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Nepal Monitor: The National Online Journal

Economic & Social Structures of Terai Conflict

Economic disparities and local politics in Terai could ultimately lead to a civil war far bigger than the 10-years of Maoist insurgency, says MAGNUS HATLEBAKK, a Norwegian economist.

>> A full-fledged conflict involving Madhesi People’s Rights Forum (MPRF) and the Maoists, could develop into a civil war of a larger dimension than the past 10-years of relatively low-scaled conflict, says Magnus Hatlebakk.
>> As the present Terai uprising is a struggle for political representation, and not for socio-economic change, we may in the future expect to see a Dalit uprising for socio-economic change, he adds.


As the Terai conflict intensifies, experts continue to make efforts to understand it fully, and donor agencies have begun to dig deeper in hopes of identifying sociological structures of the problem. The Chr. Michelsen Institute (CMI), an independent Norwegian research organization, recently commissioned a study to do just that. Dr. Magnus Hatlebakk, an economist whose research focuses on rural development, examines the conflict in the Terai in terms of economic and social structures. What follows is the summary of his brief study.


We describe, and explain, the decline in poverty in different regions of Nepal, with the main driving force being labor migration, which has contributed, first of all, with remittances, but also to a lack of surplus labor within Nepal, and thus an upward pressure on local wages. We also describe, and explain, the regional differences in economic activities, and development, within Terai. Only Eastern Terai has a large population of low-caste landless farm workers who work for a very low wage, and thus remain poor. The low paid labor force allows the farmers to spend their time on other income generating activities, and it keeps the labor costs down. This, in turn, implies that the landed households in the Eastern Terai are rarely poor, in contrast to the landed households in the Western Terai that have to do the farm work themselves. Thus, while the landless households are poor everywhere, the lower poverty rate among the landed households in the east explains the lower overall poverty rate in the Eastern Terai.

Based on our previous research on the socio-economic structures of rural Terai we conclude that the close relation between the landless workers and the landowners in Eastern Terai can be described as feudal principal-agent relationships, where the workers have no other option than accepting the payment, and working conditions, offered by the landlords.

The landlords are not only able to set contracts that leave only a small surplus for the laborers, they may even influence the laborers' outside option by collaborating with other powerful people in the village, or directly restricting the available contracts. We find, in particular, that the Terai Dalits are trapped in this kind of inferior relationships with the landlords.

These feudal relationships may also include political support for the landowners. The main traditional landlord castes are the Yadavs, together with the Tharu landlords. They now compete with hill migrants, not only as rural landlords, but also for political power at the local and national level. The relative success of the Maoists, and the new room for political, and military, struggle that has arisen after the peace accord between the government and the Maoists, may explain the recent political struggle that is led by the Terai landlords. The MPRF [Madhesi People’s Rights Forum], led by Upendra Yadav, is now in a position where they are considered as the representatives of the Terai population, and they can, due to the close landlord-laborer relationships in the villages, relatively easily mobilize the rural people for their cause. There is a power struggle between the MPRF and the Maoists at the village level, but due to the peace accord the Maoists will only to a certain extent use force. But, one has to be aware that this situation may change, and MPRF is of course aware of this as well. They thus appear to ally themselves with more or less criminal groups in Terai, and in the neighboring districts of India. A full-fledged conflict between MPRF and the Maoists, that may also include Nepali, and Indian, security forces, as well as more militant Terai groups such as the two fractions of JTMM, can develop into a civil war of a larger dimension than the past 10-years of relatively low-scaled conflict.

The way ahead must be to involve MPRF in serious discussions of political solutions that are not only acceptable to the political leaders, but do also not fuel new ethnic sentiments. The ethnic-based federalism that now appears to be the favored solution among the political leaders, in particular the MPRF and the Maoists, has the potential of fueling ethnic, and caste-based, sentiments. Any regional state in Nepal will have large minorities that may potentially meet even stronger discrimination within a federal state, than within the present unitary state.

The Terai Dalits, and other ethnic, and religious, minorities in the Terai, will not necessarily be better off in a Madhesi state ruled by the traditional Terai landlords. A federal state will also have large potential problems with redistribution of tax-income from the Kathmandu valley, and the wealthy districts of Terai, to the poorer hill districts.

As the present Terai uprising is a struggle for political representation, and not for socio-economic change, we may in the future expect to see a Dalit upraising for socio-economic change, as we have seen in states of India. To counteract such an upraising among the Dalits, and to improve their living conditions, we recommend feasible land reforms and educational programs that must be supported by local organizations for the most excluded Terai Dalits. National and international NGOs may support such organizations, but at a low scale, and they must avoid that higher caste activists, including higher ranked Dalit groups, take the control. Feasible land reforms may replicate the interventions into the Kamaiya system of Western Terai, where the poor got a small piece of land away from the village, and thus the landlords' control. The suggested Land-Bank may also be a feasible way of reallocating land to the landless based on loans where the allocated land is applied as collateral.

To read the full 24-page study, click here. This summary is republished here for its informational value and relevance to Nepal. The ideas and perspectives in this report do not necessarily reflect Nepal Monitor’s editorial views.



Posted by Editor on August 5, 2007 9:53 PM