Diplomacy: Power Play In Nepal

This November, Nepal reverberated with anti-India protests once again. The trigger this time was the new India map that came following the reorganisation of the state of Jammu and Kashmir and showed Kalapani as part of the Indian state of Uttarakhand. It led to a diplomatic row with Nepal which claims sovereignty over the 35 sq km area. 

In fact, anti-India protests have been commonplace in the Himalayan state of late, which has become a testbed for power-play between its neighbours India and China. The tilt in favour of China has been clearly visible in recent times. With the Communist Party at the helm in Nepal, China under Xi Jinping has launched a massive outreach programme aimed at not just boosting its diplomatic and defence ties with Nepal to unprecedented levels but also influencing the latter’s domestic policies through indoctrination of its cadres and personnel. 

In fact, so keen is Beijing to extend its sphere of influence in that it is ready to overlook the implications of some of its actions. Take, for instance, the Chinese proposal for the $5.5-billion, 170-km Kerung to Kathmandu Trans Himalayan Rail link. It would mean boring tunnels through the mighty Himalaya thereby shaking the very ecological foundations of Nepal, and making it vulnerable to environmental disasters. 

In sharp contrast, although India-Nepal relations go back to the ancient times and even today there is a constant and free flow of goods, services and people across the 1,800-km open border between the two countries, there has been a clear moving away from each other on account of a politically resurgent and assertive Nepal that no longer wants to play second fiddle to India as well as due to the growing influence of China.  

Present Nepali government though vociferous in its approach towards India is nonchalant and clumsy in addressing the problems on their side. The open and free trade routes with India is about the ancient relations and people to people contact which is much beyond the boundary issue. The conflicting role of the ruling Communist Party of Nepal is playing is dangerous for the sort as it is about the indoctrination by China along with the financial trap.  The projects under BRI is also staggered against the critical concern, damaging the fragility of the environment –the mighty Himalayan –the very existence that Nepal rests on.

Conflict Over Kalapani

Kalapani, located on the Kailash Mansarovar route and bordering Uttarakhand in India and Sudurpashchim Pradesh in Nepal has been a bone of contention between the two neighbours. Since 1962, Kalapani has been manned by the Indo-Tibetan Border Police. Under the 1816 Treaty of Sugauli between Nepal and the British East India Company, the Maha Kali river is Nepal’s western boundary with India. But the treaty made no specific mention of a ridgeline and subsequent maps of the areas drawn by British surveyors showed the source of the river at different places. Nepal claims that the river located towards the west of the territory is the main Maha Kali river and thus it falls in its territory. India claims the ridgeline towards the east of the Kalapani territory and hence includes it in the Indian Union.  

The Peace & Friendship Treaty of 1950, which has governed India-Nepal relations until now, is no longer acceptable to the Nepalese political leadership, especially as far as some of the articles therein are concerned. To correct the anomalies in the treaty, an Eminent Persons’ Group (EPG) was appointed by the two governments in 2014 to review bilateral issues and suggest amendments to the 1950 treaty to reflect the contemporary reality. But its reports are yet to be finalised. 

“There were certain concerns at the political level, but S. Jaishankar (Indian foreign minister) and I have discussed them and instructed the secretariat to make necessary preparations for the handover of the report. Due to elections in India, things got delayed,” said Nepalese Foreign Minister Pradeep Gyawali, explaining the delay. “Very less has been spoken about economic cooperation (in the EPG reports) which should be the core content of the treaty. A lot has changed since the treaty was signed in 1950. Like climate change, ideology, ecological balance, and linkages which should be addressed in the treaty. It will be a landmark step in furthering our relations with India,” Gyawali added

But like everything else, it seems the EPG is also turning into a bargaining chip for Nepal. It’s apparent that the current regime under PM KP Oli is too inclined to play the China card. Take the case of connectivity projects with India. A 200-km rail link from Raxaul in India to Nepal’s capital Kathmandu proposed by Prime Minister Narendra Modi during his 2019 Nepal visit has proved to be a non-starter. While Gyawali said the project “is under pre-feasibility survey and traffic-cum-engineering survey has been completed. Now we are in the process of finalising the document for DPR and making necessary arrangements for the construction”, an officer working on the project feasibility informed that many alternatives had been shared with the Nepal government but “we have yet to hear from them.” China wants Nepal to adopt its gauge standard instead of India’s. 

Similarly, India completed work on the 34-km Jaynagar (Bihar)-Kurtha (Nepal) rail line in 2018 but it is yet to be operated. The same is the case with many other key connectivity projects initiated by India wherein Nepal has yet to begin acquiring land. 

Rich River Water Resources

The Nepalese delaying tactics have thwarted key Indian water projects as well -- the Budhi Gandaki hydropower project and the proposed Pancheshwar dam on the Mahakali River along the India-Nepal border. India has been looking to augment its irrigation and drinking water needs as well as develop Nepal’s rich river water resources to produce hydropower for its growing economy. Nepal lacks the capital and technology to build large dams and other water projects and also needs a buyer for its hydropower. India’s direct involvement in the utilisation of the river water in Nepal has been crucial till now. The Mahakali Treaty, which offered an opportunity in 1996 to both the countries to rethink their bilateral river water cooperation, has remained on paper. Asked to explain the delay, Gyawali said: “Nepal is willing to go forward. Around 23 years back when this treaty was signed, we thought it will set an example for the bilateral energy resources that come to Nepal. We wanted to set an example of how two countries can save their precious water resources and be in a win-win situation.” 

Nepal lacks the capital and technology to build large dams and other water projects and also needs a buyer for its hydropower. India’s direct involvement in the utilisation of the river water in Nepal has been crucial till now. To stem the tide of cheap Chinese loans, the Indian establishment is single-mindedly focusing on the implementation of the projects. India’s aid to Nepal has been trebled from Rs 375 crore in 2017-18 to Rs 1,050 crore in 2019-20. 

China, on the other hand, has pledged nearly $492 million in financial aid in line with Beijing’s larger plan to encircle the impoverished Himalayan nation with a multitude of projects – some of them at the cost of India. Premier Xi announced this during delegation-level talks with President Bidhya Devi Bhandari in October. 

Security Diplomacy

China’s engagement with Nepal has been more on the lines of “security diplomacy” – to secure its people and assets on foreign territory. Thanks to the globalisation of the Chinese economy, the growing movement of people across Chinese borders and expanding capital have made law enforcement cooperation with the rest of the world a major priority for China. Many Chinese businessmen have bought big shops in the major commercial and tourist hub of Thamel in Kathmandu, as well as invested in shopping malls. These have necessitated MoUs that seek security for Chinese assets. 

During Premier Xi’s visit, separate deals for a trans-Himalayan railway link to Tibet and a tunnel were reached. Nepal’s Ministry of Physical Infrastructure and Transport and the Chinese Ministry of Transport signed an MoU for a feasibility study of the China-Nepal Cross-Border Railway project. This project which will require cutting through the Himalayas has been opposed by Nepalese Congress Party. The other agreements focused on strengthening bilateral cooperation in legal assistance in criminal matters, railroad connectivity, and investment.

In 2017, Nepal joined China’s Belt and Road Initiative (BRI), a global infrastructure development and investments programme involving 152 countries. Since then, China has pumped millions of dollars into projects ranging from roads to hydropower plants in-country.

Prior to Xi’s visit, in September PM Oli attended a two-day symposium titled ‘Xi Jinping Thought on Socialism With Chinese Characteristics for a New Era’ in Kathmandu that was organized by the Nepal Communist Party and the Communist Party of China’s Central Party School in the main. The whole exercise perplexed even NCP members considering Nepal is a multi-party democracy. The Nepali Congress too criticised it. PM Oli won the 2017 elections on the back of nationalist posturing against India. India has imposed a months-long blockade which he played profusely by not considering the Madhesi demand. Nepal shares a long border with Tibet and is home to around 20,000 Tibetan exiles. China is now barricading the border with Nepal and taking out Tibetans — some of them also handed over by Nepal. 

Nepal is one of the signatories to China’s Belt & Road Initiative (BRI). But some sections in Nepal have expressed concern over the terms of the financing of the projects. “I’m closely following the comments and views on BRI projects. While some are valid and should be taken into consideration, others are more political. We at least need an additional $5-6 billion in the infrastructure sector, so we are working to help reduce this gap with whatever help we can get,” said Gyawali. 

A more serious problem that Nepal faces is that of endemic project delays. Many projects initiated by India seem to be stuck in a time warp. Delay in revising and approving design documents, poor communication and coordination, slowness in the decision-making process, conflict when there is joint-ownership of the project and suspension of work extend the implementation period. 

It would appear that the Nepali leadership is too keen to woo China at the expense of others. Former Nepalese PM and Chairman of the Nepal Communist Party Pushpa Kamal Dahal (aka Prachanda) reportedly stated during his talks with Chinese Foreign Minister Wang Yi in September that Nepal disapproved of the US’s Indo-Pacific Strategy (IPS). That remark led to the US embassy in Kathmandu seeking clarification from Nepal’s foreign ministry. The US’s foreign aid agency Millennium Challenge Corporation has committed $500 million to support infrastructure and connectivity projects in Nepal, a first by it in South Asia and seen as an appreciation for Nepal’s progress towards democracy.

Time seems ripe now for the Nepali leadership to look within and lay the foundation for accountability, good governance and economic growth. After having won a hard-fought battle to establish a parliamentary democracy replacing the monarchy, Nepali leaders must now focus on the institutions to strengthen it. Instead of flirting with geopolitical alignment, their focus should be on nurturing trade and investment to put Nepal on the road to growth and development.