Kathmandu’s sovereignty concerns are genuine and deserve better treatment from India. In reality, like Kathmandu does not want to compromise its sovereignty for India’s national security, New Delhi would be unwilling to compromise its national security for Nepal’s strategic autonomy.

Beijing’s security apprehensions regarding Indian meddling in Tibet casts shadows on Nepal-Tibet trade.

Surrounded by India on three sides and Tibet on another, Nepal dwells in between two Asian giants. Given extensive historical relations, socio-cultural ties, and strategic value, New Delhi’s policy circles predominantly view Nepal as India’s backyard. Being politically unstable, economically weak, and geographically constrained, Kathmandu, has long been compelled to accept this policy framework.

The Himalayan State’s over reliance on India has seriously hampered its strategic autonomy over time…. Since Nepal clings to India for trade and economic purposes, successive Indian governments have leveraged this for geopolitical ends. India inflicted its first ever economic blockade in 1969 when Kathmandu unilaterally tried to revise the “Treaty of Peace and Friendship” and asked Indian security groups to vacate the country.

“The anti-India sentiment, exacerbated since the last blockade, has become a political weapon to garner public support, says Constantino Xavier, a non-resident fellow at Brookings.

Generally speaking, a second embargo resulted from New Delhi’s fear of whether Nepal is slipping through fingers. It occurred after several instances that led to a strained relationship between both. Two major events in this line are King Birendra’s declaration of Nepal as a “zone of peace” in 1975 and Kathmandu’s attempt to purchase Chinese anti-aircraft guns. Both these went against Indian strategic interests. Thus India imposed a second embargo in 1989.

The last and most recent economic blockade occurred in 2015 when Kathmandu refused to pay heed to Indian concerns while drafting a new constitution. The KP Sharma Oli regime initially turned down the Indian call to resolve the constitutional demands of the Madhesi community, having cultural and geographic close-contact with India. Since this exclusion of Madhesis had been contrary to Indian interests, New Delhi imposed a trade embargo on Nepal aimed to pressurize Oli regime to accommodate Madhesi demands in the new constitution. …..

The Nepal PM Kriti Nidhi Bista’s assertion that, “Nepal could not compromise its sovereignty for India’s so-called security,” indicates that concerns over Indian interference in Nepal’s domestic affairs has persisted since the 1960’s. However, the 2015 blockade created an all-time high “anti-India” mood in Nepal.

Constantino Xavier, a non-resident fellow at Brookings, explains that the “anti-India” sentiment, exacerbated since the last blockade, has become a political weapon to garner public support.

Limitations of a China Tilt

On the grounds of India’s five-month-long trade embargo in 2015, KP Sharma Oli inked a Transit Protocol with the PRC. The protocol, which came into effect in February 2020, provided Nepal access to three dry ports (Lhasa, Xigatsa, Lanzhou) and four seaports (Shenzhen, Zhanjiang, Tianjin, Lianyungang).

The distance between Nepal’s Birgunj and Tianjin, the closest port in China, is four times as much as the distance between Birgunj and Kolkata.

The former Nepalese secretary of commerce, Purushottam Ojha has said that unless China considerably brought down operational constraints, Nepalese merchants will remain attracted to the Indian side.

According to Nepal based Prof. Hari Bansh Jha, considering Beijing’s security concerns regarding Tibet, the extent to which the PRC would open it up for free trade remains questionable.

The distance between Nepal’s Birgunj and Tianjin, the closest port in China, is four times as much as the distance between Birgunj and Kolkata.

Beijing’s security apprehensions regarding Indian meddling in Tibet casts shadows on Nepal-Tibet trade.

The Chinese leadership believes that India is propelling “anti-China” sentiments in Tibet. Beijing has strong discontent over the Indian engagement with Tibetan exiles and this has been a bone of contention in Sino-Indian relations for long.

The BRI projects, designed to scale down Indian monopoly in third-country trade, have stagnated due to geographical barriers and differences over funding modality.

Meanwhile, 1770 km Indo-Nepal open border is largely unrestricted. Hence, Beijing’s fear that whether this porous border would become a means for Indian interference in Tibet complicates the Nepalese-Tibetan trade.

The BRI projects, designed to scale down Indian monopoly in third-country trade, have stagnated due to geographical barriers and differences over funding modality.

The Chinese feasibility study on the rail line up to Nepal’s Keyrung has markedly specified the geographical restraints in accomplishing the project.

Hari Bansh Jha states that the project demands snow-resistant railroads for year-long usability due to heavy snowfall throughout the winter. Since around 98 percent of the rail project would involve tunnels and bridges, the computed cost is USD 2.3 billion, making it unaffordable for Nepal.

The disagreement over funding remains a bone of contention in executing the BRI investments. As Kamal Dev Bhattarai remarks, “Nepal prefers aid or grants, but China favors loans.” When considering Beijing’s geopolitical intentions and non-transparency, BRI is imperiled with falling prey to the Chinese debt trap. If Kathmandu decides to go ahead without consulting these pitfalls, the policy implications of the already materialized BRI projects tell us that Nepal would only end up further losing its autonomy.

Currently, Nepal’s economic reliance on India is pretty high.

65.5 percent of Nepal’s entire imports are from India.

India is also Nepal’s top export destination, with a 57 percent share.

The Nepalese Planning Commission member Dr. Posh Raj Pandey explains that Kathmandu cannot easily replace India in importing essential commodities. The incapacity to cope with the Indian economic modernisation has denied Nepal the financial perks, and has thus been instrumental in triggering a feeling of external dominance. Then the question arises about how Nepal, struggling to find space in the Indian market, would gain from the fiercely competitive Chinese economy.

Besides this, Kathmandu’s objective to eliminate Indian economic dominance to achieve greater strategic autonomy includes many discrepancies.

For instance, as per the 2014 Indo-Nepal Power Trade Agreement (PTA), foreign players investing in Nepal’s hydropower sector cannot export electricity to the Indian market. With an unprofitable domestic market, access to the Indian one is vital for Nepal to attract foreign investment. As a result, Kathmandu, which aspires to transform its energy sector using FDI, practically wants a concession from New Delhi to do so.

Likewise, Kathmandu’s ambition to emerge as a transit economy connecting India and China also calls for a balancing act.

Nepal’s Strategic Autonomy: A Realist Perspective

The PRC is much more competent than New Delhi in rendering hard infrastructure for Nepal. The predominant means of Indian interference is economical. If prudently managed, Nepal could benefit from economic cooperation with Beijing and improve its strategic autonomy.

Kathmandu’s sovereignty concerns are genuine and deserve better treatment from India.

It is more precise to say that New Delhi has always followed a realistic policy approach towards Nepal rather than a colonial viewpoint.

Realistically, like Kathmandu does not want to compromise its sovereignty for India’s national security, New Delhi would not be willing to compromise its national security for Nepal’s strategic autonomy.

Therefore, when trying to achieve increased strategic autonomy, Kathmandu must consider the implications of moving close to Beijing and New Delhi’s capability to exploit its weaknesses. Since Kathmandu’s pro-China stance would cause serious security apprehensions in New Delhi’s strategic circles, that would coerce India to move to political action.

In today’s world, no country can have full-fledged strategic autonomy. The same goes for Nepal.

Nepal’s strategic autonomy will be best practiced in the current environment if it could receive maximum benefits from New Delhi for protecting Indian security interests or, in other words, for not moving close to Beijing.

For that, Kathmandu requires delicate diplomatic balancing. ( Courtesy: Australian Institute of International Affairs)

— by Jelvin Jose.

The author is an intern at National Institute of Advanced Studies (NIAS), India. He has previously published articles at The Geopolitics and NIICE, Nepal.
This article is published under a Creative Commons Licence