Is India Losing Nepal As A Loyal Neighbor To China?

Despite of growing tensions, Nepalese PM KP Oli chose India as his first overseas visit post his re-election as the PM in February this year. Keeping in line with his predecessor his move was seen as a sign of positive hope for many across the borders.

During the visit from April 6-8, India and Nepal signed three agreements. Agreement in agriculture plans for connectivity through inland waterways and expanding linkages to connect Indian railway lines to Kathmandu. The two PM’s also inaugurated a petroleum pipeline between New Delhi and Nepal.

As per a statement by the MEA (Ministry Of External Affairs), both sides have resolved to work together and take bilateral relations to a new height on the basis of equity, mutual trust, respect, and benefit. Oli said that his government attaches high value to further strengthening friendly relations with India. Putin's Landslide Victory:  A Clash of Titans In The Indian Ocean

What this visit means for Indo-Nepal relations 

This visit has surely provided both India and Nepal a chance to mend ties and narrow down their differences that had cropped up post the 2015 blockade. The blockade caused an economic and humanitarian crisis in Nepal leading to a big crunch in Nepal’s economy. Many in Kathmandu still blame India for the sufferings.

Oli’s visit this time was more focussed on building the way forward in Indo-Nepal relations rather than discussing the bones of contention in public.

Both sides this time have kept contentions at bay stating they want to build a forward-looking approach in bilateral relations. Maybe this is in the best interest of their domestic political constituencies. Back home in Kathmandu, Oli has called his visit a successful and fruitful one.

“The bilateral relations will move forward in a new direction on the basis of equality and mutual interest. We have agreed to expedite past agreements and understandings reached between the two countries," he said addressing the Nepalese media.

However, as per reports in the Kathmandu Post, the Nepalese Congress disagreed with these statements. The Congress feels that the visit was unsuccessful because Oli failed to take up talks on the Pancheshwar Multipurpose project and a serious trade deficit on the Indian side.

Commenting on Oli’s recent visit, Nivedita Mukherjee, former Additional Director, International, FICCI & Senior Journalist said, “On the face of it there is the usual bonhomie and public display of affection. It would do well to be wary and guard against over-optimism.” 

In 2014-15, Indo-Nepal trade was 5.38 billion dollars and India’s share was 63.7 per cent of it. Oli’s policies have been pro-China or so to say anti-India ever since his election campaign days.

Be it reviving the Budhi Gandaki Project or agreeing to be a part of China’s Ambitious BRI (Belt and Road initiative).

Budhi Gandaki Project was a 1200 Megawatt hydropower project between China and Nepal which was scrapped by the government in 2017, citing irregularities and lack of transparency. But as soon as Oli took up the premier position, he revived the project citing reasons in the best interest of Nepal.

“Political prejudice or pressure from rival companies may have been instrumental in the scrapping of the project. But for us, hydropower is the main focus. Come what may, we will revive the Budhi Gandaki project," Oli said in an interview to a Nepalese newspaper before his visit to India.

“Nepal being a landlocked country, is trying to link it in a better way with both India and China. It has learnt lessons from the blockades of the 1960s, 1989, and 2015 that dependence on a single country could be disastrous to national interests,” says professor BR Deepak, Professor of Chinese studies at JNU.  

How China comes into the picture

After a long dwell which costed the two nations a war, Nepal and China resumed diplomatic relations in mid-1950’s. The basis of mending ties between the two nations was Nepal’s recognition of Tibet as a part of China.

Since that time, along with strengthening its position in the Indian Ocean region, China has been trying to spread its sphere of influence on Nepal.
China has been expanding greater economic linkages and extending quiet a substantial military assistance to Nepal.

The big-time meddling from China started in 2015 when there was a blockade on the Indo-Nepal border. At that time, China offered 1.3 million litres of petrol as a grant to Nepal. With a promise to follow up after a business agreement would be signed between corporates in Nepal and China.

China has also completed a 22 Kms road in central Nepal connecting it to its southern plains and making it the shortest motorable overland route between China and India. China overtook India as the biggest source of Nepal’s foreign investment.

To counter India’s advantage on the cultural ties, language similarities and religious beliefs China started setting up CSC (Study Centres and Confucius Institutes) to promote Chinese Culture and language. 19 such centres are running and functional in Kathmandu right now. A lot of hotels in Nepal are now owned by Chinese residents of Nepal. “India isn't satisfied with Chinese inroads into Nepal as this affects Indian security,” says Professor Srikanth professor and expert of Chinese studies at JNU.     

Nepal playing the China Card on India 

In the current situation, Nepal’s diplomacy game is going pretty strong. The government of Nepal has realised that they could use the tension between the major superpowers in the Indian Ocean region, to its utmost benefit.  

“When China chequebook diplomacy is working well for the smaller nations who would sit back and be an onlooker? If Nepal is looking towards China, it is not without reasons,” adds professor Deepak.

“Nepal has been unabashedly opportunist in terms of using the China card against India. It has never shied away from hitting out at India, as in 2015, with many blaming India for the blockade on the India-Nepal border, leading to the stepping down of KP Oli as Nepal’s Prime Minister,” says Mukherjee.

China is a major source of goods and assistance to Nepal at the moment. Chinese investments in Nepal are growing rapidly in every sector; creating jobs, livelihood and a structure for a sustainable and stable economy.

For a country, which has half of its population unemployed, and most of its citizens living in abject poverty, a helping hand from China comes in at this time, so it looks in the best interest of the Himalayan Queen. Of course, India has its own share of influence in the policies in Nepal as well. A practical approach to serving its own best interests first is not a bad policy to cheer up the domestic population.

Taking a cue from other Indian neighbors, Nepal is also playing the China card on India to gain some mileage and counter India’s big daddy approach. 

Conclusion 

At this time, it surely is a bit too soon to make this kind of judgement but it certainly looks like, things could be heading this way.

“I believe there has already been a significant dilution in the so-called friendship between India and Nepal. But I would not worry too much about that in the current context. We are thinking broader and with more ambition. India should let go this paranoia of Nepal becoming pro-China. We have many other worlds to win and should focus on that,” adds Mukherjee.

But Nepal will have to be really careful in choosing sides. It can't ignore either India or China. Professor Srikanth feels that Nepal will have to do its balancing act carefully without ignoring or offending India.

“KP Oli did make pro-China comments to the South China Morning Post. However, I think the structure of India-Nepal-China relations are such that Nepal cannot ignore India. One, there is the 1950 treaty between India and Nepal. This provides rights and obligations. One such is Nepal needs to consult India on security and foreign affairs," he says.  

Now in this situation, it is necessary to realise if this situation is a real threat or just another over-emphasised perception.