Moun­tain Dy­namo

De­spite its small­ness, Bhutan holds a lot of growth po­ten­tial that could en­er­gize the en­tire re­gion in many dif­fer­ent ways.

Southasia - - CONTENTS - By Dr. Raza Khan

As the bud­ding con­sti­tu­tional monar­chy is grad­u­ally ma­tur­ing in Bhutan, the coun­try’s Prime Min­is­ter, Tsh­er­ing Tob­gay, is mak­ing ef­forts to have more trade with neigh­bor­ing In­dia in a bid to main­tain a high rate of eco­nomic growth at home and to meet in­creas­ing de­mand for busi­ness and job

op­por­tu­ni­ties from the coun­try’s youth. In this re­spect, Prime Min­is­ter Tob­gay has es­pe­cially stepped up ef­forts to have en­hanced trade ties with the In­dian state of West Ben­gal, which borders the tiny Hi­malayan coun­try.

Al­ready, In­dia is the largest trad­ing part­ner of In­dia with 99 per cent of Bhutanese ex­ports land­ing in In­dia and Thimbu also get­ting 90 per cent of its im­ports from Delhi. Thus, the Bhutanese econ­omy is al­most en­tirely de­pen­dent on In­dia and has ex­tremely cor­dial re­la­tions with New Delhi. This ex­plains the over­tures of PM Tob­gay to­wards West Ben­gal and his ef­forts to open lu­cra­tive trade av­enues with the In­dian province.

The very rea­son for Bhutan to ex­pand her eco­nomic and trade re­la­tions with In­dia and par­tic­u­larly the state of West Ben­gal is the phe­nom­e­nal growth of the Bhutanese econ­omy. Bhutan has been main­tain­ing a high rate of eco­nomic growth in re­cent years with cur­rent GDP growth hov­er­ing above 8 per­cent. In or­der to main­tain this eco­nomic growth, Bhutan needs for­eign in­vest­ment. Keep­ing in view the In­dian state of West Ben­gal’s high stakes in Bhutan, PM Tob­gay wants to cap­i­tal­ize on this op­por­tu­nity to at­tract as much as for­eign in­vest­ment as pos­si­ble. He knows that in the present sit­u­a­tion, In­dia could be the big­gest source of for­eign in­vest­ment in the coun­try. The prime min­is­ter, who re­ceived his higher ed­u­ca­tion in the United States Univer­sity of Pittsburgh, even vis­ited the US to seek Washington’s in­vest­ment in his coun­try. How­ever, at­tract­ing US in­vest­ment may take some time to ma­te­ri­al­ize. Against this back­drop, In­dia and the West Ben­gal state are the ob­vi­ous choices for Bhutan to ex­plore trade and in­vest­ment av­enues. Hav­ing said this, the ef­forts by PM Tob­gay are aimed at di­ver­si­fy­ing in­vest­ment in his state.

On their part, In­dia and the West Ben­gal for that mat­ter also are pro­foundly in­ter­ested in in­creas­ing trade and eco­nomic ties with Bhutan. The fore­most rea­son is that In­dia is an energy-de­fi­cient coun­try and crit­i­cally needs river wa­ter from Bhutan to gen­er­ate hy­dro­elec­tric power which, in turn, would be in­stru­men­tal in main­tain­ing a high rate of eco­nomic growth in In­dia. The de­mand for energy and power has been steadily in­creas­ing in In­dia be­cause of the grow­ing pop­u­la­tion and eco­nomic growth. The coun­try would like to have in­ti­mate re­la­tions with Bhutan so that it could ex­ploit more and more of Bhutanese wa­ter re­sources. For in­stance, In­dia would earn US$2 bil­lion by in­vest­ing in the con­struc­tion of three hy­dro­elec­tric power projects in Bhutan with a com­bined in­stalled ca­pac­ity of 1400 megawatts (MW) and from three other projects, to­tal­ing 3000 MW. The fact is that In­dia’s wa­ter se­cu­rity is nearly de­pen­dent on Bhutanese river wa­ter. The im­por­tance of Bhutan for In­dia can be gauged from the fact that Prime Min­is­ter Naren­dra Modi, af­ter his in­au­gu­ra­tion last year chose Bhutan for his first of­fi­cial so­journ.

Bhutan has more ice than any place on Earth be­sides the poles. The re­gion's moun­tain ice is so large in quan­tity that it's of­ten called the "Third Pole" or the "Wa­ter Tower of Asia." Glaciers from the plateau sup­ply most of Asia's rivers and, by ex­ten­sion, pro­vide wa­ter to some 2 bil­lion peo­ple. In fact, Bhutan has enough wa­ter to gen­er­ate 30 gi­gawatts of elec­tric­ity, which is about a third of the in­stalled gen­er­a­tion ca­pac­ity of the US.

For In­dia there is also a po­lit­i­cal rea­son to go the ex­tra mile to keep Bhutan eco­nom­i­cally sta­ble, which is a guar­an­tee of its po­lit­i­cal strength. It has been the con­sis­tence pol­icy of In­dia to keep Bhutan com­pletely de­pen­dent on it­self. This is aimed at mak­ing moun­tain king­dom both a ‘de­pen­dency’ and a ‘sphere of in­flu­ence’ to the ex­clu­sion of all other states in the re­gion, par­tic­u­larly China, Delhi’s re­gional ri­val.

In­dian pol­i­cy­mak­ers are of the view that as long as Bhutan, a the­o­ret­i­cally in­de­pen­dent state, re­mains po­lit­i­cally and eco­nom­i­cally sta­ble, it would not go out of In­dia’s sphere of in­flu­ence and China would not be able to ex­ploit the sit­u­a­tion to its ut­ter ad­van­tage. This has been the fun­da­men­tal rea­son that In­dia, which has po­lit­i­cal is­sues with all the ma­jor re­gional coun­tries, in­clud­ing Pak­istan, Nepal, Sri Lanka and Bangladesh, has no prob­lems with Bhutan. At the same time, Bhutan which is si­t­u­ated on the south­ern tip of Ti­betan Plateau, sand­wiched be­tween China and In­dia, has a key is­sue with Bei­jing - that of an un­set­tled bor­der. Bhutan has diplo­matic re­la­tions with 52 na­tions since it es­tab­lished for­mal ties with In­dia in 1968. It has no diplo­matic re­la­tions with China as well as the US or the other per­ma­nent mem­bers of the UN Se­cu­rity Coun­cil though it is a geopo­lit­i­cal buf­fer be­tween Asia’s two giants. This state of diplo­matic ties of Bhutan raises many ques­tions re­gard­ing the true in­de­pen­dence of the coun­try and the dom­i­neer­ing in­flu­ence of In­dia.

Bhutan ge­og­ra­phy and its wa­ter re­sources are the fun­da­men­tal de­ter­mi­nants of the state’s for­eign pol­icy, if it re­ally has one, as well as that of the poli­cies of neigh­bor­ing states to­wards Bhutan. If Bhutan has to sur­vive as an in­de­pen­dent state, it needs to es­tab­lish diplo­matic re­la­tions with China and the US as well as other coun­tries and also start trad­ing with them. History is wit­ness to the fact that a coun­try that is en­tirely de­pen­dent on a sole or cou­ple of other states, has to com­pro­mise its po­lit­i­cal sovereignty. PM Tob­gay’s visit to the US and his at­tempts to at­tract Amer­i­can in­vest­ment is a step in the right di­rec­tion. China and the US must of­fer at­trac­tive terms of trade to Bhutan so that it has no other choice but to al­low these coun­tries to have eco­nomic ties with them.

How­ever, in the de­vel­op­ing sce­nario in Asia, where the new US Sec­re­tary of De­fense, Ash­ton Carter, has come up with a new doc­trine of con­tain­ing China and of us­ing In­dia as a tool, both Washington and Bei­jing would not be likely to co­op­er­ate to pull Bhutan out. Un­der US pol­icy, Bhutan may get in­creased strate­gic im­por­tance and its de­pen­dence on In­dia may fur­ther in­crease in­stead of re­duc­tion. The Bhutanese prime min­is­ter’s over­tures to­wards the In­dian state of West Ben­gal to have more eco­nomic ties would show where the sit­u­a­tion is go­ing – and Bhutan could prove to be a tiny re­gional dy­namo pow­er­ing the larger energy roadmap.

It has been the con­sis­tence pol­icy of In­dia to keep Bhutan com­pletely de­pen­dent on it­self.

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