‘Ei­ther with us or against us’ will not work in Nepal

Given its prox­im­ity to Nepal, In­dia gets bet­ter re­turns on its in­vest­ments at a frac­tion of the cost in­curred by China

Hindustan Times (Patiala) - - Comment - BISHAL CHALISE Bishal Chalise is se­nior pro­gramme of­fi­cer at Niti Foun­da­tion, a pub­lic pol­icy think-tank based in Kath­mandu The views ex­pressed are per­sonal

Nepal has em­braced the Belt and Road Ini­tia­tive (BRI), China’s am­bi­tious in­fra­struc­ture and con­nec­tiv­ity project, with great en­thu­si­asm. Other than Pak­istan, Nepal was the only coun­try in In­dia’s neigh­bour­hood to send a high-level del­e­ga­tion to the Belt and Road Fo­rum (BRF) or­gan­ised in Beijing re­cently. The bur­geon­ing Sino-Nepal re­la­tion­ship has raised many eye­brows in In­dia.

Two re­cent events have added to In­dia’s dis­com­fort. First, Nepal signed a pro­to­col ar­range­ment for trade and tran­sit treaty with China. The agree­ment would al­low Nepal to use at least seven Chi­nese ports for third coun­try trade. Un­til now, Nepal could use only In­dian ports. Sec­ond, BRI of­fi­cially has a pro­gramme for Nepal now, sim­i­lar to China-Pak­istan Eco­nomic Cor­ri­dor (CEPC). The joint com­mu­nique is­sued dur­ing the Fo­rum in­cludes “the Nepal-China Trans-Hi­malayan Multi-Di­men­sional Con­nec­tiv­ity Net­work, in­clud­ing Nepal-China cross-bor­der rail­way” as one of 35 new BRI-af­fil­i­ated pro­grammes. While it didn’t spec­ify the num­ber or na­ture of pro­jects, Nepal has pro­posed nine pro­jects that it wants to de­velop un­der the BRI ban­ner. One of them is a rail link con­nect­ing the coun­try’s cap­i­tal to the Chi­nese bor­der.

In the short run, these agree­ments with China have mere sym­bolic, rather than eco­nomic, value. Given the dis­tance from China’s coasts, in­hos­pitable ter­rain and high costs of rail-freight trans­porta­tion, trad­ing through Chi­nese ports is phys­i­cally and eco­nom­i­cally not vi­able. Nepal only has a sin­gle all-weather road lead­ing to the Chi­nese bor­der, and that too re­mains de­funct since the 2015 earth­quake. A Chi­nese rail link is com­ing to Kath­mandu but that is at least a decade away.

Nev­er­the­less, these re­cent de­vel­op­ments are likely to have far-reach­ing im­pli­ca­tions for Nepal’s re­la­tion­ship with its north­ern neigh­bour. How­ever, for In­dia, the strate­gic ben­e­fit of fo­cus­ing on its ties with Nepal out­weighs the cost in­cur­ring from the lat­ter’s

re­la­tions with China. Hence, In­dia is bet­ter off strength­en­ing its own ties with Nepal. There are three things in par­tic­u­lar that In­dia should look at. First, In­dia should demon­strate that it can de­liver on its prom­ises as well as China does, if not bet­ter. In­dia’s large pro­jects in Nepal are of­ten de­layed, and this needs to change if it wants to makeover its im­age as a re­li­able de­vel­op­ment part­ner.

Sec­ond, In­dia should have its own ver­sion of the “com­mu­nity of shared destiny” — a con­cept used by China in its ex­ter­nal re­la­tions. Neigh­bours like Nepal ex­pect the eco­nomic rise of In­dia to ben­e­fit them as well. For ex­am­ple, a truck car­ry­ing a load from Kolkata Port takes any­where be­tween two and seven days to cross the bor­der, adding sig­nif­i­cant costs to the Nepali trader. Nepal faces a mas­sive trade deficit with In­dia, giv­ing the coun­try a hard time man­ag­ing macroe­co­nomic sta­bil­ity. Nepali agri­cul­ture ex­ports of­ten face non-tar­iff en­try bar­ri­ers. Link­ages to In­dian pro­duc­tion value chain is non-ex­is­tent. Bor­der in­fra­struc­ture direly needs an up­grade. In­dia’s ap­proach to deal­ing with Nepal is not help­ful ei­ther; for ex­am­ple, the 2015 trade block­ade. Be­sides, In­dia has not ex­changed the In­dian cur­rency held by Nepali cit­i­zens fol­low­ing the de­mon­eti­sa­tion in 2016. In­dia should give neigh­bours rea­sons to cel­e­brate its rise as an eco­nomic pow­er­house.

Third, In­dia should amend its cur­rent ap­proach of view­ing a coun­try’s lead­er­ship as pro-In­dia or pro-China. Nepali peo­ple are in gen­uine quest for pros­per­ity, and foreign in­vest­ment is a path to get there. Wel­com­ing in­vest­ment un­der BRI is there­fore not a ze­ro­sum game pit­ting China against In­dia. More­over, Nepal is a flour­ish­ing democ­racy, and its lead­ers still hold the peo­ple’s man­date. That is why con­nec­tiv­ity with China is an is­sue of bi­par­ti­san con­sen­sus in Nepal. Even if the op­po­si­tion comes to power, it can­not en­tirely sway away from the cur­rent pol­icy of pur­su­ing bet­ter re­la­tions with China.

A bet­ter op­tion for In­dia is to forgo “ei­ther you are with us or not” ap­proach and work with the Nepal gov­ern­ment to ex­pe­dite its own con­nec­tiv­ity pro­jects. Given its geo­graphic prox­im­ity, In­dia can get more im­pact out of its in­vest­ments at a frac­tion of the costs in­curred by China.


Prime Min­is­ter Naren­dra Modi with Nepal PM KP Sharma Oli, Au­gust 31, 2018. In­dia should demon­strate that it can de­liver on its prom­ises as well as China does, if not bet­ter

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