All eyes are on Bhutan as it strives to form stronger ties with China and India.
Bhutan is a landlocked country located at the eastern end of the Himalayas. Its northern border is connected to China while its southern, eastern and western borders link it to India. To Bhutan’s west lies the Indian state of Sikkim that separates it from Nepal. To the further south the Indian states of Assam and West Bengal lie between Bhutan and Bangladesh. Until the early 17th century Bhutan existed as a set of minor fiefdoms warring with each other. The fiefs were united by the military leader, Shabdrung Ngawang Namgyal, who developed a distinct Bhutanese identity among the people of the area. Namgyal arrived in Bhutan after fleeing religious persecution in Tibet.
There is a limited network of roads in Bhutan because of its mountainous landscape while the country does not have railways. This, combined with the lack of access to a coast, limits Bhutan’s trading opportunities. In 2008, Bhutan and India signed a free trade accord which allowed Bhutanese imports and exports to transit India without tariffs. Also, the value of Bhutan's currency is tied to the Indian rupee which is accepted in Bhutan as the legal tender. The economy of Bhutan is one of the smallest in the world, but it has grown rapidly in recent years - by 8 percent in 2005 and 14 percent in 2006. In 2007, Bhutan had the second fastest growing economy in the world, with an annual economic growth rate of 22.4 percent.
Bhutan maintains strong economic, strategic and military relations with India. A longstanding agreement allows Indian and Bhutanese citizens to travel to each other's country without the need for a passport or visa. Bhutanese citizens may also work in India without any legal restrictions. Bhutan is making efforts to establish and strengthen its ties with the international community. As a part of this mission, Bhutan has invited a number of foreign dignitaries to visit the country while the prime minister of Bhutan has also made several trips abroad.
So far, this tiny Himalayan kingdom has succeeded in gaining the attention of the world. A recent example is the visit by Indian Prime Minister Narendra Modi who chose Bhutan for his first international visit after taking charge of office. Although India and Bhutan already have close ties and have cooperated on numerous projects, such as electricity generation and hydropower supply, the Indian prime minister’s visit was aimed at further boosting mutual ties. The two premiers reiterated their commitment to achieve the 10,000 MW target in hydropower cooperation. Prime Minister Modi also laid the foundation stone of a 600MW hydroelectric project in Bhutan, a joint venture of India and Bhutan. Modi announced numerous measures and concessions for Bhutan and pitched the idea of an annual hill sports festival among India’s northeastern states, Bhutan and Nepal.
The Bhutanese prime minister left for Japan soon after the Indian prime minister’s visit. In Japan, he discussed with the Japanese prime minister cooperation in the fields of agriculture, farm mechanization and infrastructure development. In July 2014, the UK Foreign Minister, Hugo Swire also visited Bhutan. There have been discussions of cooperation between British companies to assist Bhutan in economic development.
Bhutan’s strong relations with India have not stopped the country from striving to form diplomatic ties with China. Both nations are ready to carry out a proper demarcation of their boundaries and forge formal diplomatic relations based on the Five Principles of Peaceful Coexistence. Also, Bhutan has sent positive vibes to China by stating that the country strongly believes in a One-China policy.
As a nod of approval to Bhutan’s efforts to make a place for itself in the world, officials from the World Bank visited the Kingdom recently. Some issues discussed during the visit were debt reassessment, expansion of development policy credit ( DPC) and exploration of new financing windows.
As Bhutan strives to gain global recognition and form stronger ties with its neighboring countries, it will be interesting to see how it performs the tightrope act and balances its relations with its rather tricky neighbor – China – and with Japan.