Walk­ing the Tightrope

As In­dia ex­pands its sphere of in­flu­ence to its north­east, China vig­or­ously takes note. Nepal is called in to play the bal­anc­ing act as it at­tempts to in­crease diplo­matic re­la­tions with both neigh­bors.

Southasia - - Region - By Col. R. Har­i­ha­ran

Nepal and In­dia share a very unique re­la­tion­ship. Nepal is sand­wiched be­tween two huge states of In­dia and China. But we are vir­tu­ally In­dia-locked, as we have an open bor­der on three sides. Most of our so­cio-eco­nomic in­ter­ac­tions take place with In­dia. Two-thirds of our an­nual trade is with In­dia, while only 10 per cent is with China. Given this his­toric tilt to­wards In­dia, our bi­lat­eral re­la­tion­ship is unique. When you have more in­ter­ac­tion, you have more prob­lems and more fric­tion. At times, there are mis­giv­ings and mis­un­der­stand­ings on var­i­ous is­sues — some are gen­uine, while oth­ers are born out of skep­ti­cism.” - Nepal Prime Min­is­ter Babu­ram Bhat­tarai, Prime Min­is­ter of Nepal, The Hindu, Oc­to­ber 19, 2011

The above com­ment on the eve of Prime Min­is­ter Bhat­tarai’s visit to In­dia re­flects the tra­di­tional view of Nepal’s prob­lems in bal­anc­ing its re­la­tions be­tween In­dia and China. This del­i­cate bal­ance in­creases in im­por­tance as the two Asian giants flex their po­lit­i­cal and eco­nomic mus­cle, look­ing uneasily at each other.

Given the sce­nario, there is ev­ery risk of Nepal be­com­ing a com­mon hunt­ing ground. It will be dif­fi­cult for the Nepalese govern­ment to bal­ance re­la­tions with its north­ern and south­ern neigh­bors due to over­whelm­ing In­dian in­flu­ence per­me­at­ing the coun­try. Apart from shar­ing com­mon his­tor­i­cal, cul­tural and re­li­gious roots, Nepal has a spe­cial re­la­tion­ship with In­dia that was for­mal­ized with the sign­ing of the In­dia-nepal Treaty of Peace and Friend­ship (INTPF) in 1950.

Un­der this treaty, cit­i­zens of both na­tions are treated equally in mat­ters of busi­ness, jobs and prop­erty own­er­ship. Nepal also con­ducts bi­lat­eral trade and has tran­sit treaties with In­dia. These treaties have opened up op­por­tu­ni­ties for Nepalese cit­i­zens to travel, study and do busi­ness freely in In­dia. The ex­ten­sion of non-re­cip­ro­cal duty-free ac­cess for Nepalese goods to In­dian mar­kets has huge po­ten­tial as it al­lows Nepal to de­velop fur­ther. On its end, In­dia has con­trib­uted sig­nif­i­cantly to Nepal’s in­fra­struc­ture de­vel­op­ment and has built ma­jor ir­ri­ga­tion projects in the coun­try such as Gan­dak and Kosi bar­rages as well as small and medium hy­dro-power projects.

Although Nepal has largely gained from this ar­range­ment, over- de­pen­dence upon In­dia has cre­ated a back­lash. Some clauses of the INTPF state that Nepal has agreed to de­pend on In­dia for se­cu­rity as well as seek In­dian con­sent to im­port arms, am­mu­ni­tion and mil­i­tary equip­ment from other coun­tries. Clauses such as this ex­em­plify In­dian dom­i­na­tion and over time, Nepal has stopped ad­her­ing to them. Trade and tran­sit is­sues have also been points of con­tention as Nepal keenly moves to diversify its trade ac­cess to other coun­tries.

As In­dian diplo­mat Ra­jiv Sikri ob­served, “Land­locked Nepal’s um­bil­i­cal and all round de­pen­dency on In­dia, un­der­stand­ably made an­tiIn­di­an­ism the foun­da­tion of Nepali

na­tion­al­ism. Some of the fault for this lies with In­dia. In­dia’s per­ceived pri­or­ity to projects that served In­dia’s se­cu­rity and other needs rather than the de­vel­op­ment of Nepal aroused an­i­mos­ity and dis­trust of In­dia in Nepal.” Rapid changes in the South Asian environment have also had ad­verse ef­fects. These in­clude the rise of China as a po­ten­tial chal­lenger to In­dia’s pre-em­i­nence in the re­gion and the emer­gence of Ji­hadi ter­ror­ism as a ma­jor threat to se­cu­rity in South Asia.

At the same time, Chi­nese in­flu­ence in Nepal has slowly in­creased over the years. The Com­mu­nist Party of Nepal (Maoists) – CPN ( M) – with strong proChina lean­ings has emerged as a ma­jor po­lit­i­cal power since 2006 fol­low­ing the end of monar­chy. In 2008, it won 270 seats of the to­tal 575 seats in the elec­tions for the con­stituent assem­bly, thereby be­com­ing the largest party.

De­spite this, CPN (M) was slow in re­ori­ent­ing its ide­ol­ogy and ac­tions to suit a multi-party democ­racy. Un­able to ar­rive at an agree­ment on a num­ber of is­sues, the party has held up the process of fi­nal­is­ing the new con­sti­tu­tion. How­ever, in early Novem­ber 2011, the Uni­fied Com­mu­nist Party of Nepal (Maoist) – UCPN (M) [for­merly CPN (M)] ar­rived at a 7-point agree­ment with the Nepali Congress (NC), the CPN (Uni­fied Marx­ist Lenin­ist) and the Mad­hesi par­ties, on the peace process, con­sti­tu­tion and power shar- ing. The par­ties also agreed to pre­pare the first draft of the Con­sti­tu­tion by late Novem­ber.

Dur­ing Nepal’s pe­riod of po­lit­i­cal in­sta­bil­ity from 2006 to 2011, In­dia greatly wielded its in­flu­ence in the coun­try, thereby en­sur­ing a con­tin­u­a­tion of the peace process. Nepal Prime Min­is­ter Bhat­tarai, who be­longs to the UCPN (M) ad­mit­ted, “In­dia played a pos­i­tive role in the peace process in Nepal and dur­ing our tran­si­tion to­wards democ­racy. My visit, at this junc­ture when we are at the last stage of com­plet­ing the peace process, as­sumes spe­cial sig­nif­i­cance.” This would in­di­cate a soft­en­ing of the hard line ap­proach UCPN (M) had pre­vi­ously adopted on In­dia.

In­dia has also re­cip­ro­cated this wel­come change in the Nepalese at­ti­tude by sign­ing two agree­ments with Nepal. One re­lated to the ex­ten­sion of a $250 mil­lion line of credit for Nepal on con­ces­sional terms and the other fo­cused on the Bi­lat­eral In­vest­ment Pro­mo­tion and Pro­tec­tion Agree­ment (BIPAA). The BIPAA will en­cour­age the flow of In­dian in­vest­ments in Nepal. Many Nepalese an­a­lysts con­sider this de­vel­op­ment a suc­cess of the coun­try’s eco­nomic di­plo­macy. Bhat­tarai him­self has called this de­vel­op­ment his­toric and a ma­jor step to­wards re­mov­ing dis­trust in the bi­lat­eral re­la­tions be­tween Nepal and In­dia.

In­dia has also agreed to fa­cil­i­tate the speedy ex­e­cu­tion of con­struc­tion

‘Two-thirds of our an­nual trade is with In­dia, while only 10 per cent is with China. Given this his­toric tilt to­wards In­dia, our bi­lat­eral re­la­tion­ship is unique. When you have more in­ter­ac­tion, you have more prob­lems and more fric­tion.’

of roads, rail and In­te­grated Check Posts along the bor­der ar­eas of Nepal and In­dia. Hic­cups in trade and tran­sit is­sues will be dis­cussed at the min­is­te­rial level. For now, In­dia has agreed to the use of Vishaka­p­at­nam port to fa­cil­i­tate Nepal’s third-coun­try trade as well as con­ceded Nepal’s de­mand for im­port­ing 200 MW of power from In­dia.

These de­vel­op­ments are sig­nif­i­cant. In the strate­gic set­ting, they also demon­strate In­dia’s strength in en­sur­ing po­lit­i­cal sta­bil­ity in Nepal if the con­sti­tu­tion is fi­nalised suc­cess­fully.

Much has been writ­ten about the grow­ing Chi­nese in­flu­ence in Nepal. Given the cur­rent state of In­dia-china re­la­tions, a sta­ble Nepal is in the in­ter­est of both coun­tries, though they may com­pete ag­gres­sively for spheres of in­flu­ence. Both In­dia and China have fo­cused on build­ing multi-faceted re­la­tions and have avoided con­tentious is­sues that could lead to a mil­i­tary con­fronta­tion. Though the Chi­nese threat fig­ures promi­nently in In­dian me­dia, In­dia has con­sciously played down the is­sue, de­spite its con­cerns of China’s in­creas­ing in­flu­ence in the re­gion.

In­dia-china bi­lat­eral trade has grown to $59.62 bil­lion dur­ing 201011; it is now set to achieve the tar­get of $100 bil­lion by 2015. This care­fully or­ches­trated re­la­tion­ship is not likely to be jeop­ar­dised by bi­lat­eral ini­tia­tives taken by ei­ther coun­try in South Asia, as long as it does not ag­gres­sively tres­pass into their strate­gic se­cu­rity do­main. The Nepal peace process and its af­ter­math, de­spite some short­com­ings on In­dia’s part, have demon­strated that Nepal con­tin­ues to be in In­dia’s se­cu­rity do­main. China is un­likely to miss this. The writer is a re­tired Mil­i­tary In­tel­li­gence spe­cial­ist on South Asia and is as­so­ci­ated with the Chen­nai Cen­tre for China Stud­ies and the South Asia Anal­y­sis Group.

Prime Min­is­ter Bhat­tarai shakes hands with his In­dian coun­ter­part,

Dr. Man­mo­han Singh.

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