Xi in Nepal, alarm in Delhi
The Indians are in a fix. They are reluctant to let any western power increase its footprint in Nepal, their traditional ‘backyard’. Yet India also increasingly thinks it alone may not be able to check China’s growing inroads into its immediate neighborhood. This is the reason it has agreed to cooperate with the US under the Indo-Pacific Strategy, meant specifically to contain China’s rise in Asia. But then, what do we make of the much-touted personal chemistry between Narendra Modi and Xi Jinping post-2017 Wuhan Summit, which has helped reduce the friction between the two Asian giants?
Whatever the state of Sino-India ties, it is hard to see them cooperate while dealing with other countries in the region, particularly those in South Asia. Indian bureaucrats and strategic thinkers are still obsessed with the idea of China ‘gobbling up’ South Asia; Modi will thus find it difficult to be seen as accommodating China in South Asia. Moreover, New Delhi seems to think the US, a faraway and not-always-reliable power, will be much easier to manage in South Asia than will be China, the next-door geopolitical adversary. Thus, even though India won’t completely cede ground to the US in South Asia, we can expect the anti-China cooperation between them to intensify.
This will be the case particularly after President Xi comes to Nepal, perhaps in as little as three months. The Chinese are unhappy with what they see as the turtle’s pace of Nepali politicians and bureaucrats who are hindering progress in China-funded projects in Nepal. Nor have they taken kindly to the criticism of the Ring Road expansion in Kathmandu—such a beautiful road they built! Why are Nepalis so thankless?
But then the time has also come for China to stamp its authority, to show the Americans and the Indians that their best of plans in Nepal can unravel if China is ready to loosen its purse-strings again. It is not a coincidence that our foreign minister these days repeatedly tweets about the ‘hoax of a Chinese debt trap’. As if to needle the Americans, the Oli government also frequently brushes aside concerns about illegal North Korean businesses in Nepal. The Americans would like no less than the shut-down of the North Korean Embassy in Kathmandu.
Will the Chinese railway come trundling into Kathmandu soon after Xi’s visit? Unlikely. With Indian markets as its final target, China sees no utility in extending the railway into Nepal without first getting India’s nod to take it all the way to UP and Bihar. A purely grants-based railway for Nepal is thus a no-no. Yet many big-ticket bilateral projects may yet be announced during Xi’s Kathmandu trip, projects that yield both economic and geostrategic benefits to China.
A visit of the Chinese president and all the projects he brings along will undoubtedly alarm the Indians and the Americans. There are bound to be retaliatory gestures. Nepal is likely to discover the perils of dual membership of the seemingly mutually exclusive BRI and Indo-Pacific clubs. Hope Nepali government officials and political leaders know what they are getting into.
India not letting go easily
Only after Nepal promised India it would limit its BRI involvement did India agree to Nepal’s participation in it. Thus how President Xi Jinping’s signature foreign policy initiative will play out in Nepal is anyone’s guess. In an interview with APEX, Deep Kumar Upadhyay, the Nepali envoy in India in 2017 as Nepal’s BRI membership was being negotiated, says it was difficult to convince New Delhi that Nepal joining the initiative would not hurt its interests. Apparently, the deal was that Nepal would limit itself to ‘connectivity’ projects under the BRI. But I could not agree with Upadhyay’s other assertion in the same interview that India is not at all worried about the ‘Nepal-tilting-towards-China’ narrative. He seemed to imply that India understands that most such narratives emerge from people with little knowledge of how diplomacy works. In this thinking, the appointment of S Jaishankar, who has served as India’s ambassador to both the US and China, as the new Minister of External Affairs, is a sign of growing amity between India and China. Jaishankar knows Beijing so well he will allow no India-China tiff to balloon into a crisis.
A corollary to this argument is that with political-level engagements between India and China as good as ever, they will increasingly see eye to eye on their immediate neighborhood. Plus, Prime Minister Narendra Modi is now so strong he can clear all bureaucratic obstacles and pursue a harmonious neighborhood policy. It was interesting to hear former ambassador Upadhyay say that during his twin tenures in New Delhi, he felt PM Modi personally oversaw India’s Nepal policy. If so, was the blockade Modi’s doing entirely? Or do we conclude that however powerful the prime minister, the bureaucrats lower down the hierarchy invariably prevail when it comes to India’s relations with smaller countries?
A Nepali team is currently in China for the finalization of the Detailed Project Report of the proposed Rasuwagadhi-Kathmandu rail link. Nepal argues the DPR as well as the construction of the $2.5 billion project should be funded with Chinese grants. China insists on a loan agreement. It is also clear that India rather than Nepal is China’s target market. So unless New Delhi gives its go-ahead to the rail line, it makes no economic sense for China just to bring it to Nepal and extend it no farther.
Separately, whatever Xi and Modi decide between them, the Indian establishment will continue to have to rely on the same old MEA bureaucrats to craft India’s Nepal policy. Even if Modi wants to oversee Nepal policy himself, he does not have the time, with his hands full with a Trumpian US, an increasingly assertive China, and the old nemesis Pakistan. Or could it be that the Indians, their hands badly singed by the blockade, will from now on be happy to work behind the scenes while the US is given the lead role in Nepal, as one seasoned diplomat hinted to me? I for one don’t believe India will ever willingly give up, or even appear to do so, its near-absolute sway over Nepal.
SCO and Nepal, Part II
China, Russia, Kazakhstan, Kirgizstan, Tajikistan, and Uzbekistan founded the Shanghai Cooperation Organization (SCO) in 2001. There were two more curious additions as full SCO members in 2017: India and Pakistan. Nepal for its part secured the status of a ‘dialogue partner’ during the 2015 summit in Ufa, Russia. At the time, there was much hoopla in Kathmandu’s strategic circles, as they struggled to understand Nepal’s role in this Eurasian economic and security body. When queried, officials of the then Sushil Koirala government were vague. Perhaps they too were clueless.
While I was digging into the source of Nepal’s interest in the SCO back in 2017, I had met Upendra Gautam of the China Study Center. He informed me that it was Prime Minister Girija Prasad Koirala who first showed an interest in the SCO soon after its formation in 2001. To quote Gautam from my article in Republica, “… the price of oil in Nepal had been steadily increasing. Koirala thought it would be wise for Nepal’s energy security to explore Central Asian oil markets”.
Which was mighty interesting. But even after Nepal secured the status of a dialogue partner in 2015, it could not make any headway in the regional grouping, maybe because it jumped on the SCO bandwagon without any homework. At the 2017 and 2018 SCO summits, Nepal was not even invited. Nor was there any effort from Nepal for a greater SCO role, or for participation in this year’s summit (June 12 and 13) in Bishkek, Kazakhstan.
Russia and China, the two main backers of the organization, are both uncomfortable with what they see as America’s unnecessary encroachment into their neighborhood. No doubt the two Eurasian behemoths have their differences. But as their relations with the US have soured, they have vastly increased their economic and military cooperation. With their long involvement in Nepal, it should not be a surprise if Russia and China start coordinating their Nepal policy—particularly if the Americans and the Indians, as part of the new Indo-Pacific Strategy join hands to limit their strategic space in Nepal.
Theoretically, the SCO gives India and Pakistan a rare platform to talk. This is important, including for a better prospect of the SAARC which Nepal currently chairs. Practically, trying to bring India and Pakistan closer via the SCO is as good as flogging a dead horse. Separately, the KP Oli government might see the organization as a part of its ‘diversification’ policy. But Nepal first needs to be clear on where India, its most important foreign partner, stands on the SCO. Ever wary of China, India has been hesitant to push the SCO idea too far. Nor does it want to jeopardize its relation with the US. This dynamic will play out here in Nepal too.
Nepal has some tough strategic choices to make. Having declared its opposition to joining the Indo-Pacific Strategy, is it in Nepal’s interest to angle for a greater role in a competing security organization? On the other hand, if we are serious about connecting with Central Asia via China—as GPK envisioned, and as the country signing up to the BRI signaled—the Beijing-based organization could be a useful vehicle. Making this difficult choice requires greater clarity on Nepal’s diversification policy.
Dahal makes another pitch abroad
Pushpa Kamal Dahal’s ‘untimely’ reminder of his written agreement with KP Oli, that each of them will get to lead the government for two-and-a-half years, was primarily directed at one person: Narendra Modi. Dahal made his case on May 29, accompanied by a ‘leak’ of the agreement, on the eve of PM Oli’s departure to New Delhi to take part in Modi’s second swearing-in as prime minister. But it was only a reminder. Last year, when Dahal was in New Delhi, he had already briefed the Indian government that there had been such an agreement and that he was the PM-in-waiting. Dahal has a checkered history of engaging in all kinds of dubious dealings abroad. On the pretext of medical check-ups for himself or one of his family members, he jets off to New Delhi or Singapore or Washington DC for hush-hush meetings with foreign spooks and bureaucrats. He does so with one intent: to find an external route back to power in his homeland.
The former Maoist supremo has been trying to impress on the Indians (and the Americans) that he is the only politician in Nepal who is acceptable to people from all political, ethnic and regional backgrounds (read: Madhesis) as the country looks to institutionalize the nascent federal republic. Oli, of late a suspect in New Delhi and Washington for his supposed pro-China proclivities, finds himself at a distinct disadvantage in this equation. Foreign powers know they cannot completely trust Dahal. Yet they also increasingly believe Nepal’s pro-China tilt can be checked only if Oli is ousted as PM.
Dahal has now thrown down the gauntlet to Oli: either quit as the prime minister after a year or hand him party leadership. Even if Oli agrees—a big if—things won’t be straightforward. Communist parties believe in centralized leadership for a reason. If Oli leads the government and Dahal the party for any length of time, the NCP will likely split sooner or later. Some reckon that is exactly what big powers active in Nepal want: A situation of ‘controlled instability’ in which they get to do as they please.
Interestingly, China is itself frustrated at what it sees as lackluster performance of the much-vaunted, two-third Oli government. Not only has PM Oli dragged his feet in clearing the obstacles for the BRI projects in Nepal. Nepal under Oli also wants all the goodies, including the trans-border railway line, pro bono, which is a no-no for Beijing as the Chinese economy begins to cool off. Perhaps the Chinese too are looking for someone more amenable than Oli? Considering the recent Modi-Xi bonhomie, it may also not be a surprise if China has agreed not to step on Indian sensitivities in Nepal, its traditional ‘backyard’. If Oli expects the northern neighbor to unconditionally prop him up, he may be in for a surprise. Faced with a protectionist US, China has far bigger fishes to fry in India.
