Nepal’s foreign policy options in its immediate neighbourhood

Gunjan Singh, Research Associate, Institute of Chinese Studies

Nepal was one of the first countries to welcome the Chinese Belt and Road Initiative (BRI). It expressed its desire to be a part of the project hoping to benefit from the investments in infrastructure. This was perceived as an attempt by Nepal to reduce its dependence on its southern neighbor India.

In the past two decades, there has been an increasing effort within the Nepalese leadership to find ways to get out of the Indian sphere of influence. The most logical alternative, then, is China.

Nepal is a landlocked, small Himalayan nation, which is looking for ways to assert its “independent” foreign policy by maneuvering between India and China. This, in turn, is creating a lot of concern within the Indian foreign-policymaking circle. However, the most pertinent question is whether Nepal can ever be able to move out of the Indian sphere of influence completely

In recent years, there has been a lot of discussion about the increasing Chinese inroads in Nepal and elsewhere in South Asia. China has been investing heavily in Nepalese infrastructure and has shown its support whenever Kathmandu appeared in need.

In exchange, Nepal has been vocal about its support for the One China Policy and not allowing Tibetan people to use its territory for anti-China activities. Similar warmth was on display during the visit by Nepalese Prime Minister K P Sharma Oli to China in June. Beijing and Kathmandu signed deals worth US$2.4 billion and also discussed the construction of a cross-border railway line. During the visit, the two sides also discussed direct flights, technology transfer and Tibet as an alternative route for supplying goods to Nepal.

Defense and economic ties with China

Though China has been keen to invest in Nepal, the recent discourse about the “debt trap” has entered the Nepalese media. This is similar to the apprehension that is being witnessed among other countries that have joined the BRI.

In an article for My Republica, Umesh K Bhattarai argues that there is a need to be concerned and not get burdened by Chinese investments. However, the West Seti hydroelectric project in Nepal has started to show signs of strain as both sides have been noncommittal about the future of the project. Last November, a Chinese company also withdrew from the construction of the Budhi Gandaki Hydropower Project.

It’s not only in the economic domain where Nepal is trying to inch toward China. The two countries have successfully conducted two rounds of joint military exercises. The first Sagarmatha Friendship exercises were held in April last year, while the second exercises were concluded this month. Nepal also decided to withdraw from the BIMSTEC drill at Pune in the western Indian state Maharashtra, citing technical issues, and instead sent an observer. This certainly created some unease in India.

Looking at the recent developments and trends, one can argue that Nepal is undertaking massive efforts to get closer to China. However, the primary hurdles for the Himalayan nation in this endeavor will be geography, history and demography. Some of the connections and events highlight the fact that Nepal will find it very difficult to get away completely from Indian influence. Though Oli is talking about making Nepal a bridge and not a buffer between India and China, the linkages Kathmandu shares with India are hard to replicate.

Nepal-India relations

Oli’s first visit to India was in April and the two countries discussed ways to develop infrastructure, connectivity and development. He also talked about increasing Indian investment in Nepal. In the first half of 2018, the number of Indians visiting Nepal was 96,372 as compared with 71,379 Chinese.

There is also huge migration by the Nepalese population to India for employment. There is no proper official figure but it is believed that around 2 million Nepalese stay and work in India without permits.

Nepalis and Indians intermarry and have historical family connections. India and Nepal conduct the Surya Kiran military exercises twice a year, which are aimed at counterterrorism. Nepalese citizens serve in the Indian Army. Indian ports are the nearest for Nepalese traders and thus are more economical for transport and shipment of goods than alternatives. Thus, geographically the issue is whether transport routes via Tibet would be financially feasible for Nepal. India and Nepal also share a porous border through which trade is conducted at a number of different levels.

It is no surprise that Nepal will look for ways to assert its independent identity and is happy to pit China and India against each other. Nepal has always been wary of facing an Indian blockade (the last was in 2015), which affects its supply of basic essentials, and continuing Indian meddling in its domestic affairs. In order to help counter any land blockade, China has provided Nepal access to a number of its ports. However, what India needs to understand is that Nepal, like all other South Asian countries, is in need of development and infrastructure, and China is ready to provide it.

In addition, India has its own domestic economic limitations and has been failing to keep up its promises. However, it still has a more benign image when compared with China, but there is an urgent need for New Delhi to realize that it cannot afford to dilly-dally on promises. Soft power and a benign image are very important positives favoring India, but hard infrastructure is what Nepal needs, and China is ready to fill the vacuum of Indian failures.

Given the deep-rooted connections, India may not lose Nepal completely to China, but it will not be in Indian interests to have a Nepal that is completely in debt to China.

This blog was originally published online as Nepal’s Shift from India to China: Will it Work?  on Asia Times on 20 September 2018

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