Nepal risks ruin because of Maoist opposition to international financial rules
Kathmandu (AsiaNews) - Nepal could be ruined and be shut out of international markets. On Tuesday, extremist fringes of the ruling Maoist party have blocked the approval of bills to crack down on money-laundering and terrorist financing as requested by the Financial Action Task Force (FATF). If it fails to approve the legislation, the country could be blacklisted as a supporter of illegal financial transactions. This could put a stop to foreign investments and sales of government bonds. At present, only North Korea and Iran are on the blacklist.
The FATF is an international body binding on United Nations member states that was created to fight money laundering and terrorist financing as well as certify financial markets.
FATF members agree to adopt laws and policies that meet the stated requirements if they do not want to see their trade with other countries banned.
Nepal joined the organisation in 2004. Four years later, the then Maoist government pledged to approve the appropriate legislation by 2010. Its fall in 2009 and the climate of instability that followed pushed FATF to postpone the deadline by two years to allow the bills to go through parliament. They are the Mutual Legal Assistance bill, the Extradition Treaty and the Organised Crimes bill.
For hard-line Maoist lawmaker Dev Gurung, the first two bills impose too many constraints on Nepal, giving rich countries too much say in Nepali affairs. For this reason, "the bills will not be endorsed under any circumstances."
By contrast, leaders in the conservative Congress Party believe Prime Minister Bhattarai is trying to gain time to protect former Maoist guerrillas at the economy's expense. If the bills were passed, many Maoist militants might be tried for terrorist offenses and organised crime.
"Maoists have misunderstood. They have not realised that the country will be blacklisted," said Dharmaraj Spakota of Nepal Rastra Bank. Unless the bills are approved, no one will want to invest in the country.
Nepal's economy is not well integrated in the world economy and is more isolated compared to other developing economies. GDP growth depends largely on remittances from Nepali migrants whose capital creates jobs at home
Meanwhile, a strike by the All Nepal Trade Federation (ANTF), a trade union associated with the former Maoist rebels, has shut down a Unilever Nepal, an Indian-owned plant that makes cosmetics and employs more than 200 people.
On 4 February, 115 ANTF-affiliated workers (pictured) padlocked the plant demanding an increase in salary.
Last time their salary was increased was in 2010.
Company sources say the company is losing about US$ 50,000 a day because of the shutdown and could be forced to close the plant permanently.