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epresentatives and journalists visiting the United States
between August 2012 and February 2013, sections in this
chapter on political processes and crime developments in
Nepal since the period of fieldwork have been kept up-todate.
The structure of the case study is as follows. Section I
discusses the political, institutional, social, and regional
context. It elaborates the current political contestation
in Nepal, new processes of inclusion and caste and
ethnic mobilization, as well as deeply-entrenched
norms of patronage, clientelism, and corruption. It also
provides an overview and assessment of key justice and
law enforcement institutions, which have a particularly
important bearing on crime. Finally, it situates domestic
political processes within the context of the geostrategic
contestation in which Nepal finds itself. In the first part
of Section II, the chapter analyzes crime in support of
political objectives. The areas covered include the role
of crime and illicit economic activities in bandhs, party
fundraising (with a focus on the Maoist and Madhesi
groups), tender acquisition, and the usurpation of public
funds. The second part of this section reviews the role
of crime in Nepal in support of international terrorism
and geostrategic competition. In the third part, Section
II discusses economically-motivated crime in Nepal,
including tax evasion and extortion, drug production and
trafficking, illegal logging, illegal trade in wildlife, and
human trafficking. Section III discusses the donor context
and the effectiveness of various donor initiatives to
reduce corruption and promote good governance. After
the conclusions presented in Section IV, Section V offers
recommendations.
I. The Political, Institutional, Social and
Regional Context
Political Contestation, Social Exclusion, and
Corruption
For several years, Nepal has teetered between upheaval
and stagnation. Over the past two decades, its people
have witnessed the transition from an authoritarian
Hindu kingdom to a constitutional monarchy in 1991; the
incomplete democratization of the 1990s; the massacre
of members of the royal family in 2001 by the heir to the
throne; a decade-long civil war between Maoist insurgents
and the government that ended in a faltering peace
agreement in 2006; and the removal of the monarchy
altogether in 2008. Particularly since 2008, when for the
first time in centuries many marginalized groups acquired
a voice in the political sp<strong>here</strong>, the country has oscillated
between increasingly violent, politically-orchestrated
chaos and paralysis. At the core of the political upheaval is
the fundamental transformation of a deeply-rooted feudal
system to a more inclusive one, albeit one whose level of
openness and accessibility still continues to be contested.
The fitful struggle since 2006 to develop a new constitution
is both a symptom and driver of the country’s multiple
ethnic, religious, geographic, caste, and class divisions.
More than 90 languages are spoken in Nepal, and
Buddhists and Muslims are sizable minorities among the
largely Hindu population. Many of these cleavages have
been suppressed for centuries, particularly during the 20th
century when the ruling royal family squashed all but the
caste divisions. However, recent political liberalization and
democratization have strongly intensified communal selfidentification
and self-determination processes. Political
competition has played a central role in playing up and
exploiting such cleavages and “democratic” politics by
catering to the interests of ethnic, class, or caste-based
groups. Despite the political empowerment of many
previously voiceless groups, the post-2006 constitution
drafting process has become a frenzied contest to secure
special privileges for one’s own parochial group, rather
than a process to redress long-standing grievances while
unifying the country.
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Responding to the Impact of Organized Crime on Developing Countries
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