Stuck between India-China rivalry, hapless Nepal poised for rough ride

There was a time – some three decades ago – when it used to be said that after the Royal Palace, the next most powerful spot in Nepal’s capital Kathmandu was the Indian consulate, followed by the local bureau of the Hindustan Times newspaper. India took Nepal for granted, almost like it was another state of the Union.

Times have, since, changed. India is still a player to reckon with, but it increasingly finds itself jostling for space with a competitor, China. Between the two giant neighbours tiny Nepal is caught in a rivalry over which it has little control.

The plight of the Himalayan kingdom is unenviable. It has had a lengthy relationship with India that continues to this day. There are at least seven million Nepalis working in India, at least 25,000 of whom are part of the Indian military; the Indian army chief, incidentally, is the honorary general of the Nepali army.  Indian exports to Nepal averaged INR 9.31 billion during a 20-year period (1991-2020).

Right under India’s nose, so to speak, over the last few decades Nepal has increasingly come under the Chinese orbit. Kathmandu is beholden to massive influx of easy funds from Beijing which is helping build infrastructure in the country. In October 2019, during a visit to Nepal, Chinese President Xi Jinping pledged $500 million in aid besides signing 20 deals including in areas of security, border management, trade, education and tourism.

China in February this year opened seven of its sea and land ports for Nepal to conduct third country trade. Until now, Nepal had been able to conduct third country trade only through India. And, most importantly, a couple of years ago, China helped unite two smaller communist parties into the all-powerful Nepal Communist Party which now rules the country.

No surprise that in the last one month, Indians have been dazed at the gumption of Nepal’s K.P. Sharma Oli government which has accused Delhi of infringing on its territory in the strategically important Limpiyadhura-Kalapani-Lipulekh triangle at the intersection of India, China and Nepal. Not just that, it has officially incorporated this territory into Nepal’s map,with parliament’s approval.

But it is no walkover for China. Nepal’s move has not gone unchallenged within his own party, with a section led by former prime minister and co-chairman Pushpa Kamal Dahal a.k.a. Prachanda threatening to break away unless Oli steps down as prime minister. The opposing group has clearly expressed unhappiness at Oli’s move to antagonise India.

What this means is Nepal has now openly turned into a proxy battlefield between India and China. It does not need a security analyst to infer that both countries are exercising their influence to manipulate Nepal’s politics to suit their strategic interests. If China succeeded in pushing Oli to accuse India of encroaching on Nepali territory, it is the pro-New Delhi lobby that is now threatening to unseat him.

In the last few days an interesting behind-the-scenes battle is on between Oli and Prachanda within the NCP. A standing committee meeting to decide an outcome has been put off several times, with the latest one on Friday (July 10) too being postponed to next week. And frantically working behind the scenes is none other than the Chinese ambassador in Nepal, Hou Yanqi, say media reports.

In a sense, India-China rivalry in recent months has risen several notches higher within Nepal. The Himalayan nation is today a veritable buffer zone between its two feuding neighbours. With the increasing consolidation of China over Tibet, in actuality, Beijing has physically moved nearer to India. Only Nepal separates the two.

In the last few years, reports say China has increased its activities on its border with Nepal. Some even accuse it of encroaching on Nepali territory with the aim of creating a no-man’s land between the two and securing Tibet’s borders, and that Oli has looked the other way to facilitate China’s actions.

If India is losing its hold over Nepal, much of the blame should go to successive governments in Delhi including the current one led by Prime Minister Narendra Modi. The 2015 India-backed blockade of Nepal over the Madhesi agitation was the latest significant goof-up as that pushed the country all the more closer to China.

In the years after India’s independence, despite an open border policy with Nepal, India did not move to consolidate its relationship with Kathmandu – either with the erstwhile monarchy or later, with the elected government.

The list of Indian strategic miscalculations in Nepal is long. The 1950 treaty of friendship between the two countries is itself seen as lopsided as that gave India the right to question sovereign decisions of Nepal. For example, in 1961, the construction of  the 100 km road from Kathamandu to Kodari was objected to by the then Nehru government as India was not consulted before the deal was signed. Later, in 1975, when King Mahendra proposed Nepal as a “zone of peace” India shot down the proposal as it was viewed as diluting the 1950 treaty. In 1988, Nepal signed an arms deal with China, again objected to by India. A slew of trade and transit routes into Nepal was shut off by India, in retaliation.

Also read: India left with few options in dealing with China, Nepal

A serious crisis arose in the early 1990s, when the feudal panchayat  system was replaced by multiparty democracy under the monarchy. The then Chandrashekhar government in New Delhi publicly supported the democratic shift  but discreetly informed the monarch it would back him to restore the panchayat system if he agreed to sign an updated agreement with India. As per this agreement, a harsher version of the 1950 treaty, Nepal would not be able to take any decision without India’s concurrence. King Mahendra decided to go with the multiparty scheme than sign the deal with New Delhi.

China, on the other hand, has positioned itself as a neighbour that  is ever willing to fund developmental projects and aid Nepal whenever requested. In addition, it has projected itself as a country that is disinterested in Nepal unlike India which is seen to be interfering in its domestic affairs. The image of China in Nepal is largely that of a neighbour that does not expect any favours in return for its help. This has helped China, over time, to harness anti-India sections within Nepal to its advantage.

Nepal, meanwhile, buffeted by a combination of headwind and tailwind in the form of India and China is poised for a rough ride. It would require strategic planning and diplomacy of the highest order by its ruling elite to manoeuvre Nepal through the rough winds.  If it works, Nepal stands to benefit as both its neighbours will go out of their way to woo the country. If not, Nepalis must be prepared for long years of political instability and uncertainty.