If federal lines are drawn to create sub-national governments on majority rule of ethnicities, minor ethnic population or communities may always be a subject of repression. Subsequently, a new conflict of interest may emerge between the ‘new’ and the ‘old’ middle classes that may end up breeding antagonism in the community.
BY Dr Surendra R Devkota
Dr Surendra R Devkota “The establishment of a Civil Constitution in society is one of the most important facts in human history.”- Kant
After the election of Constitution Assembly in 2008, Nepal entered into a republican set up, and now writing a new constitution with principles of federalism is the major mandate for the Assembly. There are expectations that Nepal will go along with democracy and federalism to pave the way for sustainability by advancing social, economic and ecological capitals and addressing injustices and inequalities.
From the early pioneer federal constitutions in the United States (1776), Switzerland (1848), and Canada (1867) to recently federated system of governance in Belgium (1993) and Ethiopia (1995) nearly forty percent of people in more than two dozens of countries ( Argentina, Australia, Austria, Belgium, Bosnia-Herzegovina, Brazil, Canada, Comoros, Ethiopia, Germany, India, Malaysia, Mexico, Micronesia, Nigeria, Pakistan, Russia, St. Kitts and Nevis, South Africa, Spain, Switzerland, United Arab Emirates, United Sates of America and Venezuela ) constitute the federal political systems. The stylized model of federal system in these countries ranges from a centralized governance like India to highly divided federalism such as Canada and Spain that comprises of a wide variation of federal institutions, politico-economic prospects and practices, and devolution of authority from center to sub-national governments. Nepal, after the abolition of the monarchy in May 2008 by the 601-member Constitutional Assembly, may join the federal club of the nations, only if she adopts the federal system of distribution of powers and responsibilities in the forthcoming constitution.
“Federalism refers to a means of governing; a polity that grants partial autonomy to geographically defined subdivisions of the polity” mentions by Feeley and Rubin in their book “Federalim” (2008). It implies the devolution of authority by geographical divisions that will also embrace the socio-political capital and resources including individual identity to build up a political regime. Federalism will address the sources of political identity and restore as well as modulate emotive feelings of people and community in particular areas. But federalism and decentralization are not mutually exclusive. Feeley and Rubin say, “While federalism generally results in a fairly high level of decentralization, decentralization does not necessarily lead to federalism.” Federalism grants sub-national governments a final authority in some areas of governance, while decentralization is simply a ‘managerial strategy’.
In order to build up a federal character at least two levels of government are required: one at national level and other at sub-national level. One of the noted 20 th century philosophers of federalism, Daniel Elazar explicitly explored about federalism in his “Exploring Federalism”. Elazar explains that federal principles are rooted in combing both “self-rule” and “shared rule” that links individuals, communities, and polities and maintain both unity and diversity with appropriate “structure” and “process”. It involves both creation and sustainability of unity and the devolution of power in the name of diversity like in Switzerland. But one has to be aware of the fact that it may lead to disunity like in Iraq. So Elazar further explains that federalism streamlines both organization of power and pursuit of justices. It may fail if federalism is imposed upon on societies if they feel as subordinate of the central government.
The conventional wisdom of a federal government is as a question of constitutional law that balances between the national government and the sub-national governments is cast in terms of rights, powers, and judicial determinations. The basic assumptions of federalism involve the requirement that a federal government needs a constitution so that the sharing of authority essential to the federal principle can be laid down and maintained.
Since federalism is to create national and sub-national regimes with explicit devolution of power to pave for a better socio-political, economic and environmental development, economics of federal structure is very crucial to sustain the spirit of federalism. To which, both political and economic federalism need to be considered.
The principle of economic federalism prefers the most decentralized structure of government capable of internalizing all economic externalities, because
it encourages an efficient allocation of national resources;
it fosters political participation and a sense of the democratic community; and
it helps to protect basic liberties and freedoms.
For example, the central government can provide public goods and correct spillovers in either of two ways: provide the goods directly or mandate outcomes or subsidize or tax the local governments to provide the efficient levels of the activity on their own. In many cases, central governments use both approaches. For instance, in the United States, national defense, social security, and environmental protection are directly provided or mandated by the federal government, while low income assistance, interstate highways, and basic research are largely managed through central government price subsidies or matching grants to state and local agencies or nonprofit organizations.
Fiscal decentralization in general reduces the role of the central government and increases that of the sub-national governments such as regional or state and local. Take a look at India’s political economy since 1990s a Nehruvian centralized command is substituting by the federal market economy. As of now India’s regional states enjoy considerable political and economic autonomy.
In a federal state, obviously, there could be a tug of war between the central and sub-national governments on taxation and revenue sharing. In general federal model public borrowing could be open to all types of government. Federal government will have major tax base in these areas such as customs and excise, corporate income tax, personal income tax, while sub-national governments will share taxes on consumption and sales tax and partially in personal income. The sub-national governments may have to rely on some further sources of revenue such as property tax that may alone be a heavy burden for local residents to sustain the sub-national governments.
A politico-economic debate about the efficacy of horizontal versus vertical equity will continue. It should be noted that inter-state production and consumption of goods with distorting taxing policy may lead to the fiscal war. Consequently, spirit of regional equilibrium and competition may be difficult to achieve and that may spur the income inequalities across the states. One should be clear that fiscal federalism or complete decentralization does not mean to weaken the central government but to make the local government much more responsible to the needs of people. Therefore, it would be sensible move to allocate revenue powers and expenditure responsibilities in the constitution.
Why Federalism in Nepal?
As Nepal turned into a republican state in 2008 socioeconomic development philosophy and policies including institutional reforms are necessary to alleviate rural poverty. Villages have been relegated to the bottom in terms of availability of socioeconomic development institutions as well as resources where the crux of problems exists. This needs to be reversed in order to sustain the village economy and to reduce the level of poverty. Therefore in order to break the vicious cycle of poverty vis-à-vis under-development, each village unit should be assigned as a socioeconomic development unit. To complement the village economy, a district unit can play a developmental planning and monitoring role. The village and district are politico-administrative units, which have to deal with lots of socioeconomic problems, but have an insignificant resources and rights. Institutional reforms to strengthen the local government units are essential so that they will be complemented by economic and development planning, and implementation facilities. Once local units are ensured through basic socioeconomic developmental structures like health clinics, basic education, technical assistance to farmers, local community infrastructure, and conservation programs, local communities would become sustainable with reduced income disparity. Institutional arrangements are the necessary foundations for vibrant economic systems, poverty alleviation and sustainable development cannot take place without them. To this end, philosophy of federalism is gaining momentum in Nepal.
In a traditional society like in Nepal, particularly the roles of elites, middle class and ordinary citizen and political interplay amongst themselves is very crucial to sustain both democracy and federalism. Elites could manipulate the political power in their favour and enjoy today at the cost of future generations. In general, elites do not like democratic process that empowers citizens, which is witnessed also in Nepal. Middle class, a buffer between elites and citizens, has a potential to change from non-democracy to democracy or vice versa. If a so-called upper section of the middle class colluded with elites like Nepal’s new millionaires emerged after 1990 due to political business and profiteering of rent seeking policies, ordinary citizens’ needs and demands could be undermined. Consequently, transitory democracy becomes uncertain due to citizens’ threat of revolution, and the country floats amidst the waves of democracy and non-democracy.
Federalism to be scripted in the forthcoming constitution should correct all the misdeeds of the past by overhauling the old top-down socio-political structures and devising a new vision to drive economic development, end injustices and inequalities, and institutionalize democratic values. While restructuring, sub-national or local governments should get a primary focus because rural economy needs to be self-sustaining so that people will enjoy their politico-economic rights, utilize the resources, and build-up a system of accountability. Federalism should herald a de jure political at national and sub-national governments to establish socio-political sustainability.
Nepal has entered in to a new dilemma of creating an optimal politico-economic jurisdiction that includes optimal size, structure and scope of each sub-national government in the constitution. It may turn an opportunity for establishing a socio-political just society as well integration of regional resources for economic development, or may push the nation into a cycle of conflict over ownership of resources and /or further continue of political identity struggle.
Major political parties in Nepal such as the Nepali Congress, and the left ideologue like the Nepal Communist Party (Unified Marxist Leninist) and the Unified Communist Party of Nepal (Maoist) have shown their commitment in the interim constitution of 2008 to create a federal structure. But the federal model is yet to be worked out. One version of federal structure proposed by the left parties such as the Maoist is ethnicity based federal model, and Nepali Congress has yet to publish its model, but the Nepali Congress has already decided to restructure the country in its central committee meeting few months earlier.
Ethnicity based federalism in Nepal could be very complex. The Census of 2001 by the Central Bureau of Statistics of Nepal records 103 castes and several dozens of ethnic groups, and 106 languages and dialects. Many languages or dialects are spoken by a small number of people; for instance, 58 languages are spoken by less than 10,000 speakers, and 28 by less than 1,000. Likewise, out of 23 million people, the 2001 census also reveals 80.6% of the population as Hindu, 10.7% Buddhist, 4.2% Muslim, 3.6% Kiranti, and the rest as belonging to other religions (Christian, Jain, and Sikh). The distribution of different ethnic communities and their socio-cultural diversity is unique in Nepal. The heterogeneous mixture of all ethnic population in one society makes it impossible to have an absolute majority of one particular ethnic group in existing political set up such as village development committee. Based on such realities it would be very difficult, if not impossible, to delineate ethnicity based federal structure for a multiethnic, multicultural, multilingual, and multi-religious nation like in Nepal.
If federal lines are drawn to create sub-national governments on majority rule of ethnicities, minor ethnic population or communities may always be a subject of repression. Subsequently, a new conflict of interest may emerge between the ‘new’ and the ‘old’ middle classes that may end up breeding antagonism in the community.
Whether federalism is the only division of population and territory? Philip G. Roeder in his book “Where Nation-States Come from” (2007) argues that federalism is not division of population according to the communal membership. Territorial division based on the community is segmentation (Box) which “divides the population into separate communities or people and allocates members of these community different decision rights that will create a ‘segment –state’. Segment –state is nothing but ethno-federalism – Lenin’s doctrine of early 20 th century employed in the formation of Soviet national republics. The communist ideologue parties in Nepal like Maoist and to some degree the UML are also advocating the ethno-federalism which seems a parallel policy of Vladimir Lenin’s step.
Box
No Communal partitioning
No territorial partitioning
Territorial partitioning
Unitary
Federal
Communal partitioning
Corporate
Segmental
Roeder advances his discussion in both making and breaking of the Russian Federation and tug-of-war between nation-state and segment-state. The conflict between the nation-sate and segment-states ended up by claiming a sovereign state by segment-states in late eighties and early nineties. Federalism in modern Russia has been contractual after the introduction of the Federation of Treaties in 1992 and in 1994 which has consolidated the power of the president at the center and limited the segment-state’s decision making authority as well as excluded the ownership of natural resources under their jurisdiction. The combination of territorial federal and traditional ethno-federal principle causes conflict since the latter promotes the disintegrative forces. As of now, Russian federalism is endangered by Putin’s centralization of presidential power since 2000 2 and Russia has de facto federalism.
Nepal could also draw a very recent and real life experience from Ethiopia. While creating an ethno-federalism in 1995, the ruling Ethiopian People’s Revolutionary Democratic Front has imposed an ethno-linguistic “holding together” federal. All languages are equally recognized. Every national group has the right to develop and promote its own culture and preserve its own history and they are entitled to a full measure of self-government including their own institutions within their territories and representation in regional and federal governments. The Ethiopian experiment is unique in that it allows for the possibility of self-determination. Subsequently, many groups are making claims for self-determination, language, and cultural recognition as well as for their own territory in the construction of a novel form of federalism based largely upon ethnic identities. In fact, Ethiopian ethnic federalism seems pursuing the Soviet-style version of multinational or ethnic federalism that suits only in non-democratic system, and democracy and federalism may not go together at all in Ethiopia. Ethiopia today lacks two basic pre-conditions for mitigating ethnic conflicts in federal states: a democratic system of governance and an inclusive and sustainable pan-national identity.
Since Nepal has both social and geographical diversities, exclusive consideration of social diversity in the federalism may be incomplete. Differences of socio-political attributes such as economic interest, religion, race, nationality, language, historical background, dissimilarities of political institutions produce a demand for federal system of diversities, which could be counter-demanded by unitary state. Henceforth, the federal system is a compromise between these two demands, and the federal constitution draws the lines of this compromise. Federalism is a compromise between centripetal and centrifugal forces but it should embrace the structural- functional characters. Structure in a federal system is geographical patterns of regional diversities and constitutional instrumentalities to preserve them, whereas functionality is the process of national and sub-national governmental progress to maturity. The fundamentals of federalism must combine both ‘structure’ and ‘processes of government to streamline the federal character of any polity. For instance, in Switzerland, Canada, and USA both structure and process are far better than in Italy and Austria. India lies in the middle of these.
The only primary factor of federation is supremacy of the political federal value and political commitment for ideological federalism that aims to manifest destiny and national greatness will success. Certain secondary and tertiary factors such as language and ethnic balance may be superficially be favorable for federalism but are not sufficient to ensure success as it has been proven in Kenya, Tanzania, Uganda, West Indies, Malaysia, Rhodesia, Nyasaland, and Ethiopia.
Based on above discussion of different aspects of federalism and that of its need in Nepal, the Constitutional Assembly’s concern is both creating and sustaining the federal structure. Therefore any federal restructuring model needs to be examined by:
its scientific basis,
economic feasibility, and
Social acceptance in order to ensure the model’s applicability and sustainability.
To which, spatial information of country that includes geophysical and natural resources profiles could be utilized to employ for both scientific and economical analyses. Meanwhile, society needs to be fully aware of both rights and resources available at their disposal so that they could crave a path of sustainable development. As mentioned earlier, the need of federalism in Nepal is for a balanced socioeconomic development and justified use of resources as well as to reduce the increasing gap of income inequality and to complement such desires every federal state must have access to resources under their jurisdiction. For example, natural resources such as forest and rivers have been the victims of rent seeking policies at the center level because a greater amount of natural resources increases the number of entrepreneurs engaged in rent seeking and reduces the number of entrepreneurs running productive firms. If that trend continues, Nepal may end up as one of the recent countries that exemplify the so-called ‘curse of natural resources’. Curse of natural resources implies that countries with huge natural resource endowments tend to grow more slowly than resource poor countries. Hence, to sustain politico-economic federalism in Nepal country’s spatial information could serve a strong foundation. To this end, ecological footprint analysis may be useful criteria for creating the federal states.
The notion of ecological footprint (EF) is to measure biophysical resource requirements in order to sustain a given regional population in terms of land areas. The EF is not to determine the maximum human population that an area can support, but to examine the productive territory actually used by resident. Since all economic and individual activities have impacts on the earth by means of use of resources and services of nature as well as generations of wastes, and these impacts are converted to biologically productive land area. So EF calculates the need of natural capital to maintain the current material throughput of economies. The EF calculation is based on resources flows, resources consumed, and waste flows, and such flow and consumption patterns can be converted into the biologically productive land areas.
Creation of federal states with respect to the dynamics of both natural resources endowment and demography could pave the way for sustainable development. The mission of federalism is not only to exercise certain socio-political rights by political parties and their entities but it also should allocate economic rights to sub-national governments. Political gerrymandering in the name of ethno-federalism could end up a situation where federalism and democracy may not be compatible like in Ethiopia or even in contemporary Russian Federation. Repetition of a failed dogma of ethno-federal models as in Ethiopia and Russia could be a futile exercise.
Ethnic diversity in Nepal is one of the salient social capitals that must be enhanced for advancing socioeconomic development. Equating ethnic diversity with a piece of federal land may not deliver a sustainable society. Therefore creation of new federal states should not only be on scientific basis but also be economically viable and socially acceptable in order to minimize social, economic and ecological injustices and build up an equitable society. Henceforth, ecological footprint approach may serve a compatible formula for creating federal states with socio-political, ecological and economic rights at sub-national governments, which will provide an ample opportunity to enhance social, economic, and ecological capitals at different scales across the country. To this end, optimal basis for creation of federal states could be based on the major river basins like Koshi, Gandakai, and Karnali river watersheds. Nepal in 21 st century must avoid the 20 th century mistakes such as ‘curses of natural resources’ and ‘tragedy of commons’ and pursue a path of prosperity and sustainability.
(Excerpts from the Devkota’s forthcoming book “ Nepal in 21 st Century”. Write to the author: [email protected]).
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