What the India-China Doklam Standoff Means for Nepal ?

By Narayani Basu—Should the ongoing stand-off between India and China at the Bhutan-China-India triboundary point escalate, where does Nepal stand? This question will be troubling Kathmandu as New Delhi sticks stubbornly to its guns and Beijing’s rhetoric grows shriller by the day.

In recent times, Nepal has preferred to maintain, in theory, what it terms an “equidistant” relationship with both countries. In practice, however, matters are a little different. Since Narendra Modi’s government swept to power in India in 2014, Nepal’s ties with New Delhi have frayed. 2015 saw the promulgation of a new Constitution in Nepal, under the aegis of newly elected Prime Minister KP Sharma Oli.

India’s reaction to this was as bizarre as it was brazen – not only did it merely “note” the existence of the new Constitution, despite the welcome it received internationally, but India imposed an “unofficial” blockade on Nepal in order to secure the rights of the Madhesi people (who have close ties to India’s own people in Uttar Pradesh and Bihar). The blockade lasted for five months – but given that India stood as Nepal’s largest trade partner, besides providing sole access to ports and seaways, the impact on the domestic economy as well as on bilateral relations was little short of brutal.

It was the perfect cue for China’s entry onto the Nepali stage. Though China stayed carefully neutral with regard to the causes of the blockade, India’s tactlessness created the perfect pretext for Beijing to project itself as the benefactor to whom a small and helpless neighbor could turn in times of crisis. Faced with crippling shortages in fuel, cooking gas, and medicine, Oli’s erstwhile government signed successive agreements with China – with whom Nepal had had minimal relations previously – to secure sea access via Chinese ports, and import crucial petroleum products from China. It was enough to break India’s long-sustained monopoly over Nepal’s fuel supplies.

As a result, 2016 saw China passing India as a top aid donor to Nepal. Indeed, official statistics released by the Nepali government showed that in fiscal year 2014-2015, India’s official development assistance (ODA) disbursement halved in the first year of the Modi government alone, allowing Beijing to sail past India on Nepal’s list of top assistance providers after the United States, the United Kingdom, and Japan.

China’s involvement in landmark infrastructure projects in Nepal also increased by leaps and bounds, the most notable example being the construction of Nepal’s second international airport at Pokhara. This is a trump card that has never failed to reap benefits for Beijing in developing countries across the world, and it did not fail now.

By the end of 2016, a new government, led by Pushpa Kamal Dahal (commonly known as Prachanda), was in place in Kathmandu, declaring its policy toward India and China to be one of “equidistance” – signaling Nepal’s recognition of the economic benefits that a partnership with China could bring to the table, while keeping friendly terms with India. The policy continues under the present Sher Bahadur Deuba government.

Small wonder, then, that China’s vision of “One Belt, One Road” (OBOR) had a willing audience in Kathmandu. An ambitious economic and infrastructural connectivity project designed to link the economies of Asia and Europe, Chinese President Xi Jinping’s blueprint envisages boosting connectivity in areas such as transit, roads, railways, trade, aviation, and power. For Nepal, the economic benefits of improved rail and road networks outweighed any geopolitical concerns it might have had with regard to India. Despite Indian pressure, then, Beijing’s blandishments met with success in May 2017, when a deal was inked between Nepal’s Foreign Secretary Shanker Das Bairagi and Hu Yong, China’s ambassador to Nepal.

Nepal was one of over 60 countries to send a high-ranking delegation to the Belt and Road Forum (BRF) in May this year, while India preferred, pointedly, to stay away. Nepal has also complained that despite promises, India has failed to adequately cash in on the advantages of geographic proximity to build better connectivity and cross-border infrastructure, as well as better platforms for transit trade. At the same time, state level visits between India and Nepal have continued, with the most recent being the visit of Nepal’s deputy prime minister and foreign affairs minister, Krishna Bahadur Mahara in June 2017.

However, Nepal’s unfortunate geographical position, as well as its size and economic dependency, leave it vulnerable in times of geopolitical crisis. A bilateral tug-of-war between its bigger neighbors often sees Nepal caught in the crosshairs of an argument that has nothing to do with it. This year has seen a particularly bad chill in ties between India and China. Not only did India stay away from the BRF, but it objected sharply to a flagship project under OBOR – the China-Pakistan Economic Corridor (CPEC) – on the grounds that it violates India’s territorial sovereignty.

Chinese submarines, destroyers, and intelligence-gathering vessels have been continually sighted in the waters of the Indian Ocean, in what China calls “anti-piracy patrols in international waters,” but which India clearly sees as an intrusion into its backyard. Matters now have come to a head with the ongoing stand-off over a narrow strip of land at the triboundary between Bhutan, China, and India.

For Nepal, the fallout of these ongoing tensions has been varied. Its first joint military exercise – code named Sagarmatha Friendship – held with China in April 2017 was scaled down, with the Chinese media asserting this was due to Indian pressure. Meanwhile, in the face of the continuing dispute in Doklam, on July 13, the Indian Ministry of Home Affairs sanctioned a full-fledged intelligence wing under the Sashastra Seema Bal (SSB), which guards the borders with Nepal and Bhutan. New Delhi approved the creation of 650 combatized intelligence outposts “due to the heightened activity of anti-social, anti-national elements, and subversive forces” – a development which will have Kathmandu on alert given Nepal’s somewhat troubled history with the SSB.

It is not likely that the rivalry between India and China will fade away in the near future. The Doklam standoff serves as a strong reminder that, for a country as geographically disadvantaged as Nepal, the only way to maintain a meaningful neutrality is to get its own house in order first.

This is a country where the peace and transition process has been in motion since 2005, and yet matters do not appear to be anywhere close to resolution. India and China have much to iron out, both bilaterally and in their relations with their smaller South Asian neighbors. But as far as its own interests are concerned, Nepal can take a strong first step by focusing on building a stable political leadership, and giving itself a stronger regional voice. Only then can Kathmandu stand up and be counted as a significant – if not mighty – force in South Asia.

(Narayani Basu is an independent author and journalist with a special interest in Chinese foreign policy and resource diplomacy in Africa and Antarctica. This article was originally published in The Diplomat on July 19, 2017.)

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