Equidistance to Equi-proxomity: Nepal-India-China Relations Post-BRI

Connectivity infrastructure inherently aids expansion. The railroad connectivity in the US in the 19th century helped its westward expansion. Now, the Chinese version of “Manifest Destiny” – the Belt and Road Initiative (BRI) – will soon bring the China’s east coast closer to South Asia. In the latest episode of this connectivity plan, India’s special neighbor Nepal signed the BRI in Kathmandu and further negotiated the deal in the recent high-profile international summit Belt and Road Forum for International Cooperation in Beijing. The question that remains is what this unprecedented Nepal-China proximity will mean for India.

There are legitimate doubts about the successful implementation of the BRI in India’s close neighbor Nepal, especially in the context of India protesting the Initiative for its own reasons. Therefore, how the BRI projects will play out in Nepal, if they will, certainly remains to be seen. However, it cannot be denied that India, despite serious levels of mistrust of China, can neither continue its policy of avoidance nor severely minimize its engagement with China in Nepal. Regardless of commentators’ narratives of India’s continuous influence in Nepal, the graph of Chinese outreach in the country has only spiked, and is highly likely to go further up in the post-BRI days, as physical distance will narrow with growing connectivity. India clearly has lot at stake in post-BRI Nepal.

For China, Nepal becoming a member of the BRI is a welcome step, but it could have lived without Nepal signing the agreement, as it already secured its vital security interests there pre-BRI. Also, the fact that Nepal shares over a thousand kilometers of border with Tibet explains China’s interests in Nepal. If Nepal and China remain committed and implement the projects well, even without considering China’s possible hidden agenda in Nepal, then India will have to actively engage to safeguard its interests in certain areas of historic concern: security, trade, water resources and environment. 

Regarding security, Nepal and China have just conducted a joint military exercise, which got mixed responses from New Delhi; in trade, China recently used its land route to send merchandise to Nepal, skipping the traditional maritime route through Calcutta. This prompted a strong reaction from India, as it perceived the action as encroachment into its privileged market. Not to mention Chinese-built road, rail, and air connectivity infrastructure in Nepal or India’s long fear either of flooding in the monsoon or insufficient discharge from tributaries to the river Ganges in the dry season, discharge of chemical waste of factories into rivers, and many more issues which the new Nepalese-Chinese relationship may further aggravate.  

Nepal is also somewhat wary about any possible overreach from Chinese side, and has concerns about environmental issues, balance of payment problem and skyrocketing Chinese debt, controversial Chinese firms and their bad track records, lack of transparency, corruption, and many other factors. The recent behavior of PM Prachanda, who awarded, without competition, the construction contract of a major hydroelectric project to a controversial Chinese firm one day before his resignation, added to that wariness. The deal was discussed in Beijing during the visits of PM Oli and PM Prachanda. It is uncertain how far Nepalese leaders would go in signing agreements and contracts with China, but in any event, the Nepalese are pretty clear that they need China.

Meanwhile, Indian hawks are defining Nepal joining the BRI in “either with India or against India” terms, and are portraying it as a tool of Chinese expansion against India by totally disregarding sovereign Nepalese views. However, that is only antagonizing people in Nepal more. Similarly, claims about Chinese influence in political and cultural patterns are unfounded, because studies show that regional integration and physical connectivity do not automatically erode differences created by geography. In fact, the EU is a good example of an area where citizens of every member country are aware and proud of their distinct culture and character. So, if India chooses to block projects for its own strategic concerns that Nepal does not share, it can definitely do that, but it will come at the cost of deep antagonism in Nepal, which can be pernicious in the long-term. There is also a “moral hazard” for India to not to block Chinse investment, because Nepal is among the poorest countries in the world.

Nevertheless, contrary to these views, the Indian establishment has apparently recalibrated its policy by showing restraint and taking a pretty reasonable approach with Nepal since Prachanda took office to improve bilateral relations. India has shown some flexibility in terms of Nepal-China relations, as evidenced by its tolerance of Nepal conducting military exercises with China and signing the BRI. India also endorsed the first phase of local elections in Nepal in the larger interests of the country, although the Madheshi leaders were not satisfied.  There is also a hint of a shift in the strategic thinking of India vis-à-vis China as it encourages building connectivity in states along the Chinese border, as opposed to its traditional policy of leaving them underdeveloped connectivity-wise to keep the Chinese at bay. This shift will be a welcome policy for Nepal, as India’s traditional thinking deprived Nepal of Chinese investment on infrastructure and kept distance between the two countries.

Therefore, it is in Nepal’s and India’s long-term interests to strategically engage in a trilateral dialogue with China. India will not necessarily have to counter China’s BRI in Nepal (in fact, Nepal and India had reportedly consulted on the BRI matter before Nepal signed it) but rather engage to safeguard its own interests.  That way, India will experience benefits post-BRI without damaging its status.