.

The idea of Nepal as a bridge or link state is easy to grasp, but it does not outline a course of action that connects it to Nepal’s national interests. However, the yam concept can be viewed as a theory of maintaining balance among our friends, both near and far, to define an area of intersection among the national interests of the important countries involved. Success in foreign policy, then, would imply expanding the intersection zone as much as possible so that Nepal becomes a trusted friend and partner for both our neighbours in the north and the south, as well as the west.

​Alternatively, Nepal as a link state is a fact of geography. However, to be called a yam between two boulders, Nepal’s role demands policy direction that maintains a balance in the relationship with foreign nations for both security and socio-economic development. This is not an easy task, especially in the context of a competitive cum adversarial relationship between India and China and the tension between China and the US.

The yam theory

The success of the yam theory of foreign policy relies on the stability and focus of Nepal’s internal politics and on the evolving structure of its economy. This is where the problem lies. A look at Nepal’s constitution reveals a commitment to parliamentary democratic principles and a socialism-oriented economic framework as the foundation for social and economic transformation. In fact, the constitution has at times been proudly labelled by Nepali politicians as the “best” in the world. And yet the irony is that the republican constitution has singularly failed to provide a stable government that remains in power for more than one year.

​The economy remains a mess. The country is scaling new heights in corruption; it has virtually institutionalised a working style that is a fertile ground for rent seekers and for the crony capitalist culture to evolve, to the extent that even high governmental positions are indirectly open to the highest bidder. The political class, until recently, paid no attention to this reality. Every year, remittances from millions of young Nepalis working abroad have provided the government with revenue; there was little pressure to focus on institution-building to raise investment productivity or to direct investment towards building physical infrastructure, which is crucial for encouraging the agricultural and industrial sectors. The results are there for all to see: The contribution of manufacturing to GDP has declined over the years and is now the same as it was over 30 years ago. Similarly, agricultural growth remains sluggish, while imports of farm products continue to increase each year.

​At present, we face an interesting paradox: Worker remittances are increasing, and banks are overflowing with funds available for investment, yet few borrowers are willing to apply for them. The private sector lacks confidence in the government and the “animal spirits” needed to generate new employment opportunities for roughly half a million young people who enter the labour force each year. A lacklustre private sector and a corruption-plagued public sector complement each other, creating a sense of hopelessness among the restless youth who see the betrayal of the social compact between the state and society. The Gen Z convulsion that the nation experienced a few months ago was a reflection of this reality.

Follow the guide

​Over 200 years ago, Prithivi Narayan Shah intuitively understood that the new nation he had founded would maintain balance in external relations only if the country strengthened its economy and adopted policies that would garner public support. He advised taking strong action against those involved in corruption (good governance). He also proposed importing new technology and skilled workers from abroad (technology transfer) to teach Nepali people to produce textiles for both internal consumption and exports. He wanted Nepalis to be prosperous because he thought it was the best way to strengthen the country’s resolve to deal with foreign governments with dignity and honour.

​In the language of our age, Shah’s strategy for success in foreign relations required good governance, an export promotion strategy and the introduction of new technology, even if it meant importing skilled foreign workers. Shah was also clear that Nepal, as a nation, belonged to all Nepalis and was not to be treated as property to be distributed among family members. When his brothers sought a share of the new nation as their fiefdom, Shah refused them and made it clear, firmly, that he would not entertain any such demand.

​Fast forward to 250 years, and we have a republican government that is relying on policies that are diametrically opposed to what Shah suggested before his death. There is a massive gap between form and substance in both the nation’s economy and politics. Basically, the country faces the problem of saving democracy from the so-called democrats, who seem determined to use it as a tool for enriching a few in positions of power and privilege. The economy remains lethargic and faces the paradoxical situation of deindustrialisation even before it reaches a minimum level of industrialisation. Unemployment remains chronic; the country is on the path to becoming a basket-case nation that cannot meet even its normal government expenditure.

​A weak economy, a corrupt political class and a restive young population that sees a bleak future will make it increasingly difficult for Nepal to pursue a balanced, trust-based foreign policy with friends near and far. In a world that is increasingly moving towards a transactional relationship model as the basis for international relations, nations like Nepal need to shape up before it is too late. This is where Prithivi Narayan Shah’s thinking becomes a genuine guide for the future.