This brings to a close days of hectic negotiations and speculations over the fate of BIPPA, which India has sought to protect security for its investments in Nepal.
Minster for Industry Anil Kumar Jha and Indian Finance Minister Pranab Mukherjee signed the agreement at Hyderabad House, the government venue for high-level negotiations in India. Prime Minister Baburam Bhattrai and his counterpart Manmohan Singh were present at the signing.
The two sides also agreed to a $250-million line of credit to finance infrastructure projects such as highways, airports and bridges. The credit line was announced during President Ram Baran Yadav’s state visit to Delhi last year. In the run-up to the visit, PM Bhattarai is known to have pitched for a $1 billion and was expecting even more, government sources said. India responded positively, according to officials.
Another agreement that was expected to be signed–Double Taxation Avoidance Agreement (DTAA)–did not materialise. The PM said the DTAA, which was on the agenda, could not be signed because of ‘miscommunication’ between the two countries.
The DTAA is expected to be inked in the near future in Kathmandu during the visit of Indian Finance Minister Pranab Mukherjee, an official said.
According to the terms of BIPPA, investments from either country in the territory of the other country are to be accorded national treatment (NT) and most favoured nation (MFN) treatment.
Provisions have also been made in the agreement for grant of compensation to the investors whose investments suffer losses owing to war, armed conflict and a state of national emergency. This was the most contentious issue and a section of the bureaucracy had expressed reservations over the clause, fearing that it is open to a broad interpretation and could lead to huge liabilities to the Nepali state.
According to a Nepali official who was part of the bilateral talks, many more issues will be covered in a joint communiqué.
On his part, Bhattarai said he had assured India that Nepal wants good relations with both its neighbours, and ‘will not allow Nepali soil to be used against its neighbours’. During the one-on-one meeting between Bhattarai and Manmohan Singh, the two talked about expanding economic cooperation.
‘A calculated gamble’
Following a significant bilateral deal to provide protection for Indian investments in Nepal, PM Baburam Bhattarai said he was well aware that the Bilateral Investment Promotion and Protection Agreement (BIPPA) could invite criticism in Nepal, clearly indicating that the move was a calculated political gamble.
“I took the risk. I am well aware of the possible backlash. This was my gamble and it will pay off,” Bhattarai said.
After talks with Indian PM Manmohan Singh and other top leaders, Bhattarai said groundwork has been laid to build a new relationship between Nepal and India.
“This was important because there was some misunderstanding between India and Nepal, especially with our party. Though I came (to New Delhi) as prime minister, they saw me as a Maoist prime minister. I succeeded in explaining to them our position.” He met Finance Minister Pranab Mukherjee in the evening and External Affairs Minister SM Krishna in the morning.
The PM said he was much impressed by the consistency of messaging by all the Indian leaders, which showed their common concerns.
In his 30-minute one-on-one with his Indian counterpart, Singh expressed his concerns over the peace process, security issues and economic cooperation.
The Indian side was open to discuss the 1950 Treaty of Peace and Friendship. The two sides agreed to approach it in a new way with the formation of an EPG (Eminent Persons Group), which will have four persons from each side. The EPG will also look into broader bilateral issues, such as border and economy. It will hand its proposal in a year.AKHILESH UPADHYAY & MAHESH ACHARYA from ekantipur