Nepal PM on $1 billion loan mission to India

NEW DELHI // The prime minister of Nepal arrived in India yesterday, sparking reports he is seeking a loan for his country's struggling economy.

Baburam Bhattarai, who came to power in August, left his nation mired in political deadlock, although some signs of progress were starting to emerge.

Mr Bhattarai is Nepal's fourth prime minister in as many years.

His arrival in India came amid media reports that he was seeking a US$1 billion (Dh3.67bn) loan.

His four-day visit was also aimed at rebuilding ties between his ruling Maoist party and the Indian government, which have often been strained since the Maoists came to power in 2008 following a decade-long civil war.

In an editorial for The Hindu newspaper in India, Mr Bhattarai described the trip as a "goodwill visit".

"Instead of harping on old disputes, Nepal would like to look forward and create an atmosphere of cooperation," he wrote.

Following the Maoists' surprising - and resounding - victory in Nepal's first fully democratic elections in 2008, India feared it would lose some of the influence it has historically exerted over Kathmandu.

The concerns appeared to come true when the first Maoist prime minister, Puspa Kamal Dahal - known by his nom de guerre, Prachanda, meaning "fierce" - broke with tradition and travelled to China for his first state visit instead of India. When Prachanda was forced to resign in May 2009 over a failed attempt to fire the army's chief of staff, he publicly blamed back-room meddling by the Indian government.

"At the time, hardline Maoists took a hostile position on India because it had so much power over the region," said Nihir Nayek of the IDSA, a think tank based in New Delhi.

"But a lot of the Maoists' anti-India statements were tactical. They were trying to generate public support or appeal to hardline factions within the party.

"In fact, every political party understands the critical role India has to play in resolving the peace process in Nepal."

That peace process has been a lot more arduous than many had hoped.

Three deadlines for drafting a new constitution have already been missed and the leading parties have failed to agree on how former Maoist fighters can be integrated into the army, as promised under the 2007 peace accord.

The lack of progress has brought down a succession of governments.

Following a government collapse in June 2010, it took 17 elections in parliament to choose a new prime minister. The eventual winner, Jhalanath Khanal, lasted less than six months in the job.

Mr Bhattarai is seen by many as the best hope yet to break the deadlock.

One of the more moderate voices in the Maoist party, he agreed to hand over control of the Maoists' weapons caches in September and was working hard to hash out an agreement on army integration.

Another deadline looms at the end of November but it was widely expected that the parties would agree to a further extension.

Mr Bhattarai, who attended university up to PhD level in Indian universities, was seen as a more acceptable candidate by the Indian government, although officials deny they have ever tried to interfere with Nepal's internal politics.

"India is willing to do business with whatever government they put up," said M Rasgotra, a former Indian ambassador to Nepal.

Tensions remain, particularly regarding the trade imbalance, which Mr Bhattarai said was seven-to-one in India's favour, which he said was "not sustainable".

Foreign visitors have been lining up to visit New Delhi in the past month.

The leaders of Afghanistan, Vietnam and Myanmar have all made an appearance in recent weeks, reflecting India's growing regional and financial clout.

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