The Problem of Nepal's Foreign Policy

As India and China continue to jockey for influence with various nations in South Asia and South East Asia, Nepal has recently become the latest hotspot in this growing rivalry. While the nation poses no threat to either China or India, its recent wavering and potential tilt towards China would be a powerful signal to many of its neighbors. However, Nepal maintains that it is merely seeking to adhere to its stated policy of nonalignment.

Historically, Nepal has had close ties to India. Beginning with the Indo-Nepal Treaty of Peace and Friendship signed in 1950, both nations agreed to not tolerate “any threat to the security of the other by a foreign aggressor”. Nepal signed onto the treaty in full after China’s invasion of Tibet, which caused Nepal to seek military ties with India as well. While relations between the two countries were not always perfect, over the decades they have formed a close relationship. The border between them is open, meaning citizens of both nations can travel freely between the two states, and Nepalese citizens are granted the same economic and educational opportunities as Indian citizens.

Prime Minister Modi attempted to further improve India-Nepal relations in his first year of office, undertaking the first visit by an Indian Prime Minister to Nepal in 17 years. In addition, he agreed to extend a credit line of $1 billion for various infrastructure developments, along with significant financial assistance for earthquake reconstruction. Over the next four years, Modi would visit the small nation two more times. Supposedly, the purpose of the last visit in May 2018 was “to reset ties”. If India and Nepal were so close, why was this reset necessary?

Prime Minister Modi meets the Nepal Delegation  Photo by Omar Havana/Getty Images News / Getty Images

Prime Minister Modi meets the Nepal Delegation

Photo by Omar Havana/Getty Images News / Getty Images

Throughout its history, Nepal has been extremely dependent on India. As a landlocked country, vast amounts of its imports travel through India. All of Nepal’s petroleum supplies travel through India. The negatives of this relationship were harshly revealed when Nepal accused India of imposing an undeclared blockade in September of 2015, which sparked an economic and humanitarian crisis in Nepal. While India blamed this blockade on Madhesi protestors in Nepal, many in the country grew to realize just how dependent they were on the whim of the Indian state. A more concerted effort grew in popularity, working to explore ways to reduce the level of influence India had over the mountainous nation. India has also moved very slowly on helping Nepal develop its infrastructure, leaving many to wonder if they would be better served by China in this regard.

Nepal has long had relations with its neighbor to the east as well. Throughout its history, Nepal has occasionally used the prospect of moving closer to China as an avenue to extract better concessions from India. However, with the recent tension between Indian and Nepal over the blockade and failure to advance on the infrastructure projects, Nepal signed a trade treaty with China that contained several significant elements. China agreed to allow Nepal access to its sea ports and to build large infrastructure projects, such as a regional international airport and additional bridges leading into Nepal. In 2017, Nepal signed onto the Belt and Road Initiative, something India has boycotted. This dramatic shift towards China caused the Modi government to take extreme notice, hence the desire to “reset ties”.

India’s quasi-rivalry with China has been well documented and there is a history of tension between the two countries. While relations are less tense they have been in the past, there is a growing sense of competition for influence in the region. Nepal’s orientation would appear to be the most recent instance of this contest. South Asia contains many multilateral institutions, with one of the most important being the South Asian Association for Regional Cooperation (SAARC). However, much to India’s distaste, SAARC includes Pakistan as a member and China as an observer, both potential spoilers for any policies India would want to drive forward. Thus, India pressed for the creation of a seemingly redundant organization, The Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC). Importantly, this initiative lacks Pakistan and China as members. On September 10th, BIMSTEC conducted its first-ever joint military exercises. However, Nepal refused to participate in the exercises, claiming that India unilaterally decided to hold joint military exercise, having not mentioned them at the summit earlier that month. Nepal issued a statement aimed squarely at India, announcing that they would not being joining any military alliance and would not deviate from its long-standing policy of nonalignment.

Nepal Prime Minister Khadga Prasad Oli on a visit to China  Photo by Lintao Zhang/Getty Images News / Getty Images

Nepal Prime Minister Khadga Prasad Oli on a visit to China

Photo by Lintao Zhang/Getty Images News / Getty Images

In a move that surprised many, Nepal then announced it would be participating in the Sagarmatha Friendship-2 joint military exercises with China, to be held a week after the BIMSTEC exercises. Many have taken this as Nepal asserting the independence of its foreign policy, a demonstration of its refusal to blindly follow India’s lead. While Nepal and India still have strong bilateral military ties, with Nepal contributing personnel to India’s armed forces (most notably the Gorkha regiments), many policy experts have called for India to take strong action to address Nepal’s shift towards China.

First and foremost, policy experts suggest that India needs to move quickly on its promises of infrastructure development in Nepal. With China increasing its ‘soft power’ influences throughout the region via its Belt and Road Initiative, it is important that India demonstrate it remains a viable alternative to China. Secondly, it is important that India begins to treat Nepal as more of a viable partner in global affairs, rather than as a protectorate. Arrogance will only serve to push Nepal further into China’s orbit, and signal to other nations that perhaps India is not the best partner to work with in the region. Only through mutual respect and understanding can India’s relationship with Nepal continue to be beneficial to both nations.

While Nepal seeks to maintain its policy of nonalignment, it has become increasing difficult to avoid being caught in the rising tensions of the region. While the nation seeks to diversify its economy and supply routes through its access to Chinese ports, it is still heavily dependent on India. In addition, Nepal should be wary of potential pitfalls regarding its growing relations with China, and should be careful to avoid falling into debt traps through the Belt and Road initiative. It remains to be seen if Prime Minister Modi’s attempts of reconciliation will bear fruit, or if Nepal’s efforts to remain nonaligned manage to continue.