In July, Nepal\u2019s fractious politics witnessed yet another churning. The 72-year-old veteran politician Khadga Prasad Sharma Oli of the Communist Party of Nepal-Unified Marxist Leninist (CPN-UML) – labeled \u201cpro-China\u201d by the Chinese media itself during his first term – won a vote of confidence in the Parliament soon after being sworn in as prime minister for the fourth time.<\/p>\n
Days later, Foreign Secretary Sewa Lamsal left for Kunming, China, to deliver the keynote address and hold bilateral meetings with high-level officials at the fifth China-South Asia Cooperation Forum. The forum is China\u2019s attempt to coalesce South Asian states, notably excluding India, to create a \u201cregional Himalayan bloc\u201d as part of its bid to create a Sino-centric global order.<\/p>\n
Do such events imply that China is gaining an irreversible edge over India in the neighborhood? The answer is more complicated than the headlines suggest.<\/p>\n
Nepal\u2019s new government is yet another coalition following a series of short-lived political arrangements. Oli\u2019s ascension to power is based on a recent deal forged between the two largest parties, the Nepali Congress (NC) and the CPN-UML, which among other factors also includes the sharing of the prime ministerial position between Oli and NC President Sher Bahadur Deuba. The previous Pushpa Kamal Dahal-led \u201cleft-unity\u201d coalition broke down only months after being formed, without any major apparent disagreements.<\/p>\n
The fact that Nepal has had 13 separate governments since becoming a federal democratic republic in May 2008 has prompted deeper questions about the country\u2019s domestic politics and its repercussions for not only Nepal\u2019s economy and good governance but also its foreign policy. This sounds promising for India, which has been looking to curb China\u2019s growing role in Nepal\u2019s domestic economic and political affairs.<\/p>\n
What will the ensuing domestic and regional politicking mean for Nepal\u2019s engagements with China and India, notwithstanding the need to avoid simplistic characterizations of the Nepali Congress as \u201cpro-India\u201d and the CPN-UML as \u201cpro-China\u201d?<\/p>\n
At first glance, the return of Oli does not bode well for India. This is primarily because the CPN-UML leader is often seen as a China backer due to his tough stance on India during his previous tenures, including the adoption of a new federal constitution that resulted in a crippling \u201cundeclared blockade\u201d by India. In addition, Oli\u2019s concerted outreach to China, which saw multiple bilateral agreements including a transit trade treaty aimed at reducing dependence on India and other infrastructure and connectivity deals via the Belt and Road Initiative (BRI), highlighted the concerns for India under his leadership.<\/p>\n
Amid multiple initiatives, from the advancement of hydropower projects funded or operated by Chinese companies, like the Upper Marsyandi, to the operationalization of the Nepal-China cross-border optical fiber link, China is undoubtedly making inroads into Nepal\u2019s economy, resources, technology, and politics.<\/p>\n
In exchange for Chinese largess and under pressure from Beijing, Nepal also has shown complete support for the \u201cOne China\u201d policy, and tightened its grip on Tibetans in the name of not allowing the use of Nepali territory for \u201cany anti-China or separatist activities.\u201d The Nepali government\u2019s restriction of Tibetan rights under Chinese pressure was acknowledged by Human Rights Watch in 2022.<\/p>\n
As per Nepali political observers, the Chinese ruling regime has been known to favor communist parties, especially the now-split Nepal Communist Party, and has even in recent times made attempts to unite the left parties. According to the Chinese state media, Deuba is a U.S. and Indian ally. But as the constant change of regimes suggests, domestic politics is not immune from shifting alliances, the stress on non-alignment in official Nepali diplomatic rhetoric notwithstanding.<\/p>\n
More to the point, despite both Oli\u2019s and Dahal\u2019s recent headline-making visits to China, the BRI project implementation plan is yet to see the light of the day. Until now, no single project has been greenlit due to a lack of consensus over a funding model, despite reports that Chinese investments into BRI countries in 2023 accelerated overall.<\/p>\n
In fact, Nepal took umbrage at China\u2019s controversial \u201clumping\u201d of projects like the China-funded Pokhara International Airport under the BRI framework. Now Nepal\u2019s anti-corruption agency is reportedly investigating the Pokhara project, further tarnishing the image of one of China\u2019s landmarks projects in Nepal.<\/p>\n
Nepal signed the BRI framework agreement way back in 2017, broadly aiming to connect trade, facilities, and people, as well as foster financial integration under a \u201cnew economic order.\u201d The tall claims have faded amid Nepal\u2019s fragile political climate and growing concerns about the BRI as an unsustainable and often debt-inducing project with expansionist ulterior motives. Reportedly, Nepal prefers grants and not loans, presumably to avoid getting caught in \u201cdebt-traps,\u201d and China is not inclined to accede to this demand.<\/p>\n
Notably, Nepal has disappointed China in its response to the three projects that aim to promote China\u2019s vision of the multipolar world: the Global Development Initiative (GDI), the Global Security Initiative (GSI) and the Global Civilization Initiative. While agreeing to be part of two small projects under the GDI that align with the United Nations Sustainable Development Goals, Nepal – then under \u201cpro-China\u201d Dahal – opted out of the GSI, highlighting its policy of non-alignment. Nepal made a similar decision to stay away from the U.S.-led Indo-Pacific construct.<\/p>\n
In addition, recent reports of Chinese \u201cinterference\u201d in Nepali territory – despite denial from the Chinese side about any encroachments – would have put additional pressure on the Nepali government not to grow too complacent about Chinese financial overtures.<\/p>\n
Yet Nepal\u2019s strategic importance to China – whether as a vital resource for water and hydropower generation, a gateway into South Asia, India\u2019s traditional backyard, or as a means of controlling the sizable Tibetan refugee population and their activities in Nepal – means that the landlocked Himalayan state will see China dangling more financial and political incentives both to gain greater access to the Asian subregion and to create more viable conditions for a Sino-centric world order.<\/p>\n
Regardless of China\u2019s greater clout, resources, and even capabilities, India\u2019s decades-old influence in Nepal cannot simply be mitigated, let alone erased. Nepal\u2019s diplomacy, too, recognizes the imperative to continue persisting with political hedging in the garb of non-alignment, rather than taking sides.<\/p>\n
So if Nepal is a willing participant in China\u2019s BRI and accepts funding for hydropower and infrastructure projects, the former has also signed a long-term power trade agreement with India to export 10,000 megawatts of electricity, among several other productive deals including on renewable energy and community development projects. In the digital sphere, too, via India\u2019s widely successful United Payments Interface, the India-Nepal connectivity will facilitate cross-border transactions and \u201ccreate new avenues for trade\u201d as well as enhance financial robustness for Nepal.<\/p>\n
Importantly, Nepal not only has open borders and deep cultural linkages with India but its primary economic relationship is also with India. India is Nepal\u2019s largest trading partner, provides transit for almost all of Nepal\u2019s third-country trade, and accounts for a large chunk of \u201cinward remittances.\u201d Also, despite Nepal escalating the border dispute with India by \u201cunilaterally\u201d updating maps, particularly after 2020 – the year of the India-China Galwan conflict – Oli has pointed to India-Nepal diplomatic mechanisms as the way ahead, signaling a non-confrontational start to the new coalition.<\/p>\n
Moreover, one of the major reasons for Nepal\u2019s deep reluctance to accept China\u2019s claims that projects like the Pokhara airport are part of the BRI is India\u2019s objection to the initiative. India has thus far refused to allow direct flights between Pokhara and Indian cities, adding to the airport\u2019s financial feasibility woes.<\/p>\n
India\u2019s Neighborhood First policy has received a major fillip in the Indian government\u2019s new term, with Nepal as a special beneficiary. Modi\u2019s swearing-in ceremony in June was attended by several leaders of the neighboring states, including Dahal, then Nepal\u2019s prime minister. A month later, India in its budget for the Ministry of External Affairs in the new fiscal year increased allocations to Nepal, Sri Lanka, and Seychelles. Both factors highlight India\u2019s intent to address the China factor and the Nepali leadership\u2019s will to pursue national interests despite political or ideological differences with the Indian side.<\/p>\n
Keeping in view both South Asia\u2019s lack of regional integration and China\u2019s military and ecological threat in the Himalayan region, be it via incursions along the Line of Actual Control, territorial adventurism in Nepal or Bhutan, or eco-dominance of the Tibetan Plateau resources and repression of the Tibetans, the only way out is through international cooperation with \u201clike-minded\u201d partners, particularly the European Union, Japan, and the United States.<\/p>\n
For example, when China was looking to further restrict Tibetan rights in Nepal via the signing of a treaty on extradition with Nepal, the pressure from the international community, including the U.S. and the European states, was reportedly responsible for curtailing this reach.<\/p>\n
In this context, Washington has been well aware of China\u2019s Himalayan agenda, as is evidenced through growing U.S. engagement with Nepal. At the same time, Nepal has been careful in rejecting the U.S. Indo-Pacific strategy and State Partnership Program, due to fact that their \u201csecurity\u201d angle contradicts Nepal\u2019s non-aligned policy. However, despite similar sovereignty concerns, Nepal signed the Millennium Challenge Corporation\u2019s Compact, highlighting the U.S. investment of about $500 million in Nepal\u2019s power and transport infrastructure. The United States now needs to have a South Asian policy that echoes or correlates with India\u2019s regional vision centered on \u201cVashudhyeya Kutumbakam\u201d while taking into account the China threat.<\/p>\n
Moreover, a Japan-U.S. partnership in the Himalayan region, including in Nepal, can be influential given that Japan already has a strong investment outreach in Northeast India. Similarly, the EU via its Global Gateway connectivity strategy is already helping improve infrastructure development in Nepal; better coordination with India could enhance the strategic aspects.<\/p>\n
It is imperative that India utilizes its growing economic, technological, and security ties with the West to highlight its Himalayan concerns. Particularly the threat from China in expanding its hydro-hegemony and the overall threat to the fragile Himalayan environment due to excessive Chinese actions, from mining to dam-building, on the Tibetan Plateau, should be enough to formulate a collaborative action plan. Nepal\u2019s strategic location and enhanced ties with China make it a vital cog in such a cooperative plan especially given the right incentive.<\/p>\n
As such, an optimistic perspective would serve Nepal well in a divisive regional landscape, where Nepal\u2019s two nuclear neighbors are looking to establish Himalayan dominance amid the broader regional strategic competition between India\u2019s Indo-Pacific partner the United States and rival China. So will an autonomous thinking among Nepal\u2019s foreign policymakers. A new stable domestic politics and wooing by both India and China amid a fractured regional political climate may just provide some momentum for Nepal\u2019s flagging economy.<\/p>\n
This piece is the outcome of the Stockholm Center for South Asian and Indo-Pacific Affairs\u2019 (SCSA-IPA) research project titled \u201cChina\u2019s Himalayan Hustle.\u201d<\/p>\n
Source : The Diplomat<\/strong><\/p>\n \n","protected":false},"excerpt":{"rendered":" In July, Nepal\u2019s fractious politics witnessed yet another churning. The 72-year-old veteran politician Khadga Prasad Sharma Oli of the Communist Party of Nepal-Unified Marxist Leninist (CPN-UML) – labeled \u201cpro-China\u201d by the Chinese media itself during his first term – won a vote of confidence in the Parliament soon after being sworn in as prime minister […]<\/p>\n","protected":false},"author":2,"featured_media":24005,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[6],"tags":[],"class_list":["post-24003","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-opinion"],"acf":[],"yoast_head":"\n