Accord Priority To Economic Diplomacy

Yuba Nath Lamsal:-- The broader national interest and security are the fundamental guidelines and objectives of any country's foreign policy and diplomacy. National security includes strategic, territorial, political, economic, energy, food, environmental and technological security, among others. In the present globalised, inter-dependent and interconnected world, economic power and competitiveness serve as a powerful lever in the realm of power politics and diplomacy. Economic interdependence and economic interest impact geopolitics and international relations more than any other factors. The level of economic engagement determines the nature of relations between countries. Economic relations around the world are becoming more complex, further complicating geopolitics. Change in the economic order also brings about change in geopolitics and international order. Empires and powers rose and fell in the annals of history with the growth and decline of their economic prowess. Once there used to be saying ‘sun never sets in British Empire’ implying dominant British power in the world. However, war bled the British economy so badly that the same global power turned out to be an ordinary power after World War II. This gave birth to bi-polar world order with the United States and the Soviet Union emerging as superpowers. But the Soviet Union could not sustain its power economically and disintegrated in 1991, turning the world into a US-led unipolar order, which continues to exist till now. The geopolitical scenario and world order seem to be changing with China’s impressive economic rise. Thus, the economy has played a greater role in determining the world order and international power equation. Politics and economics are two sides of a coin or, in other words, ‘Siamese twins’. Economic security encompasses multiple security dynamics including trade, energy, food, environmental, developmental, and infrastructure security. Accordingly, countries have accorded priorities to economic diplomacy seeking to protect and promote economic interests. Nepal’s constitution has clearly stated the components of national interests and has stated that national interest determines the principal guidelines, goals and priorities of foreign policy and diplomacy. Economic interests prevail more in the world of diplomacy as national power is determined not only by military capabilities and political influence but also by economic might, trade competitiveness, technological innovation, investment attractiveness, and integration into global markets and value chains. For developing countries like Nepal, economic diplomacy serves as a critical instrument for mobilising external resources to support domestic development. Traditional diplomacy focuses primarily on political and strategic relations and is responsible for political representation. With the dawn of the 21st century dominated more by economic interests, economic diplomacy has risen as a powerful and popular tool in the sphere of international relations. This is more so for small and developing countries, including Nepal, because these countries do not possess other leverages to influence in the international platforms and protect national interest. In fact, economic diplomacy provides Nepal with a strategic alternative to promote the economic interests of the country which includes attracting investment, expanding export trade, promoting tourism, securing technology transfer, ensuring safe employment opportunities, mobilising development assistance, and connecting Nepal’s economy with global value chains. Francis F Bernard, author of “Economic diplomacy & parallel diplomacies: History, stakeholders, tools”, is of the view that economic diplomacy is not an alternative approach and tool in the world of diplomacy but an integral part of diplomacy necessitated by the modern-day reality. Economic diplomacy is the multi-dimensional area and approach that recognises crucial role of economic factors and actors in the field of international relations. Thus, economic diplomacy plays central role in modern statecraft and diplomacy. In other words, economic diplomacy is the use of political influence to achieve economic interests. Sometimes it may be vice versa, as economic leverage is used to gain political interest in international politics. Economic diplomacy is a dynamic concept and covers wider areas of international engagement. It seeks to devise creative ways of international engagement in dealing with issues related to economic interests. As economy and technology have risen as newer and powerful security driver, economic diplomacy can be the right tool for Nepal to ensure its security, development and peace. As a country struggling to upgrade from the status of the least developed country, Nepal desperately needs more capital and technology to accelerate its tempo of development. In the past, Nepal heavily relied on grants from its development partners. Donors have drastically cut the size of grant in recent years, thus requiring us to focus more on attracting soft loan, investment and technology transfer. Hydro power, tourism, agriculture, mines and minerals are some lucrative areas for bringing in external investment provided we expedite our diplomatic efforts through economic and public diplomacy. Efforts have also been made in this regard but the outcome has not been satisfactory for lack of budget, human resources, diplomatic outreach and proficiency. Nepal’s diverse climatic conditions, unique geographical features and cultural heritages are great attractions for tourists. But we have not realised the optimum benefits in the tourism sector. Only slightly over 1.1 million tourists visited Nepal last year and their length of stay was relatively short. In our next-door neighbour India, over 14 million Indians visited other countries in 2025 while only 292,438 Indian tourists visited Nepal, which is about 2 per cent of Indian tourists visiting abroad. Similarly, over 20 million foreign tourists visited India in 2025. In the same period, over 154 million tourists arrived in China and almost 145 million Chinese tourists visited other countries in 2025. But the number of Chinese tourists visiting Nepal was a meagre 58,684. If we attract at least 10 per cent of the total Indian and Chinese tourists to Nepal, the number could be over 15 million. In total, the number of tourists visiting Nepal annually could reach over 30 million. We have potential, and we could achieve this goal if we devise appropriate and suitable strategies for different countries and work concertedly. We, thus, need to reorient diplomacy, focusing more on economic diplomacy for our interests and development. (The author is a former chief editor of this daily and a former ambassador. lamsalyubanath@gmail.com) This article originally published on July 22, 2026. You can visit: https://risingnepaldaily.com/news/83832